Document:

Exhibit 10.1

 

 

 

$700 MILLION TERM LOAN AGREEMENT

 

made and entered into

 

as of August 28, 2007

 

by and among

 

WHOLE FOODS MARKET, INC.,

 

a Texas corporation,

 

EACH OF THE FINANCIAL
INSTITUTIONS WHICH IS

 

A SIGNATORY HERETO OR WHICH MAY FROM
TIME TO

 

TIME BECOME A PARTY HERETO,

 

ROYAL BANK OF CANADA,

 

as Administrative Agent,

 

JPMORGAN CHASE BANK, N.A.,

 

as Syndication Agent,

 

and Collateral Agent,

 

WELLS FARGO BANK, N A, WACHOVIA BANK, N.A.

 

and LASALLE BANK MIDWEST, N.A.

 

as
Co-Documentation Agents

 

and

 

RBC CAPITAL MARKETS(1) AND
J. P.  MORGAN SECURITIES INC.,

 

as Joint Lead Arrangers and Joint
Bookrunners

 

 

 

(1)           RBC Capital Markets is a brand name
for the investment banking activities of Royal Bank of Canada.

 

 

TABLE OF
CONTENTS

 

	
   

  	
  Page

  
	
  Article I – DEFINITIONS

  	
   

  
	
  Section 1.1 Certain
  Defined Terms

  	
  1

  
	
  Section 1.2
  Accounting Terms and Determinations

  	
  18

  
	
   

  	
   

  
	
  Article II – LOANS; ETC.

  	
   

  
	
   

  	
   

  
	
  Section 2.1 Loans

  	
  19

  
	
  Section 2.2
  Commitment Fees; Termination and Reductions

  	
  20

  
	
  Section 2.3 Mandatory
  Prepayments; Commitment Reduction

  	
  21

  
	
  Section 2.4 Payments

  	
  21

  
	
  Section 2.5
  Prepayments of Loans

  	
  21

  
	
  Section 2.6
  Application of Payments and Prepayments

  	
  22

  
	
  Section 2.7 Pro Rata
  Treatment

  	
  23

  
	
  Section 2.8 Payment
  Dates on the Loans

  	
  23

  
	
  Section 2.9 Interest
  Options for Loans

  	
  23

  
	
  Section 2.10 Special
  Provisions Applicable to LIBOR Rate Borrowings

  	
  24

  
	
  Section 2.11 Payment
  Dates

  	
  26

  
	
  Section 2.12 Sharing
  of Payments, Etc.

  	
  26

  
	
  Section 2.13 Use of
  Proceeds

  	
  27

  
	
  Section 2.14 Evidence
  of Debt

  	
  27

  
	
   

  	
   

  
	
  Article III – CONDITIONS

  	
   

  
	
   

  	
   

  
	
  Section 3.1 All Loans

  	
  28

  
	
  Section 3.2 First
  Loan

  	
  28

  
	
  Section 3.3
  Determinations Under Section 3.2

  	
  30

  
	
   

  	
   

  
	
  Article IV – REPRESENTATIONS AND WARRANTIES

  	
   

  
	
   

  	
   

  
	
  Section 4.1
  Organization

  	
  30

  
	
  Section 4.2 Financial
  Statements

  	
  30

  
	
  Section 4.3
  Enforceable Obligations; Authorization

  	
  31

  
	
  Section 4.4 Other
  Debt

  	
  31

  
	
  Section 4.5
  Litigation

  	
  31

  
	
  Section 4.6 Title

  	
  31

  
	
  Section 4.7 Taxes

  	
  31

  
	
  Section 4.8
  Subsidiaries

  	
  31

  
	
  Section 4.9
  Representations by Others

  	
  31

  
	
  Section 4.10 Permits,
  Licenses, Etc.

  	
  32

  
	
  Section 4.11 ERISA

  	
  32

  
	
  Section 4.12
  Condition of Property

  	
  32

  
	
  Section 4.13 Assumed
  Names

  	
  32

  
	
  Section 4.14
  Investment Company Act

  	
  32

  
	
  Section 4.15 Margin
  Stock

  	
  32

  
	
  Section 4.16
  Agreements

  	
  32

  
	
  Section 4.17
  Environmental Matters

  	
  33

  

 

i

 

	
  Section 4.18 Solvency

  	
  33

  
	
  Section 4.19 Target
  Representations

  	
  33

  
	
   

  	
   

  
	
  Article V – AFFIRMATIVE COVENANTS

  	
   

  
	
   

  	
   

  
	
  Section 5.1 Taxes,
  Existence, Regulations, Property, Etc.

  	
  33

  
	
  Section 5.2 Financial
  Statements and Information

  	
  34

  
	
  Section 5.3 Financial
  Tests

  	
  34

  
	
  Section 5.4
  Inspection

  	
  34

  
	
  Section 5.5 Further
  Assurances

  	
  35

  
	
  Section 5.6 Books and
  Records

  	
  35

  
	
  Section 5.7 Insurance

  	
  35

  
	
  Section 5.8 ERISA

  	
  35

  
	
  Section 5.9 Use of
  Proceeds

  	
  35

  
	
  Section 5.10
  Additional Guaranties

  	
  35

  
	
  Section 5.11 Notice
  of Events

  	
  36

  
	
  Section 5.12 Environmental
  Matters

  	
  36

  
	
  Section 5.13 End of
  Fiscal Year

  	
  36

  
	
  Section 5.14
  Consummation of Merger

  	
  36

  
	
  Section 5.15
  Maintenance of Ratings

  	
  36

  
	
  Section 5.16 Covenant
  to Guarantee Obligations and Give Security

  	
  36

  
	
  Section 5.17 Covenant
  to Give Additional Security

  	
  37

  
	
   

  	
   

  
	
  Article VI – NEGATIVE COVENANTS

  	
   

  
	
   

  	
   

  
	
  Section 6.1
  Indebtedness

  	
  38

  
	
  Section 6.2 Liens

  	
  40

  
	
  Section 6.3
  Contingent Obligations

  	
  41

  
	
  Section 6.4 Mergers,
  Consolidations and Dispositions and Acquisitions of Assets

  	
  41

  
	
  Section 6.5 Nature of
  Business

  	
  42

  
	
  Section 6.6
  Transactions with Related Parties

  	
  42

  
	
  Section 6.7 Loans and
  Investments

  	
  42

  
	
  Section 6.8 ERISA
  Compliance

  	
  43

  
	
  Section 6.9 Credit
  Extensions

  	
  43

  
	
  Section 6.10 Change
  in Accounting Method

  	
  43

  
	
  Section 6.11
  Redemption, Dividends and Distributions

  	
  43

  
	
   

  	
   

  
	
  Article VII – EVENTS OF DEFAULT AND REMEDIES

  	
   

  
	
   

  	
   

  
	
  Section 7.1 Events of
  Default

  	
  44

  
	
  Section 7.2 Remedies
  Cumulative

  	
  46

  
	
   

  	
   

  
	
  Article VIII – THE AGENT

  	
   

  
	
   

  	
   

  
	
  Section 8.1
  Authorization and Action

  	
  46

  
	
  Section 8.2 Agents’
  Reliance, Etc.

  	
  47

  
	
  Section 8.3 Royal Bank
  and Affiliates

  	
  47

  
	
  Section 8.4 Lender
  Credit Decision

  	
  47

  
	
  Section 8.5
  Indemnification

  	
  47

  
	
  Section 8.6 Successor
  Agents

  	
  48

  
	
  Section 8.7 Other
  Agents; Arrangers and Managers

  	
  48

  

 

ii

 

	
  Article IX – MISCELLANEOUS

  	
   

  
	
   

  	
   

  
	
  Section 9.1 No Waiver

  	
  48

  
	
  Section 9.2 Notices

  	
  49

  
	
  Section 9.3
  Jurisdiction; Governing Law; Etc.

  	
  50

  
	
  Section 9.4 Survival;
  Parties Bound

  	
  51

  
	
  Section 9.5
  Counterparts

  	
  51

  
	
  Section 9.6 Survival

  	
  51

  
	
  Section 9.7 Captions

  	
  51

  
	
  Section 9.8 Expenses,
  Etc.

  	
  51

  
	
  Section 9.9
  Indemnification

  	
  52

  
	
  Section 9.10
  Amendments, Etc.

  	
  53

  
	
  Section 9.11
  Successors and Assigns

  	
  53

  
	
  Section 9.12 Entire
  Agreement

  	
  56

  
	
  Section 9.13
  Severability

  	
  56

  
	
  Section 9.14
  Disclosures

  	
  56

  
	
  Section 9.15 Capital
  Adequacy

  	
  56

  
	
  Section 9.16
  Withholding Tax

  	
  56

  
	
  Section 9.17 Waiver
  of Claims

  	
  57

  
	
  Section 9.18 Right of
  Setoff

  	
  58

  
	
  Section 9.19 USA
  PATRIOT Act

  	
  58

  
	
  Section 9.20
  Non-Consenting Lenders; Other Lenders

  	
  58

  
	
  Section 9.21
  Confidentiality

  	
  58

  

 

iii

 

	
  EXHIBITS

  	
   

  
	
   

  	
   

  
	
  A

  	
  -

  	
  Form of Note

  
	
  B

  	
  -

  	
  Notice of Assumption

  
	
  C

  	
  -

  	
  Officer’s Certificate

  
	
  D

  	
  -

  	
  Request for Extension of
  Credit and Certificate of No Default

  
	
  E

  	
  -

  	
  Rate Selection Notice

  
	
  F

  	
  -

  	
  Form of Assignment
  and Acceptance

  
	
  G-A

  	
   

  	
  Form of Security
  Agreement A

  
	
  G-B

  	
   

  	
  Form of Security
  Agreement B

  
	
  H

  	
   

  	
  Form of Guaranty
  Agreement

  
	
   

  	
   

  	
   

  
	
  SCHEDULES

  	
   

  
	
   

  	
   

  
	
  1.1(a)

  	
   

  	
  Disclosed Divestitures

  
	
  1.1(b)

  	
   

  	
  EBIT/EBITDA

  
	
  1.1(c)

  	
   

  	
  Guarantors

  
	
  2.1(a)

  	
   

  	
  Commitments

  
	
  4.8

  	
   

  	
  Subsidiaries

  
	
  4.13

  	
   

  	
  Assumed Names

  
	
  4.16

  	
   

  	
  Agreements

  
	
  6.2(a)

  	
   

  	
  Liens

  

 

iv

 

TERM
LOAN AGREEMENT (this “Agreement”)
dated as of August 28, 2007 among WHOLE FOODS MARKET, INC., a Texas
corporation (the “Company”), Royal Bank of
Canada (“Royal Bank”), as
administrative agent (together with any successor administrative agent
appointed pursuant to Article VII, the “Agent”)
for the lenders from time to time parties hereto (the “Lenders”),
JPMorgan Chase Bank, N.A., as syndication agent and collateral agent together
with any successor collateral agent appointed pursuant to Security Agreement A
or Security Agreement B, as applicable (the “Collateral
Agent”), Wells Fargo Bank, N A, Wachovia Bank, N.A. and LaSalle
Bank Midwest, N.A. as co-documentation agents and RBC Capital Markets and J. P.
Morgan Securities Inc., as joint lead arrangers and joint bookrunners (in such
capacities, the “Joint Lead Arrangers”).

 

PRELIMINARY STATEMENTS:

 

(1)           Pursuant to the agreement and plan of
merger dated as of February 21, 2007 (as amended, supplemented or
otherwise modified in accordance with its terms, to the extent permitted
hereunder, the “Merger
Agreement”) among the Company, its wholly-owned subsidiary, WFMI
Merger Co., a Delaware corporation (“Merger
Sub”) and Wild Oats Markets, Inc., a Delaware corporation
(the “Target”), the
Company, through Merger Sub, has commenced an offer to purchase all the
outstanding shares of the Target (the “Tender
Offer”).  Following the
successful consummation of the Tender Offer, the Company, through Merger Sub,
will acquire 100% of the outstanding shares of the Target and will merge with
and into the Target (the “Merger”).

 

(2)           The Company has requested that the
Lenders lend to the Company up to $700,000,000 for the purposes set forth in Section 2.13.

 

(3)           The Lenders have indicated their
willingness to lend such amount on the terms and conditions of this Agreement.

 

NOW, THEREFORE, in consideration of the premises and
of the mutual covenants and agreements contained herein, the parties hereto
hereby agree as follows:

 

ARTICLE I
– DEFINITIONS

 

Section 1.1  Certain Defined Terms.  Unless a particular word or phrase is
otherwise defined or the context otherwise requires, capitalized words and
phrases used in the Loan Documents have the meanings provided below.

 

“Additional Collateral”
has the meaning specified in the Security Agreement B attached hereto as Exhibit G-B.

 

“Additional Collateral Trigger”
shall mean the date on which (a) the Borrower’s corporate credit rating
shall be (i) with respect to S&P’s corporate credit rating, equal to
or lower than BB-, and (ii) with respect to Moody’s corporate rating
system, equal to or lower than Ba3;  or (b) the
Borrower’s corporate credit rating shall be less than (i) with respect to
S&P’s corporate credit rating, BB-, or (ii) with respect to Moody’s
corporate rating system, a rating of Ba3.

 

“Additional Security Period”  shall mean the period, if any, beginning with
the occurrence of the Additional  Collateral
Trigger until the Maturity Date.

 

“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 

 

1

 

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.

 

“Agent”
shall have the meaning ascribed to it in the recital of parties hereto.

 

“Agent’s Account”
means the Agent’s account specified by the Agent in writing to the Company and
the Lenders from time to time.

 

“Aggregate Commitment”
shall mean, on any day, the aggregate of all of the Commitments of the Lenders
on such day.

 

“Agreement”
shall have the meaning ascribed to it in the recital of parties hereto.

 

“Agreement Value”
means, for each Hedging Agreement, on any date of determination, an amount
determined by the Agent equal to the amount, if any, (a) that would be
payable by any Loan Party or any of its Subsidiaries to its counterparty to
such Hedging Agreement as if (i) such Hedging Agreement was being
terminated early on such date of determination, (ii) such Loan Party or
Subsidiary was the sole “Affected Party” and (iii) the Agent was the sole
party determining such payment amount (with the Agent making such determination
pursuant to the terms of the governing documentation); (b) in the case of
a Hedge Agreement traded on an exchange, the mark-to-market value of such Hedge
Agreement, which will be the unrealized loss on such Hedge Agreement to the
Loan Party or any of its Subsidiaries party to such Hedge Agreement based on
the settlement price of such Hedge Agreement on such date of determination; or (c) in
all other cases, the mark-to-market value of such Hedge Agreement, which will
be the unrealized loss on such Hedge Agreement to the Loan Party or Subsidiary
of a Loan Party to such Hedge Agreement as the amount, if any, by which (i) the
present value of the future cash flows to be paid by such Loan Party or
Subsidiary exceeds (ii) the present value of the future cash flows to be
received by such Loan Party or Subsidiary pursuant to such Hedge Agreement.

 

“Alternate Base Rate”
shall mean for any day (a) the greater of (i) the Prime Rate and (ii) the
Federal Funds Rate plus 0.50% per
annum, plus (b) the Applicable Margin in
effect on such day.  For purposes of this
Agreement any change in the Alternate Base Rate due to a change in the Prime
Rate or the Federal Funds Rate shall be effective on the effective date of such
change in the Prime Rate or Federal Funds Rate, respectively.  If for any reason the Agent shall have
determined (which determination shall be conclusive and binding, absent
manifest error) that it is unable to ascertain the Federal Funds Rate for any
reason, including the inability or failure of the Agent to obtain sufficient
quotations in accordance with the terms hereof, the Alternate Base Rate shall
be the Prime Rate plus the Applicable Margin.

 

“Alternate Base Rate
Borrowing” shall mean that portion of the principal balance of
the Loans at any time bearing interest at the Alternate Base Rate.

 

“Annual Audited Financial
Statements” shall mean, with respect to each fiscal year of the
Company, the Company’s 10-K Report filed with the Securities Exchange
Commission for such fiscal year, prepared in conformity with Generally Accepted
Accounting Principles and accompanied by a report and opinion of independent
certified public accountants with an accounting firm of national standing and
reputation, which shall state that such financial 

 

2

 

statements, in the opinion
of such accountants, present fairly, in all material respects, the financial
position of the Company and its Subsidiaries, on a consolidated basis, as of
the date thereof and the results of its operations and cash flows for the
period covered thereby in conformity with Generally Accepted Accounting
Principles.

 

“Applicable Margin”
shall mean with respect to any Loan on any date of determination, the
applicable rate per annum for the corresponding rating of the Company’s
corporate family ratings, and determined in accordance with the following grid:

 

	
  Moody’s and S&P 

  	
   

  	
  LIBOR Margin 

  (Per Annum)

  	
   

  	
  ABR Margin 

  (Per Annum)

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  BBB+ or Baa1

  	
   

  	
  0.375

  	
  %

  	
  0.00

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  BBB or Baa2

  	
   

  	
  0.500

  	
  %

  	
  0.00

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  BBB- and Baa3

  	
   

  	
  0.625

  	
  %

  	
  0.00

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  BBB- or Baa3

  	
   

  	
  0.875

  	
  %

  	
  0.00

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  BB+ and Ba1

  	
   

  	
  1.00

  	
  %

  	
  0.00

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  BB+ or Ba1

  	
   

  	
  1.25

  	
  %

  	
  0.25

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  BB and Ba2

  	
   

  	
  1.375

  	
  %

  	
  0.375

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  BB or Ba2

  	
   

  	
  1.50

  	
  %

  	
  0.50

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Otherwise

  	
   

  	
  1.75

  	
  %

  	
  0.75

  	
  %

  

 

For purposes of determining the Applicable Margin in
the case of split ratings, where applicable, (i) in the event of a single
category split in ratings, the higher of the two ratings shall apply, (ii) in
the event of a two-category split in ratings, the rating that is in the middle
of the two ratings shall apply and (iii) in the event that there is more
than a two-category split in ratings, the rating that is one category above the
lower rating will apply.

 

“Approved Fund”
means any Person (other than a natural person) that is engaged in making,
purchasing, holding or investing in bank loans and similar extensions of credit
in the ordinary course of its business and that is administered or managed by (a) a
Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate
of an entity that administers or manages a Lender.

 

“Borrowing”
shall mean an Alternate Base Rate Borrowing or a LIBOR Rate Borrowing.

 

“Business Day”
shall mean a day when the main office of the Agent is open for business and
banks in New York, New York are generally open for business.

 

3

 

“Business Entity”
shall mean corporations, partnerships, joint ventures, joint stock
associations, business trusts and other business entities.

 

“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).

 

“Change of Control”
shall mean any change so that any Unrelated Person (or any Unrelated Persons
acting together which would constitute a Group) together with any Affiliate or
Related Persons of such Unrelated Person or Unrelated Persons (in each case
also constituting Unrelated Persons) shall at any time after the date hereof
either (i) Beneficially Own more than fifty percent (50%) of the
aggregate voting power of all classes of Voting Stock of the Company, or (ii) succeed
in having enough of its or their nominees elected by the stockholders to the
Board of Directors of the Company so as to constitute a majority of the Board
of Directors of the Company.  As used
herein, (a) “Beneficially Own” shall mean “beneficially own” as defined in
Rule 13d-3 of the Securities and Exchange Act of 1934, as amended (the “34 Act”) or any successor provision
thereto; (b) “Group” shall mean a “group” for purposes of Section 13(d) of
the 34 Act or any successor provision; (c) “Unrelated Person” shall mean
any Person other than any trust for any employee stock ownership plan of the
Company or any Subsidiary of the Company; (d) “Related Person” shall mean
as to any Person, any other Person owning (1) five percent (5%) or
more of the outstanding common stock of such Person or (2) five
percent (5%) or more of the Voting Stock of such Person, and (e) “Voting
Stock” shall mean as to any Person, the Stock of such Person which ordinarily
has voting power for the election of directors (or persons performing similar
functions) of such Person, whether at all times or only so long as no senior
class of securities has such voting power by reason of any contingency.

 

“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.

 

“Collateral”
has the meaning specified in the Security Agreement A attached hereto as Exhibit G-A.

 

“Collateral Agent”
shall have the meaning ascribed to it in the recital of parties hereto.

 

“Commitment”
shall mean, as to any Lender, the obligation of such Lender to make Loans in an
aggregate principal amount at any one time outstanding up to, but not
exceeding, the amount set forth opposite such Lender’s name on Schedule 2.1(a) hereto
under the caption “Commitment”, or as to any Lender that becomes a Party hereto
by executing an Assignment and Acceptance, the amount set forth in such
Assignment and Acceptance (in each case, as the same may be reduced from time
to time pursuant to Section 2.2 hereof).

 

“Commitment Fee”
with respect to any Lender, shall have the meaning assigned to it in Section 2.2.

 

4

 

“Commitment Percentage”
shall mean, with respect to any Lender, the ratio, expressed as a percentage,
of (a) such Lender’s Commitment to (b) the Aggregate Commitment.

 

“Commitment Termination
Date” means September 7, 2007.

 

“Confidential Information”
means non-public information that any Loan Party furnishes to the Agent or any
Lender, unless such information is or becomes (a) generally available to
the public (other than as a result of a breach by the Agent or any Lender of
its obligations hereunder) or that is or becomes available to the Agent or such
Lender from a source other than the Loan Parties that is not, to the best of
the Agent’s or such Lender’s knowledge, acting in violation of a
confidentiality agreement with a Loan Party or (b) designated in writing
by any Loan Party as non-confidential.

 

“Consequential Loss”
shall mean, with respect to (a) the Company’s payment of principal of a
LIBOR Rate Borrowing on a day other than the last day of the applicable LIBOR
Interest Period, (b) the Company’s failure to borrow a LIBOR Rate
Borrowing on the date specified by the Company for any reason, (c) the
Company’s failure to make any prepayment of the Loans (other than Alternate
Base Rate Borrowings) on the date specified by the Company, or (d) any
cessation of the LIBOR Rate to apply to the Loans or any part thereof pursuant
to Section 2.10 hereof, in each case whether voluntary or involuntary, any
loss, expense, penalty, premium or liability incurred by any of the Lenders or
the Agent, including any interest paid by any of the Lenders to lenders of
funds borrowed by them to make or carry the Loans; a “Consequential
Loss” shall mean, with respect to the termination or
cancellation of any LIBOR Rate Borrowing pursuant to Section 2.10 hereof,
in each case whether voluntary or involuntary, any loss, expense, penalty,
premium or liability incurred by any of the Lenders or the Agent on account of
any reduction resulting from such premature termination or cancellation of such
borrowing in such Person’s margins or spreads between its cost of funds and the
interest earned on the principal of the borrowing so terminated or canceled,
including an amount equal to the excess (if any) of (x) interest that
would have accrued on any such borrowing during the remainder of the applicable
LIBOR Interest Period had such borrowing not been terminated or canceled early,
over (y) the interest actually accrued on the principal amount of that
terminated or canceled borrowing for such remainder of such LIBOR Interest
Period.

 

“Consolidated Net Worth”
shall mean, at any time, shareholder’s equity of the Company as set forth in
the most recent consolidated Annual Audited Financial Statements of the Company
and its Subsidiaries, determined in accordance with Generally Accepted
Accounting Principles, consistently applied.

 

“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 

 

5

 

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 in Section 6.1(f) hereof, and (z) the
obligations and liabilities of each Guarantor to the Agent and the Lenders under
the Guaranties.  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)
as determined by the Agent in good faith.

 

“Contribution Agreement”
shall mean that certain Contribution Agreement of even effective date herewith,
by and among the Company and the Guarantors, as the same may have been or may
hereafter be amended, modified, supplemented, restated and joined in pursuant
to a Joinder Agreement, from time to time.

 

“Convertible Senior
Debentures” shall mean those certain the 3.25% Convertible
Senior Debentures due 2034 which are governed by that certain Indenture dated June 1,
2004, by and between Target and U.S. Bank National Association as trustee.

 

“Credit Facility Hedging
Agreements” shall mean any Hedging Agreement now existing or
hereafter entered into between the Company and any lender under the Revolving
Credit Facility and/or any of their respective Affiliates in connection with
all or any portion of the Loans and/or any of the loans under the Revolving
Credit Facility for purposes of hedging the risk of variable interest rate
volatility or fluctuations of interest rates, as any such Hedging Agreement may
be modified, supplemented and in effect from time to time.

 

“Current Sum”
shall mean on any day, as to a particular Lender, the sum of the then
outstanding principal balance of such Lender’s Loans on such day.

 

“Current Sum Percentage”
shall mean, with respect to any Lender, the ratio, expressed as a percentage of
(a) such Lender’s Current Sum to (b) the aggregate Current Sum of all
Lenders.

 

“Default”
means any Event of Default or any other event or circumstance that with the
passing of time or the giving of notice, or both, would constitute an Event of
Default.

 

“Disclosed Divestitures”
shall mean the proposed divestitures of the Company and its Subsidiaries set
forth in Schedule 1.1(a) hereto.

 

“Discontinued Operations”
shall mean, as of any day, operations of the Company or its Subsidiaries which
have been discontinued, as reflected on the most recent Form 10-K or 10-Q
for the Company filed with the Security and Exchange Commission, and which, as
of such day, have been fully disposed of or liquidated.

 

“EBIT” shall
mean for any period for which EBIT is calculated, Net Income of the Company and
its Subsidiaries on a consolidated basis for such period plus, without
duplication, (a) non-recurring, non-cash charges of the Company and its
Subsidiaries on a consolidated basis for such period, (b) non-cash
pre-opening rent expenses of the Company and its Subsidiaries on a consolidated
basis for such period, (c) taxes of the Company and its Subsidiaries on a
consolidated basis for such period, (d) interest expense of the Company
and its Subsidiaries on a 

 

6

 

consolidated basis for such
period and (e) non-cash stock compensation expense of the Company and its
Subsidiaries on a consolidated basis for such period; provided that EBIT for
the three quarters immediately prior to the Effective Date shall be as set
forth in Schedule 1.1(b).  All components
of EBIT shall be determined in accordance with Generally Accepted Accounting
Principles, consistently applied.

 

“EBITDA”
shall mean for any period for which EBITDA is calculated, Net Income of the
Company and its Subsidiaries on a consolidated basis for such period plus,
without duplication, (a) taxes of the Company and its Subsidiaries on a
consolidated basis for such period (calculated after excluding any gain or loss
attributable to Discontinued Operations as of such day), (b) depreciation,
depletion, obsolescence and amortization of Property of the Company and its
Subsidiaries on a consolidated basis for such period (calculated after
excluding any depreciation, depletion, obsolescence and amortization applicable
to Discontinued Operations as of such day), (c) interest expense of the
Company and its Subsidiaries on a consolidated basis for such period
(calculated after excluding any interest expense paid in connection with
Discontinued Operations as of such day), (d) non-recurring, non-cash
charges of the Company and its Subsidiaries on a consolidated basis for such
period, (e) non-cash pre-opening rent expenses of the Company and its
Subsidiaries on a consolidated basis for such period and (f) non-cash
stock compensation expense of the Company and its Subsidiaries on a
consolidated basis for such period; provided that EBITDA for the three quarters
immediately prior to the Effective Date shall be as set forth in Schedule
1.1(b).  All components of EBITDA shall
be determined in accordance with Generally Accepted Accounting Principles,
consistently applied.

 

“Effective Date”
has the meaning ascribed thereto in Section 3.2.

 

“Eligible Assignee”
shall mean (a) a Lender, (b) an Affiliate of a Lender, (c) an
Approved Fund or (d) any other Person (other than an individual) approved
by the Agent and, except during the continuance of an Event of Default, the
Company (each such consent not to be unreasonably withheld or delayed); it
being understood that none of the Company nor any of its Affiliates shall, in
any event, be an Eligible Assignee.

 

“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 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) 

 

7

 

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, reissuance 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.

 

“Equipment”
shall have the meaning assigned to it in the Texas Business and Commerce Code
in force on the date the document using such term was executed.

 

“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.

 

“Eurocurrency Liabilities”
has the meaning specified in Regulation D.

 

“Event of Default”
shall mean any of the events specified in Section 7.1 hereof or otherwise
specified as an Event of Default in any other Loan Document, provided there has
been satisfied any requirement in connection with such event for the giving of
notice, or the lapse of time, or the happening of any further condition, event
or act, and Default shall mean any of such events, whether or not any such
requirement has been satisfied.

 

“Extraordinary Receipt”
means any cash received by or paid to or for the account of any Person not in
the ordinary course of business, including, without limitation, tax refunds (provided that, for greater clarity and without limiting the
foregoing, ordinary tax refunds on account of cash taxes actually paid would be
considered ordinary course), pension plan reversions, proceeds of insurance
(including, without limitation, any key man life insurance but excluding
proceeds of business interruption insurance to the extent such proceeds
constitute compensation for lost earnings), condemnation awards (and payments
in lieu thereof), indemnity payments and any purchase price adjustment received
in connection with any purchase agreement; provided, however, that an
Extraordinary Receipt shall not include cash receipts received from proceeds of
insurance, condemnation awards (or payments in lieu thereof) or indemnity
payments to the extent that such proceeds, awards or payments are received by
any Person in respect of any third party claim against such Person and applied
to pay (or to reimburse such Person for its prior payment of) such claim and
the costs and expenses of such Person with respect thereto.

 

“Federal Funds Rate”
means, for any period, a fluctuating interest rate per annum equal for each day
during such period to the weighted average of the rates on overnight Federal
funds transactions with members of the Federal Reserve System arranged by
Federal funds brokers, as published for such day (or, if such day is not a
Business Day, for the next preceding Business Day) by the Federal Reserve Bank
of New York, or, if such rate is not so published for any day that is a
Business Day, the average of the quotations for such day for such transactions
received by the Agent from three Federal funds brokers of recognized standing
selected by it.

 

8

 

“Fee Letter”
shall mean that certain fee letter dated as of February 23, 2007 among
Royal Bank, JPMorgan Chase Bank, N.A., J. P. Morgan Securities Inc. and the
Company.

 

“Fixed Charge Coverage
Ratio” shall mean as of any day that the Fixed Charge Coverage
Ratio is being calculated, the ratio of (a) EBIT plus Operating Lease
Expense to (b) interest expense plus Operating Lease Expense.  All components of the Fixed Charge Coverage
Ratio shall be computed for the Rolling Four Quarters as of such day and
determined for the Company and its Subsidiaries on a consolidated basis in
accordance with Generally Accepted Accounting Principles, consistently applied;
provided, that for purposes of
determining interest expense and Operating Lease Expense in the Fixed Charge
Coverage Ratio for the (a) fiscal quarter ended September 30, 2007,
such interest expense and Operating Lease Expense for the measurement period
then ended shall equal such items for such fiscal quarter multiplied by 52/13, (b) fiscal
quarter ended January 20, 2008, such interest expense and Operating Lease
Expense for the measuring period then ended shall equal such items for the two
fiscal quarters then ended multiplied by 52/29, and (c) fiscal quarter
ended April 30, 2008, such interest expense and Operating Lease Expense
for the measuring period then ended shall equal such items for the three fiscal
quarters then ended multiplied by 52/41; provided  also that EBIT for the three quarters immediately prior to
the Effective Date shall be as set forth in Schedule 1.1(b).

 

“Funded Indebtedness”
shall mean (a) all Indebtedness of the Company and its Subsidiaries on a
consolidated basis which by its terms matures more than one year after the
applicable date of calculation of Funded Indebtedness (including without
limitation, current maturities or scheduled principal payments of Funded
Indebtedness for the applicable period for which Funded Indebtedness is being
calculated), and any Indebtedness of the Company and its Subsidiaries on a consolidated
basis maturing within one year from such date and (b) without duplication,
Capital Lease Obligations of the Company and its Subsidiaries on a consolidated
basis.  All components of Funded
Indebtedness shall be determined in accordance with Generally Accepted
Accounting Principles, consistently applied.

 

“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
Agent and the Lenders, 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 Agent, any of the Lenders or the Company, any of the
Company’s Subsidiaries or their respective Property.

 

“Guaranties”
shall mean that certain Guaranty, substantially in the form of Exhibit H
hereto, by the Guarantors party thereto in favor of the Agent dated as of the
date hereof, as the same may be amended, supplemented, modified, joined in
pursuant to a Joinder Agreement and restated from time to time, and each and
every other guaranty executed by any or all of the Guarantors from time to
time; each a “Guaranty”.

 

9

 

“Guarantors”
shall mean the Persons listed on Schedule 1.1(c) hereto, each Subsidiary
that shall hereafter be required to execute and deliver a Guaranty pursuant to
the terms of this Agreement and each and every other Person executing a
guaranty from time to time guaranteeing the Indebtedness of the Company owing
from time to time to the Lenders pursuant to this Agreement or the Notes.

 

“Hazardous Substance”
shall mean any hazardous or toxic waste, substance or product or material
defined or regulated from time to time by any applicable law, rule, regulation
or order described in the definition of “Requirements of Environmental Law,”
including solid waste (as defined under RCRA or its regulations, as amended
from time to time), petroleum and any fraction thereof, 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) deposits not in excess at any time
of $25,000,000 in the aggregate to secure insurance in the ordinary course of
business, the performance of bids, tenders, contracts (other than contracts for
the payment of money), leases, licenses, franchises, statutory obligations,
surety and appeal bonds and performance bonds and other obligations of a like
nature incurred in the ordinary course of business and Liens to secure progress
or partial payments made to the Company or any Subsidiary and other Liens of
like nature made in the ordinary course of business; (v) 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 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; (vi) bankers’ liens arising by
operation of law; (vii) 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; (viii) inchoate Liens arising under ERISA to
secure contingent liabilities of the Company; and (ix) rights of lessees
and sublessees in assets leased by the Company or any Subsidiary not prohibited
elsewhere herein.

 

10

 

“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) net liabilities of such Person under
Hedging Agreements (determined by reference to the Agreement Value thereof) and
(g) all Contingent Obligations and Synthetic Indebtedness of such Person;
provided, that such term shall not mean or include any Indebtedness in respect
of which monies sufficient to pay and discharge the same in full (either on the
expressed date of maturity thereof or on such earlier date as such Indebtedness
may be duly called for redemption and payment) shall be deposited with a
depository, agency or trustee acceptable to the Agent in trust for the payment
thereof.

 

“Interest Option”
shall have the meaning ascribed to it in Section 2.9(a) hereof.

 

“Interest Payment Dates”
shall mean (a) for Alternate Base Rate Borrowings, (1) at all times
while the Notes are outstanding, the last Business Day of each March, June, September and
December, and (2) the Maturity Date; and (b) for LIBOR Rate
Borrowings, (1) if the LIBOR Interest Period applicable to such LIBOR Rate
Borrowing is equal to or less than three (3) months, the end of such
LIBOR Interest Period, and (2) in all other cases, on that day which is
three (3) calendar months following the first day of the applicable
LIBOR Interest Period (or, if such day is not a Business Day, on the next
succeeding day that is a Business Day) and at the end of such LIBOR Interest
Period.

 

“Investment”
shall mean the purchase or other acquisition of any securities or Indebtedness
of, or the making of any loan, advance, transfer of Property or capital
contribution to, or the incurring of any liability, contingently or otherwise,
in respect of the Indebtedness of, any Person.

 

“Investment Grade”
shall mean with respect to the Moody’s corporate credit rating system a rating
of Baa3 or higher and with respect to the S&P corporate credit rating
system a rating of BBB- or higher.

 

“Joinder Agreement”
shall mean any agreement, in Proper Form, executed by a Subsidiary of the
Company from time to time, pursuant to which such Subsidiary joins in the
execution and delivery of a Guaranty and the Contribution Agreement.

 

“Joint Lead Arrangers”
shall have the meaning ascribed to such term in the recitals hereto.

 

“Legal Requirement”
shall mean any law, statute, ordinance, decree, requirement, order, judgment,
rule, regulation (or interpretation of any of the foregoing) of, and the terms
of any license or permit issued by, any Governmental Authority.

 

“Lenders”
shall have the meaning ascribed to it in the recital of parties hereto.

 

“Leverage Ratio”
shall mean as of any day that the Leverage Ratio is calculated, the ratio of
Funded Indebtedness of the Company and its Subsidiaries on a consolidated basis
as of such 

 

11

 

day to EBITDA of the Company
and its Subsidiaries on a consolidated basis for the Rolling Four Quarters as
of such day; provided that EBITDA for the three
quarters immediately prior to the Effective Date shall be as set forth in
Schedule 1.1(b).

 

“LIBOR Business Day”
shall mean a Business Day on which transactions in United States Dollar
deposits between banks may be carried on in the London, England interbank
market.

 

“LIBOR Interest Period”
shall mean, for each LIBOR Rate Borrowing, a period commencing:

 

(a)           on
the date of such LIBOR Rate Borrowing, or

 

(b)           on
the last day of the immediately preceding LIBOR Interest Period in the case of
a rollover to a successive LIBOR Interest Period, and ending on the numerically
corresponding day one, two, three or (as available) six months thereafter, as
the Company shall elect in accordance herewith; provided, (w) any LIBOR
Interest Period which would otherwise end on a day which is not a LIBOR
Business Day shall be extended to the next succeeding LIBOR Business Day,
unless such LIBOR Business Day falls in another calendar month, in which case
such LIBOR Interest Period shall end on the next preceding LIBOR Business Day; (x) any
LIBOR Interest Period which begins on the last LIBOR Business Day of a calendar
month (or on a day for which there is no numerically corresponding day in the
calendar month at the end of such LIBOR Interest Period) shall end on the last
LIBOR Business Day of the appropriate calendar month; (y) no LIBOR
Interest Period shall ever extend beyond the Maturity Date; and (z) LIBOR
Interest Periods shall be selected by the Company in such a manner that the
LIBOR Interest Period with respect to any portion of the Loans which shall
become due shall not extend beyond such due date.

 

“LIBOR Rate”
means, for any LIBOR Interest Period for all LIBOR Rate Borrowings comprising
part of the same Borrowing, (a) an interest rate per annum equal to the
rate per annum obtained by dividing (i) the rate per annum (rounded
upwards, if necessary, to the nearest 1/100 of 1%) appearing on the Reuters
Screen LIBOR 01 (or any successor page) as the London interbank offered rate
for deposits in U.S. dollars at 11:00 A.M. (London time) two Business Days
before the first day of such LIBOR Interest Period for a period equal to such
LIBOR Interest Period (provided that, if for any reason such rate is not
available, the term “LIBOR” shall mean, for any LIBOR Interest Period for all
LIBOR Rate Borrowings comprising part of the same Borrowing, the rate per annum
(rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing on
Reuters Screen LIBOR 01 as the London interbank offered rate for deposits in
Dollars at approximately 11:00 A.M. (London time) two Business Days prior
to the first day of such LIBOR Interest Period for a term comparable to such LIBOR
Interest Period; provided, however, if more than one rate is specified on
Reuters Screen LIBOR 01, the applicable rate shall be the arithmetic mean of
all such rates) by (ii) a percentage equal to 100% minus the LIBOR Reserve
Percentage for such LIBOR Interest Period plus (b) the Applicable Margin
from time to time in effect during such term.

 

“LIBOR  Rate  Borrowing”
shall mean each portion of the principal balance of the Loans at any time
bearing interest at the LIBOR Rate.

 

“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, 

 

12

 

encroachments, easements,
rights of way, covenants, conditions, restrictions, leases and other title
exceptions.

 

“Loan  Documents” shall mean this
Agreement, the Notes, the Guaranties, the Contribution Agreement, the Joinder
Agreements, the Fee Letter, Security Agreement A, Security Agreement B, the
Credit Facility Hedging Agreements, all instruments, certificates and
agreements now or hereafter executed or delivered to the Agent and/or the
Lenders pursuant to any of the foregoing, and all amendments, modifications,
renewals, extensions, increases and rearrangements of, and substitutions for,
any of the foregoing.

 

“Loan  Party” means the Company or any
Guarantor.

 

“Loans”
shall mean the advances of funds described in Section 2.1 hereof.  Loan shall mean any one of the Loans.

 

“Margin  Stock” has the meaning specified in
Regulation U.

 

“Material  Adverse  Effect”
means a material adverse effect on the validity or enforceability of any
material provision of the Loan Documents, on the ability of the Company to
consummate the Transactions, on the financial condition of the Company (either
individually or taken as a whole with its Subsidiaries), or on the property,
business, operations or liabilities of the Company (either individually or
taken as a whole with its Subsidiaries).

 

“Maturity  Date” shall mean the earlier of (a) August 28,
2012 and (b) the date specified by the Agent pursuant to Section 7.1
hereof.

 

“Merger”
shall have the meaning ascribed to it in the Preliminary Statements hereto.

 

“Merger  Agreement” shall have the meaning
ascribed to it in the Preliminary Statements hereto.

 

“Moody’s”
shall mean Moody’s Investors Service, Inc.

 

“Net  Income” shall mean gross revenues
and other proper income credits, less all proper income charges, including
taxes on income, all determined in accordance with Generally Accepted
Accounting Principles; provided, that there shall not be included in such
revenues (i) any income representing the excess of equity in any
Subsidiary at the date of acquisition over the investment in such Subsidiary, (ii) any
equity in the undistributed earnings of any Person which is not a Subsidiary, (iii) any
earnings of any Subsidiary for any period prior to the date such Subsidiary was
acquired, except as may be permitted under Generally Accepted Accounting
Principles in connection with the pooling of interest method of accounting, and
(iv) any gains resulting from the write-up of assets.  Net Income shall be determined on a
consolidated basis.

 

“Net  Proceeds” shall mean:

 

(a)           with
respect to any sale, lease, transfer or other disposition of any asset of the
Company or any of its Subsidiaries (except in the case of Disclosed
Divestitures listed in part A of Schedule1.1(a)), the excess, if any, of (i) the
sum of cash and Permitted Investment Securities received in connection with
such sale, lease, transfer or other disposition (including any cash or
Permitted Investment Securities received by way of deferred payment pursuant
to, or by monetization of, a note receivable or otherwise, but only as and when
so received) less (ii) the 

 

13

 

sum of (A) the principal amount of any Indebtedness (other than
Indebtedness under the Loan Documents) that is required to be repaid in connection
with such sale, lease, transfer or other disposition thereof, (B) the
reasonable and customary out-of-pocket costs, fees, commissions, premiums and
expenses incurred by the Company or its Subsidiaries, (C) federal, state,
provincial, foreign and local taxes reasonably estimated (on a consolidated
basis) to be actually payable within the current or the immediately succeeding
tax year as a result of any gain recognized in connection therewith and (D) a
reasonable reserve for any purchase price adjustment or any indemnification
payments (fixed and contingent) attributable to the seller’s obligations to the
purchaser undertaken by the Company or any of its Subsidiaries in connection
with such sale, lease, transfer or other disposition; provided, however, that,
Net Proceeds shall not include any such amounts to the extent such amounts are
reinvested or contracted to be so reinvested in capital assets used or useful
in the business of the Company and its Subsidiaries within 270 days after the
date of receipt thereof or the date such contact is entered into; and

 

(b)           with
respect to any Extraordinary Receipt that is not otherwise included in
clause (a) above, the sum of the cash and Permitted Investment
Securities received in connection therewith (including any cash or Permitted
Investment Securities received by way of deferred payment pursuant to, or by
monetization of, a note receivable or otherwise, but only as and when so
received) less fees, costs, out of pocket expenses and commissions incurred in
connection with the receipt thereof; provided, however, that Net Proceeds shall
not include any such amounts from Extraordinary Receipts (other than in respect
of Customer Penalties) to the extent such amounts are reinvested or contracted
to be so reinvested in capital assets used or useful in the business of the
Company and its Subsidiaries within 270 days after the date of receipt thereof
or the date such contract is entered into.

 

“Non-Consenting
Lender” means, in the event that the
Required Lenders have agreed to any consent, waiver or amendment pursuant to Section 9.10
that requires the consent of one or more Lenders in addition to the Required
Lenders, any Lender who is entitled to agree to such consent, waiver or
amendment but who does not so agree.

 

“Non-Guarantor
Subsidiaries” means (a) Subsidiaries
of the Company organized under the laws of a jurisdiction located outside of
the United States, (b) prior to consummation of the Merger, the Target and
its Subsidiaries, and (c) any one or more Subsidiaries of the Company
designated by the Company in writing to the Agent from time to time that do not
represent, in the aggregate, (i) five percent (5%) or more of the
consolidated EBITDA of the Company and its Subsidiaries, or (ii)  5% or
more of the consolidated tangible assets of the Company and its Subsidiaries;
provided, that no Subsidiary of the Company shall be a Non-Guarantor Subsidiary
to the extent that such Subsidiary guaranties any other Indebtedness of the
Company.

 

“Notes”
shall mean the promissory notes, each substantially in the form of Exhibit A
attached hereto, of the Company evidencing the Loans, payable to the order of
the respective Lenders in the amount of the sum of said Lender’s Unused
Commitment and the Current Sum owing to said Lender, and all renewals,
extensions, modifications, rearrangements and replacements thereof and
substitutions therefor.  Note shall mean
any one of them.

 

“Notice  of  Assumption”
shall mean a Notice of Assumption in favor of the Agent, substantially in the
form of Exhibit B attached hereto and otherwise in Proper Form.

 

“Officer’s  Certificate” shall mean a
certificate substantially in the form of Exhibit C attached hereto.

 

14

 

“Operating  Lease  Expense”
shall mean for any period for which Operating Lease Expense is calculated, the
aggregate amount of fixed and contingent rentals (exclusive of payments of
Capital Lease Obligations) payable by the Company and its Subsidiaries for such
period with respect to leases of Property. 
Operating Lease Expense shall be determined for the Company and its
Subsidiaries on a consolidated basis in accordance with Generally Accepted
Accounting Principles, consistently applied.

 

“Organizational
Documents” shall mean, with respect
to a corporation, the certificate of incorporation, articles of incorporation
and bylaws of such corporation; with respect to a partnership, the partnership
agreement establishing such partnership; with respect to a joint venture, the
joint venture agreement establishing such joint venture, and with respect to a
trust, the instrument establishing such trust; in each case including any and
all modifications thereof as of the date of the Loan Document referring to such
Organizational Document and any and all future modifications thereof which are
consented to by the Agent.

 

“Parties”
shall mean all Persons other than the Agent or any Lender executing any Loan
Document.

 

“Past  Due  Rate”
shall mean, on any day, the Alternate Base Rate plus two percent (2%).

 

“Permitted  Asset  Dispositions”
shall have the meaning attributed to such terms in Section 6.4(z) hereof.

 

“Permitted  Investment  Securities”
shall mean:  (1) readily marketable
securities issued or fully guaranteed by the United States of America or any
agency or wholly owned corporation thereof; (2) commercial paper rated “Prime
1” by Moody’s Investors Service, Inc. 
or A-1 by Standard and Poor’s Corporation with maturities of not more
than one hundred eighty (180) days and short term notes payable of any
Business Entity where said notes are rated at least “Prime 1” by Moody’s
Investors Service, Inc.  or “A-1” by
Standard & Poor’s Corporation with maturities of not more than
ninety (90) days; (3) certificates of deposit or repurchase
certificates issued by any Lender or any other financial institution acceptable
to the Agent, all of the foregoing not having a maturity of more than one (1) year
from the date of issuance thereof; (4) securities issued by municipalities
rated AA or better by Standard & Poor’s Corporation not having a
maturity of more than one (1) year from the date of issuance thereof;
and (5) money market mutual funds having capital surplus of at least
$1,000,000,000 and deemed acceptable by the Agent, substantially all of the
assets of which are comprised of securities, commercial paper, certificates of
deposit or repurchase certificates of the type described in subclauses (1) through
(4) above.

 

“Permitted  Stock  Dispositions”
shall have the meaning attributed to such terms in Section 6.4(z) hereof.

 

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

 

“Plan” shall
mean any plan subject to Title IV of ERISA and maintained for employees of the
Company or of any member of a “controlled group of corporations”, as such term
is defined in the Code, of which the Company or any of its Subsidiaries it may
acquire from time to time is a part, or any such 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.

 

15

 

“Prime Rate”
shall mean, for any day, the corporate base rate of interest publicly announced
by the Agent from time to time for borrowings made in the United States in U.S.
Dollars.  The corporate base rate is not
necessarily the lowest rate charged by the Lender acting as the administrative
agent to its customers.

 

“Proper  Form” shall mean in form and
substance satisfactory to the Agent.

 

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

 

“Quarterly  Unaudited  Financial
Statements” shall mean, with respect
to each fiscal quarter of the Company (except for the last fiscal quarter), the
Company’s 10-Q Report filed with the Securities Exchange Commission for such
fiscal quarter.  All of the Quarterly
Unaudited Financial Statements of the Company are to be prepared in accordance
with Generally Accepted Accounting Principles and certified as true and correct
by a Responsible Officer of the Company.

 

“Rate  Selection  Date”
shall mean that Business Day which is (a) in the case of Alternate Base
Rate Borrowings, the date one (1) Business Day preceding such borrowing or
(b) in the case of LIBOR Rate Borrowings, the date three (3) Business
Days preceding the first day of any proposed LIBOR Interest Period.

 

“Rate  Selection  Notice”
shall have the meaning ascribed to it in Section 2.9(b)(i) hereof.

 

“Register”
shall have the meaning assigned to such term in Section 9.11(e).

 

“Regulation D”
shall mean Regulation D of the Board of Governors of the Federal Reserve
System from time to time in effect and shall include any successor or other
regulation relating to reserve requirements applicable to member banks of the
Federal Reserve System.

 

“Regulatory  Change” shall mean, with respect to
any Lender, any change on or after the date of this Agreement in any Legal
Requirement (including Regulation D) or the adoption or making on or after
such date of any interpretation, directive or request applying to a class of
banks including such Lender under any Legal Requirement (whether or not having
the force of law) by any Governmental Authority charged with the interpretation
or administration thereof.

 

“Request  for  Extension
of  Credit
and  Certificate
of  No
Default” shall mean a written
request for extension of credit substantially in the form of Exhibit D
attached hereto.

 

“Required  Lenders” shall mean two (2) or
more Lenders having a majority or greater of the sum of the Aggregate
Commitment or if the Aggregate Commitment has been terminated the aggregate
Current Sum for all Lenders.

 

“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 now or
hereafter in effect 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 

 

16

 

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.

 

“Responsible
Officer” shall mean the chief
executive officer, chief financial officer, president of a Loan Party and the
general counsel of the Company.  Any document
delivered hereunder that is signed by a Responsible Officer of a Loan Party
shall be conclusively presumed to have been authorized by all necessary
corporate, partnership and/or other action on the part of such Loan Party and
such Responsible Officer shall be conclusively presumed to have acted on behalf
of such Loan Party.

 

“Revolving  Credit  Facility”
shall mean the senior revolving credit facility of the Company dated as of the
date hereof among the Company, the financial institutions from time to time
parties thereto, and JPMorgan Chase Bank, N.A., as administrative agent, as the
same may be amended from time to time in accordance with the terms of this
Agreement.

 

“Rolling  Four  Quarters”
shall mean the then most recently ended four (4) consecutive fiscal
quarters of the Company for which, as of such day, financial statements are
required to have been given to the Agent and Lenders pursuant to this
Agreement.

 

“Royal  Bank” shall have the meaning
ascribed to it in the recital of parties hereto.

 

“S&P”
shall mean Standard & Poor’s, a division of The McGraw Hill Companies, Inc.

 

“Security Agreement A”  means a security and pledge agreement
substantially in the form of Exhibit G-A hereto.

 

“Security Agreement B”  means a security and pledge agreement substantially
in the form of Exhibit G-B hereto.

 

“Solvent”
and “Solvency” shall mean, with respect
to any Person on a particular date, that on such date (a) the fair value
(taken on a going concern basis) of the property of such Person is greater than
the total amount of liabilities, including, without limitation, contingent
liabilities, of such Person, (b) the present fair salable value (taken on
a going concern basis) of the assets of such Person is not less than the amount
that will be required to pay the probable liability of such Person on its debts
as they become absolute and matured, (c) such Person does not intend to,
and does not believe that it will, incur debts or liabilities beyond such
Person’s ability to pay such debts and liabilities as they mature and (d) such
Person is not engaged in business or a transaction, and is not about to engage
in business or a transaction, for which such Person’s property would constitute
an unreasonably small capital.  The
amount of contingent liabilities at any time shall be computed as the amount
that, in the light of all the facts and circumstances existing at such time,
represents the amount that can reasonably be expected to become an actual or
matured liability.  In determining the
Solvency of any Loan Party the contribution rights that such Loan Party will
have against the other Loan Parties and the subrogation rights that each
Guarantor will have against the Company shall be taken into account.

 

“Stock”
shall mean as to a Business Entity, all capital stock or other indicia of
equity rights issued by such Business Entity from time to time.

 

“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 

 

17

 

(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).

 

“Target”
shall have the meaning ascribed to it in the Preliminary Statements hereto.

 

“Target  Representations” shall mean the
representations and warranties made by or on behalf of the Target and its
Subsidiaries and contained in the Merger Agreement and the representations and
warranties of the Company with respect to the Target and its Subsidiaries set
forth in Sections 4.1, 4.3, 4.14, 4.15, 4.18 and 4.19.

 

“Target  Representation  Limitations”
means that, on the date of the initial Borrowing hereunder until the earlier of
the date of consummation of the Merger and the Commitment Termination Date, the
representations and warranties of the Company set forth in Article IV in
respect of the Target and its Subsidiaries shall be limited to the Target
Representations.

 

“Taxes”
shall have the meaning ascribed to it in Section 2.10(b) hereof.

 

“Tender  Offer” shall have the meaning
ascribed to it in the Preliminary Statements hereto.

 

“Transactions”
means the consummation of the Merger and the entering into and borrowings under
this Agreement.

 

“Unsecured  Borrowed  Debt”
shall mean all Indebtedness resulting from borrowings of the Company (exclusive
of intercompany borrowings) from time to time owing to Persons which is not
secured by any Liens (other than borrowings from trade creditors in the ordinary
course of business).

 

“Unused  Commitment” shall mean, as to a
particular Lender, the outstanding Commitment of such Lender giving effect to
any Borrowing on any day.

 

Section 1.2  Accounting Terms and Determinations.

 

Except where specifically otherwise provided:

 

(a)           The symbol “$” and the word “dollars” shall mean lawful
money of the United States of America.

 

18

 

(b)           Any accounting term not otherwise defined shall have the
meaning ascribed to it under Generally Accepted Accounting Principles.

 

(c)           Unless otherwise expressly provided, any accounting
concept and all financial covenants shall be determined on a consolidated
basis, and financial measurements shall be computed without duplication.

 

(d)           Wherever the term “including” or any of its correlatives
appears in the Loan Documents, it shall be read as if it were written “including
(by way of example and without limiting the generality of the subject or
concept referred to)”.

 

(e)           Wherever the word “herein” or “hereof” is used in any Loan
Document, it is a reference to that entire Loan Document and not just to the
subdivision of it in which the word is used.

 

(f)            References in any Loan Document to Section numbers
are references to the Sections of such Loan Document.

 

(g)           References in any Loan Document to Exhibits, Schedules,
Annexes and Appendices are to the Exhibits, Schedules, Annexes and Appendices
to such Loan Document, and they shall be deemed incorporated into such Loan
Document by reference.

 

(h)           Any term defined in the Loan Documents which refers to a
particular agreement, instrument or document shall also mean, refer to and
include all modifications, amendments, supplements, restatements, renewals,
extensions and substitutions of the same; provided that nothing in this
subsection shall be construed to authorize any such modification, amendment,
supplement, restatement, renewal, extension or substitution except as may be
permitted by other provisions of the Loan Documents.

 

(i)            All times of day used in the Loan Documents mean local
time in New York, New York.

 

(j)            Defined terms may be used in the singular or plural, as
the context requires.

 

ARTICLE II
– LOANS; ETC.

 

Section 2.1  Loans.

 

(a)           Subject to the terms and conditions hereof, each Lender
severally agrees to make up to two loans to the Company from time to time on or
prior to the Commitment Termination Date, in an aggregate principal amount at
any one time outstanding up to but not exceeding such Lender’s Unused
Commitment on such date.  Loans repaid
may not be reborrowed pursuant to the terms of this Agreement.  Each Loan shall be in an amount of at least (i) $10,000,000
or (ii) the Unused Commitment of the Lenders, whichever is less.  Each repayment of the Loans shall be in an
amount of at least $10,000,000 or, if less, the Current Sum.

 

(b)           The Company shall give the Agent notice of a request for a
Loan in accordance with Section 3.1 hereof.  Upon receipt of each such notice, the Agent
shall promptly give each of the Lenders notice of receipt thereof, which notice
may be by telephone or facsimile.  Not
later than 12:00 noon on the date specified for the making of such Loan, each
Lender shall make available to the Agent, at the Agent’s Account, such Lender’s
Commitment Percentage of such Loan in immediately available funds for the
account of the Company.  The amount so
received by the Agent shall, subject to the terms 

 

19

 

and conditions of this Agreement, be made
available to the Company by depositing same, in immediately available funds, in
an account designated by the Company maintained with the Agent or with another
financial institution reasonably acceptable to the Agent.  If a requested Loan shall not occur on any
date specified by the Company as set forth in the applicable Request for
Extension of Credit and Certificate of No Default because all of the conditions
for such Loan set forth herein or in any of the other Loan Documents shall have
not been met, the Agent shall return the amounts so received from the Lenders
in respect of such requested Loan to the applicable Lenders as soon as
practicable; provided, however, if and to the extent that the Agent fails to
return any such amounts to any applicable Lender by the Business Day following the
date that the requested Loan was to have been made, the Agent shall pay
interest on such unreturned amounts for each date from such date that the
requested Loan was to have been made, to the date that such unreturned amounts
are returned to such Lender, such interest to accrue at the Federal Funds Rate
and to be payable upon written request from such Lender.

 

(c)           Unless the Agent shall have received notice from a Lender
prior to the date of any Borrowing that such Lender will not make available to
the Agent such Lender’s ratable portions of such Borrowing, the Agent may
assume that such Lender has made such portion available to the Agent on the
date of such Borrowing in accordance with subsection (b) of this Section 2.1
and the Agent may, in reliance upon such assumption, make available to the
Company on such date a corresponding amount. 
If and to the extent that such Lender shall not have so made such
ratable portion available to the Agent, such Lender and the Company severally
agree to repay or pay to the Agent forthwith on demand such corresponding
amount and to pay interest thereon, for each day from the date such amount is
made available to the Borrower until the date such amount is repaid or paid to
the Agent, at (i) in the case of the Company, the interest rate applicable
at such time under Section 2.9 to Loans comprising such Borrowing and (ii) in
the case of such Lender, the Federal Funds Rate.  If such Lender shall pay to the Agent such
corresponding amount, such amount so paid shall constitute such Lender’s Loan
as part of such Borrowing for all purposes.

 

(d)           The obligations of the Lenders hereunder are several and
not joint; therefore, notwithstanding anything herein to the contrary, (i) no
Lender shall be required to make Loans at any one time outstanding in excess of
such Lender’s Commitment, (ii) if a Lender fails to make a Loan as and
when required hereunder and the Company subsequently makes a repayment on the
Loans, such repayment shall be split among the non-defaulting Lenders in
accordance with their respective Current Sum Percentages until each Lender has
its Commitment Percentage of all of the outstanding Loans, then the balance of
such repayment shall be divided among all of the Lenders in accordance with
their respective Commitment Percentages (it being understood that any such
repayment to a defaulting Lender shall not be deemed to relieve such defaulting
Lender from any liability to the Company resulting from such defaulting Lender’s
failure to make a Loan as and when required hereunder) and (iii) the
failure of any Lender to make any Loan shall not in itself relieve any other
Lender of its obligation to lend hereunder (provided, that no Lender shall be
responsible for the failure of any other Lender to make a Loan such other
Lender is obligated to make hereunder).

 

(e)           Notwithstanding anything to the contrary contained in this
Section 2.1 or any other provision of this Agreement, the Company
covenants and agrees that in no event shall the aggregate amount of the Loans
outstanding on any day ever exceed the amount of the Aggregate Commitment then
in effect as of such day.

 

Section 2.2  Commitment Fees; Termination and
Reductions.  In consideration of each
Lender’s Unused Commitment, the Company agrees to pay to the Agent for the
account of each Lender a commitment fee (each a “Commitment
Fee”), starting from the
date hereof and until the Commitment Termination Date, due and payable monthly
on the last day of each month and on the Commitment Termination Date, at the
rate of 0.15% per annum on the average daily Unused Commitment of such 

 

20

 

Lender.  All past due Commitment Fees
shall bear interest at the Past Due Rate and shall be payable upon demand by
the Agent.  The Aggregate Commitment may
be permanently terminated or reduced as follows, which such reductions shall be
applied pro rata:

 

(a)           the Company may, upon three (3) Business Days’
prior written notice to the Agent, permanently terminate or reduce the
aggregate of the Unused Commitments in an amount of at least $10,000,000 or the
amount of the aggregate of the Unused Commitments at such time, whichever is
less; and

 

(b)           any prepayment of the Loans in accordance with the
provisions of Section 2.3 hereof shall permanently and automatically
reduce the Aggregate Commitment in an amount equal to any such prepayment.

 

Section 2.3  Mandatory Prepayments; Commitment
Reduction.

 

(a)           The Company shall, not later than five Business Days
following the date of receipt of any Net Proceeds by any Loan Party or any of
its Subsidiaries, by notice to the Agent, prepay an aggregate principal amount
of the Loans in an amount equal to the amount of such Net Proceeds, such
prepayment to be applied to the Loans on a pro rata basis; provided
that this subsection shall not apply to the first $10,000,000 of Net Proceeds
received by the Company and its Subsidiaries in any fiscal year of the Company.

 

(b)           The Company shall, on the date that is 90 days following
the Effective Date, prepay an aggregate principal amount of the Loans in an
amount equal to the excess above $10,000,000 of the aggregate principal amount
of the Target’s Convertible Senior Debentures outstanding on such date.

 

(c)           Except to the extent of any Loans borrowed on or prior to
such date, the Unused Commitment of each Lender shall be canceled in full on
the Commitment Termination Date.

 

Section 2.4  Payments.  All sums payable by the Company to the Agent
hereunder or pursuant to Notes for its own account or the account of the
Lenders shall be payable in United States dollars in immediately available
funds not later than 12:00 noon on the date such payment or prepayment is due
and shall be made without set-off, counterclaim or deduction of any kind.  Any such payment received and accepted by the
Agent after such time shall be considered for all purposes (including the
payment of interest, to the extent permitted by law) as having been made on the
next succeeding Business Day.  All such
payments shall be made to the Agent at the Agent’s Account.  If any payment or prepayment becomes due and
payable on a day which is not a Business Day, then the date for the payment
thereof shall be extended to the next succeeding Business Day and interest
shall be payable thereon at the then applicable rate per annum during such
extension.

 

Section 2.5  Prepayments of Loans.

 

(a)           In addition to the mandatory prepayments required by Section 2.3
hereof, the Company shall have the right, at its option, to prepay the Loans in
whole at any time or in part from time to time, without premium or penalty,
except as provided in this Section or subsections (a), (b) or (c) of
Section 2.10 hereof.  Each partial
prepayment under this subsection shall be a principal amount of not less than
$10,000,000 or an integral multiple of $1,000,000 in excess thereof.  Each prepayment under this subsection shall
be applied to the prepayment of the aggregate unpaid principal amount of the
Notes.  Prepayments under this Agreement
shall be subject to the following additional conditions:

 

21

 

i.              In giving notice
of prepayment as hereinafter provided, the Company shall specify, for the
purpose of paragraphs (ii) and (iii) immediately following, the
manner of application of such prepayment as between any outstanding Alternate
Base Rate Borrowings and LIBOR Rate Borrowings; provided, that in no event
shall any LIBOR Rate Borrowing be partially prepaid.

 

ii.             Prepayments
applied to any LIBOR Rate Borrowing may be made on any LIBOR Business Day,
provided, that (A) the Company shall have given the Agent at least
two (2) LIBOR Business Days’ prior irrevocable written or facsimile
notice of such prepayment, specifying the principal amount of the LIBOR Rate
Borrowing to be prepaid, the particular LIBOR Rate Borrowing to which such
prepayment is to be applied and the prepayment date; and (ii) if such
prepayment is made on any day other than the last day of the LIBOR Interest
Period corresponding to the LIBOR Rate Borrowing to be prepaid, the Company
shall pay directly to the Agent for the account of the Lenders, on the last day
of such LIBOR Interest Period, the Consequential Loss as a result of such
prepayment.

 

iii.            Prepayments
applied to any Alternate Base Rate Borrowing may be made on any Business Day,
provided that the Company shall have given the Agent at least five (5) Business
Days prior irrevocable written notice or notice by telephone or facsimile
(which is to be promptly confirmed in writing) of such prepayment, specifying
the principal amount of the Alternate Base Rate Borrowing to be prepaid and the
prepayment date.

 

(b)           Notice of any prepayment having been given, the principal
amount specified in such notice, together with (in the case of any prepayment
of a LIBOR Rate Borrowing) interest thereon to the date of prepayment, shall be
due and payable on such prepayment date.

 

(c)           Any Lender may, if it so elects, fulfill its obligation as
to any LIBOR Rate Borrowing by causing a branch, foreign or otherwise, or
Affiliate of such Lender to make such Loans and may transfer and carry such
Loans at, to or for the account of any branch office or Affiliate of such
Lender; provided, that in such event for the
purposes of this Agreement such Loans shall be deemed to have been made by such
Lender and the obligation of the Company to repay such Loans shall nevertheless
be to such Lender and shall be deemed held by it, to the extent of such
portions of the Loan, for the account of such branch or affiliate.

 

(d)           Notwithstanding any provision of this Agreement to the
contrary, each Lender shall be entitled to fund and maintain its funding of all
or any part of the Loans hereunder in any manner it sees fit, it being
understood, however, that for the purposes of this Agreement all determinations
hereunder shall be made as if such Lender had actually funded and maintained
its portion of each LIBOR Rate Borrowing during each LIBOR Interest Period for
the Loans through the purchase of deposits having a maturity corresponding to
such LIBOR Interest Period and bearing an interest rate equal to the London
Interbank Rate for such LIBOR Interest Period.

 

(e)           The Company’s obligation to pay increased costs and
Consequential Loss with regard to each LIBOR Rate Borrowing as specified in
this Section 2.5 hereof shall survive termination of this Agreement.

 

Section 2.6  Application of Payments and Prepayments.  Prepayments of the Loans shall be applied
first to the principal amount thereof, with the balance to accrued
interest.  Regularly scheduled payments
of the Loans shall be applied first to accrued interest, the balance to the
principal.  If the Agent receives funds
on a date when payments of the Loans are due and such funds are not sufficient
to pay all of the obligations of the Company hereunder then due, or if the
Agent receives any payments or other 

 

22

 

amounts owing to Agent or
any Lender under any Loan Document, including without limitation, proceeds
obtained from the enforcement of the Guaranties, then such funds shall be
applied (a) first to fees or expenses of the Agent then due hereunder or
under any other Loan Document which are to be paid by the Company or the
applicable Guarantor, (b) second, to fees or expenses of the Lenders then
due hereunder or under any other Loan Document (other than fees or expenses
owing under the Credit Facility Hedge Agreements) which are to be paid by the
Company or the applicable Guarantor, and (c) third to the accrued interest
on and, to the extent then due, principal of the Loans then outstanding.  Each payment received by the Agent hereunder
or under any Note for the account of a Lender shall be paid promptly to such
Lender, in immediately available funds. 
If the Agent fails to send to any Lender the product of such Lender’s
Current Sum Percentage times the aggregate amount of any such payment timely
received by the Agent for the account of all the Lenders by the close of
business on the Business Day following the date such payment was received by
the Agent, the Agent shall pay to such Lender interest on such Lender’s
pro-rata portion of such payment timely received by the Agent from such date of
receipt by the Agent to the date that such Lender receives its pro-rata portion
of such payment, such interest to accrue at the Federal Funds Rate and to be
payable upon written request from such Lender.

 

Section 2.7  Pro Rata Treatment.  Except to the extent otherwise provided
herein:  (a) each borrowing from the
Lenders under Section 2.1 hereof shall be made, each payment of commitment
fees shall be made and applied for the account of the Lenders, and each
termination or reduction of the Unused Commitments of the Lenders under Section 2.2
hereof shall be applied, pro rata, according to each Lender’s Commitment
Percentage; and (b) each payment by the Company of principal of or
interest on Loans shall be made to the Agent for the account of the Lenders pro
rata in accordance with the respective Current Sum Percentage of the Lenders.

 

Section 2.8  Payment Dates on the Loans.  Accrued interest on the unpaid balance of the
Loans shall be payable on the Interest Payment Dates and at the Maturity Date,
commencing with the first of such dates to occur after the date hereof.  After the Maturity Date, accrued interest on
the Loans shall be payable on demand.  On
the Maturity Date, the outstanding principal balance of the Loans shall be
fully due and payable.

 

Section 2.9  Interest Options for Loans.

 

(a)           Options Available. 
The Loans shall bear interest at the Alternate Base Rate; provided, that
(1) all past due principal and interest shall bear interest at the Past
Due Rate which shall be payable on demand, and (2) subject to the
provisions hereof, the Company shall have the option of having all or any
portion of the outstanding principal amount of the Loans bear interest until their
respective maturities at a rate per annum equal to the LIBOR Rate (together
with the Alternate Base Rate, individually herein called an “Interest Option” and
collectively called “Interest
Options”).  The records of
the Agent with respect to Interest Options, LIBOR Interest Periods and the
amounts of Loans to which they are applicable shall be binding and conclusive,
absent manifest error.  Interest on the
Loans shall be calculated at the Alternate Base Rate except where it is
expressly provided pursuant to this Agreement that the LIBOR Rate is to apply.

 

(b)           Designation and Conversion.  The Company shall have the right to designate
or convert its Interest Options in accordance with the provisions hereof.  Provided no Event of Default has occurred and
is continuing and subject to the provisions of the last sentence of
Subsection 2.09(a) hereinabove and of Section 2.10 hereof, the
Company may elect to have the LIBOR Rate apply or continue to apply to all or
any portion of the outstanding principal balance of the Loans.  Each change in Interest Options shall be a
conversion of the rate of interest applicable to the specified portion of the
Loans, but such conversion alone shall not change the outstanding principal amount
of the Loans and 

 

23

 

such conversion shall not be construed to
make this Agreement a revolving credit facility.  The Interest Options shall be designated or
converted in the manner provided below:

 

i.              The Company shall
give the Agent notice by telephone or facsimile promptly confirmed by written
notice (the “Rate Selection Notice”)
substantially in the form of Exhibit E hereto.  Each such telephone or facsimile and written
notice shall specify the amount and type of borrowings which are the subject of
the designation, if any; the amount and type of borrowings into which such
borrowings are to be converted or for which an Interest Option is designated;
the proposed date for the designation or conversion (which, in the case of
conversion of LIBOR Rate Borrowings, shall be the last day of the LIBOR
Interest Period applicable thereto) and the LIBOR Interest Period or Periods,
if any, selected by the Company.  Such
notice by telephone or facsimile shall be irrevocable and shall be given to the
Agent no later than the applicable Rate Selection Date.  If (a) a new Loan is to be a LIBOR Rate
Borrowing, (b) an existing LIBOR Rate Borrowing is maturing at the time
that a new Loan is being requested and the Company is electing to have such
existing portion of the outstanding principal balance of the Loans going
forward bear interest at the same Interest Option and for the same LIBOR
Interest Period as the new Loan, or (c) a portion of an Alternate Base
Rate Borrowing is to be converted so as to bear interest at the same Interest
Option and for the same LIBOR Interest Period as the new Loan, then the Rate
Selection Notice shall be included in the Request for Extension of Credit and
Certificate of No Default applicable to the new Loan, which shall be given to the
Agent no later than the applicable Rate Selection Date.

 

ii.             No more than
five (5) LIBOR Interest Periods shall be in effect at any one
time.  Each LIBOR Rate Borrowing shall be
in the amount of at least $10,000,000.

 

iii.            Principal included
in any borrowing shall not be included in any other borrowing which exists at
the same time.

 

iv.            Each designation or
conversion shall occur on a Business Day (and, for LIBOR Rate Borrowings, on a
LIBOR Business Day).

 

v.             Except as provided
in Section 2.10 hereof, no LIBOR Rate Borrowing shall be converted on any
day other than the last day of the applicable LIBOR Interest Period.

 

(c)           Computations. 
Interest based on the Alternate Base Rate, to the extent determined by
reference to the Prime Rate, will be computed on the basis of 365 (or 366)
days and actual days elapsed (including the first day but excluding the last
day) occurring in the period for which payable. 
All other interest and fees shall be computed on the basis of a year of
360 days and actual days elapsed (including the first day but excluding the
last day) occurring in the period for which payable.

 

Section 2.10  Special Provisions Applicable to LIBOR
Rate Borrowings.

 

(a)           Options Unlawful. 
If, after the date of this Agreement, the adoption of any applicable
Legal Requirement or any change in any applicable Legal Requirement or in the
interpretation or administration thereof by any Governmental Authority or
compliance by the Agent or any Lender with any request or directive (whether or
not having the force of law) of any Governmental Authority shall at any time
make it unlawful or impossible for any Lender to permit the establishment of or
to maintain any LIBOR Rate Borrowing, the commitment of the Lenders to
establish or maintain the LIBOR Rate affected by such adoption or change shall
forthwith be canceled and the Company shall forthwith, upon demand by the Agent
to the Company, (1) convert the LIBOR Rate with respect to which such
demand was made to the Alternate Base Rate; (2) pay all accrued and unpaid
interest to date on the amount so 

 

24

 

converted; and (3) pay any amounts
required to compensate the Agent and the Lenders for any additional cost or
expense which the Agent or any Lender may incur as a result of such adoption of
or change in such Legal Requirement or in the interpretation or administration
thereof and any Consequential Loss which the Agent or any Lender may incur as a
result of such conversion to the Alternate Base Rate.  If, when the Agent so notifies the Company,
the Company has given a Rate Selection Notice specifying one or more borrowings
of the type with respect to which such demand was made but the selected LIBOR
Interest Period or LIBOR Interest Periods has not yet begun, such Rate Selection
Notice shall be deemed to be of no force and effect, as if never made, and the
balance of the Loans specified in such Rate Selection Notice shall bear
interest at the Alternate Base Rate until a different available Interest Option
shall be designated in accordance herewith.

 

(b)           Increased Cost of Borrowings.  If the adoption of any applicable Legal
Requirement or any change in any applicable Legal Requirement or in the
interpretation or administration thereof by any Governmental Authority or compliance
by the Agent or any Lender with any request or directive (whether or not having
the force of law) from any Governmental Authority shall at any time as a result
of any portion of the principal balance of the Loans being maintained on the
basis of the LIBOR Rate:

 

i.              subject any Lender
(or make it apparent that any Lender is subject) to any tax (including any
United States interest equalization tax), levy, impost, duty, charge, fee
(collectively, “Taxes”),
or any deduction or withholding for any Taxes on or from the payment due under
any LIBOR Rate Borrowing or other amounts due hereunder, other than income and
franchise taxes of the United States and its political subdivisions; or

 

ii.             change the basis
of taxation of payments due from the Company to the Agent or any Lender under
any LIBOR Rate Borrowing (otherwise than by a change in the rate of taxation of
the overall net income of the Agent or any Lender); or

 

iii.            impose, modify,
increase or deem applicable any reserve requirement (excluding that portion of
any reserve requirement included in the calculation of the Eurocurrency Reserve
Requirement, special deposit requirement or similar requirement (including
state law requirements and Regulation D) imposed, modified, increased or
deemed applicable by any Governmental Authority against assets held by the
Agent or any Lender, or against deposits or accounts in or for the account of
the Agent or any Lender, or against loans made by the Agent or any Lender, or
against any other funds, obligations or other Property owned or held by the
Agent or any Lender; or

 

iv.            impose on the Agent
or any Lender any other condition regarding any LIBOR Rate Borrowing;

 

and the result of any of the foregoing is to
increase the cost to any Lender of agreeing to make or of making, renewing or
maintaining such borrowing on the basis of the LIBOR Rate, or reduce the amount
of principal or interest received by any Lender, then, upon demand by the
Agent, the Company shall pay to the Agent, from time to time as specified by
the Agent, additional amounts which shall compensate such Lender for such
increased cost or reduced amount.  The
Agent will promptly notify the Company in writing of any event, upon becoming
actually aware of it, which will entitle any Lender to additional amounts
pursuant to this paragraph.  The Agent’s
determination of the amount of any such increased cost, increased reserve
requirement or reduced amount shall be conclusive and binding, absent manifest
error, provided that the calculation thereof is set forth in reasonable detail
in such notice.

 

25

 

The Company shall have the right, if it receives
from the Agent any notice referred to in the preceding paragraph, upon
three (3) Business Days’ notice to the Agent, either (i) to
repay in full (but not in part) any borrowing with respect to which such notice
was given, together with any accrued interest thereon, or (ii) to convert
the LIBOR Rate in effect with respect to such borrowing to the Alternate Base
Rate; provided, that any such repayment or conversion shall be accompanied by
payment of (x) the amount required to compensate the appropriate Lender or
Lenders for the increased cost or reduced amount referred to in the preceding
paragraph; (y) all accrued and unpaid interest to date on the amount so
repaid or converted, and (z) any Consequential Loss which may be incurred
as a result of such repayment or conversion.

 

(c)           Inadequacy of Pricing and Rate Determination.  If for any reason with respect to any LIBOR
Interest Period the Agent shall have determined (which determination shall be
conclusive and binding upon the Company, and, in the case of clause (2) below,
shall be presumed to be made upon notice from such Lender) that:  (1) the Agent is unable through its
customary general practices to determine a rate at which the Agent is offered
deposits in United States dollars by prime banks in the interbank market in
London, England in the appropriate amount for the appropriate period, or by
reason of circumstances affecting the interbank market in London, England,
generally, prime banks are not being offered deposits in United States dollars
in the interbank market in London, England, for the applicable LIBOR Interest
Period and in an amount equal to the amount of the LIBOR Rate Borrowing
requested by the Company, or (2) the LIBOR Rate will not adequately and
fairly reflect the cost to any Lender of making and maintaining any LIBOR Rate
Borrowing hereunder for any proposed LIBOR Interest Period, then the Agent
shall give the Company notice thereof and thereupon, (A) any Rate
Selection Notice previously given by the Company designating a LIBOR Rate which
has not commenced as of the date of such notice from the Agent shall be deemed
for all purposes hereof to be of no force and effect, as if never given, and (B) until
the Agent shall notify the Company that the circumstances giving rise to such
notice from the Agent no longer exist, each Rate Selection Notice requesting a
LIBOR Rate Borrowing shall be deemed a request for an Alternate Base Rate
Borrowing, and each outstanding LIBOR Rate Borrowing then in effect shall be
converted, without any notice to or from the Company, upon the termination of
the LIBOR Interest Period then in effect, to an Alternate Base Rate Borrowing.

 

(d)           Indemnification. 
The Company shall indemnify the Agent and each of the Lenders against
and hold each of them harmless from any loss or expense which they may incur or
sustain as a consequence of any untimely payment (mandatory or optional) or
default by the Company in the payment of any principal amount of or interest on
the Loans, or any failure by the Company to convert or to borrow any LIBOR Rate
Borrowing on the date specified by the Company, in each case including any
interest payable by any Lender to the lenders of the funds obtained by it in
order to make or maintain any LIBOR Rate Borrowing (or any portion thereof),
and, to the extent not covered above, any Consequential Loss.  This agreement shall survive the payment of
the Loans.  A certificate as to any
additional amounts payable pursuant to this paragraph submitted by the Agent or
any Lender to the Company shall be conclusive and binding upon the Company,
absent manifest error, provided the calculation thereof is set forth in
reasonable detail in such notice.

 

Section 2.11  Payment Dates.  Whenever any payment to be made hereunder in
respect of the Loans shall be stated to be due on a day which is neither a
Business Day nor a LIBOR Business Day, such payment may be made on the next
succeeding Business Day, or, subject to the definition of LIBOR Interest Period
in the case of any payment of the Loans to which the LIBOR Rate applies, on the
next succeeding LIBOR Business Day, and such extension of time shall in each
such case be included in computing interest and commitment fees in connection
with such payment.

 

Section 2.12  Sharing of Payments, Etc.  The Company agrees that, in addition to (and
without limitation of) any right of set-off, bankers’ lien or counterclaim a
Lender may otherwise have, 

 

26

 

upon the occurrence and during
the continuance of any Event of Default, each Lender shall be entitled, at its
option, to offset balances held by it for the account of the Company at any of
its offices against any principal of or interest on any of such Lender’s Loans
to the Company hereunder or any other obligation of the Company hereunder,
which is not paid (regardless of whether such balances are then due to the
Company), in which case it shall promptly notify the Company and the Agent
thereof, provided that such Lender’s failure to give such notice shall not
affect the validity thereof.  If a Lender
shall obtain payment of any principal of or interest on any Loan made by it
under this Agreement or other obligation then due to such Lender hereunder,
through the exercise of any right of set-off (including, without limitation,
any right of setoff or lien granted under Section 9.18 hereof), banker’s
lien, counterclaim or similar right, or otherwise, it shall promptly purchase
from the other Lenders participations in the Loans made by, or the other
obligations of the Company hereunder of, the other Lenders in such amounts, and
make such other adjustments from time to time as shall be equitable to the end
that all the Lenders shall share the benefit of such payment (net of any
expenses which may be incurred by such Lender in obtaining or preserving such
benefit) pro rata in accordance with their respective Commitment
Percentages.  To such end all the Lenders
shall make appropriate adjustments among themselves (by the resale of
participations sold or otherwise) if such payment is rescinded or must
otherwise be restored.  The Company
agrees, to the fullest extent it may effectively do so under applicable law,
that any Lender so purchasing a participation in the Loans made by, or other
obligations hereunder of, the other Lenders may exercise, upon the occurrence
and during the continuance of any Event of Default, all rights of set-off,
bankers’ lien, counterclaim or similar rights with respect to such
participation as fully as if such Lender were a direct holder of said Loans or
other obligations in the amount of such participation.  Nothing contained herein shall require any
Lender to exercise any such right or shall affect the right of any Lender to
exercise, and retain the benefits of exercising, any such right with respect to
any other indebtedness or obligation of the Company.

 

Section 2.13  Use of Proceeds.  Subject to the terms and conditions contained
herein, the proceeds of the Loans shall be used solely (a) to finance the
Tender Offer and the Merger, (b) to refinance certain existing
Indebtedness of the Target; and (c) to pay costs and expenses relating to
the Transactions.

 

Section 2.14  Evidence of Debt.

 

(a)           Each Lender shall maintain in accordance with its usual
practice an account or accounts evidencing the indebtedness of the Company to
such Lender resulting from each Loan owing to such Lender from time to time,
including the amounts of principal and interest payable and paid to such Lender
from time to time hereunder.  The Company
agrees that upon notice by any Lender to the Company (with a copy of such
notice to the Agent) to the effect that a Note or other evidence of
indebtedness is required or appropriate in order for such Lender to evidence
(whether for purposes of enforcement or otherwise) the Loans owing to, or to be
made by, such Lender, the Company shall promptly execute and deliver to such
Lender Party, with a copy to the Agent, a Note, in substantially the form of Exhibit A
hereto, payable to the order of such Lender in a principal amount equal to the
Commitment of such Lender.  All
references to Notes in the Loan Documents shall mean Notes, if any, to the
extent issued hereunder.

 

(b)           The Register maintained by the Agent pursuant to Section 9.11(e) shall
include a control account, and a subsidiary account for each Lender, in which
accounts (taken together) shall be recorded (i) the date and amount of
each Borrowing made hereunder, the Type of Loans comprising such Borrowing and,
if appropriate, the LIBOR Interest Period applicable thereto, (ii) the
terms of each Assignment and Acceptance delivered to and accepted by it, (iii) the
amount of any principal or interest due and payable or to become due and
payable from the Borrower to each Lender hereunder, and (iv) the amount of
any sum received by the Agent from the Borrower hereunder and each Lender’s
share thereof.

 

27

 

(c)           Entries made in good faith by the Agent in the Register
pursuant to subsection (b) above, and by each Lender in its account
or accounts pursuant to subsection (a) above, shall be prima facie
evidence of the amount of principal and interest due and payable or to become
due and payable from the Company to, in the case of the Register, each Lender
and, in the case of such account or accounts, such Lender, under this
Agreement, absent manifest error; provided,
however, that the failure of the Agent or such Lender to make an entry, or any
finding that an entry is incorrect, in the Register or such account or accounts
shall not limit or otherwise affect the obligations of the Borrower under this
Agreement.

 

ARTICLE III
– CONDITIONS

 

Section 3.1  All Loans.  The obligation of each Lender to make any
Loan is subject to the accuracy of all representations and warranties of the
Company on the date of such Loan, to the performance by the Company of its
obligations under the Loan Documents and to the satisfaction of the following
further conditions:

 

(a)           the Agent shall have received the following, all of which
shall be duly executed and in Proper Form:

 

i.              by no later than
11:00 a.m. (New York City time) on the applicable Rate Selection Date,
notice by telephone or facsimile from the Company of the proposed date and
amount of such Loan, and

 

ii.             no later than 1:00 p.m.
(New York City time) on the applicable Rate Selection Date, a Request for
Extension of Credit and Certificate of No Default, signed by a Responsible
Officer;

 

(b)           no Default shall have occurred and be continuing, or would
result therefrom; and

 

(c)           the representations and warranties contained in the Loan
Documents are true and correct on and as of such date (except any
representation and warranty that expressly indicates that it is being made as
of a specific date, and then as of such date).

 

Section 3.2  First Loan.  In addition to the matters described in Section 3.1
hereof, the obligation of any Lender to make the initial Loan on the date
thereof (the “Effective Date”) is subject
to the satisfaction of the following conditions precedent:

 

(a)           The Agent shall have received on or before the Effective
Date the following, each dated such day (unless otherwise specified), in Proper
Form and (except for the Notes) in sufficient copies for each Lender:

 

i.              Counterparts to
this Agreement executed by the Company and each Lender;

 

ii.             The Notes payable
to the order of the Lenders to the extent requested by the Lenders pursuant to
the terms hereof;

 

iii.            The Guaranty and
the Contribution Agreement duly executed and delivered by each Guarantor as of
the Effective Date;

 

28

 

iv.            Certified copies of
the resolutions of the board of directors (or equivalent body) of each Loan
Party approving the Transaction and each Loan Document to which it is or is to
be a party.

 

v.             a security agreement
in substantially the form of Exhibit G-A authorized and executed by the
parties thereto.

 

vi.            copies of proper
financing statements in respect of all the Loan Parties, together with evidence
that such financing statements have been presented for filing on or before the
Effective Date in all jurisdictions that the Agent may deem necessary or
desirable in order to perfect and protect the first priority liens and security
interests created under the Security Agreement A, covering the Collateral
described therein.

 

vii.           A copy of a
certificate of the Secretary of State of the jurisdiction of incorporation of
each Loan Party, dated reasonably near the Effective Date certifying (A) as
to a true and correct copy of the charter of such Loan Party and each amendment
thereto on file in such Secretary’s office and (B) that (1) such
amendments are the only amendments to such Loan Party’s charter on file in such
Secretary’s office, (2) such Loan Party has paid all franchise taxes to
the date of such certificate and (3) such Loan Party is duly incorporated
and in good standing or presently subsisting under the laws of the State of the
jurisdiction of its incorporation.

 

viii.          A certificate of
each Loan Party signed on behalf of such Loan Party by its secretary or any assistant
secretary, dated the Effective Date (the statements made in which certificate
shall be true on and as of the Effective Date), certifying as to (A) the
absence of any amendments to the charter of such Loan Party since the date of
the Secretary of State’s certificate referred to in Section 3.2(a)(v), (B) a
true and correct copy of the bylaws of such Loan Party as in effect on the date
on which the resolutions referred to in Section 3.2(a)(iv) were
adopted and on the Effective Date, (C) the absence of any proceeding for
the dissolution or liquidation of such Loan Party, (D) the truth in all
material respects of the representations and warranties contained in the Loan
Documents as though made on and as of the Effective Date, (E) the absence
of any event occurring and continuing, or resulting from the initial Borrowing
hereunder, that constitutes a Default, and (F) certifying the names and
true signatures of the officers of such Loan Party authorized to sign each Loan
Document to which it is or is to be a party and the other documents to be
delivered hereunder and thereunder.

 

ix.            A certificate, in
form and substance reasonably satisfactory to the Lenders, attesting to the
Solvency of the Company and its Subsidiaries, on a consolidated basis, both
before and after giving effect to the Transactions, from its chief financial
officer.

 

x.             Audited annual
financial statements of the Company and the Target for the three fiscal years
most recently ended and interim financial statements for the fiscal quarters
ended thereafter and prior to the Effective Date and for the most recent
quarter for which financial statements are available, pro forma
financial statements as to the Company and its Subsidiaries giving effect to
the Transactions, and forecasts prepared by management of the Company, each in
form and substance reasonably satisfactory to the Lenders, of balance sheets,
income statements and cash flow statements on an annual basis for each year
following the Effective Date until the Termination Date.

 

xi.            A favorable opinion
of counsel for the Loan Parties, in form and substance reasonably satisfactory
to the Lenders.

 

29

 

(b)           The Tender Offer shall have been consummated, or shall be
consummated substantially concurrently with the initial Borrowing hereunder, on
substantially the terms and conditions set forth in the Merger Agreement,
without any amendment or waiver of any material term thereof that is adverse,
in any material respect, to the interests of the Lenders, and the Company shall
have acquired not less than a majority of the capital stock of the Target.

 

(c)           The Company’s existing revolving credit facilities with
JPMorgan Chase Bank, N.A. shall have been terminated.

 

(d)           The Target’s existing credit and letter of credit
facilities with Bank of America, N.A. shall have been terminated and all loans,
if any, outstanding thereunder, as well as all accrued interest and fees
thereunder, if any, shall have been paid in full.

 

(e)           There shall exist no action, suit, investigation,
litigation or proceeding affecting any Loan Party or any of its Subsidiaries
pending or, to the knowledge of the Loan Parties or any of their Subsidiaries,
threatened before any Governmental Authority that has had or could reasonably
be expected to have a Material Adverse Effect on the legality, validity or
enforceability of any Loan Document or the consummation of the Transactions.

 

(f)            All governmental authorizations and third-party consents
and approvals required to be obtained under the Merger Agreement in connection
with the Transactions shall have been obtained (without the imposition of any
conditions that materially and adversely impair the rights and remedies of the
Lenders under the Loan Documents) and shall remain in effect.

 

(g)           The Company shall have paid all accrued fees and expenses
of the Agent that are due and payable in accordance herewith (including the
accrued fees and expenses of counsel to the Agent and fees due and payable to
the Joint Lead Arrangers pursuant to the Fee Letter).

 

Section 3.3  Determinations Under Section 3.2.  For purposes of determining compliance with
the conditions specified in Section 3.2, each Lender shall be deemed to
have consented to, approved or accepted or to be satisfied with each document
or other matter required thereunder to be consented to or approved by or
acceptable or satisfactory to the Lenders unless an officer of the Agent
responsible for the transactions contemplated by the Loan Documents shall have
received notice from such Lender prior to the initial Borrowing hereunder
specifying its objection thereto and shall not have made available to the Agent
such Lender’s ratable portion of such Borrowing.

 

ARTICLE IV
– REPRESENTATIONS AND WARRANTIES

 

To induce the Agent and the Lenders to enter into
this Agreement, subject to the Target Representation Limitations, the Company
represents and warrants to the Agent and the Lenders as follows:

 

Section 4.1  Organization.  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 power and authority to 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 could not
reasonably be expected to have a Material Adverse Effect.

 

Section 4.2  Financial Statements.  The financial statements of the Company and
its Subsidiaries on a consolidated basis delivered to the Agent and the Lenders
in connection with this 

 

30

 

Agreement fairly present, 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. 
Since the date of the last audited financial statements of the Company,
no event, development or circumstance has occurred or exists that could reasonably
be expected to have a Material Adverse Effect.

 

Section 4.3  Enforceable Obligations; Authorization.  The Loan Documents are legal, valid and
binding obligations of the Company and the Guarantors, enforceable in
accordance with their respective terms, except as may be limited by bankruptcy,
insolvency and other similar laws affecting creditors rights generally and by
general equitable principles.  The
execution, delivery and performance of the Loan Documents have all been duly
authorized by all necessary action; are within the power and authority of the
Company and the Guarantors; do not and will not contravene or violate any Legal
Requirement or the Organizational Documents of the Company or any Guarantors;
do not and will not result in the breach of, or constitute a default under, any
agreement or instrument by which the Company or any Guarantors or any of their
respective Property may be bound or affected; and do not and will not result in
the creation of any Lien upon any Property of the Company or any Guarantors
except as expressly contemplated therein. 
All necessary permits, registrations and consents for the execution,
delivery and performance by the Company and its Subsidiaries of the Loan
Documents have been obtained.

 

Section 4.4  Other Debt.  Neither the Company nor any of its
Subsidiaries is in default in the payment of any other Indebtedness or under
any agreement, mortgage, deed of trust, security agreement or lease to which it
is a party, the result of which has, would or could reasonably be expected to
have a Material Adverse Effect.

 

Section 4.5  Litigation.  There is no litigation or administrative
proceeding pending or, to the knowledge of the Company, threatened against, nor
any outstanding judgment, order or decree affecting, 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, could reasonably be expected to
have a Material Adverse Effect.  Neither the
Company nor any of its Subsidiaries is in default with respect to any material
judgment, order or decree of any Governmental Authority.

 

Section 4.6  Title. 
Each of the Company and its Subsidiaries has good and marketable title
to its 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.

 

Section 4.7  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 if adequate
reserves with respect thereto are maintained in accordance with Generally Accepted
Accounting Principles.

 

Section 4.8  Subsidiaries.  As of the date hereof, the Company has no
Subsidiaries other than as listed on Schedule 4.8 attached hereto.  Except as expressly indicated on Schedule 4.8
attached hereto, each of the Company’s Subsidiaries is wholly owned by the
Company.

 

Section 4.9  Representations by Others.  All representations and warranties made by or
on behalf of the Company or any of its Subsidiaries in any Loan Document shall
constitute representations and warranties of the Company hereunder.

 

31

 

Section 4.10  Permits, Licenses, Etc.  The Company and each of its Subsidiaries
possess all permits, licenses, patents, patent rights or licenses, trademarks,
trademark rights, trade names, trade name rights and copyrights which are
required to conduct its business, and which the failure of the Company or any
of its Subsidiaries to so possess would or could reasonably be expected to have
a material adverse affect on the financial condition or operations of the
Company and its Subsidiaries on a consolidated basis.

 

Section 4.11  ERISA. 
No Reportable Event (as defined in Section 4043(b) of ERISA
but excluding those events as to which the 30-day notice period is waived by
applicable 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 respect to each Plan.  The Company
has no knowledge of any event which could result in a liability of the Company
or any of its Subsidiaries to the Pension Benefit Guaranty Corporation other
than for applicable premiums.  No
accumulated funding deficiency (as defined in Section 302 of ERISA and Section 412
of the Code), whether or not waived, exists with respect to any Plan.  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 302 of ERISA or Section 412 of the Code to
attach to any Property of the Company or any of its Subsidiaries.

 

Section 4.12  Condition of Property.  The Property used or to be used in the
continuing operations of the Company and its Subsidiaries, when taken as a
whole, is in good repair, working order and condition.

 

Section 4.13  Assumed Names.  Neither the Company nor any of its
Subsidiaries is currently conducting its business under any assumed name or
names, except as set forth on Schedule 4.13 attached hereto.

 

Section 4.14  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.

 

Section 4.15  Margin Stock.  The Company is not engaged in the business of
extending credit for the purpose of purchasing or carrying Margin Stock, and no
proceeds of any Loan will be used to purchase or carry any Margin Stock or to
extend credit to others for the purpose of purchasing or carrying any Margin
Stock, other than in respect of the Transaction.

 

Section 4.16  Agreements.  Schedule 4.16 attached hereto is a complete
and correct list of (i) all credit agreements for borrowed money (other
than the indebtedness governed hereby), indentures and capitalized leases and
all Property subject to any Lien securing such Indebtedness or lease
obligation, (ii) each letter of credit and guaranty for which the
liability or potential liability of the Company and its Subsidiaries on a
consolidated basis is in excess of $250,000, (iii) all other material
instruments in effect as of the date hereof providing for, evidencing, securing
or otherwise relating to any indebtedness for borrowed money of the Company or
any of its Subsidiaries (other than the Indebtedness hereunder and Indebtedness
secured by Incidental Liens), and (iv) all obligations of the Company or
any of its Subsidiaries to issuers of appeal bonds issued for account of the
Company or any of its Subsidiaries.  The
Company shall, upon request by the Agent, deliver to the Agent and the Lenders
a complete and correct copy of all such credit agreements, indentures,
capitalized leases, letters of credit, guarantees and other 

 

32

 

instruments or leases
described in Schedule 4.16 or arising after the date hereof, including any
modifications or supplements thereto, as in effect on the date hereof.

 

Section 4.17  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 could not reasonably be expected to have a
Material Adverse Effect.  The Company and
its Subsidiaries are in compliance with all 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 could not
reasonably be expected to have a Material Adverse Effect.  The Company and its Subsidiaries (and, to the
best knowledge of the Company, each of the prior owners or operators and
predecessors in interest with respect to any of its or its Subsidiaries’
Property) (i) have obtained and maintained in effect all Environmental
Permits, the failure to obtain which could reasonably be expected to have a
Material Adverse Effect, (ii) along with their respective Property have
been and are in compliance with all applicable Requirements of Environmental
Law and Environmental Permits where such failure to comply therewith could
reasonably be expected to have a Material Adverse Effect, (iii) along with
their Property are not subject to any (A) Environmental Claims or (B) Environmental
Liabilities, in either case direct or contingent, and whether known or unknown,
arising from or based upon any act, omission, event, condition or circumstance
occurring or existing on or prior to the date hereof which could reasonably be
expected to have a Material Adverse Effect, and (iv) have not received
individually or collectively any 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 could
reasonably be expected to have a Material Adverse Effect.  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.

 

Section 4.18  Solvency.  The Company and its Subsidiaries are, on a
consolidated basis, Solvent.

 

Section 4.19  Target Representations.  As to any
date of determination prior to the consummation of the Merger, the Company
makes the Target Representations, except where the failure of any Target Representation
to be true and correct on such date would not be material and adverse to the
interests of the Lenders.

 

ARTICLE V
– AFFIRMATIVE COVENANTS

 

The Company covenants and agrees with the Agent and
the Lenders that prior to the termination of this Agreement it will do, cause
each of its Subsidiaries to do, and if necessary cause to be done, each and all
of the following:

 

Section 5.1  Taxes, Existence, Regulations, Property,
Etc.  At all times (a) pay when
due all taxes and governmental charges of every kind upon it or against its
income, profits or property, unless and only to the extent that the same shall
be contested in good faith and reserves deemed adequate by the Agent have been
established therefor; (b) do all things necessary to preserve its corporate
existence, qualifications, rights and franchises in all States where such
qualification is necessary or desirable; (c) comply in all material
respects with all applicable Legal Requirements (including all applicable
Requirements of Environmental Laws) in respect of the conduct of its business
and the ownership of its Property; and (d) cause its Property to be
protected, maintained and kept in good repair and make all 

 

33

 

replacements and additions
to its Property as may be reasonably necessary to conduct its business properly
and efficiently.

 

Section 5.2  Financial Statements and Information.  Furnish to the Agent and each Lender copies
of each of the following:  (a) as
soon as available and in any event within ninety (90) days after the end of
each fiscal year of the Company, Annual Audited Financial Statements of the
Company and its Subsidiaries, prepared on a consolidated basis; (b) as
soon as available and in any event within forty-five (45) days after the
end of each quarter (excluding the fourth quarter) of each fiscal year of the
Company, Quarterly Unaudited Financial Statements of the Company and its
Subsidiaries, prepared on a consolidated basis; (c) concurrently with the
financial statements provided for in clauses (a) and (b) hereof,
an Officer’s Certificate which shall include such schedules, computations and
other information, in reasonable detail, as may be reasonably required by the
Agent or any Lender to demonstrate compliance with the covenants set forth
herein or reflecting any non-compliance therewith as of the applicable date,
all certified as true, correct and complete by a Responsible Officer of the
Company; (d) promptly upon their becoming available, all financial
statements (other than the Annual Audited Financial Statements and Quarterly
Unaudited Financial Statements), registration statements, reports and proxy
statements which the Company or any of its Subsidiaries may file with the
Securities and Exchange Commission, and (e) such other information
relating to the financial condition and affairs of the Company and any of its
Subsidiaries as from time to time may be reasonably requested by the Agent or
any Lender.  In addition to the financial
information and reports to be delivered in accordance with the prior sentence,
if the most recent Annual Audited Financial Statements or Quarterly Unaudited
Financial Statements of the Company, as applicable, demonstrate that the
financial condition of the Company and its Subsidiaries, on a consolidated
basis, has been negatively impacted as at the end of the immediately preceding
fiscal quarter or fiscal year represented by such Annual Audited Financial
Statements or Quarterly Unaudited Financial Statements, as applicable, for one
or more reasons (said determination of negative impact to be made by the Agent
in its reasonable discretion), upon the periodic request of the Agent (until
the conditions attributable to such negative impact have been addressed and
rectified to the reasonable satisfaction of the Agent), the Company agrees that
it shall promptly provide the Agent and the Lenders with additional information
relating to the financial condition and affairs of the Company and its
Subsidiaries as may be reasonably requested by the Agent, including, but not
limited to, reports setting out in sufficient detail the financial performance
of each retail location for any and all stores and operations maintained by the
Company and/or any of its Subsidiaries.

 

Notwithstanding the foregoing, information required
to be delivered pursuant to clauses (a), (b) and (d) of this Section 5.2
shall be deemed to have been delivered if such information shall be available
on the website of the Securities and Exchange Commission at http://www.sec.gov
and the Company shall have notified the Agent of the availability of all such
financial information; provided, that the Company shall deliver paper copies of
such information to the Agent or any Lender that reasonably requests such
delivery.  Information required to be delivered
pursuant to this Section 5.2 (other than a Notice of Default) may also be
delivered by electronic means pursuant to Section 9.2(b).

 

Section 5.3  Financial Tests.  (a) Have at all times a FIXED CHARGE
COVERAGE RATIO of not less than 1.50 to 1.00; and (b) have at all times a
LEVERAGE RATIO of not more than 3.00 to 1.00.

 

Section 5.4  Inspection.  Permit the Agent and the Lenders to inspect
its Property, to examine its files, books and records and make and take away
copies thereof, and to discuss its affairs with its officers and accountants,
all at such times and intervals and to such extent as the Agent or any Lender
may reasonably desire; provided that,
in the absence of an Event of Default, no more than one such visit shall be
permitted at the expense of the Company in any fiscal year.

 

34

 

Section 5.5  Further Assurances.  Promptly execute and deliver any and all
other and further instruments which may be requested by the Agent or any Lender
to cure any defect in the execution and delivery of any Loan Document or more
fully to describe particular aspects of the Company’s agreements set forth in
the Loan Documents or so intended to be.

 

Section 5.6  Books and Records.  Maintain books of record and account in
accordance with Generally Accepted Accounting Principles.

 

Section 5.7  Insurance.  Maintain at all times insurance with such
insurers, on such of its Property, officers, directors and employees, in such
amounts and against such risks as is customarily maintained by other Persons of
similar size and engaged in businesses substantially similar to its businesses,
and furnish the Agent satisfactory evidence thereof promptly upon request.

 

Section 5.8  ERISA. 
At all times:  (a) make
contributions to each Plan in a timely manner and in an amount sufficient to
comply with the minimum funding standards requirements of ERISA; (b) immediately
upon acquiring knowledge of (i) any Reportable Event in connection with
any Plan for which no administrative or statutory exemption exists or (ii) any
“prohibited transaction”, as such term is defined in Section 4975 of the
Code, in connection with any Plan, that could result in the imposition of
material damages or a material excise tax on the Company, furnish the Agent a
statement executed by a Responsible Officer of the Company setting forth the
details thereof and the action which the Company or any such Subsidiary
proposes to take with respect thereto and, when known, any action taken by the
Internal Revenue Service with respect thereto; (c) notify the Agent
promptly upon receipt by the Company or any of its Subsidiaries of any notice
of the institution of any proceedings or other actions which may result in the
termination of any Plan by the Pension Benefit Guaranty Corporation and furnish
the Agent with copies of such notice; (d) pay when due all required
premium payments to the Pension Benefit Guaranty Corporation; (e) furnish
the Agent with copies of the annual report for each Plan filed with the
Internal Revenue Service not later than ten (10) days after the Agent
requests such report; (f) furnish the Agent with copies of any request for
waiver of the funding standards or extension of the amortization periods
required by Sections 303 and 304 of ERISA or Section 412 of the Code
promptly after the request is submitted to the Secretary of the Treasury, the
Department of Labor or the Internal Revenue Service, as the case may be; and (g) pay
when due all installment contributions required under Section 302 of ERISA
or Section 412 of the Code or within 10 days of a failure to make any such
required contributions furnish the Agent with written notice of such failure.

 

Section 5.9  Use of Proceeds.  Subject to the terms and conditions contained
herein, use the proceeds of the Loans (a) to finance the Tender Offer and
the Merger, (b) to refinance certain existing Indebtedness of the Target
and (c) to pay costs and expenses relating to the Transactions.  No proceeds of the Loans shall be used in
violation of Regulation U of the Board of Governors of the Federal Reserve
System or any successor regulation thereof or of any other rule, statute or
regulation governing Margin Stock from time to time.

 

Section 5.10  Additional Guaranties.  Notify the Agent promptly upon creation or acquisition
by the Company or any of its Subsidiaries of any additional Subsidiary of the
Company after the date hereof, and in connection therewith, furnish the Agent
with the Organizational Documents of such newly acquired or created Subsidiary
and sufficient information to disclose to the Agent in reasonable detail the
ownership structure and capitalization of such Subsidiary, and, except with
respect to a Non-Guarantor Subsidiary, promptly cause such newly created or
acquired Subsidiary of the Company to execute and deliver to the Agent for the
ratable benefit of the Lenders and the lenders under the Revolving Credit
Facility, a Joinder Agreement, together with such related certificates,
opinions, and documents as the Agent or any Lender may reasonably require.

 

35

 

Section 5.11  Notice of Events. 
Notify the Agent immediately upon acquiring knowledge of the occurrence
of, or if the Company or any of its Subsidiaries causes or intends to cause, as
the case may be:  (1) the
institution of any lawsuit or administrative proceeding affecting the Company
or any of its Subsidiaries, the adverse determination under which could
reasonably be expected to have a Material Adverse Effect; (2) the
occurrence of any Material Adverse Effect; (3) any Event of Default or any
Default, together with a detailed statement by an appropriate officer or other
responsible party acceptable to the Agent on behalf of the Company of the steps
being taken to cure the effect of such Event of Default or Default; (4) the
occurrence of a default or event of default by the Company or any of its
Subsidiaries under any agreement or series of related agreements to which it is
a party, which default or event of default could reasonably be expected to have
a Material Adverse Effect; and (5) any material change in the accuracy of
the representations and warranties of the Company or any of its Subsidiaries in
this Agreement or any other Loan Document. 
The Company will notify, or cause each Guarantor to notify, the Agent in
writing within 30 days prior to the date that the Company or any Guarantor
changes its name or the location of its chief executive office or principal
place of business or the place where it keeps its books and records.  Any notice of a name change delivered to the
Agent shall be accompanied by such certificates of Governmental Authorities as
the Agent or any Lender may require substantiating such name change.

 

Section 5.12  Environmental Matters. 
Without limiting the generality of Section 5.1(c) hereof, (a) comply
in all material respects with all limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, schedules and timetables
contained in any applicable Requirement of Environmental Law or Environmental
Permit; (b) obtain and maintain in effect all Environmental Permits, the
failure to obtain which could reasonably be expected to have a Material Adverse
Effect; and (c) keep its Property free of any Environmental Claims or
Environmental Liabilities which could reasonably be expected to have a Material
Adverse Effect.

 

Section 5.13  End of Fiscal Year.  The
Company shall cause each of its fiscal years and each of its Subsidiaries’
fiscal years to end on the last Sunday of each September.

 

Section 5.14  Consummation of Merger.  The
Company shall use commercially reasonable efforts to consummate the Merger
within 90 days following the Effective Date.

 

Section 5.15  Maintenance of Ratings.  The
Company shall use commercially reasonable efforts to maintain corporate family
(or equivalent) ratings from each of Moody’s and S&P.

 

Section 5.16  Covenant to Guarantee Obligations and Give
Security.  Except in connection with the Disclosed
Divestitures listed in part A of Schedule 1.1(a), the Loan Parties will upon (x) the
request of the Agent, (y) the formation or acquisition of any new direct
or indirect Subsidiaries by any Loan Party or (z) the acquisition of any
material property by any Loan Party, in each case at the Loan Parties’ expense:

 

(a)           Grant the Collateral Agent for the ratable
benefit of the Lenders and the lenders under the Revolving Credit Facility, and
upon the terms and conditions set forth in Security Agreement A, a security
interest in, each Loan Party’s right, title and interest in and to the
Collateral pursuant to the terms of the Security Agreement A.

 

(b)           within 15 days after such request, formation
or acquisition, (i)  cause each such Subsidiary to duly execute and
deliver to the Agent such guaranties or guaranty supplements so as to cause
such Subsidiary to guarantee all of the Guaranteed Obligations, as defined in
the Guaranty, (ii) duly execute and deliver, and cause each such
Subsidiary and each direct and indirect parent of such Subsidiary (if it has
not already done so) to duly execute and deliver, to the Collateral Agent,
pledges, 

 

36

 

assignments,
security agreement supplements and other security agreements covering the
Collateral and, as specified by and in form and substance reasonably
satisfactory to the Agent, securing payment of all the obligations of the
applicable Loan Party or such Subsidiary, as the case may be, under the Loan
Documents and the Revolving Credit Facility and constituting Liens on all such
Collateral, or (iii) take whatever action, including to file Uniform
Commercial Code financing statements, as may be necessary or advisable in the
opinion of the Agent to vest in the Collateral Agent (or its designee) valid
and subsisting Liens in the Collateral as provided in this Section 5.16(b),

 

(c)           within 60 days after such request, formation
or acquisition, deliver to the Agent, upon the request of the Agent in its sole
discretion, a signed copy of a favorable opinion, addressed to the Collateral
Agent and the Lenders, of counsel for the Loan Parties reasonably acceptable to
the Agent as to the matters contained in clause (b) above, as to such
guaranties, guaranty supplements, pledges, assignments, security agreement
supplements and security agreements being legal, valid and binding obligations
of each Loan Party party thereto enforceable in accordance with their terms, as
to the matters contained in clause (b)(ii) above, as to such recordings,
filings, notices, endorsements and other actions being sufficient to create
valid perfected Liens on such Collateral to the extent a Lien can be created by
filing under the Uniform Commercial Code, and as to such other matters as the
Agent may reasonably request, in each case to the extent that such Collateral
has a value in excess of $10,000,000.

 

(d)           The Loan Parties will, upon the incurrence of
inter-company debt not included in Part II of Schedule I  to Security Agreement A on the Effective
Date, promptly cause each Subsidiary payee under such inter-company debt to
execute and deliver to the Collateral Agent, pledges, assignments, and security
agreement supplements and other security agreements covering such Collateral
and as specified by and in form and substance reasonably satisfactory to the
Agent, securing payment of all the obligations of the applicable Loan Party or
such Subsidiary, as the case may be, under the Loan Documents and the Revolving
Credit Facility and constituting Liens on all such Collateral

 

(e)           at any time and from time to time, promptly
execute and deliver any and all further instruments and documents and take all
such other action as the Agent may reasonably deem necessary or desirable in
obtaining the full benefits of, or in perfecting and preserving the Liens of,
such guaranties, pledges, assignments, security agreement supplements and
security agreements in the Collateral.

 

Section 5.17  Covenant to Give Additional Security.At any time during the Additional Security
Period the Loan Parties will upon (x) the request of the Agent, (y) the
formation or acquisition of any new direct or indirect Subsidiaries by any Loan
Party or (z) the acquisition of any material property by any Loan Party,
then the Loan Parties shall, in each case at the Loan Parties’ expense:

 

(a)           Grant the Collateral Agent for the ratable
benefit of the Lenders and the lenders under the Revolving Credit Facility, and
upon the terms and conditions set forth in the Security Agreement B, a security
interest in, each Loan Party’s right, title and interest in and to the
Additional Collateral pursuant to the terms of the Security Agreement B.

 

(b)           within 15 days after such request, formation
or acquisition, (i)  duly execute and deliver, and cause each such
Subsidiary and each direct and indirect parent of such Subsidiary (if it has
not already done so) to duly execute and deliver, to the Collateral Agent, a
supplement to Security Agreement B, securing payment of all the obligations of
the applicable Loan Party or such Subsidiary, as the case may be, under the
Loan Documents and the Revolving Credit Facility and constituting Liens on all
such properties, provided that no real property (or interest therein) shall be
subjected to a security interest in favor of the Agent for the benefit of the
Lenders, or (ii) take whatever action contemplated by Security Agreement
B, including to file Uniform Commercial Code financing statements, as may be

 

37

 

necessary
or advisable in the opinion of the Agent to vest in the Agent (or its designee)
valid and subsisting Liens as provided in this Section 5.17(b).

 

(c)           within 60 days after such request, formation
or acquisition, deliver to the Agent, upon the request of the Collateral Agent
in its sole discretion, a signed copy of a favorable opinion, addressed to the
Agent and the Lenders, of counsel for the Loan Parties reasonably acceptable to
the Agent as to the matters contained in clauses (a) and (b) above,
as the Agent may reasonably request, in each case to the extent that such
Additional Collateral has a value in excess of $10,000,000.

 

(d)           at any time and from time to time, promptly
execute and deliver any and all further instruments and documents and take all
such other action contemplated under Security Agreement B and as the Agent may
reasonably deem necessary or desirable in obtaining the full benefits of, or in
perfecting and preserving the Liens of, such guaranties, pledges, assignments,
security agreement supplements, intellectual property security agreement
supplements and security agreements.

 

ARTICLE VI
– NEGATIVE COVENANTS

 

The Company covenants and agrees with the Agent and the Lenders that
prior to the termination of this Agreement it will not, and will not suffer or
permit any of its Subsidiaries to, do any of the following:

 

Section 6.1  Indebtedness.  Create, incur, suffer or permit to exist, or
assume or guarantee, directly or indirectly, or become or remain liable with
respect to any Indebtedness, whether direct, indirect, absolute, contingent or
otherwise, except the following:

 

(a)           Indebtedness pursuant to this Agreement, the
Guaranties and any other Loan Document;

 

(b)           Indebtedness under the Revolving Credit
Facility including, without limitation, the letters of credit under the
Revolving Credit Facility which are permitted under Section 6.1(1) hereof,
in an aggregate principal amount (as to the loans thereunder) not to exceed
$350,000,000 at any time outstanding;

 

(c)           in addition to and cumulative of any other
Indebtedness permitted in this Section 6, in the case of the Company only,
Unsecured Borrowed Debt; provided that, immediately before and immediately
after the incurrence of such Unsecured Borrowed Debt, the Company and its
Subsidiaries shall be in pro forma compliance with the financial covenants set
forth in Section 5.3 hereof;

 

(d)           Indebtedness secured by Liens permitted by Section 6.2
hereof;

 

(e)           secured Indebtedness of the Company and
Indebtedness of any one or more of the Company’s Subsidiaries, provided, that
the aggregate amount of all such Indebtedness outstanding at any time
(exclusive of Indebtedness permitted in Section 6.1(i) hereof) may
not exceed five percent (5%) of Consolidated Net Worth;

 

(f)            other liabilities existing on the date of
this Agreement and set forth on Schedule 4.16 attached hereto, and all renewals
and extensions (but not increases) thereof, provided that there shall be no
material change in the obligors thereunder;

 

(g)           current accounts payable and unsecured
current liabilities, not the result of borrowings, to vendors, suppliers and
persons providing services, for expenditures on ordinary trade

 

38

 

terms
for goods and services normally required by the Company or any of its
Subsidiaries in the ordinary course of its business;

 

(h)           agreements of intent to acquire a Person
issued by the Company or any of its Subsidiaries in anticipation of acquiring
such Person if such acquisition is permitted under the terms and conditions of
this Agreement;

 

(i)            the Indebtedness of any Subsidiary of the
Company to the Company or to any Guarantor, as permitted in Section 6.7(f) of
this Agreement;

 

(j)            guarantees by the Company or any of its
Subsidiaries of the Indebtedness of any of their respective Subsidiaries
permitted to be incurred, created or existing pursuant to Section 6.3,
provided, that such guarantees are not directly or indirectly secured by any
Liens;

 

(k)           current and deferred taxes;

 

(l)            any obligation under or in respect of
outstanding letters of credit (including without limitation, letters of credit
under the Revolving Credit Facility), acceptances and similar obligations
created for the account of the Company or any of its Subsidiaries, and any
Hedging Agreements (other than the Credit Facility Hedging Agreements) entered
into by the Company and its Subsidiaries in the ordinary course; provided that the sum of (i) the
aggregate amount of such Indebtedness and (ii) the aggregate amount of
Contingent Obligations outstanding at any time for the Company and its
Subsidiaries, on a consolidated basis, may not exceed five percent (5%) of
Consolidated Net Worth;

 

(m)          Indebtedness or other obligations of the
Company under Capital Lease Obligations for equipment for use in new retail
locations hereafter opened and operated by the Company or any of its
Subsidiaries, so long as the capitalized amount of such obligations hereafter
entered into does not exceed five percent (5%) of Consolidated Net Worth
in the aggregate, together with guaranties of such obligations by any or all
Subsidiaries of the Company now or hereafter existing; and

 

(n)           Indebtedness evidenced by those certain zero
coupon convertible subordinated debentures of the Company due 2018 which are
governed by that certain Indenture dated March 2, 1998, by and among the
Company and Chase Bank of Texas, National Association, Trustee, outstanding on
the date hereof.

 

(o)           Indebtedness of Target under its Convertible
Senior Debentures.

 

(p)           any obligation under or in respect of
outstanding letters of credit (excluding the letters of credit issued under the
Revolving Credit Facility) or other workers’ compensation coverage payment or
reimbursement obligations secured by cash or cash equivalents created for the
account of the Company or any of its Subsidiaries as fiscal security for, or
otherwise in connection with, workers’ compensation coverage secured for the
Company and/or any of its Subsidiaries (it being agreed that any letters of
credit or other such payment or reimbursement obligations issued in accordance
with the provisions of this Section 6.1(p) shall not be included
within letters of credit for purposes of determining compliance with Section 6.1(l) hereof
or included within Contingent Obligations for purposes of determining
compliance with Section 6.3 hereof).

 

The Company, the Agent, the Lenders and each Guarantor (by its
execution of a Guaranty or a Joinder Agreement) agree that, notwithstanding
anything contained in this Section 6.1, in Section 6.7(f) or in
any other provision contained in this Agreement which may appear to be to the
contrary, any and all

 

39

 

Indebtedness of (i) the Company from time to time owed to any
Subsidiary of the Company or of (ii) any Subsidiary of the Company from
time to time owed to the Company or to any Guarantor (together with any and all
Liens from time to time securing the same as permitted by Section 6.2(f) hereof)
is hereby made and at all times hereafter shall be inferior and subordinate in
all respects to the Indebtedness from time to time owing to the Agent or any
Lender pursuant hereto and to any Lien, if any, from time to time hereafter
securing any of such Indebtedness pursuant to the terms hereof.

 

Section 6.2  Liens.  Create or suffer to exist any
Lien upon any of its Property now owned or hereafter acquired, or acquire any
Property upon any conditional sale or other title retention device or arrangement
or any purchase money security agreement; or in any manner directly or
indirectly sell, assign, pledge or otherwise transfer any of its accounts or
contract rights; provided,
however, that the Company and its Subsidiaries (or any of them) may create or
suffer to exist:

 

(a)           Liens in effect on the date hereof and which
are described on Schedule 6.2(a) attached hereto, provided, that the
Property covered thereby does not increase either in quantity or value;

 

(b)           Liens securing any Indebtedness otherwise permitted
pursuant to Sections 6.1(e) and (l) hereof, provided that the aggregate amount of all
such secured Indebtedness outstanding at any time may not exceed five
percent (5%) of Consolidated Net Worth;

 

(c)           Liens in favor of the Collateral Agent pursuant
to the terms of Security Agreement A and/or Security Agreement B, as
applicable;

 

(d)           Incidental Liens;

 

(e)           purchase money security interests and liens
in Equipment and/or real property of the Company or any of its Subsidiaries in
favor of the seller or sellers of such Equipment and/or real property or their
successors and assigns, or purchase money security interests and liens in favor
of any third-party lender which loaned the money to purchase any such Equipment
and/or real property to the Company or such Subsidiary, provided, that neither
the sales price of, nor the amount of any loan made to acquire any of, such
Equipment and/or real property is greater than the fair value of such Equipment
and/or real property so acquired;

 

(f)            Liens in favor of the Company or any
Guarantor securing any Indebtedness owed by a Subsidiary of the Company
permitted pursuant to Section 6.1(i) hereof;

 

(g)           informational filings of financing statements
against the Company or any of its Subsidiaries by lessors under any operating
lease or any permitted Capital Lease Obligation now or hereafter entered into
by the Company or any of its Subsidiaries with any lessor, so long as the
applicable financing statement covers only the asset or assets leased pursuant
to the applicable operating lease or Capital Lease Obligation; and

 

(h)           Liens against cash or cash equivalents of the
Company and/or any of its Subsidiaries securing the obligations of, under or in
respect of outstanding letters of credit or other workers’ compensation coverage
payment or reimbursement obligations otherwise permitted pursuant to Section 6.1(o) hereof;

 

provided, however, that, notwithstanding anything contained above in this Section 6.2
to the contrary, in no event may the Company or any Subsidiary of the Company
ever create or suffer to exist any Lien upon any of the Stock of any of its
Subsidiaries, directly or indirectly, in favor of any Person other than the
Agent for the benefit of the Lenders and, subject to subsection (d) above,
under the Revolving Credit

 

40

 

Facility, create or suffer to exist any agreement, whether oral or in
writing, with any Person other than the Agent and the Lenders pursuant to this Section 6.2,
and, subject to subsection (d) above, under the Revolving Credit Facility,
which would or could prohibit the Company or any of its Subsidiaries from
creating or permitting to exist any Lien in favor of the Agent or the Lenders
for the benefit of all of the Lenders for Indebtedness from time to time
arising under this Agreement.

 

Section 6.3  Contingent Obligations. 
Except for guaranties by Subsidiaries of the Company which are otherwise
permitted by Sections 6.1(l) and 6.1(m) hereof, and the
Guaranties, create, incur, suffer or permit to exist, directly or indirectly,
any Contingent Obligations if such Contingent Obligations would cause the sum
of (a) the aggregate amount of Contingent Obligations outstanding for the
Company and its Subsidiaries, and (b) the aggregate amount of outstanding
Indebtedness permitted by Section 6.1(l), on a consolidated basis, to
exceed five percent (5%) of Consolidated Net Worth.

 

Section 6.4  Mergers, Consolidations and Dispositions and
Acquisitions of Assets.  In any single transaction or series of
related transactions, directly or indirectly:

 

(a)           Wind up its affairs, liquidate or dissolve;

 

(b)           Be a party to any merger or consolidation
(other than the Merger) and except as permitted under Section 6.4(e);

 

(c)           Sell, convey, lease or otherwise dispose of
all or any material part of the assets (except for the sale of inventory in the
ordinary course of business) of the Company and/or its Subsidiaries, or agree
to take any such action, if such sale, lease or conveyance of assets is not
otherwise permitted for the applicable fiscal year by Section 6.4(z) hereof;

 

(d)           Sell, assign, pledge, transfer or otherwise
dispose of, or in any way part with control of, any Stock of any of its
Subsidiaries or any Indebtedness or obligations of any character of any of its
Subsidiaries, or permit any such Subsidiary so to do with respect to any Stock
of any other Subsidiary or any Indebtedness or obligations of any character of
the Company or any of its other Subsidiaries, or permit any of its Subsidiaries
to issue any additional Stock other than (i) to the Company or any of its
Subsidiaries or (ii) to purchase or acquire for a consideration any Stock
of the Company or any of its other Subsidiaries to the extent permitted under Section 6.11(a) hereof;
or

 

(e)           Take any action with a view toward
dissolution, liquidation or termination;

 

provided, however, that:

 

(x)           Any of the Company’s Subsidiaries may merge
or consolidate with any one or more of the Company’s other Subsidiaries, or
with any other Business Entity or Business Entities; provided that each surviving Business Entity after
any such merger or consolidation shall be a wholly-owned Subsidiary of the
Company or of a wholly-owned Subsidiary of the Company, and, provided, further, that the surviving Business Entity shall
simultaneously with such merger, execute and deliver to the Agent a Notice of
Assumption, appropriately completed;

 

(y)           Any of the Company’s Subsidiaries may (i) sell,
transfer or otherwise dispose of any Stock of the Company or any of its
Subsidiaries to the Company or another Subsidiary of the Company or (ii) sell,
lease, transfer or otherwise dispose of any of its assets to another Subsidiary
of the Company; provided that if all or substantially all of the transferring
Subsidiary’s assets are being sold, leased, transferred or otherwise disposed
of, then the Subsidiary to whom the sale, lease, transfer or disposition was
made must, unless it is already a Guarantor, simultaneously

 

41

 

execute and deliver to the Agent a Notice of Assumption.  If such transferring Subsidiary is a
wholly-owned Subsidiary of the Company, it may wind up its affairs, liquidate
or dissolve following the consummation of any such sale, lease, transfer or disposal
of all or substantially all of its assets; and

 

(z)           Subject to the limitations set forth below, (i) (A) a
proposed sale, lease or conveyance of assets of one or more of the Subsidiaries
of the Company (a “Permitted Asset Disposition”) or (B) a proposed sale of the Stock of one or more Subsidiaries
of the Company (a “Permitted Stock Disposition”), in a single transaction or series of related transactions, to a
Person or Persons which is not or are not an Affiliate or Affiliates of the
Company or any of its Subsidiaries, on an arms-length basis, may occur in any
fiscal year of the Company so long as the aggregate consideration paid by such
acquiring Person or Persons (inclusive of the fair value of any non-cash
Property received as consideration) from all Permitted Asset Dispositions and all
Permitted Stock Dispositions which occur during such fiscal year does not
exceed five percent (5%) of Consolidated Net Worth and (ii) the
Company may consummate the Disclosed Divestitures; provided, however, that no Permitted Asset Disposition (other
than a Disclosed Divestiture) or Permitted Stock Disposition may occur if a
Default shall have then occurred and is then continuing or would be caused by
such proposed Permitted Asset Disposition or Permitted Stock Disposition, in
each case if consummated; provided
further that the ability to
consummate such Disclosed Divestiture shall not constitute a waiver of any such
Default.

 

Section 6.5  Nature of Business. 
Materially change the nature of its business or enter into any business
which is substantially different from the business in which it is presently
engaged; provided, however, that vertical integration within
the natural foods industry shall not be deemed to be a violation of this Section 6.5.

 

Section 6.6  Transactions with Related Parties. 
Enter into any transaction, contract or agreement of any kind with any
officer, director or holder of any of the outstanding Stock of the Company or
any of its Subsidiaries (or any Affiliate of such Person), unless such
transaction, contract or agreement is made upon terms and conditions not less
favorable to such Person than those which could have been obtained from wholly
independent and unrelated sources.  Other
than pursuant to agreements of the Target in effect on the date hereof, the
Company will not permit the compensation of any officer, stockholder, director,
partner or proprietor of the Company or any of its Subsidiaries to be
excessive, taking into consideration the financial circumstances of the Company
or such Subsidiary and the position and qualifications of such Person.

 

Section 6.7  Loans and Investments. 
Make, directly or indirectly, any loan or advance to or have any
Investment in any Person, or make any commitment to make such loan, advance or
Investment, except:

 

(a)           Stock of any Subsidiary, subject to the terms
of Section 6.7(h) as to Investments in internet strategy lines of
business;

 

(b)           Permitted Investment Securities;

 

(c)           Stock received in the settlement of debts
(created in the ordinary course of business);

 

(d)           travel advances in the ordinary course of
business to officers and employees;

 

42

 

(e)           customer obligations and receivables owing to
the Company and arising out of sales or leases made or the rendering of
services by the Company in the ordinary course of business;

 

(f)            so long as no Default shall have occurred and
is then continuing, and subject to the terms of Section 6.1 hereof, loans
by the Company or any Guarantor to any Subsidiary of the Company;

 

(g)           so long as no Default has occurred and is
then continuing, or would result therefrom, loans to any Person which is not a
Subsidiary of the Company or of any of the Company’s Subsidiaries, provided, that the aggregate of all of
such loans does not exceed at any time five percent (5%) of Consolidated Net
Worth; and

 

(h)           so long as no Default shall have occurred and
is then continuing, or would result therefrom, Investments by the Company
and/or any Guarantor in internet strategy lines of business.

 

Section 6.8  ERISA Compliance.  At
any time permit any Plan to engage in any “prohibited transaction” as defined
in ERISA; incur any “accumulated funding deficiency” as defined in ERISA; or be
terminated in a manner which could result in the imposition of a Lien on any
Property of the Company or any of its Subsidiaries pursuant to ERISA.

 

Section 6.9  Credit Extensions. 
Extend credit other than normal and prudent extensions of credit to
customers for goods and services in the ordinary course of business.

 

Section 6.10  Change in Accounting Method.  Make
any material change in accounting method except as may be required by Generally
Accepted Accounting Principles as they are from time to time in effect.

 

Section 6.11  Redemption, Dividends and Distributions.  At
any time (1) each of the Company’s Moody’s and S&P rating have been
downgraded below Investment Grade, or (2) either of the Company’s Moody’s
or S&P rating has been downgraded by at least two categories below
Investment Grade:

 

(a)           Redeem, retire or otherwise acquire, directly
or indirectly, any shares of its Stock if such redemption or repurchase would
cause the sum of (A) and (B) below to exceed the sum of (i) $150,000,000,
plus (ii) fifty percent
(50%) of the aggregate of Net Income, depreciation, amortization and non-cash
stock compensation expense of the Company and its Subsidiaries, on a
consolidated basis, for each fiscal quarter of the Company ending after August 28,
2007 (said amount to not be adjusted or changed for a particular fiscal quarter
if the aggregate Net Income, depreciation, amortization and non-cash stock
compensation expense of the Company and its Subsidiaries, on a consolidated
basis, for such fiscal quarter is negative): 
(A) the aggregate cost paid by the Company for such Stock so
redeemed or repurchased on or after July 1, 2007, as shown on the
consolidated financial statements of the Company and its Subsidiaries to be
delivered pursuant to Sections 5.2(a) and (b) hereof; and (B) the
aggregate cash dividends paid by the Company to owners of Stock in the Company
on or after July 1, 2007;

 

(b)           Pay any dividend except (i) dividends
paid to the Company or any Subsidiary of the Company which is a direct parent
of the Subsidiary paying a dividend, (ii) dividends payable in Stock or in
rights or warrants to purchase Stock, or (iii) cash dividends paid by the
Company to owners of Stock in the Company if the aggregate amount of such cash
dividends payable by the Company to owners of Stock in the Company on or after August 28,
2007, together with the aggregate cost paid by the Company for Stock redeemed
or repurchased on or after July 1, 2007 (as shown on the consolidated
financial statements of the Company and its Subsidiaries to be delivered
pursuant to Sections 5.2(a) and (b)

 

43

 

hereof),
does not exceed (i) $150,000,000, plus
(ii) fifty percent (50%) of the aggregate of Net Income, depreciation,
amortization and non-cash stock compensation expense of the Company and its
Subsidiaries, on a consolidated basis, for each fiscal quarter of the Company
ending after July 1, 2007 (said amount to not be adjusted or changed for a
particular fiscal quarter if the aggregate Net Income, depreciation,
amortization and non-cash stock compensation expense of the Company and its
Subsidiaries, on a consolidated basis, for such fiscal quarter is negative); or

 

(c)           Make any other distribution of any Property
or cash to stockholders as such, except as permitted under Section 6.4(e)(y).

 

ARTICLE VII
– EVENTS OF DEFAULT AND REMEDIES

 

Section 7.1  Events of Default.  If
any of the following events shall occur, then the Agent may, unless directed to
the contrary by the Required Lenders in writing actually received by the Agent
prior to the Agent doing so (and, if directed by the Required Lenders, shall),
do any or all of the following:  (1) without
notice to the Company or any other Person, declare the Loans and the Notes then
outstanding to be, and thereupon the Loans and the Notes shall forthwith
become, immediately due and payable, together with all accrued interest
thereon, the Commitment Fees and all other amounts then payable hereunder,
without notice of any kind, notice of acceleration or of intention to
accelerate, presentment and demand or protest, or other notice of any kind all
of which are hereby expressly WAIVED by the Company; (2) without notice to
the Company, terminate the Commitments and thereupon all of the Lenders shall
be relieved of any obligation to make any additional Loans; (3) by notice
in writing to the Company, accelerate the Maturity Date to a date as early as
the date of the notice, and (4) exercise any and all other rights pursuant
to the Loan Documents:

 

(a)           The Company shall fail to pay or prepay any
principal of or interest of any Loan, the Commitment Fees or any other
obligation hereunder as and when due and, solely in respect of interest, fees
and obligations other than principal, such failure remains uncured after
three (3) Business Days, in the case of interest, and five (5) Business
Days, in the case of fees and such other obligations, in each case from such
due date; or

 

(b)           The Company or any of its Subsidiaries (i) shall
fail to pay at maturity, or within any applicable period of grace, any
principal of or interest on any other borrowed money obligation in excess of
$20,000,000 in principal amount (unless such payment is being contested in good
faith by appropriate proceedings and adequate reserves have been provided
therefor), (ii) shall otherwise be in default under the provisions of any
instrument or document evidencing, securing or guaranteeing any other borrowed
money obligation of the Company or any of its Subsidiaries, including, without
limitation, in respect of the Revolving Credit Facility, in excess of
$20,000,000 in principal amount if such default continues beyond any applicable
grace or curative period, if any, and such default would entitle the holder of
such borrowed money obligation to declare such obligation to be due prior to
its stated maturity, or (iii) is in default under or in violation of any
Legal Requirement, which failure could or does have a Material Adverse Effect;
or

 

(c)           Any representation or warranty made in
connection with any Loan Document shall prove to have been materially
incorrect, false or misleading when made or deemed to have been made; or

 

(d)           Default shall occur in the punctual and
complete performance of (i) any of the affirmative covenants contained in Section 5
(other than Section 5.3) and such default shall not be cured within
ten (10) days after the Agent has given written notice to the Company
that such default has occurred, (or immediately in the case of Sections 5.14,
5.16, or 5.17) (ii) any of the negative covenants

 

44

 

contained
in Section 6, or (iii) any covenant contained in Section 5.3 or
any other covenant of the Company or any other Person contained in any Loan
Document; or

 

(e)           Any judgments or orders in the aggregate for
the payment of money in excess of $20,000,000 shall be rendered against the
Company or any of its Subsidiaries at any time, regardless of whether the same
is being appealed or reserves established therefor or paid in full; provided, however,
that any such judgment or order shall not give rise to an Event of Default
under this Section 7.1(e) if and for so long as the amount of such
judgment or order is covered by a valid and binding policy of insurance in
favor of the Company or any of its Subsidiaries as to which coverage in respect
of such claim has not been disputed; or

 

(f)            The Company or any Subsidiary of the Company
shall claim, or any court shall find or rule, that the Agent for the benefit of
the Lenders does not have a valid Lien on any Collateral or Additional
Collateral, as the case may be, having a value in the aggregate in excess of
$5,000,000 which may have been provided to secure the Indebtedness arising
pursuant hereto from time to time by the Company or any of its Subsidiaries; or

 

(g)           Any order shall be entered in any proceeding
against the Company or any of its Subsidiaries decreeing the dissolution,
liquidation or split-up thereof, and such order shall remain in effect for
thirty (30) days; provided, however, the provisions of this
subparagraph (g) shall not apply to any divestiture by the Company or
any of its Subsidiaries of any Subsidiary acquired after the effective date of
this Agreement as a result of anti-trust issues or concerns; or

 

(h)           The occurrence of an event of default or
default under any Loan Document other than this Agreement; or

 

(i)            The Company or any of its Subsidiaries shall
have concealed, removed, or permitted to be concealed or removed, any part of
its Property, with intent to hinder, delay or defraud its creditors or any of
them, or made or suffered a transfer of any of its Property which may be
fraudulent under any bankruptcy, fraudulent conveyance or similar law; or shall
have made any transfer of its Property to or for the benefit of a creditor at a
time when other creditors similarly situated have not been paid; or

 

(j)            A change shall occur in the assets,
liabilities, financial condition, business or affairs of the Company or any of
its Subsidiaries which, in the reasonable opinion of the Required Lenders,
would or does have a Material Adverse Effect; provided,
however, the occurrence of any
such Material Adverse Effect shall not be deemed to be an Event of Default
hereunder until the Agent shall have provided the Company with written notice
that the Required Lenders have determined that such a Material Adverse Effect
has occurred; or

 

(k)           A Change of Control shall occur.

 

In addition to the actions permitted to be taken by the Agent under the
terms of the initial paragraph of this Section 7.1, if any of the
following events shall occur, then the Loans and the Notes together with all
accrued interest thereon, the Commitment Fees and all other amounts then
payable hereunder shall automatically, without demand, presentment, protest,
notice of intent to accelerate, notice of acceleration or other notice to any
Person of any kind, all of which are hereby expressly WAIVED by the Company,
become immediately due and payable and all Commitments shall be immediately and
automatically terminated and the Maturity Date shall immediately and
automatically be accelerated to the date of such occurrence:

 

45

 

(x)           The Company or any of its Subsidiaries shall
make a general assignment for the benefit of creditors or shall petition or
apply to any tribunal for the appointment of a trustee, custodian, receiver or
liquidator of all or any substantial part of its business, estate or assets or
shall commence any proceeding under any bankruptcy, reorganization,
arrangement, insolvency, readjustment of debt, dissolution or liquidation law
of any jurisdiction, whether now or hereafter in effect; or

 

(y)           Any such petition or application shall be
filed or any such proceeding shall be commenced against the Company or any of
its Subsidiaries and the Company or such Subsidiary by any act or omission
shall indicate approval thereof, consent thereto or acquiescence therein which
shall not have been dismissed within 60 days, or an order shall be entered
appointing a trustee, custodian, receiver or liquidator of all or any
substantial part of the assets of the Company or any of its Subsidiaries or
granting relief to the Company or any of its Subsidiaries or approving the
petition in any such proceeding, and such order shall remain in effect for more
than sixty (60) days; or

 

(z)           The Company or any of its Subsidiaries shall
admit in writing its inability to pay its debts as they become due or fail
generally to pay its debts as they become due or suffer any writ of attachment
or execution or any similar process to be issued or levied against it or any
substantial part of its Property which is not released, stayed, bonded or
vacated within thirty (30) days after its issue or levy.

 

Section 7.2  Remedies Cumulative.  No
remedy, right or power conferred upon the Agent or any Lender is intended to be
exclusive of any other remedy, right or power given hereunder or now or
hereafter existing at law, in equity, or otherwise, and all such remedies,
rights and powers shall be cumulative.

 

ARTICLE VIII – THE AGENT

 

Section 8.1  Authorization and Action.  (a)  Each Lender hereby irrevocably appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers and discretion under this Agreement and the other Loan Documents as
are delegated to the Agent by the terms hereof and thereof, together with such
powers and discretion as are reasonably incidental thereto.  As to any matters not expressly provided for
by the Loan Documents (including, without limitation, enforcement or collection
of the obligations of the Company or any Guarantor), no Agent shall be required
to exercise any discretion or take any action, but shall be required to act or
to refrain from acting (and shall be fully protected in so acting or refraining
from acting) upon the instructions of the Required Lenders, and such
instructions shall be binding upon all Lenders, and all holders of Notes, and the
Agent agrees to request from the Company any information that is reasonably
requested by any Lender; provided,
however, that no Agent shall be
required to take any action that exposes the Agent to personal liability or
that is contrary to this Agreement or applicable law.

 

(b)           The Agent and/or the Collateral Agent may
execute any of its duties under this Agreement or any other Loan Document by or
through agents, employees or attorneys-in-fact and shall be entitled to advice
of counsel and other consultants or experts concerning all matters pertaining
to such duties.

 

(c)           Each of the Lenders hereby appoints and
authorizes the Collateral Agent to take such action as collateral agent on its
behalf and to exercise such powers under the Security Agreement A and Security
Agreement B as are specifically delegated to the Collateral Agent by the terms
of such Loan Documents, together with such other powers as are reasonably
incidental thereto.

 

46

 

Section 8.2  Agents’ Reliance, Etc. 
Neither the Agent nor the Collateral Agent nor any of their respective
directors, officers, agents or employees shall be liable for any action taken
or omitted to be taken by it or them under or in connection with the Loan
Documents, except for its or their own gross negligence or willful
misconduct.  Without limitation of the
generality of the foregoing, the Agent:  (a) may
consult with legal counsel (including counsel for any Loan Party), independent
public accountants and other experts selected by it and shall not be liable for
any action taken or omitted to be taken in good faith by it in accordance with
the advice of such counsel, accountants or experts; (b) makes no warranty
or representation to any Lender and shall not be responsible to any Lender for
any statements, warranties or representations (whether written or oral) made in
or in connection with the Loan Documents; (c) shall not have any duty to
ascertain or to inquire as to the performance, observance or satisfaction of
any of the terms, covenants or conditions of any Loan Document on the part of
any Loan Party or the existence at any time of any Default under the Loan
Documents or to inspect the property (including the books and records) of any
Loan Party; (d) shall not be responsible to any Lender for the due
execution, legality, validity, enforceability, genuineness, sufficiency or
value of, or the perfection or priority of any lien or security interest
created or purported to be created under or in connection with, any Loan
Document or any other instrument or document furnished pursuant thereto; and (e) shall
incur no liability under or in respect of any Loan Document by acting upon any
notice, consent, certificate or other instrument or writing (which may be by
telegram, telecopy or electronic communication) believed by it to be genuine
and signed or sent by the proper party or parties.

 

Section 8.3  Royal Bank and Affiliates.  With
respect to its Commitments, the Loan made by it and any Note issued to it,
Royal Bank shall have the same rights and powers under the Loan Documents as
any other Lender and may exercise the same as though each were not an Agent;
and the term “Lender” or “Lenders” shall, unless otherwise expressly indicated,
include Royal Bank in its individual capacity. 
Royal Bank and its affiliates may accept deposits from, lend money to,
act as trustee under indentures of, accept investment banking engagements from,
act as a counterparty to any Hedging Agreements and generally engage in any
kind of business with, any Loan Party, any of its Subsidiaries and any Person
that may do business with or own securities of any Loan Party or any such
Subsidiary, all as if Royal Bank were not the Agent and without any duty to
account therefor to the Lenders.  No
Agent shall have any duty to disclose any information obtained or received by
it or any of its Affiliates relating to any Loan Party or any of its
Subsidiaries to the extent such information was obtained or received in any
capacity other than as the Agent.

 

Section 8.4  Lender Credit Decision.  Each
Lender acknowledges that it has, independently and without reliance upon the
Agent or any other Lender and based on the financial statements referred to in Section 4.01
and such other documents and information as it has deemed appropriate, made its
own credit analysis and decision to enter into this Agreement.  Each Lender also acknowledges that it will,
independently and without reliance upon the Agent or any other Lender and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Agreement.

 

Section 8.5  Indemnification.  Each
Lender severally agrees to indemnify the Agent (to the extent not promptly
reimbursed by the Company) from and against such Lender’s ratable share
(determined as provided below) of any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever that may be imposed on, incurred by, or
asserted against the Agent in any way relating to or arising out of the Loan
Documents or any action taken or omitted by the Agent under the Loan Documents
(collectively, the “Indemnified
Costs”); provided,
however, that no Lender shall be
liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from the Agent’s gross negligence or willful misconduct as found in a
final, non-appealable judgment by a court of competent jurisdiction.  Without limitation of the foregoing, each
Lender agrees to reimburse the Agent

 

47

 

promptly upon demand for its ratable share of any costs and expenses
(including, without limitation, fees and expenses of counsel) payable by the
Company under Section 9.8, to the extent that the Agent is not promptly
reimbursed for such costs and expenses by the Company.  In the case of any investigation, litigation
or proceeding giving rise to any Indemnified Costs, this Section 8.5
applies whether any such investigation, litigation or proceeding is brought by
any Lender or any other Person.

 

For purposes of this Section 8.5, each Lender’s ratable share of
any amount shall be determined, at any time, according to the sum of (i) the
aggregate principal amount of the Loans outstanding at such time and owing to
such Lender and (ii) the aggregate Unused Commitments at such time.  The failure of any Lender to reimburse the Agent
promptly upon demand for its ratable share of any amount required to be paid by
the Lenders to the Agent as provided herein shall not relieve any other Lender
of its obligation hereunder to reimburse the Agent for its ratable share of
such amount, but no Lender shall be responsible for the failure of any other
Lender to reimburse the Agent for such other Lender’s ratable share of such
amount.  Without prejudice to the
survival of any other agreement of any Lender hereunder, the agreement and
obligations of each Lender contained in this Section 8.6 shall survive the
payment in full of principal, interest and all other amounts payable hereunder
and under the other Loan Documents.

 

Section 8.6  Successor Agents.  The
Agent may resign at any time by giving written notice thereof to the Lenders
and the Company.  Upon any such
resignation, the Lenders (in consultation with the Company) shall have the
right to appoint a successor Agent.  If
no successor Agent shall have been so appointed by the Lenders, and shall have
accepted such appointment, within 30 days after the retiring Agent’s giving of
notice of resignation, then the retiring Agent may, on behalf of the Lenders,
appoint a successor Agent, which shall be a commercial bank organized under the
laws of the United States or of any State thereof and having a combined capital
and surplus of at least $250,000,000. 
Upon the acceptance of any appointment as Agent hereunder by a successor
Agent, such successor Agent shall succeed to and become vested with all the rights,
powers, discretion, privileges and duties of the retiring Agent, and the
retiring Agent shall be discharged from its duties and obligations under the
Loan Documents.  If within 30 days after
written notice is given of the retiring Agent’s resignation under this Section 8.6
no successor Agent shall have been appointed and shall have accepted such
appointment, then on such 30th day (a) the
retiring Agent’s resignation or removal shall become effective, (b) the
retiring Agent shall thereupon be discharged from its duties and obligations
under the Loan Documents and (c) the Lenders shall thereafter perform all
duties of the retiring Agent under the Loan Documents until such time, if any,
as the Lenders appoint a successor Agent as provided above.  After any retiring Agent’s resignation or
removal hereunder as Agent as to the Facility shall have become effective, the
provisions of this Article VIII shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent under this
Agreement.

 

Section 8.7  Other Agents; Arrangers and Managers.  None
of the Lenders or other Persons identified on the facing page or signature
pages of this Agreement as a “syndication agent,” “documentation agent,” “bookrunner,”
or “lead arranger” shall have any right, power, obligation, liability,
responsibility or duty under this Agreement other than to the extent expressly
set forth herein and, in the case of such Lenders, those applicable to all
Lenders as such.  Without limiting the
foregoing, none of the Lenders or other Persons so identified shall have or be
deemed to have any fiduciary relationship with any Lender.  Each Lender acknowledges that it has not
relied, and will not rely, on any of the Lenders or other Persons so identified
in deciding to enter into this Agreement or in taking or not taking action
hereunder.

 

ARTICLE IX – MISCELLANEOUS

 

Section 9.1  No Waiver.  No waiver of any Default shall
be deemed to be a waiver of any other Default. 
No failure to exercise and no delay on the part of the Agent or any
Lender in exercising any right or power under any Loan Document or at law or in
equity shall operate as a waiver thereof, nor

 

48

 

shall any single or partial exercise of any such right or power, or the
abandonment or discontinuance of steps to enforce any such right or power,
preclude any further or other exercise thereof or the exercise of any other
right or power.  No course of dealing
between the Company and the Agent or any Lender shall operate as a waiver of
any right or power of the Agent or any Lender. 
No amendment, modification or waiver of any provision of this Agreement
or any other Loan Document nor any consent to any departure therefrom shall be
effective unless the same is in writing and signed by the Person against whom
it is sought to be enforced, and then it shall be effective only in the
specific instance and for the purpose for which given.  No notice to or demand on the Company or any
other Person shall entitle the Company or any other Person to any other or
further notice or demand in similar or other circumstances.

 

Section 9.2  Notices.

 

(a)           All notices and other communications provided
for hereunder shall be either (x) in writing (including facsimile or
electronic communication) and mailed, faxed or delivered or (y) as and to
the extent set forth in Section 9.2(b) and in the proviso to this Section 9.2(a),
in an electronic medium and delivered as set forth in Section 9.2(b), if
to any Loan Party, to the Company at its address at 550 Bowie Street, Austin,
Texas 78703, Attention:  Glenda
Chamberlain, Chief Financial Officer, and Faxed to: 512 482 7205, with copy to
the General Counsel’s Office at the same address and faxed to: 512 482 7217; if
to any initial Lender party to this Agreement on date hereof, at the address
specified for such Lender on Schedule 2.1(a) hereto; if to any other
Lender, at the address specified in the Assignment and Acceptance pursuant to
which it became a Lender; if to the Agent, at its address at  200 Bay Street, 12th Floor, South Tower,
Royal Bank Plaza, Toronto, Ontario M5J 2W7, Attention:  Manager, Agency, Fax: 416-842-4023; or, as to
any Party, at such other address as shall be designated by such party in a
written notice to the other parties; provided,
however, that materials and
information described in Section 9.2(b) shall be delivered to the
Agent in accordance with the provisions thereof or as otherwise specified to
the Company by the Agent.  Except as
otherwise provided herein, all notices, consents, certificates, waivers,
documents and other communications required or permitted to be delivered to any
party under the terms of any Loan Document (a) must be in writing, (b) must
be personally delivered, transmitted by a recognized courier service or
transmitted by facsimile, and (c) must be directed to such party at its
address or facsimile number set forth above or on Schedule 2.1(a) hereto.  Except as provided in subsection (b) below,
all notices will be deemed to have been duly given and received on the date of
delivery if delivered personally, three (3) days after delivery to
the courier if transmitted by courier, or the date of transmission during
normal business hours with confirmation if transmitted by facsimile, whichever
occurs first, except that notices and communications to the Agent or the
Collateral Agent pursuant to Article II, III or VII shall not be
effective until received by such Agent. 
Any party may change its address or facsimile number for purposes hereof
by notice to all other parties.  Delivery
by telecopier of an executed counterpart of a signature page to any
amendment or waiver of any provision of this Agreement or the Notes shall be
effective as delivery of an original executed counterpart thereof.

 

(b)           The Company hereby agrees that it will
provide to the Agent all information, documents and other materials that it is
obligated to furnish to the Agent pursuant to the Loan Documents, including,
without limitation, all notices, requests, financial statements, financial and
other reports, certificates and other information materials, but excluding any
such communication that (i) relates to a request for a new, or a
conversion of an existing, Borrowing (including any election of an interest
rate or LIBOR Interest Period relating thereto), (ii) relates to the
payment of any principal or other amount due under this Agreement prior to the
scheduled date therefor, (iii) provides notice of any Default or Event of
Default under this Agreement or (iv) comprises original executed counterparts,
original governmental certificates , in each case, required to be delivered to
satisfy any condition precedent to the effectiveness of this Agreement and/or
any Borrowing thereunder (all such non-excluded communications being referred
to herein collectively as “Communications”), by transmitting the Communications in an electronic/soft medium in
a format reasonably acceptable to the Agent to an electronic mail address

 

49

 

specified
by the Agent to the Company.  In
addition, the Company agrees to continue to provide the Communications to the
Agent in the manner specified in the Loan Documents but only to the extent
requested by the Agent.  The Company
further agrees that the Agent may make the Communications available to the
Lenders by posting the Communications on IntraLinks or a substantially similar
electronic transmission system (the “Platform”); provided that, unless
otherwise indicated by the Company, all such information so made available to
the Lender Parties shall be treated by the Agent as confidential information.

 

(c)           THE PLATFORM IS PROVIDED “AS IS” AND “AS
AVAILABLE.”  THE AGENT PARTIES (AS
DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE
COMMUNICATIONS, OR THE ADEQUACY OF THE PLATFORM AND EXPRESSLY DISCLAIM
LIABILITY FOR ERRORS OR OMISSIONS IN THE COMMUNICATIONS.  NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR
STATUTORY, INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF MERCHANTABILITY,
FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR
FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY THE AGENT PARTIES IN
CONNECTION WITH THE COMMUNICATIONS OR THE PLATFORM.  IN NO EVENT SHALL THE AGENT OR ANY OF ITS
AFFILIATES OR ANY OF THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, AGENTS,
ADVISORS OR REPRESENTATIVES (COLLECTIVELY, “AGENT PARTIES”) HAVE ANY LIABILITY
TO THE COMPANY, ANY LENDER OR ANY OTHER PERSON OR ENTITY FOR DAMAGES OF ANY
KIND, INCLUDING, WITHOUT LIMITATION, DIRECT OR INDIRECT, SPECIAL, INCIDENTAL OR
CONSEQUENTIAL DAMAGES, LOSSES OR EXPENSES (WHETHER IN TORT, CONTRACT OR
OTHERWISE) ARISING OUT OF THE COMPANY’S OR THE AGENT’S TRANSMISSION OF
COMMUNICATIONS THROUGH THE INTERNET, EXCEPT TO THE EXTENT THE LIABILITY OF THE
AGENT OR THE COLLATERAL AGENT PARTY IS FOUND IN A FINAL NON-APPEALABLE JUDGMENT
BY A COURT OF COMPETENT JURISDICTION TO HAVE RESULTED PRIMARILY FROM SUCH AGENT
PARTY’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.

 

(d)           The Agent agrees that the receipt of the
Communications by the Agent at its e-mail address set forth above shall
constitute effective delivery of the Communications to the Agent for purposes
of the Loan Documents.  Each Lender
agrees that notice to it (as provided in the next sentence) specifying that the
Communications have been posted to the Platform shall constitute effective
delivery of the Communications to such Lender for purposes of the Loan
Documents.  Each Lender agrees to notify
the Agent in writing (including by electronic communication) from time to time
of such Lender’s e-mail address to which the foregoing notice may be sent by
electronic transmission and (ii) that the foregoing notice may be sent to
such e-mail address.  Nothing herein
shall prejudice the right of the Agent or any Lender to give any notice or other
communication pursuant to any Loan Document in any other manner specified in
such Loan Document.

 

Section 9.3  Jurisdiction; Governing Law; Etc.

 

(a)           Each of the parties hereto hereby irrevocably
and unconditionally submits, for itself and its property, to the nonexclusive
jurisdiction of any New York State court or Federal court of the United States
of America sitting in New York City, and any appellate court from any thereof,
in any action or proceeding arising out of or relating to this Agreement or any
of the other Loan Documents to which it is a party, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in any such New York State court or, to
the fullest extent permitted by law, in such Federal court.  Each of the parties hereto agrees that a
final judgment in any such action or

 

50

 

proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law.  Nothing in this Agreement shall affect any
right that any party may otherwise have to bring any action or proceeding
relating to this Agreement or any of the other Loan Documents in the courts of
any jurisdiction.

 

(b)           EACH OF THE PARTIES HERETO IRREVOCABLY AND
UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT IT MAY LEGALLY AND
EFFECTIVELY DO SO, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE
LAYING OF VENUE OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS TO WHICH IT IS A PARTY IN ANY
NEW YORK STATE OR FEDERAL COURT.  EACH OF
THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED
BY LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION
OR PROCEEDING IN ANY SUCH COURT.

 

(c)           THIS AGREEMENT AND THE NOTES SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK.

 

(d)           EACH OF THE COMPANY, THE AGENT AND THE
LENDERS IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING
OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF
OR RELATING TO ANY OF THE LOAN DOCUMENTS, THE LOANS OR THE ACTIONS OF THE AGENT
OR ANY LENDER IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT
THEREOF.

 

Section 9.4  Survival; Parties Bound.  All
representations, warranties, covenants and agreements made by or on behalf of
the Company in connection herewith shall survive the execution and delivery of
the Loan Documents, shall not be affected by any investigation made by any
Person, and shall bind the Company and its successors, trustees, receivers and
assigns and inure to the benefit of the successors and assigns of the Agent and
the Lenders, provided that the undertaking of the Lenders hereunder to make
Loans to the Company shall not inure to the benefit of any successor or assign
of the Company.  The term of this
Agreement shall be until the final maturity of each Note and the payment of all
amounts due under the Loan Documents.

 

Section 9.5  Counterparts.  This
Agreement may be executed in any number of counterparts and by different
parties hereto in separate counterparts, each of which when so executed shall
be deemed to be an original and all of which taken together shall constitute
one and the same agreement.  Delivery of
an executed signature page of this Agreement by facsimile transmission or
electronic transmission (i.e., a “pdf” or “tif”) shall be effective as delivery
of an original executed counterpart of this Agreement.

 

Section 9.6  Survival.  The obligations of the Company
under Sections 2.15(d), 2.6, 2.10(b), 2.10(d), 9.8, 9.9, 9.16 and 9.17
hereof shall survive the repayment of the Loans and the termination of the
Commitments.

 

Section 9.7  Captions.  The headings and captions
appearing in the Loan Documents have been included solely for convenience and
shall not be considered in construing the Loan Documents.

 

Section 9.8  Expenses, Etc. 
Whether or not any Loan is ever made, the Company shall pay or reimburse
on demand each of the Lenders and the Agent for paying:  (a) the reasonable fees and expenses of
Shearman & Sterling LLP, counsel to the Agent or any other legal
counsel engaged by the

 

51

 

Agent, in connection with (i) the preparation, execution and
delivery of this Agreement (including the exhibits and schedules hereto) and
the Loan Documents and the making of the Loans hereunder and (ii) any
modification, supplement or waiver of any of the terms of this Agreement or any
other Loan Document made as a result of any request by the Company; (b) all
reasonable costs and expenses (including reasonable attorneys’ fees) of the
Lenders and the Agent in connection with the enforcement of this Agreement or
any other Loan Document; (c) all transfer, stamp, documentary or other
similar taxes, assessments or charges levied by any governmental or revenue
authority after the effective date hereof in respect of this Agreement or any
other Loan Document or any other document referred to herein or therein; (d) all
costs, expenses, taxes, assessments and other charges incurred after the
effective date hereof in connection with any filing, registration, recording or
perfection of any security interest contemplated by Section 5.10 of this
Agreement; and (e) expenses of mutually agreed due diligence and
syndication.

 

Section 9.9  Indemnification.  The
Company shall indemnify the Agent, the Lenders and each Affiliate thereof and
their respective directors, officers, employees, counsel and agents from, and
hold each of them harmless against, any and all losses, liabilities (including
Environmental Liabilities), claims (including Environmental Claims) or damages
to which any of them may become subject, insofar as such losses, liabilities,
claims or damages arise out of or result from any (a) actual or proposed
use by the Company of the proceeds of any extension of credit by any Lender hereunder,
(b) breach by the Company of this Agreement or any other Loan Document, (c) violation
by the Company or any of its Subsidiaries of any law, rule, regulation or order
including any Requirements of Environmental Law, (d) Liens or security
interests granted on any Property pursuant to or under the Loan Documents, to
the extent resulting from any Hazardous Substance, petroleum, petroleum product
or petroleum waste located in, on or under any such property, (e) ownership
by the Lenders or the Agent of any Property following foreclosure under the
Loan Documents, to the extent such losses, liabilities, claims or damages arise
out of or result from any Hazardous Substance, petroleum, petroleum product or
petroleum waste located in, on or under such Property, including losses,
liabilities, claims or damages which are imposed upon Persons under laws
relating to or regulating Hazardous Substances, petroleum, petroleum products
or petroleum wastes solely by virtue of ownership, (f) any Lender or the
Agent being deemed an operator of any such Property by a court or other
regulatory or administrative agency or tribunal or other third party, to the
extent such losses, liabilities, claims or damages arise out of or result from
any Hazardous Substance, petroleum, petroleum product or petroleum waste
located in on or under such Property, (g) the making of the extensions of
credit hereunder and the consummation of any of the transactions contemplated
in the Loan Documents or (h) investigation, litigation or other proceeding
(including any threatened investigation or proceeding) relating to any of the
foregoing, and the Company shall reimburse the Agent and each Lender, and each
Affiliate thereof and their respective directors, officers, employees, counsel
and agents, upon demand for any expenses (including legal fees) incurred in
connection with any such investigation or proceeding, AND WHETHER ANY SUCH LOSS, LIABILITY, CLAIM OR DAMAGE
RESULTS FROM THE NEGLIGENCE OF ANY SUCH INDEMNIFIED PERSON; but
excluding any such losses, liabilities, claims, damages or expenses incurred by
a Person or any Affiliate thereof or their respective directors, officers,
employees, counsel or agents by reason of the gross negligence or willful
misconduct of such Person, affiliate, director, officer, employee or
agent.  Promptly after receipt by an
indemnified person of notice of any claim or the commencement of any action,
such indemnified person shall, if any claim in respect thereof is to be made
against the Company under this Section 9.10, notify the Company in writing
of the claim or the commencement of that action.  The Company shall not be liable for any
settlement of any such claim or action involving the payment of monetary
damages effected without its written consent not to be unreasonably
withheld.  If any such claim or action
shall be brought against an indemnified person and it shall notify the Company
thereof, the Company shall be entitled to participate in the joint defense
thereof.

 

52

 

Section 9.10  Amendments, Etc.  No
amendment or waiver of any provision of this Agreement, the Notes or any other
Loan Document (except for the Credit Facility Hedging Agreements), nor any
consent to any departure by the Company therefrom, shall in any event be
effective unless the same shall be agreed or consented to by the Required
Lenders and the Company, and each such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given;
provided, that no amendment, waiver or consent shall, unless in writing and
signed by each Lender, do any of the following: 
(a) increase any Commitment of any of the Lenders or subject the
Agent or any of the Lenders to any additional obligations; (b) reduce the
principal of, or interest on, any Loan, or any fee hereunder; (c) waive or
postpone any scheduled date fixed for any payment of principal of, or interest
on, any Loan, or any fee or other sum to be paid hereunder; (d) change the
percentage of any of the Commitments or of the aggregate unpaid principal
amount of any of the Loans, or the number of Lenders, which shall be required
for the Lenders or any of them to take any action under this Agreement; (e) change
any provision contained in Sections 2.4, 2.7, 9.8 or 9.9 hereof or this Section 9.10
or Sections 9.15 or 9.18 hereof; (f) release all or any substantial
part of the security for the obligations of the Company under this Agreement,
any Application or any Note; (g) release any Guarantor from any Guaranty
(except for Guarantors sold by the Company or any of its Subsidiaries pursuant
to the terms of Section 6.4(y) hereof); (h) change the
definition of “Required Lenders” contained herein; (i) modify the
requirement of unanimous written approval by the Lenders of any unilateral
reduction by the Lenders of the Aggregate Commitment as provided for in Section 2.2;
or (j) waive or postpone any prepayment required by Section 2.3
hereof.  Anything in this Section 9.10
to the contrary, no amendment, waiver or consent shall be made with respect to Section 8
without the consent of the Agent.

 

Section 9.11  Successors and Assigns.

 

(a)           This Agreement shall be binding upon and
inure to the benefit of the Company, the Agent and the Lenders and their
respective successors and assigns.  The
Company may not assign or transfer any of its rights or obligations hereunder
without the prior written consent of all of the Lenders.

 

(b)           Each Lender may sell participations to any
Person in all or part of any Loan, or all or part of its Notes or Commitments,
to another bank or other entity, in which event, without limiting the
foregoing, the provisions of Sections 2.12, 9.09, 9.15 and 9.16 shall
inure to the benefit of each purchaser of a participation and the pro rata
treatment of payments, as described in Section 2.9, shall be determined as
if such Lender had not sold such participation. 
In the event any Lender shall sell any participation, (i) the
Company, the Agent and the other Lenders shall continue to deal solely and
directly with such selling Lender in connection with such selling Lender’s
rights and obligations under the Loan Documents (including the Note held by
such selling Lender), (ii) such Lender shall retain the sole right and
responsibility to enforce the obligations of the Company relating to the Loans,
including the right to approve any amendment, modification or waiver of any
provision of this Agreement other than (and then only if expressly permitted by
the applicable participation agreement) amendments, modifications or waivers
with respect to (A) any fees payable hereunder to the Lenders and (B) the
amount of principal or the rate of interest payable on, or the dates fixed for
the scheduled repayment of principal of, the Loans and other sums to be paid to
the Lenders hereunder, and (iii) the Company agrees, to the fullest extent
it may effectively do so under applicable law, that any participant of a Lender
may exercise all rights of set-off, bankers’ lien, counterclaim or similar
rights with respect to such participation as fully as if such participant were
a direct holder of Loans if such Lender has previously given notice of such
participation to the Company and such participant agrees to be bound by Section 2.12
as if it were a Lender.

 

(c)           Each Lender may assign to one or more Lenders
or Eligible Assignees all or a portion of its interests, rights and obligations
under this Agreement (including all or a portion of its Commitment and the same
portion of the related Loan at the time owing to it) (a “Ratable
Assignment”); provided, however,
that, (i) the aggregate amount of the Commitment and Loan of the assigning
Lender

 

53

 

subject
to each such assignment (determined as of the date the Assignment and
Acceptance (as defined below) with respect to such assignment is delivered to
the Agent) shall in no event be less than $5,000,000 (unless all of the
assigning Lender’s Commitment and Loan is being assigned); and (ii) the
parties to each such assignment shall execute and deliver to the Agent, for its
acceptance and recording in its records, an Assignment and Acceptance in the
form of Exhibit F attached hereto (each an “Assignment and
Acceptance”) with blanks
appropriately completed, together with any Note or Notes subject to such
assignment and a processing and recordation fee of $3,500 (for which the
Company shall have no liability, and provided that only one such fee shall be
required in the case of simultaneous assignments to related entities).  Upon such execution, delivery, acceptance and
recording, from and after the effective date specified in each Assignment and
Acceptance, which effective date shall be at least five Business Days after the
execution thereof, unless a shorter period of time may be agreed to by the
Agent in its sole and absolute discretion, (A) the assignee thereunder
shall be a party hereto and, to the extent provided in such Assignment and
Acceptance, have the rights and obligations of a Lender hereunder and (B) the
Lender thereunder shall, to the extent provided in such assignment, be released
from its obligations under this Agreement (and, in the case of an Assignment
and Acceptance covering all or the remaining portion of an assigning Lender’s
rights and obligations under this Agreement, such Lender shall cease to be a
party hereto).

 

(d)           By executing and delivering an Assignment and
Acceptance, the Lender assignor thereunder and the assignee thereunder confirm
to and agree with each other and the other parties hereto as follows:  (i) other than the representation and
warranty that it is the legal and beneficial owner of the interest being
assigned thereby free and clear of any adverse claim, such Lender assignor
makes no representation or warranty and assumes no responsibility with respect
to any statements, warranties or representations made in or in connection with
any Loan Document or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of any Loan Document or any other instrument
or document furnished pursuant thereto; (ii) such assignor Lender makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of the Company or any of its Subsidiaries or the
performance or observance by the Company of any of its obligations hereunder; (iii) such
assignee confirms that it has received a copy of this Agreement and the other
Loan Documents, together with copies of the financial statements of the Company
previously delivered in accordance herewith and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into such Assignment and Acceptance; (iv) such assignee
will, independently and without reliance upon the Agent, such assignor Lender
or any other Lender and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under the Loan Documents; (v) such assignee
appoints and authorizes the Agent to take such action as agent on its behalf
and to exercise such powers under the Loan Documents as are delegated to the
Agent by the terms hereof, together with such powers as are reasonably
incidental thereto; and (vi) such assignee agrees that it will perform in
accordance with their terms all obligations that by the terms of the Loan
Documents are required to be performed by it as a Lender.

 

(e)           The Agent shall maintain at its office a copy
of each Assignment and Acceptance delivered to it and a record of the names and
addresses of the Lenders and the Commitments of, and principal amount of the
Loans owing to each Lender from time to time (the “Register”).  The entries in the register
shall be conclusive, in the absence of manifest error, and the Company, the
Agent and the Lenders may treat each person the name of which is recorded
therein as a Lender hereunder for all purposes of the Loan Documents.  Such records shall be available for
inspection by the Company or any Lender at any reasonable time and from time to
time upon reasonable prior notice.

 

(f)            Upon its receipt of an Assignment and
Acceptance executed by an assigning Lender and the assignee thereunder together
with the Note, if any, subject to such assignment, the written consent to such
assignment and the fee payable in respect thereto, the Agent shall, if such
Assignment and

 

54

 

Acceptance
has been completed with blanks appropriately filled, (i) accept such
Assignment and Acceptance, (ii) record the information contained therein
in the Register and (iii) give prompt notice thereof to the Company and
the Lenders.  Contemporaneously with the
receipt by the Company of such Assignment and Acceptance, the Company, at its
own expense, shall execute and deliver to the Agent in exchange for the
surrendered Note a new Note payable to the order of such assignee in an amount
equal to the Commitment and Loan assumed by it pursuant to such Assignment and
Acceptance and, if the assigning Lender has retained a Commitment and Loan
hereunder, a new Note to the order of the assigning Lender in an amount equal
to the Commitment and Loan retained by it hereunder.  Such new Notes shall be in an aggregate
principal amount equal to the aggregate principal amount of such surrendered Note,
shall be dated the effective date of such Assignment and Acceptance and shall
otherwise be in substantially the form of the surrendered Note.  Thereafter, such surrendered Note shall be
marked canceled and returned to the Company.

 

(g)           Any Lender may, in connection with any
assignment or participation or proposed assignment or participation pursuant to
this Section 9.11, disclose to the assignee or participant or proposed
assignee or participant, any information relating to the Company furnished to
such Lender by or on behalf of the Company.

 

(h)           Each Lender agrees that, in connection with
any assignment or participation or proposed assignment or participation
pursuant to this Section 9.11, the Company will not be responsible for the
accuracy and completeness of any written materials furnished by such Lender to
any actual or prospective assignee or participant, other than copies of (i) documents
furnished to such Lender pursuant to clause (a), (b), (c) or (d) of
Section 5.2 hereof, and (ii) any other documents which are prepared
by the Company for use in such connection and which contain a statement to such
effect.

 

(i)            Notwithstanding anything herein to the
contrary, each Lender may pledge and assign all or any portion of its rights
and interests under the Loan Documents to any Federal Reserve Bank.

 

(j)            Notwithstanding anything to the contrary
contained herein, any Lender (a “Granting Lender”) may grant to a special purpose funding vehicle identified as such in
writing from time to time by the Granting Lender to the Agent and the Company
(an “SPC”) the option to provide all or any part of
any Loan that such Granting Lender would otherwise be obligated to make
pursuant to this Agreement; provided,
however, that (i) nothing
herein shall constitute a commitment by any SPC to fund any Loan, and (ii) if
an SPC elects not to exercise such option or otherwise fails to make all or any
part of such Loan, the Granting Lender shall be obligated to make such Loan
pursuant to the terms hereof.  The making
of an Loan by an SPC hereunder shall utilize the Commitment of the Granting
Lender to the same extent, and as if, such Loan were made by such Granting
Lender.  Each party hereto hereby agrees
that (i) no SPC shall be liable for any indemnity or similar payment
obligation under this Agreement for which a Lender would be liable, (ii) no
SPC shall be entitled to the benefits of Sections 2.10 and 9.15 (or any
other increased costs protection provision) and (iii) the Granting Lender
shall for all purposes, including, without limitation, the approval of any
amendment or waiver of any provision of any Loan Document, remain the Lender of
record hereunder.  In furtherance of the
foregoing, each party hereto hereby agrees (which agreement shall survive the
termination of this Agreement) that, prior to the date that is one year and one
day after the payment in full of all outstanding commercial paper or other
senior Debt of any SPC, it will not institute against, or join any other person
in instituting against, such SPC any bankruptcy, reorganization, arrangement,
insolvency, or liquidation proceeding under the laws of the United States or
any State thereof.  Notwithstanding
anything to the contrary contained in this Agreement, any SPC may (i) with
notice to, but without prior consent of, the Company and the Agent, assign all
or any portion of its interest in any Loan to the Granting Lender and (ii) disclose
on a confidential basis any non-public information relating to its funding of
Loans to any rating agency, commercial paper dealer or

 

55

 

provider
of any surety or guarantee or credit or liquidity enhancement to such SPC.  This subsection (j) may not be
amended without the prior written consent of each Granting Lender, all or any
part of whose Loans are being funded by the SPC at the time of such amendment.

 

Section 9.12  Release of Collateral.  Upon
the sale, lease, transfer or other disposition of any item of Collateral or
Additional Collateral of any Loan Party (including, without limitation, as a
result of the sale, in accordance with the terms of the Loan Documents, of the
Loan Party that owns such Collateral or Additional Collateral) in accordance
with the terms of the Loan Documents, the Collateral Agent will, at the
Borrower’s expense, execute and deliver to such Loan Party such documents as
such Loan Party may reasonably request to evidence the release of such item of
Collateral or Additional Collateral from the assignment and security interest
granted under the Security Agreements A or B, as applicable in accordance with
the terms of the Loan Documents.

 

Section 9.13  Entire Agreement.  This
Agreement embodies the entire agreement and understanding among the Company,
the Agent and the Lenders relating to the subject matter hereof and supersedes
all prior proposals, agreements and understandings relating to the subject
matter hereof.  The Company certifies
that it is relying on no representation, warranty, covenant or agreement except
for those set forth in this Agreement and the other Loan Documents of even date
herewith.

 

Section 9.14  Severability.  If
any provision of any Loan Documents shall be invalid, illegal or unenforceable
in any respect under any applicable law, the validity, legality and
enforceability of the remaining provisions shall not be affected or impaired
thereby.

 

Section 9.15  Disclosures.  Every reference in the Loan
Documents to disclosures of the Company to the Agent and the Lenders in
writing, to the extent that such references refer to disclosures at or prior to
the execution of this Agreement, shall be deemed strictly to refer only to
written disclosures delivered to the Agent and the Lenders in an orderly manner
concurrently with the execution hereof.

 

Section 9.16  Capital Adequacy.

 

(a)           If after the date of this Agreement, any
Lender shall have determined that the adoption or effectiveness (regardless of
whether previously announced) of any applicable Legal Requirement or treaty
regarding capital adequacy, or any change therein, or any change in the
interpretation or administration thereof by any Governmental Authority or
comparable agency charged with the interpretation or administration thereof, or
compliance by any Lender with any request or directive regarding capital
adequacy (whether or not having the force of law) of any such Governmental
Authority, has or would have the effect of increasing the cost of, or reducing
the rate of return on the capital of such Lender (or any holding company of
which such Lender is a part) as a consequence of its obligations hereunder or
under any Note to a level below that which such Lender or holding company could
have achieved but for such adoption, change or compliance by an amount deemed
by such Lender to be material, then from time to time, upon written demand to
the Company by such Lender (with a copy to the Agent), the Company shall pay to
such Lender, but only with respect to periods arising after such demand by such
Lender and applicable periods prior to such demand by such Lender if such
adoption, change or compliance is retroactive in application, such additional
amount or amounts as will compensate such Lender or holding company for such
reduction.

 

(b)           The certificate of any Lender setting forth
such amount or amounts as shall be necessary to compensate such Lender or its
holding company as specified in Subsection 9.15(a) above (and setting
forth the calculation thereof in reasonable detail) shall be delivered as soon
as practicable to the Company and shall be conclusive and binding, absent
manifest error.  The Company shall pay
such Lender the amount shown as due on any such certificate within five days
after such Lender delivers such

 

56

 

certificate.  In preparing such certificate, such Lender
may employ such assumptions and allocations of costs and expenses as it shall
in good faith deem reasonable and may use any reasonable averaging and
attribution method.

 

Section 9.17  Withholding Tax.

 

(a)           As used in this Section 9.17, the
following terms shall have the following meanings:

 

i.              “Indemnifiable Tax” means any Tax, but excluding, in any case, any Tax that (a) would
not be imposed in respect of a payment to a Lender under this Agreement, under
the Notes held by such Lender or under any of the other Loan Documents except
for a present or former connection between the jurisdiction of the Governmental
Authority imposing such Tax and such holder (or a shareholder or other Person
with an interest in such holder), including a connection arising from such
holder’s (or shareholder of such holder or such other Person) being or having
been a citizen or resident of such jurisdiction, or being or having been
organized, present or engaged in a trade or business in such jurisdiction, or
having or having had a permanent establishment or fixed place of business in such
jurisdiction, but excluding a connection arising solely from such holder having
executed, delivered, performed its obligations or received a payment under, or
enforced, this Agreement, the Notes or any other Loan Documents, or (b) is
imposed under United States federal income tax law.

 

ii.             “Tax”
means any present or future tax, levy, impost, duty, charge, assessment or fee
of any nature (including interest thereon and penalties and additions thereto)
that is imposed by any Governmental Authority in respect of a payment to a
Lender under this Agreement or under any of the other Loan Documents.

 

(b)           If the Company is required by any applicable
Legal Requirement to make any deduction or withholding for or on account of any
Tax from any payment to be made by it under this Agreement in respect of the
Loans or under any other Loan Documents, then the Company shall (i) promptly
notify the applicable Lender hereunder that is entitled to such payment of such
requirement to so deduct or withhold such Tax, (ii) pay to the relevant
authorities the full amount required to be so deducted or withheld, (iii) promptly
forward to such Lender an official receipt (or certified copies thereof), or
other documentation reasonably acceptable to such Lender, evidencing such
payment to such Governmental Authorities and (iv) if such Tax is an
Indemnifiable Tax, pay, to the extent permitted by law, to such holder, in
addition to whatever net amount of such payment is paid to such Lender, such
additional amount as is necessary to ensure that the total amount actually
received by such Lender (free and clear of Indemnifiable Tax) will equal the
full amount of the payment such Lender would have received had no such
deduction or withholding been required. 
If the Company pays any additional amount to a Lender pursuant to the
preceding sentence and such Lender shall receive a refund of an Indemnifiable
Tax with respect to which, in the good faith opinion of such Lender, such
payment was made, such Lender shall pay to the Company the amount of such
refund promptly upon receipt thereof.

 

(c)           In the event that any Governmental Authority
notifies the Company that it has improperly failed to withhold or deduct any
Tax from a payment received by any Lender under this Agreement, the Company
shall timely and fully pay such Tax to such Governmental Authority and such
Lender shall, upon receipt of written notice of such payment, immediately pay
to the Company, an amount necessary in order that the amount of such payment to
the Company after payment of all Taxes with respect to such payment, shall
equal the amount that the Company paid to such Governmental Authority pursuant
to this clause (c).

 

57

 

(d)           Each Lender shall, upon request by the
Company, take requested measures to mitigate the amount of Indemnifiable Tax
required to be deducted or withheld from any payment made by the Company under
this Agreement or under any other Loan Documents if such measures can, in the
sole and absolute opinion of such Lender, be taken without such Lender
suffering any economic, legal, regulatory or other disadvantage (provided, however,
that no such Lender shall be required to designate a funding office that is not
located in the United States of America).

 

Section 9.18  Waiver of Claims.  The
Company hereby waives and releases the Agent and all Lenders from any and all
claims or causes of action which the Company may own, hold or claim in respect
of any of them as of the date hereof.

 

Section 9.19  Right of Setoff.  Upon
the occurrence and during the continuance of any Event of Default, the Lenders
each are hereby authorized at any time and from time to time, without notice to
the Company or any of the Guarantors (any such notice being expressly waived by
the Company and by the Guarantors by their execution of a Guaranty or a Joinder
Agreement), to setoff and apply any and all deposits (general or special, time
or demand, provisional or final, whether or not such setoff results in any loss
of interest or other penalty, and including without limitation all certificates
of deposit) at any time held, and any other funds or property at any time held,
and other Indebtedness at any time owing by such Lender to or for the credit or
the account of the Company or any such Guarantor against any and all of the
Indebtedness arising in connection with this Agreement irrespective of whether
or not such Lender will have made any demand under this Agreement, the Notes or
any other Loan Document.  Each of the
Company and the Guarantors (by their execution of a Guaranty or a Joinder
Agreement) also hereby grants to each of the Lenders a security interest in and
hereby transfers, assigns, sets over, and conveys to each of the Lenders, as
security for payment of all Loans, all such deposits, funds or property of the
Company or any such Guarantor or Indebtedness of any Lender to the Company or
any such Guarantor.  Should the right of
any Lender to realize funds in any manner set forth hereinabove be challenged
and any application of such funds be reversed, whether by court order or
otherwise, the Lenders shall make restitution or refund to the Company pro rata
in accordance with their respective Commitment Percentages.  Each Lender agrees to promptly notify the Company
and the Agent after any such setoff and application, provided that the failure
to give such notice will not affect the validity of such setoff and
application.  The rights of the Agent and
the Lenders under this Section are in addition to other rights and
remedies (including without limitation other rights of setoff) which the Agent
or the Lenders may have.  This Section is
subject to the terms and provisions of Section 2.12 hereof.

 

Section 9.20  USA PATRIOT Act.  Each
Lender that is subject to the requirements of the USA PATRIOT Act (Title III of
Pub. L. 107-56 (signed into law October 26, 2001)) (the “Act”) hereby notifies
the Company that pursuant to the requirements of the Act, it is required to
obtain, verify and record information that identifies the Company, which
information includes the name and address of the Company and other information
that will allow such Lender to identify the Company in accordance with the Act,
and such notice is sufficient as to each such Lender.  The Company shall, and shall cause each of
its Subsidiaries to, provide to the extent commercially reasonable, such
information and take such actions as are reasonably requested by the Agent or
any Lender in order to assist the Agent and the Lenders in maintaining
compliance with the Act.

 

Section 9.21  Non-Consenting Lenders; Other Lenders.  If
at any time, any Lender becomes a Non-Consenting Lender or makes a demand for
increased costs or a withholding tax gross-up under Section 2.10 or Section 9.17,
then the Company may, at its sole cost and expense, on five Business Days’
prior written notice to the Agent and such Lender, replace such Lender by
causing such Lender to (and such Lender shall be obligated to) assign pursuant
to Section 9.11 all of its rights and obligations under this Agreement to
one or more Eligible Assignees; provided
that neither the Agent nor any Lender shall have any obligation to the Company
to find a replacement Lender or other such Person; provided,

 

58

 

further, that such Non-Consenting Lender or other Lender shall be entitled to
receive the full outstanding principal amount of Loans so assigned, together
with accrued interest and fees payable in respect of such Loans as of the date
of such assignment and any other costs payable to such Lender under this
Agreement.

 

Section 9.22  Confidentiality.  Neither the Agent nor any Lender shall
disclose any Confidential Information to any Person without the prior written
consent of the Company, other than (a) to such Agent’s or such Lender’s
Affiliates and their officers, directors, employees, agents and advisors and to
actual or prospective Eligible Assignees and participants, and then only on a
confidential basis, (b) as required by any law, rule or regulation or
judicial process, provided that to the extent
practicable and permitted by applicable law, the party requested to disclose
any information will provide prompt written notice of such request to the
Company, will allow the Company a reasonable opportunity to seek appropriate
protective measures prior to disclosure (at the Company’s sole cost and
expense), (c) as requested or required by any state, federal or foreign
authority or examiner (including the National Association of Insurance
Commissioners or any similar organization or quasi-regulatory authority)
regulating such Lender, (d) to any rating agency when required by it, provided that, prior to any such disclosure, such rating
agency shall undertake to preserve the confidentiality of any Confidential
Information relating to the Loan Parties received by it from such Lender, (e) to
the extent reasonably necessary after consultation with counsel, in connection
with any litigation or proceeding to which the Agent or such Lender or any of
its Affiliates may be a party, provided that,
to the extent reasonably practicable, the party requested to disclose any such
information will provide prompt written notice of such request to the Company
and will allow the Company a reasonable opportunity to seek appropriate
protective measures prior to such disclosure) or (f) in connection with
the exercise of any right or remedy under this Agreement or any other Loan
Document.

 

[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.]

 

59

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date set forth above.

 

 

	
   

  	
  WHOLE FOODS MARKET, INC., as the Company

  
	
   

  	
   

  
	
   

  	
  By: 

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ROYAL BANK OF CANADA, as the Agent

  
	
   

  	
   

  
	
   

  	
  By: 

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ROYAL BANK OF CANADA, as Lender

  
	
   

  	
   

  
	
   

  	
  By: 

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  JPMORGAN CHASE BANK, N.A., as Lender

  
	
   

  	
   

  
	
   

  	
  By: 

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

60

 

EXHIBIT A

 

FORM OF

TERM NOTE

 

	
  $                            ,

  	
                          ,
  2007

  

 

FOR VALUE RECEIVED, WHOLE FOODS MARKET, INC. (herein
called “Company”), a Texas corporation, promises to pay to the order of
                                    
(herein called “Payee”), at the account specified by the Payee or at
such other place as the Payee may hereafter designate in writing, in
immediately available funds and in lawful money of the United States of
America, the principal sum of                           
Dollars ($
                      )
(or the unpaid balance of all principal advanced against this Term Note, if
that amount is less), together with interest on the unpaid principal balance of
this Term Note from time to time outstanding until maturity at the rate or
rates provided for in the Term Loan Agreement referred to below and interest on
all past due amounts, both principal and accrued interest, at the Past Due
Rate.

 

This Term Note has been
issued pursuant to the terms of, and is entitled to the benefits of, the Term
Loan Agreement, dated as of [                      ], 2007 (as the same may be amended, restated, modified or
supplemented from time to time, the “Term Loan Agreement”), by and among
the Company, Royal Bank of Canada, as administrative agent (in such capacity,
the “Agent”), JPMorgan Chase Bank, N.A., as collateral agent and
syndication agent, Payee and certain other signatory financial institutions
named therein or which may be a party thereto from time to time, to which
reference is made for all purposes. 
Advances against this Term Note by Payee or other holders hereof,
payments and prepayments hereunder and acceleration hereof shall be governed by
the Term Loan Agreement.  Capitalized
words and phrases used herein and not defined herein and which are defined in
the Term Loan Agreement shall have the same meanings herein as are ascribed to
them in the Term Loan Agreement.

 

The unpaid principal balance
of this Term Note at any time shall be the total of all principal lent or advanced
against this Term Note less the sum of all principal payments and permitted
prepayments made on this Term Note by or for the account of Company.  All Loans and advances and all payments and
permitted prepayments made hereon may be endorsed by the holder of this Term
Note on the schedule which is attached hereto (and hereby made a part hereof
for all purposes) or otherwise recorded in the holder’s records; provided,
that any failure to make notation of (a) any advance shall not cancel,
limit or otherwise affect Company’s obligations or any holder’s rights with
respect to that advance, or (b) any payment or permitted prepayment of
principal shall not cancel, limit or otherwise affect Company’s entitlement to
credit for that payment as of the date received by the holder.

 

Company and any and all
co-makers, endorsers, guarantors and sureties severally waive notice
(including, but not limited to, notice of intent to accelerate and notice of
acceleration, notice of protest and notice of dishonor), demand, presentment
for payment, protest, diligence in collecting and the filing of suit for the
purpose of fixing liability and consent that the time of payment hereof may be
extended and re-extended from time to time without notice to any of them.  Each such person agrees that his, her or its
liability on or with respect to this Term Note shall not be affected by any
release of or change in any guaranty or security at any time existing or by any
failure to perfect or maintain perfection of any lien against or security
interest in any such security or the partial or complete unenforceability of
any guaranty or other surety obligation, in each case in whole or in part, with
or without notice and before or after maturity.

 

 

This
Term Note shall be governed by, and construed in accordance with, the laws of
the State of New York.

 

 

	
   

  	
  WHOLE
  FOODS MARKET, INC.

  
	
   

  	
  a
  Texas corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 

LOANS AND PAYMENTS OF PRINCIPAL

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Amount of

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Principal Paid or

  	
   

  	
  Unpaid Principal

  	
   

  	
   

  	
   

  
	
  Date

  	
   

  	
  Amount of Loan

  	
   

  	
  Prepaid

  	
   

  	
  Balance

  	
   

  	
  Notation Made By

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

EXHIBIT B

 

NOTICE OF ASSUMPTION

 

Reference is made to that certain Term Loan
Agreement dated as of
                      ,
2007 (as the same may have heretofore been amended, restated, modified and
supplemented from time to time, the “Term Loan Agreement”), by and among
Whole Foods Market, Inc., certain financial institutions from time to time
a party thereto, Royal Bank of Canada, in its capacity as administrative gent
on behalf of said financial institutions (in such capacity, the “Agent”),
and JPMorgan Chase Bank, N.A., as collateral agent and syndication agent.  Terms used herein and not defined herein
shall have the same meanings herein as are ascribed to them in the Term Loan
Agreement.

 

[Pursuant to Section 6.4(x) of
the Term Loan Agreement, the undersigned Subsidiary hereby gives notice to the
Agent that [the entities listed on Exhibit A attached hereto and
incorporated herein by reference (the “Merged Guarantors”) have] [
                      
(the “Merged Guarantor”), a
                    
corporation, has] been merged into the undersigned Subsidiary effective as of
                    
, 20       and the undersigned Subsidiary is the
surviving Business Entity.  The
undersigned Person is liable for, and does hereby assume all of, the
obligations of the Merged Guarantor[s] under the Guaranties and the
Contribution Agreement and shall be a “Guarantor” thereunder for all purposes.]

 

[Pursuant to Section 6.4(y) of
the Term Loan Agreement, the undersigned Subsidiary (the  “Transferor
Subsidiary Guarantor”) hereby gives notice to the Agent that the
undersigned has acquired, purchased, leased or received all of the Stock and/or
assets of [                                    ] (the “Transferee Subsidiary Guarantor”) effective
as of
                    
, 20      . 
The undersigned does hereby assume and is hereby liable for, all of the
obligations of the Transferor Subsidiary Guarantor under the Guaranties and the
Contribution Agreement and shall be a “Guarantor” thereunder for all purposes.]

 

EXECUTED the      day of
                    ,
20      .

 

	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  

 

[Attachment: Exhibit A - List of Merged
Guarantors]

 

 

EXHIBIT C

 

OFFICER’S CERTIFICATE

 

Date:           

 

Royal Bank of Canada- Agency Services

12th Floor, Royal Bank Plaza, 200 Bay Street

Toronto, Ontario, Canada M5J2W7

Tel: (416) 842-3910

Fax: (416) 842-4023

Attention: 
Manager

 

	
  Re:

  	
   

  	
  Financial Statements
  Required under Term Loan Agreement (as the same may have been amended,
  modified and restated from time to time, the “Term Loan Agreement”)
  dated as of
                                  ,
  2007, by and among Whole Foods Market, Inc., the financial institutions
  or party thereto from time to time, Royal Bank of Canada, as Administrative
  Agent, and JPMorgan Chase Bank, N.A., as Collateral Agent and Syndication
  Agent.

  

 

Ladies and Gentlemen:

 

Reference is made to the above referenced Term Loan
Agreement.  Capitalized words and phrases
used herein and not defined herein and defined in the Term Loan Agreement are
used herein with the same meanings as are assigned to them in the Term Loan
Agreement.

 

The undersigned hereby certifies, warrants and
represents to the addressee named above that:

 

(1)  He or she is the duly appointed and acting(1)                     
of the Company;

 

[Use
following paragraph 1 for fiscal year-end financial statements]

 

(2)  This Certificate is delivered in conjunction
with the Annual Audited Financial Statements of the Company and its
Subsidiaries for the fiscal year of the Company ended as of
                                ,
20      , together with the annual audit report
and opinion of an independent certified public accountant for such fiscal year
that are required to be delivered by Section 5.2(a) of the
Term Loan Agreement.  Each such document
referred to herein is currently available on the website of the Securities and
Exchange Commission at http://www.sec.gov.

 

[Use following paragraph 1 for
fiscal quarter-end financial statements]

 

(2)  This Certificate is delivered in
conjunction with the consolidated Quarterly Unaudited Financial Statements of
the Company and its Subsidiaries required by Section 5.2(b) of
the Term Loan Agreement for the fiscal quarter of the Company ended as of the
above date.  Each such document referred
to herein is currently available on the website of the Securities and Exchange
Commission at http://www.sec.gov.

 

(3)  Based on my knowledge, the financial
statements do not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading with
respect to the period covered by the financial statements.

 

(1) Must be the chief executive officer, president, chief operating
officer or chief financial officer of the Company.

 

 

(4)  As of the end of the period covered by the
attached financial statements:

 

(a)  LEVERAGE RATIO:

 

	
  (i)

  	
  Funded
  Indebtedness: 

  	
   

  	
  $                 

  
	
   

  	
   

  	
   

  	
   

  
	
  (ii)

  	
  EBIT
  of the Company and its Subsidiaries for the Rolling Four Quarters:

  	
   

  	
  $               

  
	
   

  	
   

  	
   

  	
   

  
	
  (iii)

  	
  Depreciation, depletion, obsolescence and amortization of the Company
  and its Subsidiaries for the Rolling Four Quarters:

  	
   

  	
  $              

  
	
   

  	
   

  	
   

  	
   

  
	
  (iv)

  	
  EBITDA for the Rolling, Four Quarters (the sum of (ii) plus
  (iii)):

  	
   

  	
  $              

  
	
   

  	
   

  	
   

  	
   

  
	
  (v)

  	
  Required Leverage Ratio (not more than):

  	
   

  	
  3.00 to 1.00

  
	
   

  	
   

  	
   

  	
   

  
	
  (vi)

  	
  Actual Leverage Ratio:

  	
   

  	
   

  
	
   

  	
  ((i) to
  (iv))

  	
   

  	
         to 1.00

  

 

(b)  FIXED CHARGE COVERAGE RATIO:

 

	
  (i)

  	
  EBIT for the Rolling Four Quarters (see a(ii) above)  

  	
   

  	
  $              

  
	
   

  	
   

  	
   

  	
   

  
	
  (ii)

  	
  Operating Lease Expense for the Rolling Four Quarters:(2)

  	
   

  	
  $              

  
	
   

  	
   

  	
   

  	
   

  
	
  (iii)

  	
  (i) plus
  (ii) =

  	
   

  	
  $              

  

 

(2)          For the fiscal quarter ended (i) September,
30, 2007, such amount shall equal such item for such fiscal quarter multiplied
by 52/13,  (ii) January, 20, 2008,
such amount to equal such item for such fiscal quarter multiplied by 52/29
and  (iii) April, 30, 2008, such
amount to equal such item for such fiscal quarter multiplied by 52/41.

 

 

	
  (iv)

  	
  Interest
  expense for the Rolling Four Quarters:(3)

  	
   

  	
  $              

  
	
   

  	
   

  	
   

  	
   

  
	
  (v)

  	
  Operating
  Lease Expense for the Rolling Four Quarters (see b(ii)):

  	
   

  	
  $              

  
	
   

  	
   

  	
   

  	
   

  
	
  (vi)

  	
  Fixed
  Charge Coverage Ratio for the applicable period (iii) to the sum of (iv) and
  (v):

  	
   

  	
       to 1.00

  
	
   

  	
   

  	
   

  	
   

  
	
  (vii)

  	
  Required Fixed Charge Coverage Ratio for the Applicable period (not
  less than):

  	
   

  	
  1.50 to 1.00

  

 

(c)  RESTRICTED PAYMENTS:

 

	
  (i)

  	
  Aggregate
  cost paid by Company for Stock redeemed or repurchased on or after
  [                ,
  2007]:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  (ii)

  	
  Aggregate
  cash dividends paid by Company to owners of Stock on or after
  [                ,
  2007]:

  	
   

  	
  $                   

  
	
   

  	
   

  	
   

  	
   

  
	
  (iii)

  	
  Amount
  of permitted “restricted payments” described in (i) & (ii) (See Section 6.11):

  	
   

  	
  $                   

  

 

	
  (A)

  	
   

  	
  Initial
  threshold — $[150,000,000]

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (B)

  	
   

  	
  [50]% of the
  aggregate of Net Income, depreciation, amortization and non-cash stock
  compensation expense of the Company and its Subsidiaries, on a consolidated
  basis, for each fiscal quarter of the Company ending after
  [                        ,
  2007] — $              

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (C)

  	
   

  	
  Sum
  of (A) & (B):

  	
   

  	
  $                  .

  

 

(4)  (Check either (a) or (b) )

 

(3)   For the fiscal quarter ended (i) [              ],
2007, such amount shall equal such item for such fiscal quarter multiplied by
52/13,  (ii) [              ],
2008, such amount to equal such item for such fiscal quarter multiplied by
52/29 and  (iii) [              ],
2008, such amount to equal such item for such fiscal quarter multiplied by
52/41..

 

 

(a)                        The Company has kept, observed, performed and
fulfilled each and every one of its covenants and obligations under the Term
Loan Agreement during the period covered by the attached financial statements
and no Default or Event of Default has occurred and is continuing.

 

(b)                       The Company has kept, observed, performed and
fulfilled each and every one of the covenants and obligations under the Term
Loan Agreement during the period covered by the attached financial statements
except for the following matters: [Describe all
such defaults, specifying the nature, duration and status thereof and what
action the Company has taken or proposes to take with respect thereto].

 

(5)  The representations and warranties of the
Company contained in Article IV of the Agreement, or which are contained
in any document furnished at any time under or in connection with the Loan
Documents, are true and correct in all material respects on and as of the date
hereof, except to the extent that such representations and warranties
specifically refer to an earlier date, in which case they are true and correct
as of such earlier date, and except that for purposes of this Officer’s
Certificate, the representations and warranties contained in Section 4.2
of the Term Loan Agreement shall be deemed to refer to the most recent
statements furnished pursuant to clause (a) and (b), respectively, of Section 5.2
of the Term Loan Agreement, including the statements in connection with which
this Officer’s Certificate is delivered.

 

 

	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

 

EXHIBIT D

 

[Company Letterhead]

 

REQUEST FOR EXTENSION OF
CREDIT

 

Date:             

 

Royal Bank of Canada- Agency Services

12th Floor, Royal Bank Plaza, 200 Bay Street

Toronto, Ontario, Canada M5J2W7

Tel: (416) 842-3910

Fax: (416) 842-4023

Attention: 
Manager

 

	
  Re:

  	
   

  	
  Loan under Term Loan
  Agreement dated as of
                ,
  2007, by and among Whole Foods Market, Inc., a Texas corporation, the
  financial institutions a party thereto from time to time, Royal Bank of
  Canada, as Administrative Agent (in such capacity, the “Agent”), and
  JPMorgan Chase Bank, N.A., as Collateral Agent and Syndication Agent (as the
  same may have been amended, modified and/or restated from time to time, the “Term
  Loan Agreement”).

  

 

Ladies and Gentlemen:

 

Reference is made to the above referenced Term Loan
Agreement.  Capitalized words and phrases
used herein but not defined herein which are defined in the Term Loan Agreement
are used herein with the same meanings as are ascribed to them in the Term Loan
Agreement.

 

The Company requests that a Loan be made under the
Term Loan Agreement in the amount of $[700],000,000  and that
such Loan be made on
                ,
2007, which is a Business Day, or in the case of a LIBOR Rate Borrowing, a LIBOR
Business Day (unless this request for a Loan is received by the Agent after
12:00 noon in which case, then on the next to occur Business Day, or in the
case of a LIBOR Rate Borrowing, the next to occur LIBOR Business Day,
hereafter).

 

The Loan is to be an (check one)
[  ] Alternate Base Rate Borrowing [  ] LIBOR Rate Borrowing.  If the Loan is to be a LIBOR Rate Borrowing,
the LIBOR Interest Period is to be (check one)
[  ] one [  ] two [ 
] three [  ] six months.

 

 

The proceeds of the
advances should be disbursed to the following account:

 

[Bank]

[Bank
Address]

[Account
Name]

[Account
Number]

[ABA#]

 

	
   

  	
  Very
  truly yours,

  
	
   

  	
   

  
	
   

  	
  WHOLE
  FOODS MARKET, INC., a Texas corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

 

EXHIBIT E

 

RATE SELECTION NOTICE

 

Whole Foods Market, Inc., a Texas corporation,
certain financial institutions signatory thereto (collectively, the “Lenders”),
Royal Bank of Canada, as Administrative Agent for and on behalf of the Lenders
and JPMorgan Chase Bank, N.A., as Collateral Agent and Syndication Agent
executed and delivered that certain Term Loan Agreement (as amended,
supplemented and restated, the “Term Loan Agreement”) dated as of
                    ,
2007.  Any term used herein and not
otherwise defined herein shall have the meaning herein ascribed to it in the
Term Loan Agreement.

 

In accordance with the Term Loan Agreement, the
Company hereby notifies the Agent of the exercise of an Interest Option.

 

A.            Current
borrowing

 

	
  1.

  	
   

  	
  Interest
  Option now in effect:

  	
               

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
  Amount:

  	
   

  	
   

  	
  $              

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
   

  	
  Expiration
  of current Interest Period, if applicable:

  	
   

  	
   

  	
           ,
  200     

  

 

B.            Proposed
borrowing

 

	
  1.

  	
   

  	
  Amount:

  	
   

  	
   

  	
  $              

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
  Date
  Interest Option is to be effective: 

  	
           ,
  200   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
   

  	
  Interest
  Option to be applicable (check one):

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
    o          Alternate
  Base Rate

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
    o          LIBOR
  Rate

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
   

  	
  Interest
  period (check one if applicable):

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
    o          1
  month

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
    o          2
  months

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
    o          3
  months

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
    o          6
  months

  	
   

  	
   

  	
   

  

 

 

The Company represents and warrants that the
Interest Option and the interest period (if applicable) selected above comply
with all provisions of the Term Loan Agreement and that there exists no Event
of Default or any event which, with the passage of time, the giving of notice
or both, would be an Event of Default.

 

	
   

  	
  WHOLE
  FOODS MARKET, INC., a Texas corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
  Date:            200    

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
  *

  

 

* Must be the
chief executive officer, president, chief operating officer or chief financial
officer of the Company.

 

 

EXHIBIT F

 

FORM OF

ASSIGNMENT AND ACCEPTANCE

 

Dated:                  ,
200    

 

Reference is made to the Term Loan Agreement dated
as of                ,
2007 (as restated, amended, modified, supplemented and in effect from time to
time, the “Term Loan Agreement”), among Whole Foods Market, Inc., a
Texas corporation (the “Company”), the financial institutions from time
to time a party thereto, Royal Bank of Canada, as Administrative Agent (the “Agent”),
and JPMorgan Chase Bank, N.A., as Collateral Agent and Syndication Agent.  Capitalized terms used herein and not
otherwise defined herein shall have the meanings assigned to such terms in the
Term Loan Agreement.  This Assignment and
Acceptance, between the Assignor (as set forth on Schedule I attached
hereto and made a part hereof by reference for all purposes) and the Assignee
(as set forth on Schedule I hereto and made a part hereof), is dated as of the
Effective Date (as set forth on Schedule I hereto attached).

 

1.  Each
Assignor hereby irrevocably sells and assigns to each Assignee without recourse
to the Assignor, and each Assignee hereby irrevocably purchases and assumes
from such Assignor without recourse to the Assignor, as of the Effective Date,
an undivided interest (the “Assigned Interest”) in and to all such
Assignor’s rights and obligations under the Term Loan Agreement respecting the
credit facility and only the credit facility provided for in the Term Loan
Agreement (the “Facility”), in a principal amount as set forth on Schedule
I.

 

2.  Each
Assignor (i) makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with the Term Loan Agreement or any other Loan
Document or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of the Term Loan Agreement, any other Loan Document or any
other instrument or document furnished pursuant thereto, other than that it is
the legal and beneficial owner of the interest being assigned by it hereunder
and that such interest is free and clear of any adverse claim; (ii) makes
no representation or warranty and assumes no responsibility with respect to the
financial condition of the Company or its Subsidiaries or the performance or observance
by the Company or its Subsidiaries of any of its respective obligations under
the Term Loan Agreement, any other Loan Document or any other instrument or
document furnished pursuant thereto; and (iii) attaches the Term Note (if
any) held by it and requests that the Agent exchange such Term Note for a new
Term Note payable to such Assignor (if such Assignor has retained any interest
in the Facility) and a new Term Note payable to such Assignee in the respective
amounts which reflect the assignment being made hereby (and after giving effect
to any other assignments which have become effective on the Effective Date).

 

3.  Each
Assignee (i) represents and warrants that it is legally authorized to
enter into this Assignment and Acceptance and that it is an Eligible Assignee
(as that term is defined in the Term Loan Agreement); (ii) confirms that
it has received a copy of the Term Loan Agreement, together with copies of the
financial statements referred to in Section 4.2 thereof, or if later the
most recent financial statements delivered pursuant to Section 5.2
thereof, and such other documents and information as it has deemed appropriate
to make its own credit analysis; (iii) agrees that it will, independently
and without reliance upon the Agent, the Assignor or any other Lender and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
the Term Loan Agreement; (iv) appoints and authorizes the Agent to take
such action as agent on its behalf and to exercise such powers under the Term
Loan Agreement as are delegated to the Agent by the terms thereof, together
with such powers as are reasonably incidental thereto; (v) agrees that it
will be bound by the provisions of the Term Loan Agreement and will perform in
accordance with its terms all the obligations which by the terms of the Term
Loan Agreement are required to be performed by it as a Lender; (vi) if
such Assignee is organized under the laws of a jurisdiction outside the United
States,

 

 

attaches the forms
prescribed by the Internal Revenue Service of the United States certifying as
to the Assignee’s exemption from United States withholding taxes with respect
to all payments to be made to the Assignee under the Term Loan Agreement or
such other documents as are necessary to indicate that all such payments are
subject to such tax at a rate reduced by an applicable tax treaty, and (vii) has
supplied the information requested on the administrative questionnaire attached
hereto as Exhibit A.

 

4.  Following
the execution of this Assignment and Acceptance, it will be delivered to the
Agent, together with a processing and recordation fee of $3,500, for acceptance
by it and the Company and recording by the Agent pursuant to Section 9.11
of the Term Loan Agreement, effective as of the Effective Date (which Effective
Date shall, unless otherwise agreed to by the Agent in it sole and absolute
discretion, be at least five Business Days after the execution of this Assignment
and Acceptance).

 

5.  Upon such
acceptance and recording, from and after the Effective Date, the Agent shall
make all payments in respect of the Assigned Interest (including payments of
principal, interest, fees and other amounts) to such Assignee, whether such
amounts have accrued prior to the Effective Date or accrue subsequent to the
Effective Date.  Each Assignor and each
Assignee shall make all appropriate adjustments in payments for periods prior
to the Assignment Effective Date by the Agent or with respect to the making of
this assignment directly between themselves.

 

6.  From and
after the Effective Date, (i) each Assignee shall be a party to the Term
Loan Agreement and, to the extent provided in this Assignment and Acceptance,
have the rights and obligations of a Lender thereunder, and (ii) each
Assignor shall, to the extent provided in this Assignment and Acceptance,
relinquish its rights and be released from its obligations under the Term Loan
Agreement provided that such Assignor hereby represents and warrants that
restrictions set forth in Section 9.11 of the Term Loan Agreement
pertaining to the minimum amount of assignments has been satisfied.

 

7.  This
Assignment and Acceptance shall be governed by, and construed in accordance
with, the laws of the State of New York.

 

8.  This Assignment and Acceptance may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement.  Delivery of an executed
counterpart of Schedule I to this Assignment and Acceptance by
telecopier or electronic format shall be effective as delivery of an original
executed counterpart of this Assignment and Acceptance.

 

IN
WITNESS WHEREOF, the parties hereto have caused this Assignment and Acceptance
to be executed by their respective duly authorized officers on Schedule I
attached hereto.

 

[The remainder of this page is intentionally left blank.]

 

 

SCHEDULE 1

TO

ASSIGNMENT AND ACCEPTANCE

 

Effective Date:

 

 

                                            ,
2007(4)

 

 

Assignor

 

	
   

  	
                      ,
  as Assignor

  
	
   

  	
  [Type or print legal name
  of Assignor]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  Dated:                     ,
  200  

  

 

(4) This date
should be no earlier than five Business Days after the delivery of this
Assignment and Acceptance to the Agent.

 

 

Assignee

 

	
   

  	
                        ,
  as Assignee

  
	
   

  	
  [Type or print legal name
  of Assignee]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  Dated: 
                      ,
  200  

  
	
   

  	
  Lending Office:

  

 

 

	
  Accepted:

  	
   

  
	
   

  	
   

  
	
  ROYAL
  BANK OF CANADA, as Agent

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   WHOLE FOODS MARKET, INC.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
  *

  	
   

  

 

* Must be the chief executive officer, president, chief operating
officer or chief financial officer of the Company

 

 

SCHEDULE 1

TO

ASSIGNMENT AND ACCEPTANCE

 

	
  ASSIGNORS:

  	
   

  	
   

  
	
  Percentage interest assigned

  	
   

  	
  %

  
	
  Aggregate outstanding principal amount of Term
  Loans assigned

  	
   

  	
  $

  
	
  Principal amount of Term Note payable to Assignor

  	
   

  	
  $

  

 

 

EXHIBIT G-A

 

SECURITY
AGREEMENT A

 

 

Dated August 28, 2007

 

From

 

WHOLE FOODS MARKET, INC.,

 

as Grantor

 

- and -

 

the other Grantors referred to herein

 

as Grantors

 

to

 

JPMORGAN CHASE BANK, N.A.

 

as Collateral Agent

 

 

T  A  B  L  E  O  F  C  O  N  T  E  N
T  S

 

	
  Section

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  Section 1. Grant of Security

  	
   

  	
  1

  
	
   

  	
   

  	
   

  
	
  Section 2. Security for Obligations;
  Interpretation

  	
   

  	
  3

  
	
   

  	
   

  	
   

  
	
  Section 3. Grantors Remain Liable

  	
   

  	
  3

  
	
   

  	
   

  	
   

  
	
  Section 4. Representations and
  Warranties

  	
   

  	
  3

  
	
   

  	
   

  	
   

  
	
  Section 5. Further Assurances

  	
   

  	
  4

  
	
   

  	
   

  	
   

  
	
  Section 6. Post-Closing Changes

  	
   

  	
  4

  
	
   

  	
   

  	
   

  
	
  Section 7. Voting Rights; Dividends;
  Etc.

  	
   

  	
  4

  
	
   

  	
   

  	
   

  
	
  Section 8. Transfers and Other Liens;
  Additional Shares

  	
   

  	
  5

  
	
   

  	
   

  	
   

  
	
  Section 9. Collateral Agent Appointed
  Attorney-in-Fact

  	
   

  	
  5

  
	
   

  	
   

  	
   

  
	
  Section 10. Collateral Agent
  May Perform

  	
   

  	
  6

  
	
   

  	
   

  	
   

  
	
  Section 11. The Collateral Agent’s
  Duties

  	
   

  	
  6

  
	
   

  	
   

  	
   

  
	
  Section 12. Remedies

  	
   

  	
  8

  
	
   

  	
   

  	
   

  
	
  Section 13. Indemnity and Expenses

  	
   

  	
  9

  
	
   

  	
   

  	
   

  
	
  Section 14. Amendments; Waivers;
  Additional Grantors; Etc.

  	
   

  	
  9

  
	
   

  	
   

  	
   

  
	
  Section 15. Notices, Etc.

  	
   

  	
  9

  
	
   

  	
   

  	
   

  
	
  Section 16. Continuing Security Interest;
  Assignments under the Loan Agreements

  	
   

  	
  10

  
	
   

  	
   

  	
   

  
	
  Section 17. Release; Termination

  	
   

  	
  10

  
	
   

  	
   

  	
   

  
	
  Section 18. Execution in Counterparts

  	
   

  	
  10

  
	
   

  	
   

  	
   

  
	
  Section 19. Jurisdiction; Governing
  Law; Etc

  	
   

  	
  10

  

 

 

SCHEDULES

 

	
  Schedule I

  	
   

  	
  –

  	
   

  	
  Initial Pledged Equity and Initial Pledged Debt

  
	
  Schedule II

  	
   

  	
  –

  	
   

  	
  Location, Chief Executive Office, Place Where
  Agreements Are Maintained, Type Of Organization, Jurisdiction Of Organization
  And Organizational Identification Number

  
	
  Schedule III

  	
   

  	
  –

  	
   

  	
  Changes in Name, Location, Etc.

  

 

EXHIBIT

 

	
  Exhibit A

  	
   

  	
  –

  	
   

  	
  Form of Security Agreement A Supplement

  

 

ii

 

SECURITY
AGREEMENT A

 

SECURITY AGREEMENT dated August 28, 2007 made by
WHOLE FOODS MARKET, INC., a Texas corporation (the “Borrower”), and the other Persons
listed on the signature pages hereof (the Borrower and the Persons so
listed being, collectively, the “Grantors”), to JPMORGAN CHASE BANK, N.A.
(“JPMorgan”),
as collateral agent (in such capacity, and together with any successor
collateral agent appointed pursuant to this Agreement, the “Collateral Agent”)
for the Secured Parties (as defined below).

 

PRELIMINARY STATEMENTS.

 

1.             The Borrower has entered into a
Term Loan Agreement dated as of August 28, 2007 among the Borrower, Royal
Bank of Canada, as administrative agent for the lenders from time to time
parties thereto (together with its successors and assigns in such capacity, the
“Term Loan Administrative Agent”), JPMorgan Chase Bank, N.A., as
Collateral Agent and as syndication agent, and RBC Capital Markets and J. P.
Morgan Securities Inc., as joint lead arrangers and joint bookrunners (said
agreement, as it may hereafter be amended, restated, supplemented or otherwise
modified from time to time, being the “Term Loan Agreement”).

 

2.             The Borrower has entered into a
Revolving Credit Agreement dated as of August 28, 2007 among the Borrower,
JPMorgan Chase Bank, N.A., as Collateral Agent and as administrative agent for
the lenders from time to time parties thereto (together with its successors and
assigns in such capacity, the “Revolving Loan Administrative Agent”),
Royal Bank of Canada,, as syndication agent, and J. P. Morgan Securities Inc.
and RBC Capital Markets, as joint lead arrangers and joint bookrunners (said
agreement, as it may hereafter be amended, restated, supplemented or otherwise
modified from time to time, being the “Revolving Loan Agreement”).  The Term Loan Agreement and the Revolving
Loan Agreement shall sometimes hereinafter be collectively referred to as the “Loan
Agreements.”

 

3.             In connection with the Term Loan
Agreement, certain of the Grantors (other than the Borrower) and other
affiliated entities have executed and delivered a Master Guaranty Agreement to
the Term Loan Administrative Agent dated as of August 28, 2007, and in
connection with the Revolving Loan Agreement, the Grantors (other than the
Borrower) and other affiliated entities have executed and delivered a Master
Guaranty Agreement to the Revolving Loan Administrative Agent dated as of August 28,
2007 (both of said Master Guaranty Agreements, as each of the same may
hereafter be amended, restated, supplemented or otherwise modified from time to
time, being the “Master Guaranty Agreements”).

 

4.             It is a condition precedent to the
making of Loans by the Lenders under the Loan Agreements that the Grantors
shall have granted the security interest contemplated by this Agreement.  Each Grantor will derive substantial direct
and indirect benefit from the transactions contemplated by the Loan Agreements.

 

5.             Terms defined in the Loan
Agreements and not otherwise defined in this Agreement are used in this
Agreement as defined in the Loan Agreements. 
Further, unless otherwise defined in this Agreement or in the Loan
Agreements, terms defined in Article 8 or 9 of the UCC (as defined below)
are used in this Agreement as such terms are defined in such Article 8 or
9.  “UCC” means the Uniform Commercial
Code as in effect from time to time in the State of New York; provided that, if perfection or the effect
of perfection or non-perfection or the priority of the security interest in any
Collateral is governed by the Uniform Commercial Code as in effect in a
jurisdiction other than the State of New York, “UCC” means the Uniform Commercial
Code as in effect from time to time in such other jurisdiction for purposes of
the provisions hereof relating to such perfection, effect of perfection or
non-perfection or priority.

 

NOW, THEREFORE, in consideration of the premises and
in order to induce the Lenders to make Loans under the Loan Agreements, each
Grantor hereby agrees with the Collateral Agent for the ratable benefit of the
Secured Parties under each of the Loan Agreements as follows:

 

Section 1. 
Grant of Security.  Each
Grantor hereby grants to the Collateral Agent, for the ratable benefit of the
lenders from time to time party to either or both of the Loan Agreements
(together with the Collateral Agent, the Term Loan Administrative Agent and the
Revolving Loan Administrative Agent, the “Secured Parties”) ,

 

 

a security interest in such
Grantor’s right, title and interest in and to the following, in each case, as
to each type of property described below, whether now owned or hereafter
acquired by such Grantor, wherever located, and whether now or hereafter
existing or arising (collectively, the “Collateral”):

 

(a)  (i) 
all of such shares of capital stock, partnership interests, membership
interests in a limited liability company, beneficial interests in a trust or
other equity interests in any Person, or any obligations convertible into or
exchangeable for, or giving any Person a right, option or warrant to acquire,
such equity interests or such convertible or exchangeable obligations (any and
all such interests being the “Equity Interests”) owned by each Grantor,
including without limitation, the initial pledged equity listed in Part I
of Schedule I hereof, (the “Initial Pledged Equity”), and the
certificates, if any, representing any of the foregoing, and all dividends,
distributions, return of capital, cash, instruments and other property from
time to time received, receivable or otherwise distributed in respect of or in
exchange for any or all of the foregoing and all subscription warrants, rights
or options issued thereon or with respect thereto; provided that, notwithstanding anything contained herein to
the contrary, such Grantor shall not be required to pledge, and the terms “Pledged Equity” and “Collateral” used in this
Agreement shall not include, any Equity Interests in any foreign subsidiary
acquired, owned, or otherwise held by such Grantor, in each case, that, when
aggregated with all of the other shares of stock in such foreign Subsidiary
pledged by such Grantor, would result in more than 66% of the shares of stock
in such foreign Subsidiary being pledged to the Collateral Agent for the
benefit of the Secured Parties under this Agreement;

 

(ii)           all Equity Interests from time to
time acquired by each Grantor in any manner (such Equity Interests, together
with the Initial Pledged Equity, being the “Pledged Equity”), and the
certificates, if any, representing such additional Equity Interests, and all
dividends, distributions, return of capital, cash, instruments and other
property from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of such Equity Interests and all
subscription warrants, rights or options issued thereon or with respect
thereto;

 

(iii)          all investment property (including,
without limitation, all (A) securities, whether certificated or
uncertificated, (B) security entitlements, (C) securities accounts, (D) commodity
contracts and (E) commodity accounts) in which such Grantor has now, or
acquires from time to time hereafter, any right, title or interest in any
manner, and the certificates or instruments, if any, representing or evidencing
such investment property, and all dividends, distributions, return of capital,
interest, cash, instruments and other property from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or all
of such investment property and all warrants, rights or options issued thereon
or with respect thereto.

 

(b)           all indebtedness from time to time
owed to such Grantor (such indebtedness being the “Pledged Debt”)
including without limitation, the initial pledged debt listed in Part II
of Schedule I hereof, (the “Initial Pledged Debt”) and all
interest, cash, instruments and other property from time to time received,
receivable or otherwise distributed in respect of or in exchange for any of all
such indebtedness.

 

(c)           all proceeds of, collateral for and
supporting obligations relating to, any and all of the foregoing (including,
without limitation, proceeds, collateral and supporting obligations that
constitute property of the types described in clause (a) and (b) of
this Section 1 and this clause (c)) and, to the extent not otherwise
included, all cash.

 

Notwithstanding the
foregoing, “Collateral”
shall not include and the Grantors shall not be deemed to have granted a
security interest in any property or agreement of such Grantor to the extent
(but only so long as) (x) the granting of a security interest thereunder
is prohibited by any applicable law or (y) is prohibited by, or
constitutes a breach or default under or results in the termination of or
requires any consent not obtained under, any contract, lease, license,
agreement, instrument or other document giving rise to such property, in each
case solely to the extent that such breach or default is not rendered
ineffective by the UCC or other applicable law or, in the case of any consent,
such consent is actually required to grant such security interest under
applicable law.

 

2

 

Section 2. 
Security for Obligations; Interpretation.  This Agreement secures, in the case of each
Grantor, the payment of all Indebtedness and other obligations of such Grantor
now or hereafter existing under any of the Loan Documents (as defined in each
of the Loan Agreements), whether direct or indirect, absolute or contingent, and
whether for principal, reimbursement obligations, interest, fees, premiums,
penalties, indemnifications, contract causes of action, costs, expenses or
otherwise (all such obligations being the “Secured Obligations”).  Without limiting the generality of the
foregoing, this Agreement secures, as to each Grantor, the payment of all
amounts that constitute part of the Secured Obligations and would be owed by
such Grantor to any Secured Party under any of the Loan Documents but for the
fact that they are unenforceable or not allowable due to the existence of a
bankruptcy, reorganization or similar proceeding involving a Loan Party.

 

Section 3. 
Grantors Remain Liable. 
Anything herein to the contrary notwithstanding, (a) each Grantor
shall remain liable under the contracts and agreements included in or related
to such Grantor’s Collateral to the extent set forth therein to perform all of
its duties and obligations thereunder to the same extent as if this Agreement
had not been executed, (b) the exercise by the Collateral Agent of any of
the rights hereunder shall not release any Grantor from any of its duties or
obligations under the contracts and agreements included in or related to the
Collateral and (c) no Secured Party shall have any obligation or liability
under the contracts and agreements included in or related to the Collateral by
reason of this Agreement or any other Loan Document, nor shall any Secured
Party be obligated to perform any of the obligations or duties of any Grantor
thereunder or to take any action to collect or enforce any claim for payment.

 

Section 4. 
Representations and Warranties. 
Each Grantor represents and warrants as follows:

 

(a)           As of the date hereof, such Grantor’s
exact legal name, location, chief executive office, type of organization,
jurisdiction of organization and organizational identification number is set
forth in Schedule II hereto. 
Within the five years preceding the date hereof, such Grantor has not
changed its name, location, chief executive office, type of organization,
jurisdiction of organization or organizational identification number from those
set forth in Schedule II hereto except as set forth in Schedule III
hereto.

 

(b)           Such Grantor is the legal and
beneficial owner of the Collateral granted or purported to be granted by it
pursuant to Schedule I hereof, free and clear of any Lien, claim, option
or right of others, except for the security interest created under this
Agreement or permitted under the Loan Agreements.  Except as permitted under the Loan Agreements,
no effective financing statement or other instrument similar in effect covering
all or any part of such Collateral or listing such Grantor or any trade name of
such Grantor as debtor is on file in any recording office, except such as may
have been filed in favor of the Collateral Agent relating to the Loan
Documents, filings which have not been authorized by the applicable Grantor or
as otherwise permitted under the Loan Agreements.

 

(c)           If such Grantor is an issuer of
Collateral, such Grantor confirms that it has received notice of the security
interest granted hereunder.

 

(d)           The Pledged Equity pledged by such
Grantor hereunder has been duly authorized and validly issued and is fully paid
and non-assessable.  The Pledged Debt
pledged by such Grantor hereunder has been duly authorized, authenticated or
issued and delivered, is the legal, valid and binding obligation of the issuers
thereof.

 

(e)           This Agreement creates in favor of
the Collateral Agent for the benefit of the Secured Parties under the Loan Agreements
a valid security interest in the Collateral granted by such Grantor (to the
extent such matter is governed by the laws of the United States, or a
jurisdiction located therein), securing the payment of the Secured Obligations;
all filings and other actions necessary to perfect the security interest in the
Collateral granted by such Grantor, to the extent required hereunder, have been
or will be timely made or taken and are, or will be, in full force and effect
(to the extent perfection can be accomplished by such filing or action); such
security interest is first priority except for the Liens permitted by the Loan
Agreements.

 

(f)            To such Grantor’s knowledge, no
material Governmental Authorization by, and no notice to or filing with, any
Governmental Authority or other third party is required for the grant by such
Grantor of the security interest granted hereunder or for the execution,
delivery or performance of this Agreement by such Grantor.

 

3

 

Section 5. 
Further Assurances.  (a) 
Each Grantor agrees that from time to time, at the expense of such Grantor,
such Grantor will promptly execute and deliver, or otherwise authenticate, all
further instruments and documents, and take all further action that may be
necessary or reasonably desirable, or that the Collateral Agent may reasonably
request, in order to perfect and maintain perfection of any pledge or security
interest granted or purported to be granted by such Grantor hereunder or to
enable the Collateral Agent to exercise and enforce its rights and remedies
hereunder with respect to any Collateral of such Grantor.  Without limiting the generality of the
foregoing, each Grantor will promptly with respect to Collateral of such
Grantor:  (i) execute or authenticate
and file, or authorize the Collateral Agent to file, such financing or
continuation statements, or amendments thereto, and as permitted by the terms
of this Agreement or otherwise with the Grantor’s consent, such other
instruments or notices, as may be necessary or desirable, or as the Collateral
Agent may reasonably request, in order to perfect and preserve the security
interest granted or purported to be granted by such Grantor hereunder; (ii) upon
the occurrence and during the continuance of an Event of Default, take all
action necessary to ensure that the Collateral Agent has control of Collateral
consisting of investment property as provided in Section 9-106 of the UCC;
and (iii) deliver to the Collateral Agent evidence that all other actions
that the Collateral Agent may deem reasonably necessary or desirable in order
to perfect and protect the security interest granted or purported to be granted
by such Grantor under this Agreement has been taken. Notwithstanding anything
to the contrary set forth in this Section 5 or in this Agreement, unless
an Event of Default shall have occurred and be continuing, the Grantors shall
not be required to take any action to perfect the security interests granted
under this Agreement in any Collateral other than (A) executing,
authenticating and filing, or authorizing the Collateral Agent to file,
financing or continuation statements, or amendments thereto, and (B) delivering
any certificated stock certificates (and blank stock powers) representing the
Pledged Equity.

 

(b)           Each Grantor hereby authorizes the
Collateral Agent to file one or more financing or continuation statements, and
amendments thereto, including, without limitation, one or more financing
statements indicating that such financing statements cover the Collateral
listed in Section 1 of this Agreement of such Grantor, in each case
without the signature of such Grantor, and regardless of whether any particular
asset described in such financing statements falls within the scope of the UCC
or the granting clause of this Agreement. 
A photocopy or other reproduction of this Agreement shall be sufficient
as a financing statement where permitted by law.  Each Grantor ratifies its authorization for
the Collateral Agent to have filed such financing statements, continuation
statements or amendments filed prior to the date hereof.

 

(c)           Upon the occurrence and continuance
of an Event of Default, upon the written request of the Collateral Agent, each
Grantor will furnish to the Collateral Agent from time to time statements and
schedules further identifying and describing the Collateral of such Grantor and
such other reports in connection with such Collateral as the Collateral Agent
may reasonably request, all in reasonable detail.

 

Section 6. 
  Post-Closing Changes.  (a)  No Grantor will change its name,
type of organization, jurisdiction of organization, organizational
identification number or location from those set forth in Section 4(a) of
this Agreement without first giving at least 15 days’ prior written notice to
the Collateral Agent and taking all action reasonably required by the
Collateral Agent for the purpose of perfecting or protecting the security
interest granted by this Agreement.  Each
Grantor will hold and preserve its records relating to the Collateral and will
permit representatives of the Collateral Agent at any reasonable time during
normal business hours upon reasonable advance notice to inspect and make
abstracts from such records and other documents.  If any Grantor does not have an organizational
identification number and later obtains one, it will forthwith notify the
Collateral Agent of such organizational identification number.

 

Section 7. 
Voting Rights; Dividends; Etc. 
(a)  So long as no Event of Default shall have occurred and be continuing:

 

(i)            Each Grantor shall be entitled to
exercise any and all voting and other consensual rights pertaining to the
Collateral of such Grantor or any part thereof for any purpose.

 

(ii)           Each Grantor shall be entitled to
receive and retain any and all dividends, interest and other distributions paid
in respect of the Collateral of such Grantor if and to the extent that the
payment thereof is not otherwise prohibited by the terms of the Loan Documents,
provided, however, that any and all dividends and other
distributions paid or payable in cash in 

 

4

 

respect of any Collateral in
connection with a partial or total liquidation or dissolution or in connection
with a reduction of capital, capital surplus or paid-in-surplus shall be
received in trust for the benefit of the Collateral Agent, be segregated from
the other property or funds of such Grantor and be forthwith delivered to the
Collateral Agent as Collateral in the same form as so received (with any necessary
indorsement), together with any instruments or certificates evidencing all
related Collateral (with any necessary indorsement).

 

(iii)          The Collateral Agent will execute and
deliver (or cause to be executed and delivered) to each Grantor all such proxies
and other instruments as such Grantor may reasonably request for the purpose of
enabling such Grantor to exercise the voting and other rights that it is
entitled to exercise pursuant to paragraph (i) above and to receive
the dividends or interest payments that it is authorized to receive and retain
pursuant to paragraph (ii) above.

 

(b)           Upon the occurrence and during the
continuance of an Event of Default:

 

(i)            All rights of each Grantor (x) to
exercise or refrain from exercising the voting and other consensual rights that
it would otherwise be entitled to exercise pursuant to Section 7(a)(i) shall,
upon five Business Days’ notice to such Grantor by the Collateral Agent, cease
and (y) to receive the dividends, interest and other distributions that it
would otherwise be authorized to receive and retain pursuant to Section 7(a)(ii) shall
automatically cease, and all such rights shall thereupon become vested in the
Collateral Agent, which shall thereupon have the sole right to exercise or
refrain from exercising such voting and other consensual rights and to receive
and hold as Collateral such dividends, interest and other distributions.

 

(ii)           All dividends, interest and other
distributions that are received by any Grantor contrary to the provisions of
paragraph (i) of this Section 7(b) shall be received in
trust for the benefit of the Collateral Agent, shall be segregated from other
funds of such Grantor and shall be forthwith paid over to the Collateral Agent
as Collateral in the same form as so received (with any necessary indorsement),
together with any instruments or certificates evidencing all related Collateral
(with any necessary indorsement).

 

Section 8. 
Transfers and Other Liens; Additional Shares.  Each Grantor agrees that:

 

(a)           It will not (i) sell, assign or
otherwise dispose of, or grant any option with respect to, any of the
Collateral, other than sales, assignments and other dispositions of Collateral,
and options relating to Collateral, permitted under the terms of this Agreement
or the Loan Agreements, or (ii) create or suffer to exist any Lien upon or
with respect to any of the Collateral of such Grantor except for the pledge,
assignment and security interest created under this Agreement and Liens
permitted under the Loan Agreements.

 

(b)           It will (i) cause each issuer of
the Pledged Equity pledged by such Grantor not to issue any Equity Interests or
other securities in addition to or in substitution for the Pledged Equity
issued by such issuer, except to such Grantor or except as permitted by the
Loan Agreements, and (ii) pledge hereunder, immediately upon its
acquisition (directly or indirectly) thereof, any and all additional Equity
Interests or other securities.

 

Section 9. 
Collateral Agent Appointed Attorney-in-Fact.  Each Grantor hereby irrevocably appoints the
Collateral Agent such Grantor’s attorney-in-fact (such appointment to cease
upon the payment in full of all the Secured Obligations other than contingent
indemnification claims as to which no demand has been made), with full authority
in the place and stead of such Grantor and in the name of such Grantor or
otherwise, from time to time, upon the occurrence and during the continuance of
an Event of Default, in the Collateral Agent’s reasonable discretion, to take
any action and to execute any instrument that the Collateral Agent may deem
reasonably necessary or advisable to accomplish the purposes of this Agreement,
including, without limitation:

 

5

 

(a)           to ask for, demand, collect, sue for,
recover, compromise, receive and give acquittance and receipts for moneys due
and to become due under or in respect of any of the Collateral,

 

(b)           to receive, indorse and collect any
drafts or other instruments, documents and chattel paper, in connection with
clause (a) or (b) above, and

 

(c)           to file any claims or take any action
or institute any proceedings that the Collateral Agent may deem necessary or
desirable for the collection of any of the Collateral or otherwise to enforce
the rights of the Collateral Agent with respect to any of the Collateral.

 

Section 10. 
Collateral Agent May Perform.  If any Grantor fails to perform any agreement
contained herein, the Collateral Agent may, as the Collateral Agent deems
necessary to protect the security interest granted hereunder in the Collateral
or to protect the value thereof, but without any obligation to do so and
without notice, itself perform, or cause performance of, such agreement, and
the expenses of the Collateral Agent incurred in connection therewith shall be
payable by such Grantor under Section 13.

 

Section 11. 
The Collateral Agent’s Duties. 
(a)  The powers conferred on the Collateral Agent hereunder are
solely to protect the Secured Parties’ interest in the Collateral and shall not
impose any fiduciary relationship or any duty upon it to exercise any such
powers.  Except for the exercise of
reasonable care in the safe custody of any Collateral in its possession or in
the possession of an Affiliate of the Collateral Agent or any designee (including
without limitation, a Subagent (as defined in clause (b) below)) of the
Collateral Agent acting on its behalf and the accounting for moneys actually
received by it or its Affiliates hereunder in accordance with the express terms
hereof, the Collateral Agent shall have no fiduciary relationship or other duty
as to any Collateral, as to ascertaining or taking action with respect to
calls, conversions, exchanges, maturities, tenders or other matters relative to
any Collateral, whether or not any Secured Party has or is deemed to have
knowledge of such matters, or as to the taking of any necessary steps to
preserve rights against any parties or any other rights pertaining to any
Collateral.  The Collateral Agent and any
of its Affiliates or any designee (including without limitation, a Subagent) on
its behalf shall be deemed to have exercised reasonable care in the custody and
preservation of any Collateral in its possession or in the possession of an
Affiliate or any designee (including without limitation, a Subagent) on its
behalf if such Collateral is accorded treatment substantially equal to that
which it accords its own property.

 

(b)           Anything contained herein to the
contrary notwithstanding, the Collateral Agent may from time to time, when the
Collateral Agent deems it to be necessary, appoint one or more subagents (each
a “Subagent”)
for the Collateral Agent hereunder with respect to all or any part of the
Collateral.  In the event that the
Collateral Agent so appoints any Subagent with respect to any Collateral, (i) the
assignment and pledge of such Collateral and the security interest granted in
such Collateral by each Grantor hereunder shall be deemed for purposes of this
Security Agreement A to have been made to such Subagent, in addition to the Collateral
Agent, for the ratable benefit of the Secured Parties, as security for the
Secured Obligations of such Grantor, (ii) such Subagent shall
automatically be vested, in addition to the Collateral Agent, with all rights,
powers, privileges, interests and remedies of the Collateral Agent hereunder
and pursuant to the terms hereof, with respect to such Collateral, and (iii) the
term “Collateral Agent,” when used herein in relation to any rights, powers,
privileges, interests and remedies of the Collateral Agent with respect to such
Collateral, shall include such Subagent; provided, however, that no such Subagent shall be
authorized to take any action with respect to any such Collateral unless and
except to the extent expressly authorized in writing by the Collateral Agent.

 

(c)           Each Secured Party by its acceptance
thereof hereby appoints and authorizes the Collateral Agent to take such action
as agent on its behalf and to exercise such powers hereunder and under the
other Loan Documents as are specifically delegated to the Collateral Agent by
the terms of this Agreement and the Loan Documents, together with such other
powers as are reasonably incidental thereto. 
The Collateral Agent shall not have any duties or responsibilities
except those expressly set forth in this Agreement and the Loan Documents.

 

(d)           As to any matters not expressly
provided for by the Loan Documents, the Collateral Agent shall not be required
to exercise any discretion or take any action, but shall be required to act or
to refrain from acting (and shall be fully protected in so acting or refraining
from acting) upon the written instructions signed by the Term Loan
Administrative Agent and the Revolving Loan Administrative Agent provided,
however, that the Collateral Agent shall not be required to take any action
that exposes the Collateral Agent to personal liability or that 

 

6

 

is contrary to
this Agreement or applicable law. The Collateral Agent shall in all cases be
fully protected in acting or refraining from acting under this Agreement or any
of the Loan Documents upon written directions signed by the Term Loan
Administrative Agent and the Revolving Loan Administrative Agent, except for
any such actions (or restraint of actions) which constitute gross negligence or
willful misconduct on the part of the Collateral Agent. Any such directions by
the Collateral Agent and any action taken by the Collateral Agent and any
failure by the Collateral Agent to act, in each case pursuant to such directions,
shall be binding on all the Secured Parties and their respective successors and
assigns.  The Collateral Agent shall not
be responsible to any Secured Party for any recitals, statements,
representations, or warranties (other than any thereof made by the Collateral
Agent or any officer thereof) contained in this Agreement or in any of the Loan
Documents, for the value, validity, effectiveness, genuineness, enforceability,
or sufficiency of this Agreement, of any of the Loan Documents, or of the Collateral,
or for the creation, maintenance, priority or perfection of any Lien created by
the Loan Documents.

 

(e)           Subject to the provisions of Section 11(d),
the Collateral Agent may consult with independent legal counsel and the advice
of such counsel shall be full and complete authorization and protection in
respect of any action to be taken, suffered, or omitted by it hereunder in good
faith and in reliance thereon.  The
Collateral Agent may execute any of the rights or powers hereunder or perform
any duties hereunder either directly or through other agents or attorneys
reasonably acceptable to the Required Lenders under each of the Loan
Agreements.  The Collateral Agent shall
not be liable for the misconduct or negligence of any such agent or attorney
appointed by it with due care.  The
foregoing shall not exculpate any such agent or attorney from liability for its
own misconduct or negligence.

 

(f)            The Collateral Agent, in its
individual capacity and its affiliates may accept deposits from, lend to, and generally
engage in any kind of lending, banking, or trust business with, any Grantor or
their respective affiliates as if it were not acting as the Collateral
Agent.  With respect to its commitment
and in its capacity as a Lender under each of the Loan Agreements, the
Collateral Agent shall have and may exercise the same rights and powers under
this Agreement and is subject to the same obligations and liabilities as
applicable to any other Lender.

 

(g)           To the extent that Grantors fail to
do so under the terms of the Loan Documents, and without limiting the primary
obligation of Grantors to do so, the Secured Parties will reimburse the
Collateral Agent upon demand and hold the Collateral Agent, its directors,
officers, employees, and agents harmless against any and all losses,
liabilities, or expenses incurred by the Collateral Agent arising out of or in
connection with any action taken pursuant to and consistently with the express
written direction of the applicable Secured Parties given under Section 11(d),
including any costs and expenses incurred in connection with any investigation,
suit (whether or not the Collateral Agent or any other such indemnified person
is named as a party thereto), or claim arising out of or related to such
action, in proportion to the respective principal amounts of the Indebtedness
under the Loan Agreements at the time held by them, provided, that no Secured
Party shall be liable under this Section 11(g) for any such losses,
liabilities, or expenses incurred by the Collateral Agent as a result of its
own breach of this Agreement, gross negligence or willful misconduct.

 

(h)           The Collateral Agent may resign at
any time by giving at least forty-five (45) days’ prior written notice of
resignation to Grantors and each Secured Party, such resignation to be
effective upon the appointment of a successor Collateral Agent as provided in
this Section 11.  The Collateral
Agent may be removed at any time, for or without cause, by an instrument or
instruments in writing delivered to the Collateral Agent and Grantors and
signed by the Required Lenders under both of the Loan Agreements.  In case the office of Collateral Agent shall
become vacant for any reason, a successor Collateral Agent may be appointed to fill
such vacancy by an instrument or instruments in writing delivered to such
successor Collateral Agent, the departing Collateral Agent, each Lender under
any Loan Agreement and Grantors.  After
any such resignation or removal, the provisions of this Section 11 shall
continue in effect for the benefit of the departing Collateral Agent with
respect to any actions taken or omitted by it while acting as Collateral Agent.

 

(i)            Any corporation or national banking
association into which the Collateral Agent may be merged or with which it may
be consolidated, or any corporation or national banking association resulting
from any merger or consolidation to which the Collateral Agent is a party, or
any state or national bank or trust company in any manner succeeding to all or
substantially all of the business of the Collateral Agent and shall
automatically succeed to all of the rights and obligations of the Collateral
Agent hereunder and under the Loan Documents without 

 

7

 

further action
on the part of any of the parties hereto. 
Such surviving or succeeding corporation or national banking association
(if other than the Collateral Agent) shall forthwith deliver to each Secured
Party and Grantors written notice of such succession to the rights and
obligations of the Collateral Agent hereunder and under the Loan Documents.

 

Section 12. 
Remedies.  If any Event of
Default shall have occurred and be continuing:

 

(a)           The Collateral Agent may exercise in
respect of the Collateral, in addition to other rights and remedies provided
for herein or otherwise available to it, all the rights and remedies of a
secured party upon default under the UCC and also may:  (i) without notice except as specified
below, sell the Collateral or any part thereof in one or more parcels at public
or private sale, at any of the Collateral Agent’s offices or elsewhere, for
cash, on credit or for future delivery, and upon such other terms as the
Collateral Agent may in its reasonable discretion deem commercially reasonable
and (ii) exercise any and all rights and remedies of any of the Grantors
under or in connection with the Collateral, or otherwise in respect of the
Collateral, including, without limitation, (A) any and all rights of such
Grantor to demand or otherwise require payment of any amount under, or
performance of any provision of or related to the Collateral and (B) exercise
all other rights and remedies with respect to the Collateral, including,
without limitation, those set forth in Section 9-607 of the UCC.  Each Grantor agrees that, to the extent
notice of sale shall be required by law, at least ten days’ notice to such
Grantor of the time and place of any public sale or three days’ notice of the
time and place of any private sale shall constitute reasonable
notification.  The Collateral Agent shall
not be obligated to make any sale of Collateral regardless of notice of sale
having been given.  The Collateral Agent
may adjourn any public or private sale from time to time by announcement at the
time and place fixed therefor, and such sale may, without further notice, be
made at the time and place to which it was so adjourned.

 

(b)           Any cash held by or on behalf of the
Collateral Agent and all cash proceeds received by or on behalf of the
Collateral Agent in respect of any sale of, collection from, or other
realization upon all or any part of the Collateral shall be held by the
Collateral Agent as collateral for, and/or then or at any time thereafter
applied (after payment of any amounts payable to the Collateral Agent pursuant
to Section 13) in whole or in part by the Collateral Agent for the benefit
of the Secured Parties against, all or any part of the Secured Obligations in
the following order, (i) first, on a pari
passu basis, to all Secured Obligations (excluding Secured Obligations
arising under the terms of any Credit Facility Hedging Agreements), comparing (1) the
aggregate principal amount of the then outstanding term loans under the Term
Loan Agreement to (2) the amount of the then effective Aggregate
Commitment (as defined in the Revolving Loan Agreement), if the Aggregate
Commitment has not been terminated, or the sum of the aggregate principal
amount of the then outstanding revolving loans under the Revolving Loan
Agreement and the Letter of Credit Exposure Amount (as defined in the Revolving
Loan Agreement) then outstanding under the Revolving Loan Agreement, if the
Aggregate Commitment has been terminated; provided that the amounts set forth in
this clause (i) that will be given pari
passu treatment as set forth above shall be limited to amounts (of
Aggregate Commitments and Loans under the Term Loan Agreement and Aggregate
Commitments or Loans and Letter of Credit Exposure Amount under the Revolving
Credit Agreement, or as applicable) which would not give rise to an Event of
Default arising under section 7.1(d) of the Term Loan Agreement or the
Revolving Credit Agreement as a result of a breach of section 6.1(b) of
the Term Loan Agreement or the Revolving Credit Agreement, respectively
and (ii) second, on a pari passu
basis, to all Secured Obligations arising under the terms of any Credit
Facility Hedging Agreements).  Any surplus of such cash or cash proceeds held by
or on the behalf of the Collateral Agent and remaining after
payment in full of all the Secured Obligations (other than contingent
indemnification claims as to which no demand has been made) shall be paid over
to the applicable Grantor or to whomsoever may be lawfully entitled to receive
such surplus.

 

(c)           All payments received by any Grantor
under or in respect of the Collateral shall be received in trust for the
benefit of the Collateral Agent, shall be segregated from other funds of such
Grantor and shall be forthwith paid over to the Collateral Agent in the same
form as so received (with any necessary indorsement).

 

8

 

(d)           The Collateral Agent is authorized,
in connection with any sale of the Collateral pursuant to this Section 12,
to deliver or otherwise disclose to any prospective purchaser of the Collateral
any information in its possession relating to such Collateral.

 

Section 13.  Indemnity and Expenses.  (a)  Each Grantor agrees to indemnify,
defend and save and hold harmless each Secured Party and each of their
Affiliates and their respective officers, directors, employees, agents and
advisors (each, an “Indemnified
Party”) from and against, and shall pay on demand, any and all
actual claims, damages, losses, liabilities and out-of-pocket expenses
(including, without limitation, reasonable fees and expenses of counsel but
excluding special, indirect, punitive or consequential damages, whether arising
in tort, contract or otherwise) that may be incurred by or asserted or awarded
against any Indemnified Party, in each case arising out of or in connection
with or by reason of (including, without limitation, in connection with any
investigation, litigation or proceeding or preparation of a defense in
connection therewith) this Agreement, except to the extent such claim, damage,
loss, liability or expense is found in a final nonappealable judgment by a
court of competent jurisdiction to have resulted from such Indemnified Party’s
gross negligence or willful misconduct. 
In the case of an investigation, litigation or other proceeding to which
the indemnity in this Section 13(a) applies, such indemnity shall be
effective whether or not such investigation, litigation or proceeding is
brought by any Grantor, its directors, shareholders or creditors or any
Indemnified Party or any other Person, whether or not any Indemnified Party is
otherwise a party thereto and whether or not the Merger is consummated.  The Grantors also agree not to assert any
claim against the Collateral Agent, any Secured Party or any of their
Affiliates, or any of their respective officers, directors, employees, agents
and advisors, on any theory of liability, for special, indirect, consequential
or punitive damages arising out of or otherwise relating to the this Agreement.

 

(b)           Each Grantor agrees to pay on demand (i) all
reasonable out-of-pocket costs and expenses of the Collateral Agent in
connection with the preparation, execution, delivery, administration,
modification and amendment of, or any consent or waiver under, this Agreement
(including, without limitation, the reasonable out-of-pocket fees and expenses
of counsel for the Collateral Agent with respect thereto, with respect to
advising the Collateral Agent as to its rights and responsibilities, or the
perfection, protection or preservation of rights or interests, under this
Agreement, with respect to negotiations with any Grantor or with other creditors
of any Grantor or any of its Subsidiaries arising out of any Default or any
events or circumstances that may give rise to a Default and with respect to
presenting claims in or otherwise participating in or monitoring any
bankruptcy, insolvency or other similar proceeding involving creditors’ rights
generally and any proceeding ancillary thereto) and (ii) all costs and
expenses of the Collateral Agent and each Secured Party in connection with the
enforcement of this Agreement, whether in any action, suit or litigation, or
any bankruptcy, insolvency or other similar proceeding affecting creditors’
rights generally (including, without limitation, the reasonable fees and
expenses of counsel for the Collateral Agent and each Secured Party with
respect thereto).

 

Section 14. 
Amendments; Waivers; Additional Grantors; Etc.  (a)  No amendment or waiver of any
provision of this Agreement, and no consent to any departure by any Grantor
herefrom, shall in any event be effective unless the same shall be in writing and
signed by the Collateral Agent, the Term Loan Administrative Agent and the
Revolving Loan Administrative Agent and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.  No failure on the part of the
Collateral Agent or any other Secured Party to exercise, and no delay in
exercising any right hereunder, shall operate as a waiver thereof; nor shall
any single or partial exercise of any such right preclude any other or further
exercise thereof or the exercise of any other right.

 

(b)           Upon the execution and delivery by
any Person of a security agreement supplement in substantially the form of Exhibit A
hereto (each a “Security Agreement A Supplement”), such Person
shall be referred to as an “Additional Grantor”
and shall be and become a Grantor hereunder, and each reference in this
Agreement and the other Loan Documents to “Grantor” shall also mean and be a
reference to such Additional Grantor, each reference in this Agreement and the
other Loan Documents to the “Collateral” shall also mean and be a reference to
the Collateral granted by such Additional Grantor and each reference in this
Agreement to a Schedule shall also mean and be a reference to the schedules
attached to such Security Agreement A Supplement.

 

Section 15. 
Notices, Etc.  All notices
and other communications provided for hereunder shall be in writing (including
telecopier) and mailed, telecopied or otherwise delivered, in the case of the
Borrower or the Collateral Agent, addressed to it at its address specified in
the Loan Agreements and, in the case of each Grantor 

 

9

 

other than the Borrower,
addressed to it at its address set forth opposite such Grantor’s name on the
signature pages hereto or on the signature page to the Security
Agreement A Supplement pursuant to which it became a party hereto; or, as to
any party, at such other address as shall be designated by such party in a
written notice to the other parties.  All
such notices and other communications shall, when mailed, telegraphed or
telecopied, be effective when deposited in the mails, delivered to the
telegraph company or transmitted by telecopier, respectively.  Delivery by telecopier of an executed
counterpart of a signature page to any amendment or waiver of any
provision of this Agreement of any Exhibit hereto to be executed and
delivered hereunder shall be effective as delivery of an original executed
counterpart thereof.  As agreed to among
the Borrower, the Collateral Agent and the applicable Secured Parties from time
to time, notices and other communications may also be delivered by e-mail to
the e-mail address of a representative of the applicable Person provided from
time to time by such Person.

 

Section 16. 
Continuing Security Interest; Assignments under the Loan Agreements.  This Agreement shall create a continuing
security interest in the Collateral and shall (a) remain in full force and
effect until the payment in full in cash of the Secured Obligations (other than
contingent indemnification obligations as to which no demand has been made), (b) be
binding upon each Grantor, its successors and assigns and (c) inure,
together with the rights and remedies of the Collateral Agent hereunder, to the
benefit of the Secured Parties and their respective successors, transferees and
assigns.  Without limiting the generality
of the foregoing clause (c), any Lender may assign or otherwise transfer
all or any portion of its rights and obligations under the applicable Loan
Agreement(s) (including, without limitation, all or any portion of the
Loans owing to it and the Note or Notes, if any, held by it) to any other
Person, and such other Person shall thereupon become vested with all the
benefits in respect thereof granted to such Lender herein or otherwise.

 

Section 17. 
Release; Termination.  (a) 
Upon any sale, lease, transfer or other disposition of any item of Collateral
of any Grantor in accordance with the terms of the Loan Documents, the
Collateral Agent will, at such Grantor’s expense, execute and deliver to such
Grantor such documents as such Grantor shall reasonably request to evidence the
release of such item of Collateral from the assignment and security interest
granted hereby; provided, however, that (i) at the time of such
request and such release no Event of Default shall have occurred and be
continuing, (ii) such Grantor shall have delivered to the Collateral
Agent, prior to the date of the proposed release, a written request for release
describing the item of Collateral, together with a form of release for
execution by the Collateral Agent and a certificate of such Grantor to the
effect that the transaction is in compliance with the Loan Documents and as to
such other matters as the Collateral Agent may reasonably request and (iii) the
proceeds of any such sale, lease, transfer or other disposition required to be
applied, or any payment to be made in connection therewith, in accordance with
the terms of this Agreement.

 

(b)           Upon the payment in full in cash of
the Secured Obligations (other than contingent indemnification obligations as
to which no demand has been made), and the termination of the Aggregate
Commitment (as defined in each of the Loan Agreements), the pledge and security
interest granted hereby shall terminate and all rights to the Collateral shall
revert to the applicable Grantor.  Upon
any such termination, the Collateral Agent will, at the applicable Grantor’s
expense, execute and deliver to such Grantor such documents as such Grantor
shall reasonably request to evidence such termination.

 

Section 18. 
Execution in Counterparts. 
This Agreement may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together
shall constitute one and the same agreement. 
Delivery of an executed signature page of this Agreement by
facsimile transmission or electronic transmission (i.e., a “pdf” or “tif”)
shall be effective as delivery of an original executed counterpart of this
Agreement.

 

Section 19. 
Jurisdiction; Governing Law; Etc. 
(a) Each of the parties hereto hereby irrevocably and
unconditionally submits, for itself and its property, to the nonexclusive
jurisdiction of any New York State court or Federal court of the United States
of America sitting in New York City, and any appellate court from any thereof,
in any action or proceeding arising out of or relating to this Agreement or any
of the other Loan Documents to which it is a party, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in any such New York State court or, to
the fullest extent permitted by law, in such Federal court.  Each of the parties hereto agrees that a
final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law.  Nothing in this
Agreement 

 

10

 

shall affect any right
that any party may otherwise have to bring any action or proceeding relating to
this Agreement or any of the other Loan Documents in the courts of any
jurisdiction.

 

(b)           EACH OF THE PARTIES HERETO
IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT IT MAY LEGALLY
AND EFFECTIVELY DO SO, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO
THE LAYING OF VENUE OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS TO WHICH IT IS A
PARTY IN ANY NEW YORK STATE OR FEDERAL COURT. 
EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE
MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.

 

(c)           THIS AGREEMENT AND THE NOTES SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK.

 

(d)           EACH
OF THE GRANTORS AND THE COLLATERAL AGENT IRREVOCABLY WAIVES ALL RIGHT TO TRIAL
BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT,
TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO ANY OF THE LOAN DOCUMENTS, THE
LOANS OR THE ACTIONS OF THE AGENT OR ANY LENDER IN THE NEGOTIATION,
ADMINISTRATION, PERFORMANCE OR ENFORCEMENT THEREOF.

 

[Rest of this page intentionally left blank.]

 

11

 

IN WITNESS WHEREOF, each of the undersigned have
caused this Agreement to be duly executed and delivered by its officer
thereunto duly authorized as of the date first above written.

 

	
   

  	
   

  	
  JPMORGAN CHASE BANK, N.A., AS COLLATERAL AGENT

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  WHOLE FOODS MARKET, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Address for Notices:

  	
   

  	
  [OTHER GRANTORS]

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  

 

 

Schedule I to the

Security Agreement A

 

PLEDGED
INTERESTS AND PLEDGED DEBT

 

Part I

 

 Initial
Pledged Interests

 

	
  Grantor

  	
   

  	
  Issuer

  	
   

  	
  Class of Equity

  Interest

  	
   

  	
  Par Value

  	
   

  	
  Certificate

  No(s)

  	
   

  	
  Number

  of Shares

  	
   

  	
  Percentage

  of

  Outstanding

  Shares of the

  Same Class of

  Equity Interest

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

Part II

 

Initial
Pledged Debt

 

	
  Grantor

  	
   

  	
  Debt

  Issuer

  	
   

  	
  Description of

  Debt

  	
   

  	
  Debt Certificate No(s).

  	
   

  	
  Final

  Scheduled

  Maturity

  	
   

  	
  Outstanding

  Principal

  Amount

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

Schedule II
to the

Security Agreement A

 

LOCATION, CHIEF EXECUTIVE OFFICE, TYPE OF
ORGANIZATION, JURISDICTION OF ORGANIZATION AND ORGANIZATIONAL IDENTIFICATION
NUMBER

 

	
  Grantor

  	
   

  	
  Location

  	
   

  	
  Chief

  Executive

  Office

  	
   

  	
  Type of

  Organization

  	
   

  	
  Jurisdiction

  of

  Organization

  	
   

  	
  Organizational

  I.D. No.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

Schedule III
to the

Security Agreement A

 

CHANGES IN NAME, LOCATION, ETC.

 

 

Exhibit A to the

Security Agreement A

 

FORM OF SECURITY AGREEMENT SUPPLEMENT

 

[Date of Security Agreement A Supplement]

 

JPMORGAN CHASE BANK,
N.A.,

as the Collateral Agent for the

Secured Parties referred to in the

Loan Agreements  referred to below

                                        

                                        

	
  Attn:

  	
                              

  	
   

  

 

WHOLE FOODS MARKET, INC.

 

Ladies and Gentlemen:

 

Reference is made to (i) the Term Loan Agreement
dated as of August [  ], 2007 (as
amended, amended and restated, supplemented or otherwise modified from time to
time, the “Term Loan Agreement”), among the Borrower, Royal Bank of
Canada, as administrative agent for the lenders from time to time parties
thereto, JPMorgan Chase Bank, N.A., and
              
as [joint] syndication agent[s],
                    
as documentation
agent,                      
as managing agent and RBC Capital Markets and J. P. Morgan Securities Inc., as
joint lead arrangers and joint bookrunners (ii)  the Revolving Credit Loan
Agreement dated as of August [  ],
2007 (as amended, amended and restated, supplemented or otherwise modified from
time to time, the “Revolving Loan Agreement”), among the Borrower,
JPMorgan Chase Bank, N.A., as administrative agent for the lenders from time to
time parties thereto, Royal Bank of Canada, as syndication agents, and J. P.
Morgan Securities Inc. and RBC Capital Markets, as joint lead arrangers and
joint bookrunners, and (iii) the Security Agreement A dated
[                      
    ], 2007 (as amended, amended and restated, supplemented
or otherwise modified from time to time, the “Security Agreement A”) made by the
Grantors from time to time party thereto in favor of JPMorgan Chase Bank, N.A.
as collateral agent (together with any successor collateral agent, the “Collateral Agent”)
for the Secured Parties under the Term Loan Agreement and the Revolving Loan
Agreement (the Term Loan Agreement and the Revolving Loan Agreement being
sometimes hereinafter collectively referred to as the “Loan Agreements”).  Terms defined in the Loan Agreements or the
Security Agreement A and not otherwise defined herein are used herein as
defined in the Loan Agreements or the Security Agreement A.

 

SECTION 1. 
Grant of Security.  The
undersigned hereby grants to the Collateral Agent, for the ratable benefit of
the Secured Parties under the Loan Documents, a security interest in, all of
its right, title and interest in and to all of the Collateral of the
undersigned, whether now owned or hereafter acquired by the undersigned,
wherever located and whether now or hereafter existing or arising, including,
without limitation, the property and assets of the undersigned set forth on the
attached supplemental schedules to the Schedules to the Security Agreement A.

 

SECTION 2. 
Security for Obligations. 
The grant of a security interest in the Collateral by the undersigned
under this Security Agreement A Supplement and the Security Agreement A secures
the payment of all Indebtedness and other obligations of the undersigned now or
hereafter existing under or in respect of the Loan Documents, whether direct or
indirect, absolute or contingent, and whether for principal, reimbursement
obligations, interest, premiums, penalties, fees, indemnifications, contract
causes of action, costs, expenses or otherwise. 
Without limiting the generality of the foregoing, this Security
Agreement A Supplement and the Security Agreement A secure the payment of all
amounts that constitute part of the Secured Obligations and that would be owed
by the undersigned to any Secured Party under the Loan Documents but for the
fact that such Secured Obligations are

 

 

unenforceable
or not allowable due to the existence of a bankruptcy, reorganization or
similar proceeding involving a Loan Party.

 

SECTION 3. 
Supplements to Security Agreement A Schedules.  The undersigned has attached hereto
supplemental Schedules I through III to Schedules I through III,
respectively, to the Security Agreement A, and the undersigned hereby certifies,
as of the date first above written, that such supplemental schedules have been
prepared by the undersigned in substantially the form of the equivalent
Schedules to the Security Agreement A and are complete and correct.

 

SECTION 4. 
Representations and Warranties. 
The undersigned hereby makes each representation and warranty set forth
in Section 4 of the Security Agreement A (as supplemented by the attached
supplemental schedules) to the same extent as each other Grantor.

 

SECTION 5. 
Obligations Under the Security Agreement A.  The undersigned hereby agrees, as of the date
first above written, to be bound as a Grantor by all of the terms and
provisions of the Security Agreement A to the same extent as each of the other
Grantors.  The undersigned further
agrees, as of the date first above written, that each reference in the Security
Agreement A to an “Additional Grantor” or a “Grantor” shall also mean and be a
reference to the undersigned.

 

SECTION 6. 
Governing Law.  This
Security Agreement A Supplement shall be governed by, and construed in
accordance with, the laws of the State of New York.

 

	
   

  	
   

  	
  Very truly yours,

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  [NAME OF ADDITIONAL GRANTOR]

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Address for notices:

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
						

 

A-2

 

EXHIBIT G-B

 

SECURITY
AGREEMENT B

 

Dated
[                      
    ], 2007

 

From

 

WHOLE FOODS MARKET, INC.,

 

as Grantor

 

- and -

 

the other Grantors referred to herein

 

as Grantors

 

to

 

JPMORGAN CHASE BANK, N.A.

 

as Collateral Agent

 

 

T A B L E  O F  C O N T E N T S

 

	
  Section

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  Section 1. Grant of
  Security

  	
   

  	
  2

  
	
   

  	
   

  	
   

  
	
  Section 2. Security
  for Obligations; Interpretation

  	
   

  	
  4

  
	
   

  	
   

  	
   

  
	
  Section 3. Grantors
  Remain Liable

  	
   

  	
  4

  
	
   

  	
   

  	
   

  
	
  Section 4.
  Representations and Warranties

  	
   

  	
  4

  
	
   

  	
   

  	
   

  
	
  Section 5. Further
  Assurances

  	
   

  	
  5

  
	
   

  	
   

  	
   

  
	
  Section 6. As to
  Equipment and Inventory

  	
   

  	
  5

  
	
   

  	
   

  	
   

  
	
  Section 7. Insurance

  	
   

  	
  6

  
	
   

  	
   

  	
   

  
	
  Section 8.
  Post-Closing Changes; Collections on Receivables and Related Contracts

  	
   

  	
  6

  
	
   

  	
   

  	
   

  
	
  Section 9. As to
  Intellectual Property Collateral

  	
   

  	
  6

  
	
   

  	
   

  	
   

  
	
  Section 10. As to
  Letter-of-Credit Rights

  	
   

  	
  6

  
	
   

  	
   

  	
   

  
	
  Section 11.
  Commercial Tort Claims

  	
   

  	
  7

  
	
   

  	
   

  	
   

  
	
  Section 12. Transfers
  and Other Liens; Additional Shares

  	
   

  	
  7

  
	
   

  	
   

  	
   

  
	
  Section 13.
  Collateral Agent Appointed Attorney-in-Fact

  	
   

  	
  7

  
	
   

  	
   

  	
   

  
	
  Section 14.
  Collateral Agent May Perform

  	
   

  	
  7

  
	
   

  	
   

  	
   

  
	
  Section 15. The
  Collateral Agent’s Duties

  	
   

  	
  7

  
	
   

  	
   

  	
   

  
	
  Section 16. Remedies

  	
   

  	
  9

  
	
   

  	
   

  	
   

  
	
  Section 17. Indemnity
  and Expenses

  	
   

  	
  10

  
	
   

  	
   

  	
   

  
	
  Section 18.
  Amendments; Waivers; Additional Grantors; Etc.

  	
   

  	
  11

  
	
   

  	
   

  	
   

  
	
  Section 19. Notices,
  Etc.

  	
   

  	
  11

  
	
   

  	
   

  	
   

  
	
  Section 20.
  Continuing Security Interest; Assignments under the Loan Agreements

  	
   

  	
  12

  
	
   

  	
   

  	
   

  
	
  Section 21. Release;
  Termination

  	
   

  	
  12

  
	
   

  	
   

  	
   

  
	
  Section 22. Execution
  in Counterparts

  	
   

  	
  12

  
	
   

  	
   

  	
   

  
	
  Section 23.
  Jurisdiction; Governing Law, Etc

  	
   

  	
  12

  

 

 

SCHEDULES

 

	
  Schedule I

  	
  -

  	
  Location, Chief Executive Office, Place Where
  Agreements Are Maintained, Type Of Organization, Jurisdiction Of Organization
  And Organizational Identification Number

  
	
  Schedule II

  	
  -

  	
  Changes in Name, Location, Etc.

  
	
   

  	
   

  	
   

  
	
  EXHIBIT

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Exhibit A

  	
  -

  	
  Form of Security Agreement B Supplement

  

 

ii

 

SECURITY
AGREEMENT B

 

SECURITY AGREEMENT dated
[                    
    ], 20     made by WHOLE FOODS
MARKET, INC., a Texas corporation (the “Borrower”), and the other Persons
listed on the signature pages hereof (the Borrower and the Persons so
listed being, collectively, the “Grantors”), to JPMORGAN CHASE BANK, N.A.
(“JPMorgan”),
as collateral agent (in such capacity, and together with any successor
collateral agent appointed pursuant to this Agreement, the “Collateral Agent”)
for the Secured Parties (as defined below).

 

PRELIMINARY STATEMENTS.

 

1.                                       The Borrower has entered into a Term Loan
Agreement dated as of August 28, 2007 among the Borrower, Royal Bank of
Canada, as administrative agent for the lenders from time to time parties
thereto (together with its successors and assigns in such capacity, the “Term
Loan Administrative Agent”), JPMorgan Chase Bank, N.A., as Collateral Agent
and as syndication agent, and RBC Capital Markets and J. P. Morgan Securities Inc.,
as joint lead arrangers and joint bookrunners (said agreement, as it may
hereafter be amended, restated, supplemented or otherwise modified from time to
time, being the “Term Loan Agreement”).

 

2.                                       The Borrower has entered into a Revolving
Credit Agreement dated as of August 28, 2007 among the Borrower, JPMorgan
Chase Bank, N.A., as Collateral Agent and as administrative agent for the
lenders from time to time parties thereto (together with its successors and
assigns in such capacity, the “Revolving Loan Administrative Agent”),
Royal Bank of Canada,, as syndication agent, and J. P. Morgan Securities Inc.
and RBC Capital Markets, as joint lead arrangers and joint bookrunners (said
agreement, as it may hereafter be amended, restated, supplemented or otherwise
modified from time to time, being the “Revolving Loan Agreement”).  The Term Loan Agreement and the Revolving
Loan Agreement shall sometimes hereinafter be collectively referred to as the “Loan
Agreements.”

 

3.                                       In connection with the Term Loan Agreement,
certain of the Grantors (other than the Borrower) and other affiliated entities
have executed and delivered a Master Guaranty Agreement to the Term Loan
Administrative Agent dated as of August 28, 2007, and in connection with
the Revolving Loan Agreement, the Grantors (other than the Borrower) and other
affiliated entities have executed and delivered a Master Guaranty Agreement to
the Revolving Loan Administrative Agent dated as of August 28, 2007 (both
of said Master Guaranty Agreements, as each of the same may hereafter be
amended, restated, supplemented or otherwise modified from time to time, being
the “Master
Guaranty Agreements”).

 

4.                                       In connection with the Loan Agreements,
the Grantors have executed and delivered a Security Agreement A to the Collateral
Agent dated as of August 28, 2007 (said agreement, as it may hereafter be
amended, restated, supplemented or otherwise modified from time to time, being
the “Security
Agreement A”), with the understanding that this Agreement and the
security interest granted hereunder is in addition to, and not in lieu of,
Security Agreement A.

 

5.                                       Pursuant to Section 5.17 of the Term
Loan Agreement and/or Section 5.17 of the Revolving Loan Agreement, either
or both of the Term Loan Administrative Agent and/or the Revolving Loan
Administrative Agent have requested that the Grantors grant the security
interest contemplated by this Agreement. 
Each Grantor will derive substantial direct and indirect benefit from
the transactions contemplated by the Loan Agreements.

 

6.                                       Upon the request of the Collateral Agent
in connection with the exercise of its remedies hereunder, the Borrower will
open a collateral deposit account (the “Collateral Account”) pursuant to,
and subject to the terms of, this Agreement.

 

7.                                       Terms defined in the Loan Agreements and
not otherwise defined in this Agreement are used in this Agreement as defined
in the Loan Agreements.  Further, unless
otherwise defined in this Agreement or in the Loan Agreements, terms defined in
Article 8 or 9 of the UCC (as defined below) are used in this Agreement as
such terms are defined in such Article 8 or 9.  “UCC” means the Uniform Commercial Code
as in effect from time to time in the State of New York; provided that, if perfection or the effect
of perfection or non-perfection or the

 

 

priority of the security
interest in any Collateral is governed by the Uniform Commercial Code as in
effect in a jurisdiction other than the State of New York, “UCC”
means the Uniform Commercial Code as in effect from time to time in such other
jurisdiction for purposes of the provisions hereof relating to such perfection,
effect of perfection or non-perfection or priority.

 

NOW, THEREFORE, in consideration of the premises, each
Grantor hereby agrees with the Collateral Agent for the ratable benefit of the
Secured Parties under each of the Loan Agreements as follows:

 

Section 1. 
Grant of Security.  Each
Grantor hereby grants to the Collateral Agent, for the ratable benefit of the
lenders from time to time party to either or both of the Loan Agreements
(together with the Collateral Agent, the Term Loan Administrative Agent and the
Revolving Loan Administrative Agent, the “Secured Parties”) , a security
interest in such Grantor’s right, title and interest in and to the following,
in each case, as to each type of property described below, whether now owned or
hereafter acquired by such Grantor, wherever located, and whether now or
hereafter existing or arising (collectively, the “Additional Collateral”):

 

(a)                                  all
equipment in all of its forms, including, without limitation, all machinery,
tools, furniture and fixtures, and all parts thereof and all accessions
thereto, including, without limitation, computer programs and supporting
information that constitute equipment within the meaning of the UCC (any and
all such property being the “Equipment”);

 

(b)                                 all
inventory in all of its forms, including, without limitation, (i) all raw
materials, work in process, finished goods and materials used or consumed in
the manufacture, production, preparation or shipping thereof, (ii) goods
in which such Grantor has an interest in mass or a joint or other interest or
right of any kind (including, without limitation, goods in which such Grantor
has an interest or right as consignee) and (iii) goods that are returned
to or repossessed or stopped in transit by such Grantor, and all accessions
thereto and products thereof and documents therefor, including, without
limitation, computer programs and supporting information that constitute
inventory within the meaning of the UCC (any and all such property being the “Inventory”);

 

(c)                                  all
accounts, chattel paper (including, without limitation, tangible chattel paper
and electronic chattel paper), instruments (including, without limitation,
promissory notes), deposit accounts, letter-of-credit rights, general
intangibles (including, without limitation, payment intangibles) and other
obligations of any kind, whether or not arising out of or in connection with
the sale or lease of goods or the rendering of services and whether or not
earned by performance, and all rights now or hereafter existing in and to all
supporting obligations and in and to all security agreements, mortgages, Liens,
leases, letters of credit and other contracts securing or otherwise relating to
the foregoing property (any and all of such accounts, chattel paper,
instruments, deposit accounts, letter-of-credit rights, general intangibles and
other obligations, to the extent not referred to in clause (d), (e) or
(f) below, being the “Receivables,” and any and all such supporting
obligations, security agreements, mortgages, Liens, leases, letters of credit
and other contracts being the “Related Contracts”);

 

(d)                                 the
following (collectively, the “Account Collateral”):

 

(i)                                     the
Collateral Account and each other deposit account and all funds and financial
assets from time to time credited thereto (including, without limitation, all
Cash Equivalents), and all certificates and instruments, if any, from time to
time representing or evidencing the Collateral Account or such other deposit
account;

 

(ii)                                  all
promissory notes, certificates of deposit, checks and other instruments from
time to time delivered to or otherwise possessed by the Collateral Agent or an
Affiliate of the Collateral Agent on its behalf, for or on behalf of such
Grantor in substitution for or in addition to any or all of the then existing
Account Collateral; and

 

(iii)                               all
interest, dividends, distributions, cash, instruments and other property from
time to time received, receivable or otherwise distributed in respect of or in
exchange for any or all of the then existing Account Collateral;

 

2

 

(e)                                  the
following (collectively, the “Intellectual Property Collateral”):

 

(i)                                     all
patents, patent applications, utility models and statutory invention
registrations, all inventions claimed or disclosed therein and all improvements
thereto;

 

(ii)                                  all
trademarks, service marks, domain names, trade dress, logos, designs, slogans,
trade names, business names, corporate names and other source identifiers,
whether registered or unregistered (provided
that no security interest shall be granted in United States intent-to-use
trademark applications to the extent that, and solely during the period in
which, the grant of a security interest therein would impair the validity or
enforceability, or result in the cancellation, of such intent-to-use trademark
applications under applicable federal law), together, in each case, with the
goodwill symbolized thereby (“Trademarks”);

 

(iii)                               all
copyrights, including, without limitation, copyrights in Computer Software (as
hereinafter defined), internet web sites and the content thereof, whether
registered or unregistered;

 

(iv)                              all
computer software, programs and databases (including, without limitation,
source code, object code and all related applications and data files), firmware
and documentation and materials relating thereto, together with any and all
maintenance rights, service rights, programming rights, hosting rights, test rights,
improvement rights, renewal rights and indemnification rights and any
substitutions, replacements, improvements, error corrections, updates and new
versions of any of the foregoing (“Computer
Software”);

 

(v)                                 all
confidential and proprietary information, including, without limitation,
know-how, trade secrets, manufacturing and production processes and techniques,
inventions, research and development information, databases and data,
including, without limitation, technical data, financial, marketing and
business data, pricing and cost information, business and marketing plans and
customer and supplier lists and information, and all other intellectual,
industrial and intangible property of any type, including, without limitation,
industrial designs and mask works;

 

(vi)                              all
registrations and applications for registration for any of the foregoing,
together with all reissues, divisions, continuations, continuations-in-part,
extensions, renewals and reexaminations thereof;

 

(vii)                           all
tangible embodiments of the foregoing, all rights in the foregoing provided by
international treaties or conventions, all rights corresponding thereto
throughout the world and all other rights of any kind whatsoever of such
Grantor accruing thereunder or pertaining thereto;

 

(viii)                        all
agreements, permits, consents, orders and franchises relating to the license,
development, use or disclosure of any of the foregoing to which such Grantor,
now or hereafter, is a party or a beneficiary (“IP Agreements”);

 

(ix)                                any
and all claims for damages and injunctive relief for past, present and future
infringement, dilution, misappropriation, violation, misuse or breach with
respect to any of the foregoing, with the right, but not the obligation, to sue
for and collect, or otherwise recover proceeds arising from such damages;

 

(f)                                    all
commercial tort claims;

 

(g)                                 all
books and records (including, without limitation, customer lists, credit files,
printouts and other computer output materials and records) of such Grantor
pertaining to any of the Additional Collateral; and

 

(h)                                 all
proceeds of, collateral for, income, royalties and other payments now or
hereafter due and payable with respect to, and supporting obligations relating
to, any and all of the Additional Collateral 

 

3

 

(including,
without limitation, proceeds, collateral and supporting obligations that
constitute property of the types described in clauses (a) through (g) and
this clause (h) of this Section 1) and, to the extent not otherwise included,
all (A) payments under insurance (whether or not the Collateral Agent is
the loss payee thereof), or any indemnity, warranty or guaranty, in each case,
payable by reason of loss or damage to or otherwise with respect to any of the
foregoing Additional Collateral, and (B) cash.

 

Notwithstanding the foregoing, “Additional
Collateral” shall not include and the Grantors shall not be deemed
to have granted a security interest in any property or agreement of such
Grantor to the extent (but only so long as) (x) the granting of a security
interest thereunder is prohibited by any applicable law or (y) is
prohibited by, or constitutes a breach or default under or results in the
termination of or requires any consent not obtained under, any contract, lease,
license, agreement, instrument or other document giving rise to such property,
in each case solely to the extent that such breach or default is not rendered
ineffective by the UCC or other applicable law or, in the case of any consent,
such consent is actually required to grant such security interest under
applicable law.

 

Section 2. 
Security for Obligations; Interpretation.  This Agreement secures, in the case of each
Grantor, the payment of all Indebtedness and other obligations of such Grantor
now or hereafter existing under any of the Loan Documents (as defined in each
of the Loan Agreements), whether direct or indirect, absolute or contingent,
and whether for principal, reimbursement obligations, interest, fees, premiums,
penalties, indemnifications, contract causes of action, costs, expenses or
otherwise (all such obligations being the “Secured Obligations”).  Without limiting the generality of the
foregoing, this Agreement secures, as to each Grantor, the payment of all
amounts that constitute part of the Secured Obligations and would be owed by
such Grantor to any Secured Party under any of the Loan Documents but for the
fact that they are unenforceable or not allowable due to the existence of a
bankruptcy, reorganization or similar proceeding involving a Loan Party.

 

Section 3. 
Grantors Remain Liable. 
Anything herein to the contrary notwithstanding, (a) each Grantor
shall remain liable under the contracts and agreements included in such Grantor’s
Additional Collateral to the extent set forth therein to perform all of its
duties and obligations thereunder to the same extent as if this Agreement had
not been executed, (b) the exercise by the Collateral Agent of any of the
rights hereunder shall not release any Grantor from any of its duties or
obligations under the contracts and agreements included in the Additional
Collateral and (c) no Secured Party shall have any obligation or liability
under the contracts and agreements included in the Additional Collateral by
reason of this Agreement or any other Loan Document, nor shall any Secured
Party be obligated to perform any of the obligations or duties of any Grantor
thereunder or to take any action to collect or enforce any claim for payment.

 

Section 4. 
Representations and Warranties. 
Each Grantor represents and warrants as follows:

 

(a)                                  As
of the date hereof, such Grantor’s exact legal name, location, chief executive
office, type of organization, jurisdiction of organization and organizational
identification number is set forth in Schedule I hereto.  Within the five years preceding the date
hereof, such Grantor has not changed its name, location, chief executive
office, type of organization, jurisdiction of organization or organizational
identification number from those set forth in Schedule I hereto except
as set forth in Schedule II hereto.

 

(b)                                 Such
Grantor is the legal and beneficial owner of the Additional Collateral granted
or purported to be granted by it free and clear of any Lien, claim, option or
right of others, except for the security interest created under this Agreement
or permitted under the Loan Agreements. 
Except as permitted under the Loan Agreements, no effective financing
statement or other instrument similar in effect covering all or any part of such
Additional Collateral or listing such Grantor or any trade name of such Grantor
as debtor is on file in any recording office, except such as may have been
filed in favor of the Collateral Agent relating to the Loan Documents, filings
which have not been authorized by the applicable Grantor or as otherwise
permitted under the Loan Agreements.

 

(c)                                  This
Agreement creates in favor of the Collateral Agent for the benefit of the
Secured Parties under the Loan Agreements a valid security interest in the
Additional Collateral granted by such Grantor (to the extent such matter is
governed by the laws of the United States, or a jurisdiction located therein),
securing the payment of the Secured Obligations; all filings and other actions
necessary to perfect the security interest in the Additional Collateral granted
by such Grantor, to the extent required hereunder, have been or will be timely
made or taken and are, or will be, in full force and effect (but only to the
extent perfection can be accomplished by filing a 

 

4

 

financial
statement in the proper jurisdiction); such security interest is first priority
except for the Liens permitted by the Loan Agreements.

 

(d)                                 To
such Grantor’s knowledge, no material Governmental Authorization by, and no
notice to or filing with, any Governmental Authority or other third party is
required for the grant by such Grantor of the security interest granted
hereunder or for the execution, delivery or performance of this Agreement by
such Grantor.

 

(e)                                  As
to itself and its material Intellectual Property Collateral (i) to such
Grantor’s knowledge, the operation of such Grantor’s business as currently
conducted or as contemplated to be conducted and the use of the Intellectual
Property Collateral in connection therewith do not conflict with, infringe,
misappropriate, dilute, misuse or otherwise violate the intellectual property
rights of any third party, (ii) such Grantor is the exclusive owner of all
right, title and interest in and to, or has a valid right to use, all Intellectual
Property Collateral subject only to the terms of the IP Agreements and (iii) there
is no judgment or decree in respect of any Intellectual Property Collateral
that would reasonably be expected to have a Material Adverse Effect.

 

Section 5. 
Further Assurances.  (a) 
Each Grantor agrees that from time to time, at the expense of such Grantor,
such Grantor will promptly execute and deliver, or otherwise authenticate, all
further instruments and documents, and take all further action that may be
necessary or reasonably desirable, or that the Collateral Agent may reasonably
request, in order to perfect and maintain perfection of any pledge or security
interest granted or purported to be granted by such Grantor hereunder or to
enable the Collateral Agent to exercise and enforce its rights and remedies
hereunder with respect to any Additional Collateral of such Grantor.  Without limiting the generality of the
foregoing, each Grantor will promptly with respect to Additional Collateral of
such Grantor:  (i) execute or
authenticate and file, or authorize the Collateral Agent to file, such
financing or continuation statements, or amendments thereto, and as permitted
by the terms of this Agreement or otherwise with the Grantor’s consent, such
other instruments or notices, as may be necessary or desirable, or as the
Collateral Agent may reasonably request, in order to perfect and preserve the
security interest granted or purported to be granted by such Grantor hereunder;
(ii) upon the occurrence and during the continuance of an Event of
Default, take all action necessary to ensure that the Collateral Agent has
control of Additional Collateral consisting of deposit accounts, electronic
chattel paper and letter of credit rights as provided in Sections 9-104, 9-105
and 9-107 of the UCC; and (iii) deliver to the Collateral Agent evidence that
all other actions that the Collateral Agent may deem reasonably necessary or
desirable in order to perfect and protect the security interest granted or
purported to be granted by such Grantor under this Agreement has been taken.
Notwithstanding anything to the contrary set forth in this Section 5 or in
this Agreement, unless an Event of Default shall have occurred and be
continuing, (A) the Grantors shall not be required to take any action to
perfect the security interests granted under this Agreement in any Additional
Collateral other than executing, authenticating and filing, or authorizing the
Collateral Agent to file, financing or continuation statements, or amendments
thereto and (B) landlords and warehousemen shall be not be required to
provide access or subordination agreements.

 

(b)                                 Each
Grantor hereby authorizes the Collateral Agent to file one or more financing or
continuation statements, and amendments thereto, including, without limitation,
one or more financing statements indicating that such financing statements
cover all assets or all personal property (or words of similar effect) of such
Grantor, in each case without the signature of such Grantor, and regardless of
whether any particular asset described in such financing statements falls
within the scope of the UCC or the granting clause of this Agreement.  A photocopy or other reproduction of this
Agreement shall be sufficient as a financing statement where permitted by law.  Each Grantor ratifies its authorization for
the Collateral Agent to have filed such financing statements, continuation
statements or amendments filed prior to the date hereof.

 

(c)                                  Upon
the occurrence and continuance of an Event of Default, upon the written request
of the Collateral Agent, each Grantor will furnish to the Collateral Agent from
time to time statements and schedules further identifying and describing the
Additional Collateral of such Grantor and such other reports in connection with
such Additional Collateral as the Collateral Agent may reasonably request, all
in reasonable detail.

 

Section 6.  As to Equipment and Inventory             Each
Grantor will cause its Equipment to be maintained and preserved in the same
condition, repair and working order as when new, ordinary wear and tear and
casualty and condemnation losses excepted, and will forthwith, or in the case
of any loss or damage to any of such Equipment as soon as practicable after the
occurrence thereof, make or cause to be made all repairs, replacements

 

5

 

and other
improvements in connection therewith that such Grantor determines are necessary
or desirable to such end.

 

Section 7. 
Insurance.  Each Grantor
will, at its own expense, maintain insurance with respect to its Equipment and
Inventory in the manner required by the Loan Agreements.

 

Section 8. 
  Post-Closing Changes;
Collections on Receivables and Related Contracts.  (a)  No Grantor will change its name,
type of organization, jurisdiction of organization, organizational
identification number or location from those set forth in Section 4(a) of
this Agreement without first giving at least 15 days’ prior written notice to
the Collateral Agent and taking all action reasonably required by the Collateral
Agent for the purpose of perfecting or protecting the security interest granted
by this Agreement.  Each Grantor will
hold and preserve its records relating to the Additional Collateral and will
permit representatives of the Collateral Agent at any reasonable time during
normal business hours upon reasonable advance notice to inspect and make
abstracts from such records and other documents.  If any Grantor does not have an
organizational identification number and later obtains one, it will forthwith
notify the Collateral Agent of such organizational identification number.

 

(b)                                 Except
as otherwise provided in this subsection (b), each Grantor will continue to
collect, at its own expense, all amounts due or to become due such Grantor
under the Receivables and Related Contracts. 
In connection with such collections, such Grantor may take (and, at the
Collateral Agent’s direction, upon the occurrence and during the continuance of
an Event of Default, will take) such action as such Grantor or the Collateral
Agent may deem necessary or advisable to enforce collection of the Receivables
and Related Contracts; provided, however, that the Collateral Agent shall have
the right at any time, upon the occurrence and during the continuance of an
Event of Default and upon written notice to such Grantor of its intention to do
so, to notify the Obligors under any Receivables and Related Contracts of the
assignment of such Receivables and Related Contracts to the Collateral Agent
and to direct such Obligors to make payment of all amounts due or to become due
to such Grantor thereunder directly to the Collateral Agent and, upon such
notification and at the expense of such Grantor, to enforce collection of any
such Receivables and Related Contracts, to adjust, settle or compromise the
amount or payment thereof, in the same manner and to the same extent as such
Grantor might have done, and to otherwise exercise all rights with respect to
such Receivables and Related Contracts, including, without limitation, those
set forth set forth in Section 9-607 of the UCC.  After receipt by any Grantor of the notice
from the Collateral Agent referred to in the proviso to the preceding sentence,
upon the occurrence and during the continuance of an Event of Default (i) all
amounts and proceeds (including, without limitation, instruments) received by
such Grantor in respect of the Receivables and Related Contracts of such
Grantor shall be deemed to be received in trust for the benefit of the
Collateral Agent hereunder, shall be segregated from other funds of such
Grantor and shall be forthwith paid over to the Collateral Agent in the same
form as so received (with any necessary indorsement) to be deposited in the
Collateral Account and either (A) released to such Grantor so long as no
Event of Default shall have occurred and be continuing or (B) if any Event
of Default shall have occurred and be continuing, applied as provided in Section 16(b) and
(ii) such Grantor will not adjust, settle or compromise the amount or
payment of any Receivable or amount due on any Related Contract, release wholly
or partly any Obligor thereof or allow any credit or discount thereon.  No Grantor will permit or consent to the
subordination of its right to payment under any of the Receivables and Related
Contracts to any other indebtedness or obligations of the Obligor thereof.

 

Section 9. 
As to Intellectual Property Collateral.  Each Grantor shall take such commercially
reasonable actions to take all steps as are reasonable and appropriate under
the circumstances (all as determined by the Board of Directors of the Grantor)
to preserve and protect each material item of its Intellectual Property
Collateral.

 

Section 10. 
As to Letter-of-Credit Rights. 
Each Grantor, by granting a security interest in its Receivables
consisting of letter-of-credit rights to the Collateral Agent, intends to (and
hereby does) assign to the Collateral Agent its rights (including its
contingent rights) to the proceeds of all Related Contracts consisting of
letters of credit of which it is or hereafter becomes a beneficiary or
assignee.  Upon the occurrence and during
the continuance of an Event of Default, each Grantor will promptly use
commercially reasonable efforts to cause the issuer of each letter of credit
and each nominated person (if any) with respect thereto to consent to such
assignment of the proceeds thereof pursuant to a consent in form and substance
reasonably satisfactory to the Collateral Agent and deliver written evidence of
such consent to the Collateral Agent.

 

6

 

Section 11. 
Commercial Tort Claims. 
Each Grantor will promptly give notice to the Collateral Agent of any
commercial tort claim that may arise after the date hereof with an anticipated
recovery of at least $5,000,000 and, upon the request of the Collateral Agent,
will promptly execute or otherwise authenticate a supplement to this Agreement,
and otherwise take all action reasonably necessary to subject such commercial
tort claim to the security interest created under this Agreement.

 

Section 12. 
Transfers and Other Liens; Additional Shares.  Each Grantor agrees that:

 

(a)                                  It
will not (i) sell, assign or otherwise dispose of, or grant any option
with respect to, any of the Additional Collateral, other than sales, assignments
and other dispositions of Additional Collateral, and options relating to
Additional Collateral, permitted under the terms of this Agreement or the Loan
Agreements, or (ii) create or suffer to exist any Lien upon or with
respect to any of the Additional Collateral of such Grantor except for the
pledge, assignment and security interest created under this Agreement and Liens
permitted under the Loan Agreements.

 

Section 13. 
Collateral Agent Appointed Attorney-in-Fact.  Each Grantor hereby irrevocably appoints the
Collateral Agent such Grantor’s attorney-in-fact (such appointment to cease
upon the payment in full of all the Secured Obligations other than contingent
indemnification claims as to which no demand has been made), with full
authority in the place and stead of such Grantor and in the name of such
Grantor or otherwise, from time to time, upon the occurrence and during the
continuance of an Event of Default, in the Collateral Agent’s reasonable
discretion, to take any action and to execute any instrument that the
Collateral Agent may deem reasonably necessary or advisable to accomplish the
purposes of this Agreement, including, without limitation:

 

(a)                                  to
ask for, demand, collect, sue for, recover, compromise, receive and give
acquittance and receipts for moneys due and to become due under or in respect
of any of the Additional Collateral,

 

(b)                                 to
receive, indorse and collect any drafts or other instruments, documents and
chattel paper, in connection with clause (a) or (b) above, and

 

(c)                                  to
file any claims or take any action or institute any proceedings that the
Collateral Agent may deem necessary or desirable for the collection of any of
the Additional Collateral or otherwise to enforce the rights of the Collateral
Agent with respect to any of the Additional Collateral.

 

Section 14. 
Collateral Agent May Perform.  If any Grantor fails to perform any agreement
contained herein, the Collateral Agent may, as the Collateral Agent deems
necessary to protect the security interest granted hereunder in the Additional
Collateral or to protect the value thereof, but without any obligation to do so
and without notice, itself perform, or cause performance of, such agreement,
and the expenses of the Collateral Agent incurred in connection therewith shall
be payable by such Grantor under Section 17.

 

Section 15. 
The Collateral Agent’s Duties. 
(a)  The powers conferred on the Collateral Agent hereunder are
solely to protect the Secured Parties’ interest in the Additional Collateral
and shall not impose any fiduciary relationship or any duty upon it to exercise
any such powers.  Except for the exercise
of reasonable care in the safe custody of any Additional Collateral in its
possession or in the possession of an Affiliate of the Collateral Agent or any
designee (including without limitation, a Subagent (as defined in clause (b) below))
of the Collateral Agent acting on its behalf and the accounting for moneys
actually received by it or its Affiliates hereunder in accordance with the
express terms hereof, the Collateral Agent shall have no fiduciary relationship
or other duty as to any Additional Collateral, as to ascertaining or taking
action with respect to calls, conversions, exchanges, maturities, tenders or
other matters relative to any Additional Collateral, whether or not any Secured
Party has or is deemed to have knowledge of such matters, or as to the taking
of any necessary steps to preserve rights against any parties or any other
rights pertaining to any Additional Collateral. 
The Collateral Agent and any of its Affiliates or any designee
(including without limitation, a Subagent) on its behalf shall be deemed to
have exercised reasonable care in the custody and preservation of any
Additional Collateral in its possession or in the possession of an Affiliate or
any designee (including without limitation, a Subagent) on its behalf if such
Additional Collateral is accorded treatment substantially equal to that which
it accords its own property.

 

7

 

(b)           Anything contained herein to the
contrary notwithstanding, the Collateral Agent may from time to time, when the
Collateral Agent deems it to be necessary, appoint one or more subagents (each
a “Subagent”)
for the Collateral Agent hereunder with respect to all or any part of the
Additional Collateral.  In the event that
the Collateral Agent so appoints any Subagent with respect to any Additional
Collateral, (i) the assignment and pledge of such Additional Collateral
and the security interest granted in such Additional Collateral by each Grantor
hereunder shall be deemed for purposes of this Security Agreement B to have
been made to such Subagent, in addition to the Collateral Agent, for the
ratable benefit of the Secured Parties, as security for the Secured Obligations
of such Grantor, (ii) such Subagent shall automatically be vested, in
addition to the Collateral Agent, with all rights, powers, privileges,
interests and remedies of the Collateral Agent hereunder and pursuant to the
terms hereof, with respect to such Additional Collateral, and (iii) the
term “Collateral Agent,” when used herein in relation to any rights, powers,
privileges, interests and remedies of the Collateral Agent with respect to such
Additional Collateral, shall include such Subagent; provided, however,
that no such Subagent shall be authorized to take any action with respect to
any such Additional Collateral unless and except to the extent expressly
authorized in writing by the Collateral Agent.

 

(c)           Each Secured Party by its acceptance
thereof hereby appoints and authorizes the Collateral Agent to take such action
as agent on its behalf and to exercise such powers hereunder and under the
other Loan Documents as are specifically delegated to the Collateral Agent by
the terms of this Agreement and the Loan Documents, together with such other
powers as are reasonably incidental thereto. 
The Collateral Agent shall not have any duties or responsibilities
except those expressly set forth in this Agreement and the Loan Documents.

 

(d)           As to any matters not expressly
provided for by the Loan Documents, the Collateral Agent shall not be required
to exercise any discretion or take any action, but shall be required to act or
to refrain from acting (and shall be fully protected in so acting or refraining
from acting) upon the written instructions signed by the Term Loan
Administrative Agent and the Revolving Loan Administrative Agent provided,
however, that the Collateral Agent shall not be required to take any action
that exposes the Collateral Agent to personal liability or that is contrary to
this Agreement or applicable law. The Collateral Agent shall in all cases be
fully protected in acting or refraining from acting under this Agreement or any
of the Loan Documents upon written directions signed by the Term Loan
Administrative Agent and the Revolving Loan Administrative Agent, except for
any such actions (or restraint of actions) which constitute gross negligence or
willful misconduct on the part of the Collateral Agent. Any such directions by
the Collateral Agent and any action taken by the Collateral Agent and any
failure by the Collateral Agent to act, in each case pursuant to such
directions, shall be binding on all the Secured Parties and their respective
successors and assigns.  The Collateral
Agent shall not be responsible to any Secured Party for any recitals,
statements, representations, or warranties (other than any thereof made by the
Collateral Agent or any officer thereof) contained in this Agreement or in any
of the Loan Documents, for the value, validity, effectiveness, genuineness,
enforceability, or sufficiency of this Agreement, of any of the Loan Documents,
or of the Additional Collateral, or for the creation, maintenance, priority or
perfection of any Lien created by the Loan Documents.

 

(e)           Subject to the provisions of Section 15(d),
the Collateral Agent may consult with independent legal counsel and the advice
of such counsel shall be full and complete authorization and protection in
respect of any action to be taken, suffered, or omitted by it hereunder in good
faith and in reliance thereon.  The
Collateral Agent may execute any of the rights or powers hereunder or perform
any duties hereunder either directly or through other agents or attorneys
reasonably acceptable to the Required Lenders under each of the Loan
Agreements.  The Collateral Agent shall
not be liable for the misconduct or negligence of any such agent or attorney
appointed by it with due care.  The
foregoing shall not exculpate any such agent or attorney from liability for its
own misconduct or negligence.

 

(f)            The Collateral Agent, in its
individual capacity and its affiliates may accept deposits from, lend to, and
generally engage in any kind of lending, banking, or trust business with, any
Grantor or their respective affiliates as if it were not acting as the
Collateral Agent.  With respect to its
commitment and in its capacity as a Lender under each of the Loan Agreements,
the Collateral Agent shall have and may exercise the same rights and powers
under this Agreement and is subject to the same obligations and liabilities as
applicable to any other Lender.

 

(g)           To the extent that Grantors fail to
do so under the terms of the Loan Documents, and without limiting the primary
obligation of Grantors to do so, the Secured Parties will reimburse the
Collateral Agent 

 

8

 

upon demand and
hold the Collateral Agent, its directors, officers, employees, and agents
harmless against any and all losses, liabilities, or expenses incurred by the
Collateral Agent arising out of or in connection with any action taken pursuant
to and consistently with the express written direction of the applicable
Secured Parties given under Section 15(d), including any costs and
expenses incurred in connection with any investigation, suit (whether or not
the Collateral Agent or any other such indemnified person is named as a party
thereto), or claim arising out of or related to such action, in proportion to
the respective principal amounts of the Indebtedness under the Loan Agreements
at the time held by them, provided, that no Secured Party shall be liable under
this Section 15(g) for any such losses, liabilities, or expenses
incurred by the Collateral Agent as a result of its own breach of this Agreement,
gross negligence or willful misconduct.

 

(h)           The Collateral Agent may resign at
any time by giving at least forty-five (45) days’ prior written notice of
resignation to Grantors and each Secured Party, such resignation to be
effective upon the appointment of a successor Collateral Agent as provided in
this Section 15.  The Collateral
Agent may be removed at any time, for or without cause, by an instrument or
instruments in writing delivered to the Collateral Agent and Grantors and
signed by the Required Lenders under both of the Loan Agreements.  In case the office of Collateral Agent shall
become vacant for any reason, a successor Collateral Agent may be appointed to
fill such vacancy by an instrument or instruments in writing delivered to such
successor Collateral Agent, the departing Collateral Agent, each Lender under
any Loan Agreement and Grantors.  After
any such resignation or removal, the provisions of this Section 15 shall
continue in effect for the benefit of the departing Collateral Agent with
respect to any actions taken or omitted by it while acting as Collateral Agent.

 

(i)            Any corporation or national banking
association into which the Collateral Agent may be merged or with which it may
be consolidated, or any corporation or national banking association resulting
from any merger or consolidation to which the Collateral Agent is a party, or
any state or national bank or trust company in any manner succeeding to all or
substantially all of the business of the Collateral Agent and shall automatically
succeed to all of the rights and obligations of the Collateral Agent hereunder
and under the Loan Documents without further action on the part of any of the
parties hereto.  Such surviving or
succeeding corporation or national banking association (if other than the
Collateral Agent) shall forthwith deliver to each Secured Party and Grantors
written notice of such succession to the rights and obligations of the
Collateral Agent hereunder and under the Loan Documents.

 

Section 16. 
Remedies.  If any Event of
Default shall have occurred and be continuing:

 

(a)           The Collateral Agent may exercise in
respect of the Additional Collateral, in addition to other rights and remedies
provided for herein or otherwise available to it, all the rights and remedies
of a secured party upon default under the UCC and also may:  (i) require each Grantor to, and each
Grantor hereby agrees that it will at its expense and upon request of the
Collateral Agent forthwith, assemble all or part of the Additional Collateral
as directed by the Collateral Agent and make it available to the Collateral
Agent at a place and time to be designated by the Collateral Agent that is
reasonably convenient to both parties; (ii) without notice except as
specified below, sell the Additional Collateral or any part thereof in one or
more parcels at public or private sale, at any of the Collateral Agent’s
offices or elsewhere, for cash, on credit or for future delivery, and upon such
other terms as the Collateral Agent may in its reasonable discretion deem
commercially reasonable; (iii) occupy any premises owned by any of the Grantors
where the Additional Collateral or any part thereof is assembled or located for
a reasonable period in order to effectuate its rights and remedies hereunder or
under law, without obligation to such Grantor in respect of such occupation;
and (iv) exercise any and all rights and remedies of any of the Grantors
under or in connection with the Additional Collateral, or otherwise in respect
of the Additional Collateral, including, without limitation, (A) any and all
rights of such Grantor to demand or otherwise require payment of any amount
under, or performance of any provision of, the Receivables, the Related
Contracts and the other Additional Collateral, (B) withdraw, or cause or
direct the withdrawal, of all funds with respect to the Account Collateral and (C) exercise
all other rights and remedies with respect to the Receivables, the Related
Contracts and the other Additional Collateral, including, without limitation, those
set forth in Section 9-607 of the UCC. 
Each Grantor agrees that, to the extent notice of sale shall be required
by law, at least ten days’ notice to such Grantor of the time and place of any
public sale or three days’ notice of the time and place of any private sale
shall constitute reasonable notification. 
The Collateral Agent shall not be obligated to make any sale of
Additional Collateral regardless of notice of sale having been given.  The 

 

9

 

Collateral Agent may adjourn any
public or private sale from time to time by announcement at the time and place
fixed therefor, and such sale may, without further notice, be made at the time
and place to which it was so adjourned.

 

(b)           Any cash held by or on behalf of the
Collateral Agent and all cash proceeds received by or on behalf of the
Collateral Agent in respect of any sale of, collection from, or other
realization upon all or any part of the Additional Collateral shall be held by
the Collateral Agent as collateral for, and/or then or at any time thereafter
applied (after payment of any amounts payable to the Collateral Agent pursuant
to Section 17) in whole or in part by the Collateral Agent for the  benefit of the Secured Parties against, all
or any part of the Secured Obligations in the following order: (i) first,
on a pari passu basis, to all
Secured Obligations (excluding Secured Obligations arising under the terms of
any Credit Facility Hedging Agreements) comparing (1) the aggregate
principal amount of the then outstanding term loans under the Term Loan
Agreement to (2) the amount of the then effective Aggregate Commitment (as
defined in the Revolving Loan Agreement), if the Aggregate Commitment has not
been terminated, or the sum of the aggregate principal amount of the then
outstanding revolving loans under the Revolving Loan Agreement and the Letter
of Credit Exposure Amount (as defined in the Revolving Loan Agreement) then
outstanding under the Revolving Loan Agreement, if the Aggregate Commitment has
been terminated; provided that
the amounts set forth in this clause (i) that will be given pari passu treatment as set forth above
shall be limited to amounts (of Aggregate Commitments and Loans under the Term
Loan Agreement and Aggregate Commitments or Loans and Letter of Credit Exposure
Amount under the Revolving Credit Agreement, or as applicable) which would not
give rise to an Event of Default arising under section 7.1(d) of the Term
Loan Agreement or the Revolving Credit Agreement as a result of a breach of
section 6.1(b) of the Term Loan Agreement or the Revolving Credit
Agreement, respectively and, (ii) second, on a pari passu basis, to all Secured
Obligations arising under the terms of any Credit Facility Hedging
Agreements).  Any surplus of such cash or cash proceeds held by or on the behalf of
the Collateral Agent and remaining after payment in full of all
the Secured Obligations (other than contingent indemnification claims as to
which no demand has been made) shall be paid over to the applicable Grantor or
to whomsoever may be lawfully entitled to receive such surplus.

 

(c)           All payments received by any Grantor
under or in respect of the Additional Collateral shall be received in trust for
the benefit of the Collateral Agent, shall be segregated from other funds of
such Grantor and shall be forthwith paid over to the Collateral Agent in the
same form as so received (with any necessary indorsement).

 

(d)           The Collateral Agent may, without
notice to any Grantor except as required by law and at any time or from time to
time, charge, set-off and otherwise apply all or any part of the Secured
Obligations then due and owing against any funds held with respect to the
Account Collateral or in any other deposit account.

 

(e)           In the event of any sale or other
disposition of any of the Intellectual Property Collateral of any Grantor, the
goodwill symbolized by any Trademarks subject to such sale or other disposition
shall be included therein, and such Grantor shall supply to the Collateral
Agent or its designee such Grantor’s know-how and expertise, and documents and
things relating to any Intellectual Property Collateral subject to such sale or
other disposition, and such Grantor’s customer lists and other records and
documents relating to such Intellectual Property Collateral and to the
manufacture, distribution, advertising and sale of products and services of
such Grantor.

 

Section 17. 
Indemnity and Expenses.  (a) 
Each Grantor agrees to indemnify, defend and save and hold harmless each
Secured Party and each of their Affiliates and their respective officers,
directors, employees, agents and advisors (each, an “Indemnified Party”) from and against, and shall pay on
demand, any and all actual claims, damages, losses, liabilities and
out-of-pocket expenses (including, without limitation, reasonable fees and
expenses of counsel but excluding special, indirect, punitive or consequential
damages, whether arising in tort, contract or otherwise) that may be incurred
by or asserted or awarded against any Indemnified Party, in each case arising
out of or in connection with or by reason of (including, without limitation, in
connection with any investigation, litigation or proceeding or preparation of a
defense in connection therewith) this Agreement, except to the extent such
claim, damage, loss, liability or expense is found in a final nonappealable
judgment by a court of 

 

10

 

competent jurisdiction to
have resulted from such Indemnified Party’s gross negligence or willful
misconduct.  In the case of an
investigation, litigation or other proceeding to which the indemnity in this Section 17(a) applies,
such indemnity shall be effective whether or not such investigation, litigation
or proceeding is brought by any Grantor, its directors, shareholders or
creditors or any Indemnified Party or any other Person, whether or not any
Indemnified Party is otherwise a party thereto and whether or not the Merger is
consummated.  The Grantors also agree not
to assert any claim against the Collateral Agent, any Secured Party or any of
their Affiliates, or any of their respective officers, directors, employees,
agents and advisors, on any theory of liability, for special, indirect,
consequential or punitive damages arising out of or otherwise relating to the
this Agreement.

 

(b)           Each Grantor agrees to pay on demand (i) all
reasonable out-of-pocket costs and expenses of the Collateral Agent in
connection with the preparation, execution, delivery, administration,
modification and amendment of, or any consent or waiver under, this Agreement
(including, without limitation, the reasonable out-of-pocket fees and expenses
of counsel for the Collateral Agent with respect thereto, with respect to
advising the Collateral Agent as to its rights and responsibilities, or the
perfection, protection or preservation of rights or interests, under this
Agreement, with respect to negotiations with any Grantor or with other
creditors of any Grantor or any of its Subsidiaries arising out of any Default
or any events or circumstances that may give rise to a Default and with respect
to presenting claims in or otherwise participating in or monitoring any
bankruptcy, insolvency or other similar proceeding involving creditors’ rights
generally and any proceeding ancillary thereto) and (ii) all costs and
expenses of the Collateral Agent and each Secured Party in connection with the
enforcement of this Agreement, whether in any action, suit or litigation, or
any bankruptcy, insolvency or other similar proceeding affecting creditors’
rights generally (including, without limitation, the reasonable fees and
expenses of counsel for the Collateral Agent and each Secured Party with
respect thereto).

 

Section 18. 
Amendments; Waivers; Additional Grantors; Etc.  (a)  No amendment or waiver of any
provision of this Agreement, and no consent to any departure by any Grantor
herefrom, shall in any event be effective unless the same shall be in writing
and signed by the Collateral Agent, the Term Loan Administrative Agent and the
Revolving Loan Administrative Agent, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.  No failure on the part of the
Collateral Agent or any other Secured Party to exercise, and no delay in
exercising any right hereunder, shall operate as a waiver thereof; nor shall
any single or partial exercise of any such right preclude any other or further
exercise thereof or the exercise of any other right.

 

(b)           Upon the execution and delivery by any
Person of a security agreement supplement in substantially the form of Exhibit A
hereto (each a “Security Agreement B Supplement”), such Person
shall be referred to as an “Additional Grantor”
and shall be and become a Grantor hereunder, and each reference in this
Agreement and the other Loan Documents to “Grantor” shall also mean and be a
reference to such Additional Grantor, each reference in this Agreement and the
other Loan Documents to the “Additional Collateral” shall also mean and be a
reference to the Additional Collateral granted by such Additional Grantor and
each reference in this Agreement to a Schedule shall also mean and be a
reference to the schedules attached to such Security Agreement B Supplement.

 

Section 19. 
Notices, Etc.  All notices
and other communications provided for hereunder shall be in writing (including
telecopier) and mailed, telecopied or otherwise delivered, in the case of the
Borrower or the Collateral Agent, addressed to it at its address specified in
the Revolving Agreements and, in the case of each Grantor other than the
Borrower, addressed to it at its address set forth opposite such Grantor’s name
on the signature pages hereto or on the signature page to the
Security Agreement B Supplement pursuant to which it became a party hereto; or,
as to any party, at such other address as shall be designated by such party in
a written notice to the other parties. 
All such notices and other communications shall, when mailed,
telegraphed or telecopied, be effective when deposited in the mails, delivered
to the telegraph company or transmitted by telecopier, respectively.  Delivery by telecopier of an executed
counterpart of a signature page to any amendment or waiver of any
provision of this Agreement of any Exhibit hereto to be executed and
delivered hereunder shall be effective as delivery of an original executed
counterpart thereof.  As agreed to among
the Borrower, the Collateral Agent and the applicable Secured Parties from time
to time, notices and other communications may also be delivered by e-mail to
the e-mail address of a representative of the applicable Person provided from
time to time by such Person.

 

11

 

Section 20. 
Continuing Security Interest; Assignments under the Loan Agreements.  This Agreement shall create a continuing
security interest in the Additional Collateral and shall (a) remain in
full force and effect until the payment in full in cash of the Secured
Obligations (other than contingent indemnification obligations as to which no
demand has been made), (b) be binding upon each Grantor, its successors
and assigns and (c) inure, together with the rights and remedies of the
Collateral Agent hereunder, to the benefit of the Secured Parties and their
respective successors, transferees and assigns. 
Without limiting the generality of the foregoing clause (c), any
Lender may assign or otherwise transfer all or any portion of its rights and
obligations under the applicable Loan Agreement(s) (including, without
limitation, all or any portion of the Loans owing to it and the Note or Notes,
if any, held by it) to any other Person, and such other Person shall thereupon
become vested with all the benefits in respect thereof granted to such Lender
herein or otherwise.

 

Section 21. 
Release; Termination.  (a) 
Upon any sale, lease, transfer or other disposition of any item of Additional
Collateral of any Grantor in accordance with the terms of the Loan Documents,
the Collateral Agent will, at such Grantor’s expense, execute and deliver to
such Grantor such documents as such Grantor shall reasonably request to
evidence the release of such item of Additional Collateral from the assignment
and security interest granted hereby; provided,
however, that (i) at the
time of such request and such release no Event of Default shall have occurred
and be continuing, (ii) such Grantor shall have delivered to the
Collateral Agent, prior to the date of the proposed release, a written request
for release describing the item of Additional Collateral, together with a form
of release for execution by the Collateral Agent and a certificate of such
Grantor to the effect that the transaction is in compliance with the Loan
Documents and as to such other matters as the Collateral Agent may reasonably
request, (iii) the proceeds of any such sale, lease, transfer or other
disposition required to be applied, or any payment to be made in connection
therewith, in accordance with the terms of this Agreement and (iv) with
respect to sales of Equipment and Inventory in the ordinary course of business
and other sales and dispositions that are explicitly permitted by the Loan
Agreements, the Liens granted herein shall be deemed to be released with no
further action on the part of any Person.

 

(b)           Upon the payment in full in cash of
the Secured Obligations (other than contingent indemnification obligations as
to which no demand has been made) and the termination of the Aggregate
Commitment (as defined in each of the Loan Agreements), the pledge and security
interest granted hereby shall terminate and all rights to the Additional
Collateral shall revert to the applicable Grantor.  Upon any such termination, the Collateral
Agent will, at the applicable Grantor’s expense, execute and deliver to such
Grantor such documents as such Grantor shall reasonably request to evidence
such termination.

 

Section 22. 
Execution in Counterparts. 
This Agreement may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so executed
shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement. 
Delivery of an executed signature page of this Agreement by
facsimile transmission or electronic transmission (i.e., a “pdf” or “tif”)
shall be effective as delivery of an original executed counterpart of this
Agreement.

 

Section 23. 
Jurisdiction; Governing Law, Etc. (a) Each of the parties
hereto hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of any New York State court or
Federal court of the United States of America sitting in New York City, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement or any of the other Loan Documents to which it is a
party, or for recognition or enforcement of any judgment, and each of the
parties hereto hereby irrevocably and unconditionally agrees that all claims in
respect of any such action or proceeding may be heard and determined in any
such New York State court or, to the fullest extent permitted by law, in such
Federal court.  Each of the parties
hereto agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment
or in any other manner provided by law. 
Nothing in this Agreement shall affect any right that any party may
otherwise have to bring any action or proceeding relating to this Agreement or
any of the other Loan Documents in the courts of any jurisdiction.

 

(b)           EACH OF THE PARTIES HERETO
IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT IT MAY LEGALLY
AND EFFECTIVELY DO SO, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO
THE LAYING OF VENUE OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS TO WHICH IT IS A
PARTY IN ANY NEW YORK STATE OR FEDERAL COURT. 
EACH OF 

 

12

 

THE PARTIES
HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE
DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR
PROCEEDING IN ANY SUCH COURT.

 

(c)           THIS AGREEMENT AND THE NOTES SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

 

(d)           EACH
OF THE GRANTORS AND THE COLLATERAL AGENT IRREVOCABLY WAIVES ALL RIGHT TO TRIAL
BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT,
TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO ANY OF THE LOAN DOCUMENTS, THE
LOANS OR THE ACTIONS OF THE AGENT OR ANY LENDER IN THE NEGOTIATION,
ADMINISTRATION, PERFORMANCE OR ENFORCEMENT THEREOF.

 

[Rest of this page intentionally left blank.]

 

13

 

IN WITNESS WHEREOF, each of the undersigned have
caused this Agreement to be duly executed and delivered by its officer
thereunto duly authorized as of the date first above written.

 

	
   

  	
  JPMORGAN CHASE BANK, N.A., AS

  
	
   

  	
  COLLATERAL AGENT

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  WHOLE FOODS MARKET, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
  Address for Notices:

  	
  [OTHER GRANTORS]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 

Schedule I
to the

Security Agreement B

 

LOCATION, CHIEF EXECUTIVE OFFICE, TYPE OF
ORGANIZATION, JURISDICTION OF ORGANIZATION AND ORGANIZATIONAL IDENTIFICATION
NUMBER

 

	
  Grantor

  	
   

  	
  Location

  	
   

  	
  Chief

  Executive

  Office

  	
   

  	
  Type of

  Organization

  	
   

  	
  Jurisdiction

  of

  Organization

  	
   

  	
  Organizational

  I.D. No.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

Schedule II
to the

Security Agreement B

 

CHANGES IN NAME, LOCATION, ETC.

 

 

Exhibit A to the

Security Agreement B

 

FORM OF SECURITY AGREEMENT B SUPPLEMENT

 

[Date of Security Agreement B Supplement]

 

JPMORGAN CHASE BANK,
N.A.,

as the Collateral Agent for the

Secured Parties referred to in the

Loan Agreements  referred to below

                                        

                                        

Attn:

 

WHOLE FOODS MARKET, INC.

 

Ladies and Gentlemen:

 

Reference is made to (i) the Term Loan Agreement
dated as of August 24, 2007 (as amended, amended and restated,
supplemented or otherwise modified from time to time, the “Term Loan
Agreement”), among the Borrower, Royal Bank of Canada, as administrative
agent for the lenders from time to time parties thereto, JPMorgan Chase Bank,
N.A., and
              
as [joint] syndication agent[s],
                    
as documentation
agent,                      
as managing agent and RBC Capital Markets and J. P. Morgan Securities Inc., as
joint lead arrangers and joint bookrunners, (ii)  the Revolving Credit
Loan Agreement dated as of August 28, 2007 (as amended, amended and
restated, supplemented or otherwise modified from time to time, the “Revolving
Loan Agreement”), among the Borrower, JPMorgan Chase Bank, N.A., as
administrative agent for the lenders from time to time parties thereto, Royal
Bank of Canada, as syndication agents, and J. P. Morgan Securities Inc. and RBC
Capital Markets, as joint lead arrangers and joint bookrunners, and (iii) the
Security Agreement B dated
[                      
    ], 2007 (as amended, amended and restated, supplemented
or otherwise modified from time to time, the “Security Agreement B”) made by the
Grantors from time to time party thereto in favor of JPMorgan Chase Bank, N.A.
as collateral agent (together with any successor collateral agent, the “Collateral Agent”)
for the Secured Parties under the Term Loan Agreement and the Revolving Loan
Agreement (the Term Loan Agreement and the Revolving Loan Agreement being
sometimes hereinafter collectively referred to as the “Loan Agreements”).  Terms defined in the Loan Agreements or the
Security Agreement B and not otherwise defined herein are used herein as
defined in the Loan Agreements or the Security Agreement B.

 

SECTION 1. 
Grant of Security.  The
undersigned hereby grants to the Collateral Agent, for the ratable benefit of
the Secured Parties under the Loan Documents, a security interest in, all of
its right, title and interest in and to all of the Additional Collateral of the
undersigned, whether now owned or hereafter acquired by the undersigned,
wherever located and whether now or hereafter existing or arising, including,
without limitation, the property and assets of the undersigned set forth on the
attached supplemental schedules to the Schedules to the Security Agreement B.

 

SECTION 2. 
Security for Obligations. 
The grant of a security interest in the Additional Collateral by the
undersigned under this Security Agreement B Supplement and the Security
Agreement B secures the payment of all Indebtedness and other obligations of
the undersigned now or hereafter existing under or in respect of the Loan
Documents, whether direct or indirect, absolute or contingent, and whether for
principal, reimbursement obligations, interest, premiums, penalties, fees,
indemnifications, contract causes of action, costs, expenses or otherwise.  Without limiting the generality of the
foregoing, this Security Agreement B Supplement and the Security Agreement B
secure the payment of all amounts that constitute part of the Secured
Obligations and that would be owed by the undersigned to any Secured Party
under the Loan Documents but for the fact that such

 

 

Secured
Obligations are unenforceable or not allowable due to the existence of a
bankruptcy, reorganization or similar proceeding involving a Loan Party.

 

SECTION 3. 
Supplements to Security Agreement B Schedules.  The undersigned has attached hereto
supplemental Schedules I and II to Schedules I and II, respectively, to
the Security Agreement B, and the undersigned hereby certifies, as of the date
first above written, that such supplemental schedules have been prepared by the
undersigned in substantially the form of the equivalent Schedules to the
Security Agreement B and are complete and correct.

 

SECTION 4. 
Representations and Warranties. 
The undersigned hereby makes each representation and warranty set forth
in Section 4 of the Security Agreement B (as supplemented by the attached
supplemental schedules) to the same extent as each other Grantor.

 

SECTION 5. 
Obligations Under the Security Agreement B.  The undersigned hereby agrees, as of the date
first above written, to be bound as a Grantor by all of the terms and
provisions of the Security Agreement B to the same extent as each of the other
Grantors.  The undersigned further
agrees, as of the date first above written, that each reference in the Security
Agreement B to an “Additional Grantor” or a “Grantor” shall also mean and be a
reference to the undersigned.

 

SECTION 6. 
Governing Law.  This
Security Agreement B Supplement shall be governed by, and construed in
accordance with, the laws of the State of New York.

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  [NAME OF ADDITIONAL GRANTOR]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  	
  Address for notices:

  
	
   

  	
   

  

 

A-2

 

EXHIBIT
H

 

MASTER GUARANTY

 

THIS MASTER GUARANTY (“Guaranty”) dated
effective as of August 28, 2007, executed and delivered by various
Subsidiaries of WHOLE FOODS MARKET, INC., a Texas corporation (“Company”)
and EACH OF THE PERSONS WHICH IS OR WHICH MAY BECOME A PARTY HERETO
(individually, a “Guarantor” and, collectively, the “Guarantors”),
to ROYAL BANK OF CANADA, in its capacity as administrative agent (“Agent”)
for each of the financial institutions (collectively the “Lenders”) now
or hereafter a party to that certain Term Loan Agreement, dated as of August 28,
2007, by and between the Company, the Agent, JPMorgan Chase Bank, N.A. as
collateral agent and syndication agent and the Lenders, (as may have heretofore
been amended, restated, modified and supplemented from time to time, the “Term
Loan Agreement”).

 

ARTICLE
1

 

Section 1.1                                      Definitions.  As used in
this Guaranty, these terms shall have these respective meanings:

 

Bankruptcy Law means any proceeding of the type referred to in Section 7.01(x) and
(y) of the Term Loan Agreement or Title 11, U.S. Code, or any similar
foreign, federal or state law for the relief of debtors.

 

Dollars and $ means lawful money of the United States
of America.

 

Guaranteed Obligations means the sum of all indebtedness and obligations of
the Company or any Subsidiary at any time evidenced by or arising pursuant to
any and all of the advances, the Notes and all other obligations and
indebtedness of the Company or any Subsidiary at any time incurred under or
arising pursuant to or in connection with the Term Loan Agreement or any of the
other Loan Documents (including, without limitation, any extensions,
modifications, substitutions, amendment or renewals of any or all of the
foregoing Indebtedness), whether direct or indirect, absolute or contingent,
and whether for principal, interest, premiums, fees, indemnities, contract
causes of action, costs, expenses or otherwise. 
The Guaranteed Obligations include interest and other obligations accruing
or arising in connection with the foregoing after (a) commencement of any
case under any bankruptcy or similar laws by or against any Obligor or (b) the
obligations of any Obligor shall cease to exist by operation of law or for any
other reason.  The Guaranteed Obligations
also include all reasonable attorneys’ fees and any other expenses incurred by
Agent or any Lender in negotiating, monitoring or enforcing the Loans, the
Notes or any of the Loan Documents or defending against any claims made by
Persons other than the Lenders or the Agent, arising directly or indirectly in
respect of or on account of any of the Guaranteed Obligations.

 

Joinder Agreement means each Joinder Agreement, substantially in the
form of Exhibit A attached hereto, from time to time executed and
delivered to Agent by a Subsidiary of Company pursuant to the terms of the Term
Loan Agreement, for the purpose, among others, of becoming an additional
Guarantor hereunder and an additional party to the Contribution Agreement.

 

1

 

Obligor means any person or entity now or hereafter primarily
or secondarily obligated to pay all or any part of the Guaranteed Obligations,
including Company and each Guarantor.

 

Unless redefined in this Guaranty, capitalized terms
used in this Guaranty have the respective meanings ascribed to them in the Term
Loan Agreement.  The provisions of Section 1.2
of the Term Loan Agreement are incorporated herein by reference for all
purposes.

 

ARTICLE
2

 

Section 2.1                                      Execution of Loan Documents. 
Company has executed and delivered the Term Loan Agreement and the Notes
to the Lenders.

 

Section 2.2                                      Consideration.  In
consideration of the credit and financial accommodations contemplated to be
extended to Company by the Lenders pursuant to the Loan Documents or otherwise,
which each Guarantor has determined will substantially benefit it directly or
indirectly, and for other good and valuable consideration, the receipt and
sufficiency of which each Guarantor hereby acknowledges, each Guarantor
executes and delivers this Guaranty to Agent with the intention of being
presently and legally bound by its terms.

 

ARTICLE
3

 

Section 3.1                                      Payment Guaranty; Limitation of Liability.  (a) 
Guarantors, as primary obligors and not as sureties, unconditionally guarantee,
jointly and severally, to the Agent for the benefit of the Lenders, the full,
prompt and punctual payment of the Guaranteed Obligations when due (whether at
its stated maturity, by acceleration or otherwise) in accordance with the Loan
Documents, to the extent set forth herein. 
This Guaranty is irrevocable, unconditional and absolute, and if for any
reason all or any portion of the Guaranteed Obligations shall not be paid when
due, Guarantors, jointly and severally will immediately pay the Guaranteed
Obligations to Agent or other Person entitled to it, in Dollars, regardless of (a) any
defense, right of set-off or counterclaim which any Obligor may have or assert,
(b) whether Agent or any other Person shall have taken any steps to
enforce any rights against any Obligor or any other Person to collect any of
the Guaranteed Obligations and (c) any other circumstance, condition or
contingency.  Without limiting the
generality of the foregoing, each Guarantor’s liability shall extend to all
amounts that constitute part of the Guaranteed Obligations and would be owed by
the Company or any Subsidiary to the Agent, for the benefit of the Lenders,
under or in respect of the Loan Documents but for the fact that they are
unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving such Guarantor.

 

(b)                                 Each Guarantor, and by its acceptance of
this Guaranty, the Agent and each other Lender, hereby confirms that it is the
intention of all such Persons that this Guaranty and the obligations of each
Guarantor hereunder not constitute a fraudulent transfer or conveyance for
purposes of Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform
Fraudulent Transfer Act or any similar foreign, federal or state law to the
extent applicable to this Guaranty and the obligations of each Guarantor
hereunder.  To effectuate the foregoing
intention, the Agent, the Lenders and the Guarantors hereby irrevocably agree
that the obligations of each Guarantor under this Guaranty at any time shall be
limited to the maximum

 

2

 

amount as will result in the obligations of such
Guarantor under this Guaranty not constituting a fraudulent transfer or
conveyance.

 

Section 3.2                                      Obligations Not Affected. 
Guarantors’ covenants, agreements and obligations under this Guaranty
shall in no way be released, diminished, reduced, impaired or otherwise
affected by reason of the happening from time to time of any of the following
things, for any reason, whether by voluntary act, operation of law or order of
any competent governmental authority and whether or not Guarantors are given
any notice or are asked for or give any further consent (all requirements for
which, however arising, each Guarantor hereby WAIVES to the fullest extent
permitted by applicable law):

 

(a)                                  release or waiver of any obligation or
duty to perform or observe any express or implied agreement, covenant, term or
condition imposed in any of the Loan Documents or by applicable law on any
Obligor or any party to the Loan Documents, including, without limitation, any
increase in the Guaranteed Obligations resulting from the extension of
additional credit to the Company or any Subsidiary or otherwise.

 

(b)                                 extension of the time for payment of any
part of the Guaranteed Obligations or any other sums payable under the Loan
Documents, extension of the time for performance of any other obligation under
or arising out of or in connection with the Loan Documents or change in the
manner, place or other terms of such payment or performance.

 

(c)                                  settlement or compromise of any or all of
the Guaranteed Obligations.

 

(d)                                 renewal, supplementing, modification,
rearrangement, amendment, restatement, replacement, cancellation, rescission,
revocation or reinstatement (whether or not material) of any part of any of the
Loan Documents or any obligations under the Loan Documents of any Obligor or
any other party to the Loan Documents (without limitation on the number of
times any of the foregoing may occur).

 

(e)                                  acceleration of the time for payment or
performance of any Guaranteed Obligations or other obligation under any of the
Loan Documents or exercise of any other right, privilege or remedy under or in
regard to any of the Loan Documents.

 

(f)                                    failure, omission, delay, neglect,
refusal or lack of diligence by any Lender or Agent or any other Person to
assert, enforce, give notice of intent to exercise—or any other notice with
respect to—or exercise any right, privilege, power or remedy conferred on any
Lender or Agent or any other Person in any of the Loan Documents or by law or
action on the part of any Lender or Agent or any other Person granting
indulgence, grace, adjustment, forbearance or extension of any kind to any
Obligor or any other Person.

 

(g)                                 release, surrender, exchange,
subordination or loss of any security or lien priority under any of the Loan
Documents or in connection with the Guaranteed Obligations.

 

(h)                                 release, modification or waiver of, or
failure, omission, delay, neglect, refusal or lack of diligence to enforce, any
guaranty, pledge, mortgage, deed of trust, security agreement, lien, charge,
insurance agreement, bond, letter of credit or other security device, guaranty,
surety or indemnity agreement whatsoever.

 

3

 

(i)                                     taking or acceptance of any other
security or guaranty for the payment or performance of any or all of the
Guaranteed Obligations or the obligations of any Obligor.

 

(j)                                     release, modification or waiver of, or
failure, omission, delay, neglect, refusal or lack of diligence to enforce, any
right, benefit, privilege or interest under any contract or agreement, under
which the rights of any Obligor have been collaterally or absolutely assigned,
or in which a security interest has been granted, to any Lender or Agent as
direct or indirect security for payment of the Guaranteed Obligations or
performance of any other obligations to—or at any time held by any Lender or
Agent.

 

(k)                                  voluntary or involuntary liquidation,
dissolution, sale of any collateral, marshaling of assets and liabilities,
change in corporate or organizational status, receivership, insolvency,
bankruptcy, assignment for the benefit of creditors, reorganization,
arrangement, composition or readjustment of debt or other similar proceedings
of or affecting any Obligor or any of the assets of any Obligor, even if any of
the Guaranteed Obligations is thereby rendered void, unenforceable or
uncollectible against any other Person.

 

(l)                                     occurrence or discovery of any
irregularity, invalidity or unenforceability of any of the Guaranteed
Obligations or Loan Documents or any defect or deficiency in any of the
Guaranteed Obligations or Loan Documents, including the unenforceability of any
provisions of any of the Loan Documents because entering into any such Loan
Document was ultra  vires or because anyone who executed them
exceeded their authority.

 

(m)                               failure to acquire, protect or perfect
any lien or security interest in any collateral intended to secure any part of
the Guaranteed Obligations or any other obligations under the Loan Documents or
failure to maintain perfection.

 

(n)                                 failure by any Lender, Agent or any other
Person to notify or timely notify any Guarantor of any default, event of
default or similar event (however denominated) under any of the Loan Documents,
any renewal, extension, supplementing, modification, rearrangement, amendment,
restatement, replacement, cancellation, rescission, revocation or reinstatement
(whether or not material) or assignment of any part of the Guaranteed
Obligations, release or exchange of any security, any other action taken or not
taken by any Lender or Agent against any Obligor or any other Person or any
direct or indirect security for any part of the Guaranteed Obligations or other
obligation of Company, any new agreement between any Lender or Agent and any
Obligor or any other Person or any other event or circumstance.  Except as required by applicable law, neither
Agent nor any Lender has any duty or obligation to give any Guarantor any
notice of any kind under any circumstances whatsoever with respect to or in
connection with the Guaranteed Obligations or the Loan Documents.

 

(o)                                 occurrence of any event or circumstances
which might otherwise constitute a defense available to, or a discharge of, any
Obligor, including failure of consideration, fraud by or affecting any Person,
usury, forgery, breach of warranty, failure to satisfy any requirement of the
statute of frauds, running of any statute of limitation, accord and
satisfaction and any defense based on election of remedies of any type.

 

4

 

(p)                                 receipt and/or application of any
proceeds, credits or recoveries from any source, including any proceeds,
credits, or amounts realized from exercise of any rights, remedies, powers or
privileges of any Lender or Agent under the Loan Documents, by law or otherwise
available to any Lender or Agent except only as and to the extent the same
reduces the Guaranteed Obligations pursuant to and in accordance with other
express provisions of this Guaranty.

 

Section 3.3                                      Waiver of Certain Rights and Notices.  (a) 
To the fullest extent permitted by applicable law, each Guarantor hereby WAIVES
and RELEASES all right to require marshalling of assets and liabilities, sale
in inverse order of alienation, notice of acceptance of this Guaranty and of
any liability to which it applies or may apply, notice of the creation,
accrual, renewal, increase, extension, modification, amendment or rearrangement
of any part of the Guaranteed Obligations, presentment, demand for payment,
protest, notice of nonpayment, notice of dishonor, notice of intent to
accelerate, notice of acceleration and all other notices and demands,
collection, suit and the taking of any other action by any Lender or Agent.

 

(b)                                 Each Guarantor hereby unconditionally and
irrevocably waives (i) any defense arising by reason of any claim or
defense based upon an election of remedies by Agent or any Lender that in any
manner impairs, reduces, releases or otherwise adversely affects the
subrogation, reimbursement, exoneration, contribution or indemnification rights
of such Guarantor or other rights of such Guarantor to proceed against any of
the other Loan Parties, any other guarantor or any other Person and (ii) any
defense based on any right of set-off or counterclaim against or in respect of
the obligations of such Guarantor hereunder.

 

(c)                                  Each Guarantor hereby unconditionally and
irrevocably waives any duty on the part of the Agent or any Lender to disclose
to such Guarantor any matter, fact or thing relating to the business, condition
(financial or otherwise), operations, performance, properties or prospects of
any other Loan Party or any of its Subsidiaries now or hereafter know by such
Agent or Lender.

 

Section 3.4                                      Not a Collection Guaranty. 
This is an absolute guaranty of payment, and an absolute guaranty of
performance of all of the obligations of the Obligors under the Loan Documents,
and not of collection, and to the fullest extent not prohibited by applicable
law, each Guarantor WAIVES any right to require that any action be brought
against any Obligor or any other Person, or that any Lender or Agent be
required to enforce, attempt to enforce or exhaust any rights, benefits or
privileges of any Lender or Agent under any of the Loan Documents, by law or
otherwise; provided that nothing herein shall be construed to prevent
any Lender or Agent from exercising and enforcing at any time any right,
benefit or privilege which any Lender or Agent may have under any Loan Document
or by law from time to time, and at any time, and Guarantors agree that
Guarantors’ obligations hereunder are—and shall be—absolute, independent,
unconditional, joint and several under any and all circumstances.  Should any Lender or Agent seek to enforce
Guarantors’ obligations by action in any court, to the fullest extent not
prohibited by applicable law, each Guarantor WAIVES any requirement,
substantive or procedural, that (a) Agent pursue any foreclosure action,
realize or attempt to realize on any security or preserve or enforce any
deficiency claim against any Obligor or any other Person after any such
realization, (b) a judgment first be sought or rendered against any
Obligor or any other Person, (c) any Obligor or any other Person be joined
in such action or (d) a separate action

 

5

 

be brought against any Obligor or any other
Person.  Guarantors’ obligations under
this Guaranty are several from those of any other Obligor or any other Person,
and are primary obligations concerning which Guarantors are the principal
obligors.  All waivers in this Guaranty
or any of the Loan Documents shall be without prejudice to any Lender or Agent
at its option to proceed against any Obligor or any other Person, whether by
separate action or by joinder. 
Guarantors agree that this Guaranty shall not be discharged except by
payment of the Guaranteed Obligations in full, complete performance of all
obligations of the Obligors under the Loan Documents and termination of each
Lender’s obligation if any—to make any further advances under the Loan
Documents or extend other financial accommodations to any Obligor.

 

Section 3.5                                      Subrogation.  Each
Guarantor hereby unconditionally and irrevocably agrees not to exercise any rights
that it may now have or hereafter acquire against the Company, any other
Obligor or any other insider guarantor that arise from the existence, payment,
performance or enforcement of such Guarantor’s obligations under or in respect
of this Guaranty or any other Loan Document, including, without limitation, any
right of subrogation, reimbursement, exoneration, contribution or
indemnification and any right to participate in any claim or remedy of the
Agent or any Lender against the Company, any other Obligor or any other insider
guarantor or any Collateral, whether or not such claim, remedy or right arises
in equity or under contract, statute or common law, including, without
limitation, the right to take or receive from the Company, any other Obligor or
any other insider guarantor, directly or indirectly, in cash or other property
or by set-off or in any other manner, payment or security on account of such
claim, remedy or right, unless and until all of the Guaranteed Obligations and
all other amounts payable under this Guaranty shall have been paid in full in
cash and the Commitments shall have expired or been terminated.  If any amount shall be paid to any Guarantor
in violation of the immediately preceding sentence at any time prior to the
latest of the payment in full in cash of the Guaranteed Obligations and all
other amounts payable under this Guaranty, such amount shall be received and
held in trust for the benefit of the Agent and the Lenders, shall be segregated
from other property and funds of such Guarantor and shall forthwith be paid or
delivered to the Agent in the same form as so received (with any necessary
endorsement or assignment) to be credited and applied to the Guaranteed
Obligations and all other amounts payable under this Guaranty, whether matured
or unmatured, in accordance with the terms of the Loan Documents, or to be held
as Collateral for any Guaranteed Obligations or other amounts payable under
this Guaranty thereafter arising.  If (i) any
Guarantor shall make payment to the Agent, for the benefit of the Lenders, of
all or any part of the Guaranteed Obligations, (ii) all of the Guaranteed
Obligations and all other amounts payable under this Guaranty shall have been
paid in full in cash and (iii) the Maturity Date shall have occurred, the
Agent will, at such Guarantor’s request and expense, execute and deliver to
such Guarantor appropriate documents, without recourse and without
representation or warranty, necessary to evidence the transfer by subrogation
to such Guarantor of an interest in the Guaranteed Obligations resulting from
such payment made by such Guarantor pursuant to this Guaranty.

 

Section 3.6                                      Taxes.  (a)  If
any Guarantor is required by any applicable Legal Requirement to make any
deduction or withholding for or on account of any Tax from any payment to be
made by it under this Guaranty in respect of the Loans or under any other Loan
Documents, then such Guarantor shall (i) promptly notify the applicable
Lender hereunder that is entitled to such payment of such requirement to so
deduct or withhold such Tax, (ii) pay to the relevant authorities the full
amount required to be so deducted or withheld, (iii) promptly

 

6

 

forward to such Lender an official receipt (or
certified copies thereof), or other documentation reasonably acceptable to such
Lender, evidencing such payment to such Governmental Authorities and (iv) if
such Tax is an Indemnifiable Tax, pay, to the extent permitted by law, to such
holder, in addition to whatever net amount of such payment is paid to such
Lender, such additional amount as is necessary to ensure that the total amount
actually received by such Lender (free and clear of Indemnifiable Tax) will
equal the full amount of the payment such Lender would have received had no
such deduction or withholding been required. 
If any Guarantor pays any additional amount to a Lender pursuant to the
preceding sentence and such Lender shall receive a refund of an Indemnifiable
Tax with respect to which, in the good faith opinion of such Lender, such
payment was made, such Lender shall pay to such Guarantor the amount of such
refund promptly upon receipt thereof.

 

(b)                                 In the event that any Governmental
Authority notifies any Guarantor that it has improperly failed to withhold or
deduct any Tax from a payment received by any Lender under this Guaranty, such
Guarantor shall timely and fully pay such Tax to such Governmental Authority
and such Lender shall, upon receipt of written notice of such payment,
immediately pay to such Guarantor, an amount necessary in order that the amount
of such payment to such Guarantor after payment of all Taxes with respect to
such payment, shall equal the amount that such Guarantor paid to such
Governmental Authority pursuant to this clause (b).

 

(c)                                  Each Lender shall, upon request by any
Guarantor, take requested measures to mitigate the amount of Indemnifiable Tax
required to be deducted or withheld from any payment made by the Company under
this Guaranty or under any other Loan Documents if such measures can, in the
sole and absolute opinion of such Lender, be taken without such Lender
suffering any economic, legal, regulatory or other disadvantage (provided,
however, that no such Lender shall be required to designate a funding
office that is not located in the United States of America).

 

Section 3.7                                      Reliance on Guaranty.  All
extensions of credit and financial accommodations heretofore or hereafter made
by any Lender or Agent under or in respect of the Term Loan Agreement, the
Notes or any of the other Loan Documents shall be conclusively presumed to have
been made in acceptance of this Guaranty.

 

Section 3.8                                      Demands are Conclusive.  Any demand by
Agent under this Guaranty shall be conclusive, absent manifest error, as to the
matters therein stated, including the amount due.

 

Section 3.9                                      Joint and Several.  If any Person
makes any guaranty of any of the obligations guaranteed hereby or gives any
security for them, Guarantors’ obligations hereunder shall be joint and several
with the obligations of such other Person pursuant to such agreement or other
papers making the guaranty or giving the security.

 

Section 3.10                                Payments Returned.  Guarantors
agree that, if at any time all or any part of any payment previously applied by
Agent to the Guaranteed Obligations is or must be returned by any Lender or
Agent—or recovered from any Lender or Agent—for any legally binding reason
(including the order of any bankruptcy court), to the extent not prohibited by
applicable law, this Guaranty shall automatically be reinstated to the same
effect as if the prior application

 

7

 

had not been made, and, in addition, each Guarantor
hereby agrees, to the extent not prohibited by applicable law, to indemnify
each Lender and Agent against, and to save and hold each Lender and Agent
harmless from any required return by any Lender or Agent—or recovery from any
Lender or Agent—of any such payment because of its being deemed preferential
under applicable bankruptcy, receivership or insolvency laws, or for any other
reason.

 

ARTICLE
4

 

Each Guarantor hereby makes each representation and
warranty made in the Loan Documents by the Company with respect to such
Guarantor and each Guarantor hereby further represents and warrants as follows:

 

Section 4.1                                      Relationship to Company.  It has
determined that its liability and obligation under this Guaranty may reasonably
be expected to substantially benefit it directly or indirectly, and its board
of directors has made that determination. 
Company and it are mutually dependent on each other in the conduct of
their respective businesses and are, and do business together with the other
Subsidiaries of Company as, an integrated business enterprise involved in
same-day local delivery and distribution management services.  The maintenance and improvement of Company’s
financial condition is vital to sustaining its business and the transactions
contemplated in the Term Loan Agreement produce distinct and identifiable
financial and economic direct or indirect benefits to it.  Such identifiable benefits include:  (i) the availability to it of the
proceeds of the Loans on an as needed basis by way of intercompany loans and/or
capital contributions for general corporate or other purposes and (ii) the
general improvement of its financial and economic condition.  It has had full and complete access to the
Loan Documents and all other papers executed by any Obligor or any other Person
in connection with the Guaranteed Obligations, has reviewed them and is fully
aware of the meaning and effect of their contents.  It is fully informed of all circumstances
which bear upon the risks of executing this Guaranty and which a diligent
inquiry would reveal.  It has adequate
means to obtain from Company on a continuing basis information concerning
Company’s financial condition, and is not depending on Agent or any Lender to
provide such information, now or in the future. 
It agrees that neither Agent nor any Lender shall have an obligation to
advise or notify it or to provide it with any such data or information.  The execution and delivery of this Guaranty
is not a condition precedent (and neither Agent nor any Lender has in any way
implied that the execution of this Guaranty is a condition precedent) to Agent’s
or any Lender’s making, extending or modifying any loan or any other financial
accommodation to or for it.

 

Section 4.2                                      Proceedings.  No bankruptcy
or insolvency proceedings are pending or contemplated by or—to the best of its
knowledge—against it.

 

ARTICLE
5

Covenants for the Benefit of Agent

 

Each Guarantor covenants and agrees that, so long as
any part of the Guaranteed Obligations shall remain unpaid or any Lender shall
have any Commitment outstanding, such Guarantor will perform and observe, and
cause each of its Subsidiaries to perform and observe, all of the terms,
covenants and agreements set forth in the Loan Documents on its or their part
to be performed or observed or that the Company has agreed to cause such
Guarantor or such

 

8

 

Subsidiaries to perform or observe.  Each Guarantor, jointly and severally,
covenants and agrees that, until termination of the Term Loan Agreement in
accordance with its terms, each Guarantor will promptly after learning of any
Default or Event of Default, notify Agent of it in writing, specifying its
nature, the period of its existence and what action Guarantors are taking or
propose to take with respect thereto.

 

ARTICLE
6

Term

 

Subject to the automatic reinstatement provisions of Article 3
above, this Guaranty shall terminate and be of no further force or effect upon
payment in full of the Guaranteed Obligations.

 

ARTICLE
7

Default

 

If any Event of Default occurs under the Term Loan
Agreement, then that shall automatically constitute default under this
Guaranty.

 

ARTICLE
8

 

Section 8.1                                      Binding on Successors; No Assignment by Guarantors. 
All guaranties, warranties, representations, covenants and agreements in
this Guaranty shall bind the trustees, receivers, successors and assigns of
each Guarantor and shall benefit the Lenders and Agent, their respective
successors and assigns, and any holder of any part of the Guaranteed
Obligations.  No Guarantor shall assign
or delegate any of its obligations under this Guaranty or any of the other Loan
Documents without the express prior written consent of Agent.

 

Section 8.2                                      Subordination of Company’s Obligations to Guarantors. 
Each Guarantor agrees that if, for any reason whatsoever, Company now or
hereafter owes any Indebtedness, directly or indirectly, to any Guarantor, or
any Guarantor now or hereafter owes any Indebtedness, directly or indirectly,
to any other Guarantor, all such Indebtedness, together with all interest
thereon and fees and other charges in connection therewith, and all Liens
securing any such Indebtedness shall at all times be second, subordinate and
inferior in right of payment, in lien priority and in all other respects to the
Guaranteed Obligations and the fulfillment of any such indebted Guarantor’s
obligations hereunder or under any of the other Loan Documents and all Liens
from time to time securing the Guaranteed Obligations.  The provisions of this Section are in
addition to, and cumulative of, any other provisions contained in any other
Loan Document or other document, instrument or writing.

 

Section 8.3                                      Waiver of Suretyship Rights. 
By signing this Guaranty or executing a Joinder Agreement, each
Guarantor to the fullest extent not prohibited by applicable law, WAIVES each
and every right to which it may be entitled by virtue of any suretyship law.

 

Section 8.4                                      Indemnification.  To the fullest extent not prohibited by
applicable law, Guarantors, jointly and severally, agree to indemnify, defend
and hold each Lender and Agent and their respective shareholders, directors,
officers, agents, attorneys, advisors and employees (collectively, the “Indemnified
Parties”) harmless from and against any and

 

9

 

all loss, liability, obligation,
damage, penalty, judgment, claim, deficiency, expense, action, suit, cost and
disbursement of any kind or nature whatsoever (including interest, penalties,
attorneys’ fees and amounts paid in settlement) (the “Losses”),
REGARDLESS OF WHETHER CAUSED IN WHOLE OR IN PART BY THE NEGLIGENCE OF ANY
OF THE INDEMNIFIED PARTIES, imposed on, incurred by or asserted against the
Indemnified Parties growing out of or resulting from any Loan Document or any
transaction or event contemplated therein (except that such indemnity shall not
be paid to any Indemnified Party to the extent that the Losses directly result
from the gross negligence or willful misconduct of that Indemnified Party), to
the extent that such Losses arise out of or by reason of claims made by Persons
other than the Indemnified Parties, Company or any Guarantor.  Each Indemnified Party will give prompt
written notice to the Guarantors of any claim for indemnification by such
Person and shall consult with the Guarantors in the conduct of any defense; provided,
that failure to give any such notice shall not diminish the Guarantors’
obligations hereunder.  Any amount to be
paid under this Section by Guarantors to any Lender or Agent shall be a
joint and several demand obligation owing by Guarantors and shall bear interest
from the date of expenditure until paid at the Past Due Rate.

 

Section 8.5                                      Amendments in Writing.  This Guaranty
shall not be changed orally but shall be changed only by agreement in writing
signed by each Guarantor, the Agent and the Required Lenders; provided, however,
that that no amendment, waiver or consent shall, unless in writing and signed
by all of the Lenders (a) reduce or limit the obligations of any Guarantor
hereunder, release any Guarantor hereunder or otherwise limit any Guarantor’s
liability with respect to the Obligations owing to the Lenders under or in
respect of the Loan Documents (except as provided in the next succeeding
sentence, (b) postpone any date fixed for payment hereunder or (c) change
the number of Lenders or the percentage of the aggregate unpaid principal
amount of the Loans that, in each case, shall be required for the Lenders or
any of them to take any action hereunder. 
Upon the sale or disposition of a Guarantor to the extent permitted in
accordance with the terms of the Loan Documents, such Guarantor shall be
automatically released from this Guaranty. 
Any waiver or consent with respect to this Guaranty shall be effective
only in the specific instance and for the specific purpose for which given.  No course of dealing between the parties, no
usage of trade and no parole or extrinsic evidence of any nature shall be used
to supplement or modify any of the terms or provisions of this Guaranty.

 

Section 8.6                                      Notices.  Any notices
or other communications required or permitted to be given hereunder shall be
given, made and received in the manner provided in Section 9.2 of the Term
Loan Agreement; provided, that with respect to the Guarantors, any such notices
or other communications shall be sent to them at the “Address for Notices”
specified below their respective names on the signature pages hereof or on
the signature pages of any Joinder Agreement or at such other address as
shall be designated by such recipient in a notice to the other parties hereto
given in accordance with Section 9.2 of the Term Loan Agreement.

 

Section 8.7                                      Gender; “Including” is Not Limiting; Section Headings. 
The masculine and neuter genders used in this Guaranty each includes the
masculine, feminine and neuter genders, and the singular number includes the
plural where appropriate, and vice  versa.  Wherever the term “including” or a similar
term is used in this Guaranty, it shall be read as if it were written “including
by way of example only and without in any way limiting the generality

 

10

 

of the clause or concept referred to.”  The headings used in this Guaranty are
included for reference only and shall not be considered in interpreting,
applying or enforcing this Guaranty.

 

Section 8.8                                      Offset Rights.  (a) 
Each Guarantor agrees that, in addition to (and without limitation of) any
right of set-off, bankers’ lien or counterclaim a Lender may otherwise have, to
the fullest extent not prohibited by applicable law, each Lender shall be
entitled, at its option, upon the occurrence and during the continuance of an
Event of Default to offset balances held by it for the account of any Guarantor
at any of its offices, in Dollars or in any other currency, against any
obligations of Guarantors hereunder or under any other Loan Document, which is not
paid when due, in which case it shall promptly notify the affected Guarantor
and Agent thereof, provided that such Lender’s failure to give such
notice shall not affect the validity thereof.

 

(b)                                 If a Lender shall obtain payment of any
obligation then due hereunder or under any other Loan Document to such Lender,
through the exercise of any right of set-off, banker’s lien, counterclaim or
similar right, or otherwise, it shall promptly purchase from the other Lenders
participations in the Loans made by, or other obligations under the Loan
Documents of, the other Lenders in such amounts, and make such other
adjustments from time to time as shall be equitable to the end that all the
Lenders shall share the benefit of such payment (net of any expenses which may
be incurred by such Lender in obtaining or preserving such benefit) pro rata
in accordance with their respective Commitment Percentages.  To such end all the Lenders shall make
appropriate adjustments among themselves (by the resale of participations sold
or otherwise) if such payment is rescinded or must otherwise be restored.

 

(c)                                  Guarantors agree, that any Lender so
purchasing a participation in the Loans made by, or other obligations under the
Loan Documents of, other Lenders may to the fullest extent it may effectively
do so under applicable law, exercise all rights of set-off, bankers’ lien,
counterclaim or similar rights with respect to such participation as fully as
if such Lender were a direct holder of such Loans or other obligations in the
amount of such participation.  Nothing
contained herein shall require any Lender to exercise any such right or shall
affect the right of any Lender to exercise, and retain the benefits of
exercising, any such right with respect to any other Indebtedness of Guarantors.

 

Section 8.9                                      Jurisdiction; Governing Law; Etc.  (a) 
Each of the parties hereto hereby irrevocably and unconditionally submits, for
itself and its property, to the nonexclusive jurisdiction of any New York State
court or Federal court of the United States of America sitting in New York
City, and any appellate court from any thereof, in any action or proceeding
arising out of or relating to this Guaranty or any of the other Loan Documents
to which it is a party, or for recognition or enforcement of any judgment, and
each of the parties hereto hereby irrevocably and unconditionally agrees that
all claims in respect of any such action or proceeding may be heard and
determined in any such New York State court or, to the fullest extent permitted
by law, in such Federal court.  Each of
the parties hereto agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law.  Nothing in this Guaranty shall affect any
right that any party may otherwise have to bring any action or proceeding
relating to this Guaranty or any of the other Loan Documents in the courts of
any jurisdiction.

 

11

 

(b)           EACH OF THE PARTIES HERETO
IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT IT MAY LEGALLY
AND EFFECTIVELY DO SO, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO
THE LAYING OF VENUE OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING
TO THIS GUARANTY OR ANY OF THE OTHER LOAN DOCUMENTS TO WHICH IT IS A PARTY IN
ANY NEW YORK STATE OR FEDERAL COURT. 
EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE
MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.

 

(c)           THIS GUARANTY SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

 

(d)           EACH GUARANTOR, THE AGENT AND THE
LENDERS IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING
OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF
OR RELATING TO THE GUARANTY, ANY OF THE LOAN DOCUMENTS OR THE ACTIONS OF THE
AGENT OR ANY LENDER IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE OR
ENFORCEMENT THEREOF.

 

Section 8.10           Survival.  All representations, warranties, covenants
and agreements made by or on behalf of each Guarantor in connection herewith
shall survive the execution and delivery of this Guaranty and the Loan
Documents, shall not be affected by any investigation made by any Person, and
shall bind each Guarantor and its successors, trustees, receivers and assigns
and inure to the benefit of the successors and assigns of the Agent and the
Lenders.

 

Section 8.11           Counterparts.  This Guaranty may be executed in any number
of counterparts and by different parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.  Delivery of an executed signature page of
this Guaranty by facsimile transmission or electronic transmission (i.e., a “pdf”
or “tif”) shall be effective as delivery of an original executed counterpart of
this Guaranty.

 

Section 8.12           Rights Cumulative; Delay Not
Waiver.  Any Lender’s or Agent’s
exercise of any right, benefit or privilege under any of the Loan Documents or
any other papers or at law or in equity shall not preclude the concurrent or
subsequent exercise of any other present or future rights, benefits or
privileges or any Lender or Agent.  The
remedies provided in this Guaranty are cumulative and not exclusive of any
remedies provided by law, the Loan Documents or any other papers or in equity.  No failure by any Lender or Agent to exercise,
and no delay in exercising, any right under any Loan Document or any other
papers shall operate as a waiver thereof.

 

Section 8.13           Severability.  If any provision of this Guaranty is held to
be illegal, invalid or unenforceable under present or future laws, the
legality, validity and enforceability of the remaining provisions of this
Guaranty shall not be affected thereby, and this Guaranty shall be liberally
construed so as to carry out the intent of the parties to it.  Each waiver in this Guaranty is subject to
the overriding and controlling rule that it shall be effective only if and
to the extent

 

12

 

that (a) it is not prohibited by applicable law and (b) applicable
law neither provides for nor allows any material sanctions to be imposed
against any Lender or Agent for having bargained for and obtained it.

 

Section 8.14           Entire Agreement.  This Guaranty embodies the entire agreement
and understanding between Guarantors and the Lenders and Agent with respect to
its subject matter and supersedes all prior conflicting or inconsistent
agreements, consents and understandings relating to such subject matter.  Guarantors acknowledge and agree that there
is no oral agreement between any Guarantor and any Lender or Agent which has
not been incorporated in this Guaranty.

 

ARTICLE
9

Joinder

 

It is contemplated by each Guarantor that additional Subsidiaries of
Company may from time to time become a Guarantor hereunder (as required by the
terms of the Term Loan Agreement) and a party to the Contribution Agreement, by
their execution and delivery to Agent on behalf of the Lenders of a Joinder
Agreement.  Each Guarantor agrees,
consents and acknowledges that upon the execution and delivery to Agent by any
such Subsidiary of a Joinder Agreement, such Subsidiary shall become a
Guarantor hereunder for all purposes, jointly and severally liable hereunder as
if such Subsidiary had originally been a party hereto, without notice to any
Guarantor or any other Party.  Delivery
of a Joinder Agreement to any Guarantor or any other Party is not required for
the Subsidiary of the Company executing and delivering such Joinder Agreement
to become a Guarantor hereunder and a party to the Contribution Agreement.

 

13

 

THIS GUARANTY is executed as of the date first above written.

 

	
   

  	
  WHOLE FOODS MARKET, INC.,

  
	
   

  	
  a Texas corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Glenda Chamberlain, Exec. Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  [SIGNATURES OF GUARANTOR SUBSIDIARIES]

  

 

14

 

Exhibit A

 

Form of Joinder
Agreement

 

 

FORM OF JOINDER
AGREEMENT

 

This JOINDER AGREEMENT (this “Joinder Agreement”) is dated
effective as of
[                        ],
, 200[  ], and is executed and delivered
by the undersigned to ROYAL BANK OF CANADA, AS ADMINISTRATIVE AGENT FOR AND ON
BEHALF OF THE LENDERS (in such capacity, together with its successors in such
capacity, the “Agent”).  The
undersigned shall each sometimes hereinafter be individually referred to as a “Joining
Guarantor” and collectively referred to as the “Joining Guarantors.”

 

W I T N E S S E T H:

 

RECITALS:

 

1.             Whole
Foods Market, Inc., a Texas corporation (“Company”), of which
Joining Guarantors are Subsidiaries, has entered into that certain Term Loan
Agreement with Agent and certain financial institutions which are signatories
thereto or which may become a party thereto from time to time, dated as of
[                        ],
2007 (said Term Loan Agreement, as hereafter amended, modified, restated, and
supplemented from time to time, shall hereinafter be collectively referred to
as the “Term Loan Agreement”).

 

2.             Certain
of the Subsidiaries of the Company executed and delivered to the Agent a Master
Guaranty dated effective
[                        ],
2007, pursuant to which, among other things, each of such Subsidiaries jointly
and severally unconditionally guaranteed the payment and performance of all of
the Guaranteed Obligations.  Said Master
Guaranty, as heretofore or hereafter amended, modified, supplemented, joined in
and restated from time to time, is herein called the “Guaranty.”  All Persons from time to time a party to the
Guaranty (whether originally or by joinder) are herein collectively called the “Guarantors”
and are each a “Guarantor” herein.

 

3.             In
addition, in connection with the execution and delivery of the Guaranty,
Company and Guarantors have executed and delivered a Contribution Agreement
dated effective
[                              ],
2007, pursuant to which, among other things, each Guarantor grants to the other
Guarantors a right of contribution from such Guarantor for any payments made
under the Guaranty, all as is more fully described therein.  The Contribution Agreement as heretofore or
hereafter amended, modified, supplemented, joined in and restated from time to
time, is herein called the “Contribution Agreement.”

 

4.             In
accordance with the terms of Section 5.10 of the Term Loan
Agreement, Joining Guarantors are now required to join in the execution and
delivery to Agent on behalf of Lenders of (a) the Guaranty and (b) the
Contribution Agreement, in each case, by their execution and delivery of this
Joinder Agreement and otherwise by such action as Agent or any Lender may
reasonably require.

 

5.             In
order to comply with such requirement, Joining Guarantors execute and deliver
this Joinder Agreement.

 

 

AGREEMENTS:

 

Now, in consideration of the credit and financial accommodations
extended and to be extended to Company pursuant to the Term Loan Agreement and
the other Loan Documents or otherwise, which Joining Guarantors hereby agree
have and shall continue to benefit Joining Guarantors and their respective
shareholders, directly or indirectly, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Joining Guarantors hereby agree, assume, ratify, join and acknowledge as
follows:

 

1.             ASSUMPTION.  Joining Guarantors hereby unconditionally,
jointly and severally, assume liability for all covenants, warranties, representations,
indemnifications, obligations and other Indebtedness of Guarantors now existing
or which may hereafter arise under the Guaranty and shall be liable therefor as
though Joining Guarantors had originally been parties to the Guaranty.  Without limitation of the foregoing, Joining
Guarantors, as primary obligors and not as sureties, unconditionally, jointly
and severally, guarantee unto Agent on behalf of the Lenders (i) the
payment of the Guaranteed Obligations when due (whether at the stated maturity,
by acceleration or otherwise) in accordance with the terms of the Loan
Documents, and (ii) that Company will perform and observe each agreement,
covenant, term and condition in the Loan Documents to be performed or observed
by Company and, upon Company’s failure to do so, will promptly perform and
observe, or will cause to be promptly performed and observed, each such
agreement, covenant, term or condition.

 

Each Joining Guarantor, and by its assumption of this Joinder
Agreement, the Agent and each other Lender, hereby confirms that it is the
intention of all such Persons that this Joinder Agreement and the obligations
of each Joining Guarantor hereunder not constitute a fraudulent transfer or
conveyance for purposes of Bankruptcy Law, the Uniform Fraudulent Conveyance
Act, the Uniform Fraudulent Transfer Act or any similar foreign, federal or
state law to the extent applicable to the Guaranty and the obligations of each
Joining Guarantor hereunder.  To
effectuate the foregoing intention, the Agent, the Lenders and the Joining
Guarantors hereby irrevocably agree that the obligations of each Joining
Guarantor under this Joinder Agreement at any time shall be limited to the
maximum amount as will result in the obligations of such Joining Guarantor
under this Joinder Agreement not constituting a fraudulent transfer or
conveyance.

 

2.             CONTRIBUTION.  Joining Guarantors hereby unconditionally,
jointly and severally, assume liability for all covenants, warranties,
representations, indemnifications, obligations and other Indebtedness of
Guarantors now existing or which may hereafter arise under the Contribution
Agreement and shall be liable therefor as though Joining Guarantors had
originally been parties to the Contribution Agreement.  Without limitation of the foregoing, Joining
Guarantors unconditionally agree that in the event any other Guarantor shall
suffer any loss or liability under the Guaranty beyond such Guarantor’s
Proportionate Share (as defined in the Contribution Agreement), then Joining
Guarantors will upon demand by such other Guarantor pay thereto a sum equal to
the amount of such excess loss or liability, not to exceed each Joining
Guarantor’s Proportionate Share of the total loss or liability.

 

3.             TERMS
RATIFIED.  Joining Guarantors hereby
expressly ratify all guarantees, terms, covenants, representations,
indemnifications, warranties, agreements, provisions, WAIVERS, RELEASES,
restrictions, duties and responsibilities of the Guarantors under the 

 

 

Guaranty, the Contribution Agreement and all other Loan Documents and
agree that they shall apply to Joining Guarantors as if Joining Guarantors had
executed the Guaranty and the Contribution Agreement, and that any reference to
“Guarantors” or a “Guarantor” contained in the Guaranty, the Contribution Agreement,
the Term Loan Agreement or any other Loan Documents shall mean, without
limitation, Joining Guarantors.

 

4.             REPRESENTATIONS.  Joining Guarantors hereby make each
representation and warranty set forth in Article 4 of the Guaranty to the
same extent as each other Guarantor. 
Joining Guarantors (a) confirm that they each have received a copy
of the Loan Documents, together with such other documents and information as it
has deemed appropriate to make its own credit analysis and decision to enter
into this Joinder Agreement; (b) agree that they will, independently and
without reliance upon Agent or any Lender and based on such documents and
information as they shall deem appropriate at the time, continue to make their
own credit decisions in taking or not taking action under the Loan Documents,
and (c) represent that the value of the consideration received and to be
received by each Joining Guarantor is reasonably worth at least as much as the
liability and obligation of such Joining Guarantor hereunder, and that such
liability and obligation may reasonably be expected to benefit Joining
Guarantors directly or indirectly.  The
Board of Directors of each of Joining Guarantors has duly adopted resolutions
certifying that the execution, delivery and performance of this Joinder
Agreement (and the effect thereof) will benefit the applicable Joining
Guarantor, directly or indirectly.

 

5.             NO
IMPAIRMENT.  Nothing herein shall in any
manner impair or extinguish the Guaranty, the Contribution Agreement or any of
the other Loan Documents or any lien or security interest now or hereafter
securing the payment of any of the Indebtedness arising pursuant to the Loan
Documents.

 

6.             GOVERNING
LAW; JURISDICTION, ETC.  (a)  Unless
otherwise specified therein, this Joinder Agreement shall be governed by and
construed in accordance with the laws of the State of New York and the United
States of America.  Each Joining
Guarantor hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of any New York State court or
Federal court of the United States of America sitting in New York City, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Joinder Agreement or any of the other Loan Documents to which
it is a party, or for recognition or enforcement of any judgment, and each of
the parties hereto hereby irrevocably and unconditionally agrees that all
claims in respect of any such action or proceeding may be heard and determined in
any such New York State court or, to the fullest extent permitted by law, in
such Federal court.  Each Joining
Guarantor agrees that a final judgment in any such action or proceeding shall
be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law.  Nothing in this Joinder Agreement shall
affect any right that any party may otherwise have to bring any action or
proceeding relating to this Joinder Agreement or any of the other Loan
Documents in the courts of any jurisdiction.

 

(b)           EACH JOINING
GUARANTOR HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT
IT MAY LEGALLY AND EFFECTIVELY DO SO, ANY OBJECTION THAT IT MAY NOW
OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS GUARANTY OR ANY OF THE OTHER LOAN DOCUMENTS 

 

 

TO WHICH IT IS A PARTY IN ANY NEW YORK STATE OR
FEDERAL COURT.  EACH OF THE PARTIES
HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE
DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR
PROCEEDING IN ANY SUCH COURT.

 

(c)           EACH JOINING
GUARANTOR, THE AGENT AND THE LENDERS IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY
JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT
OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS JOINDER AGREEMENT, ANY OF THE
LOAN DOCUMENTS OR THE ACTIONS OF THE AGENT OR ANY LENDER IN THE NEGOTIATION,
ADMINISTRATION, PERFORMANCE OR ENFORCEMENT THEREOF.

 

7.             SURVIVAL;
PARTIES BOUND.  All representations,
warranties, covenants and agreements made by or on behalf of each Joining
Guarantor in connection herewith shall survive the execution and delivery of
this Joinder Agreement and the other Loan Documents, shall not be affected by any
investigation made by any Person, and shall bind Joining Guarantors and their
successors, trustees, receivers and assigns and inure to the benefit of the
successors and assigns of Agent and Lenders. 
The term of this Joinder Agreement shall be until the termination of the
Guaranty and the Contribution Agreement as to all Parties.

 

8.             CAPTIONS.  The headings and captions appearing in this
Joinder Agreement have been included solely for convenience and shall not be
considered in construing this Joinder Agreement.

 

9.             DEFINITIONS.     Terms used herein and not defined herein,
but which are defined in the Term Loan Agreement or the Guaranty, shall have
the meanings herein assigned to them in the Term Loan Agreement or the
Guaranty, respectively.

 

10.           PARTIES
BOUND.  This Joinder Agreement shall bind
and benefit the parties hereto and their respective successors and assigns,
except that Joining Guarantors may not assign their rights or obligations
hereunder without the prior written consent of Agent and Lenders.

 

11.           COUNTERPARTS.  This Joinder Agreement may be executed in any
number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same
agreement.  Delivery of an executed
signature page of this Joinder Agreement by facsimile transmission or
electronic transmission (i.e., a “pdf” or “tif”) shall be effective as delivery
of an original executed counterpart of this Joinder Agreement.

 

[Remainder
of page left intentionally blank.]

 

 

IN WITNESS WHEREOF, Joining Guarantors have executed this Joinder
Agreement as of the date set forth above.

 

 

	
   

  	
  [Joining Guarantors]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 

NOTE: A request for confidential treatment has been made with respect
to the portions of the following document that are marked with
[*CONFIDENTIAL*].  The redacted portions
have been filed separately with the SEC.

 

Schedule 1.1(a)

Disclosed Divestitures

 

Part A

 

1.                                       Sale of Henry’s
and Sun Harvest stores, and related Southern California distribution center.

 

Part B

 

2.                                       Divestiture of
such of the Wild Oats stores as may be mandated by the FTC/DOJ in connection
with their legal challenge to consummation of the Transactions.

 

 

NOTE: A request for confidential treatment has been made with respect
to the portions of the following document that are marked with
[*CONFIDENTIAL*].  The redacted portions
have been filed separately with the SEC.

 

Schedule 1.1(b)

 

EBIT/EBITDA

(in millions)

 

For
the Fiscal Quarter ending on 1/14/07

 

·                  EBIT shall be:  $95.2

·                  EBITDA shall be:  $154.4

 

For
the Fiscal Quarter ending on 4/08/07

 

·                  EBIT shall be:  $86.1

·                  EBITDA shall be:  $135.2

 

For the Fiscal Quarter
ending on 6/01/07

 

·                  EBIT shall be:  $89.5

·                  EBITDA shall be:  $138.2

 

2

 

NOTE: A request for confidential treatment has been made with respect
to the portions of the following document that are marked with
[*CONFIDENTIAL*].  The redacted portions
have been filed separately with the SEC.

 

Schedule 1.1(c)

Guarantors

 

[*CONFIDENTIAL*]

 

Allegro
Coffee Company, a Colorado corporation

 

Mrs. Gooch’s
Natural Food Markets, Inc., a California corporation

 

Nature’s
Heartland, Inc., a Massachusetts corporation

 

The
Sourdough, A European Bakery, Inc., a Texas corporation

 

WFM
Beverage Corp., a Texas corporation

 

WFM
Beverage Holding Company, a Texas corporation

 

WFM
Gift Card, LLC, a Virginia limited liability company

 

WFM
Hawaii, LLC, a Hawaii limited liability company

 

WFM
IP Investments, Inc., a Delaware corporation

 

WFM
IP Management, Inc., a Delaware corporation

 

WFM
Northern Nevada, Inc., a Delaware corporation

 

WFM
Private Label Management, Inc., a Delaware corporation

 

WFM
Private Label, L.P., a Delaware limited partnership

 

WFM
Procurement Investments, Inc., a Delaware corporation

 

WFM
Properties Scottsdale, LLC, a Delaware limited liability company

 

WFM
Properties, L.P., a Texas limited partnership

 

WFM
Purchasing Management, Inc., a Delaware corporation

 

WFM
Purchasing, L.P., a Delaware limited partnership

 

WFM
Select Fish, Inc., a Delaware corporation

 

WFM
Southern Nevada, Inc., a Delaware corporation

 

WFMI
Merger Co., a Delaware corporation

 

3

 

NOTE: A request for confidential treatment has been made with respect
to the portions of the following document that are marked with
[*CONFIDENTIAL*].  The redacted portions
have been filed separately with the SEC.

 

Whole
Food Company, Inc., a Louisiana corporation

 

Whole
Foods Market Brand 365, LLC, a California limited liability company

 

Whole
Foods Market California, Inc., a California corporation

 

Whole
Foods Market Distribution, Inc., a Delaware corporation

 

Whole
Foods Market Finance, Inc., a Delaware corporation

 

Whole
Foods Market Group, Inc., a Delaware corporation

 

Whole
Foods Market IP, L.P., a Delaware limited partnership

 

Whole
Foods Market Pacific Northwest, Inc., a Delaware corporation

 

Whole
Foods Market Procurement, Inc., a Delaware corporation

 

Whole
Foods Market Rocky Mountain/Southwest I, Inc., a Delaware corporation

 

Whole
Foods Market Rocky Mountain/Southwest, L.P., a Texas limited partnership

 

Whole
Foods Market Services, Inc., a Delaware corporation

 

Whole
Foods Market Southwest Investments, Inc., a Delaware corporation

 

4

 

NOTE: A request for confidential treatment has been made with respect
to the portions of the following document that are marked with
[*CONFIDENTIAL*].  The redacted portions
have been filed separately with the SEC.

 

SCHEDULE 1.1 (d)

EXISTING LETTERS OF CREDIT

 

I.                                         WHOLE
FOODS MARKET, INC.

 

	
  LOC #

  	
   

  	
  ISSUER

  	
   

  	
  BENEFICIARY

  	
   

  	
  AMOUNT

  	
   

  	
  EXPIRATION

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  a.

  	
   

  	
  i-463934

  	
   

  	
  JPMorgan Chase Bank, N.A.

  	
   

  	
  *CONFIDENTIAL*

  	
   

  	
  *CONFIDENTIAL*

  	
   

  	
  *CONFIDENTIAL*

  
	
  b.

  	
   

  	
  SBD-231337

  	
   

  	
  JPMorgan Chase Bank, N.A.

  	
   

  	
  *CONFIDENTIAL*

  	
   

  	
  *CONFIDENTIAL*

  	
   

  	
  *CONFIDENTIAL*

  
	
  c.

  	
   

  	
  TDTS-636991

  	
   

  	
  JPMorgan Chase Bank, N.A.

  	
   

  	
  *CONFIDENTIAL*

  	
   

  	
  *CONFIDENTIAL*

  	
   

  	
  *CONFIDENTIAL*

  
	
  d.

  	
   

  	
  TDTS-230794

  	
   

  	
  JPMorgan Chase Bank, N.A.

  	
   

  	
  *CONFIDENTIAL*

  	
   

  	
  *CONFIDENTIAL*

  	
   

  	
  *CONFIDENTIAL*

  

 

II.                                     WILD
OATS MARKETS, INC.

 

	
  LOC #

  	
   

  	
  ISSUER

  	
   

  	
  BENEFICIARY

  	
   

  	
  AMOUNT

  	
   

  	
  EXPIRATION

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  a.

  	
   

  	
  3085815

  	
   

  	
  Bank of America

  	
   

  	
  Capitol Indemnity Corporation and/or Platte River Ins. Co.

  	
   

  	
  $

  	
  1,075,000.00

  	
   

  	
  11/30/2007

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  b.

  	
   

  	
  3078322

  	
   

  	
  Bank of America

  	
   

  	
  Liberty Mutual Insurance Company

  	
   

  	
  $

  	
  7,448,000.00

  	
   

  	
  9/30/2007

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  c.

  	
   

  	
  3076234

  	
   

  	
  Bank of America

  	
   

  	
  Park Blvd Holdings, a California Limited Partnership

  	
   

  	
  $

  	
  100,000.00

  	
   

  	
  11/30/2007

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  d.

  	
   

  	
  3076235

  	
   

  	
  Bank of America

  	
   

  	
  Pinecrest Plaza LLC, a Florida Ltd Liability Company

  	
   

  	
  $

  	
  549,514.00

  	
   

  	
  11/30/2007

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  e.

  	
   

  	
  3076236

  	
   

  	
  Bank of America

  	
   

  	
  Travelers Indemnity Company

  	
   

  	
  $

  	
  6,035,000.00

  	
   

  	
  9/30/2007

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  f.

  	
   

  	
  3076237

  	
   

  	
  Bank of America

  	
   

  	
  Travelers Indemnity Company

  	
   

  	
  $

  	
  422,000.00

  	
   

  	
  9/30/2007

  

 

5

 

NOTE: A request for confidential treatment has been made with respect
to the portions of the following document that are marked with
[*CONFIDENTIAL*].  The redacted portions
have been filed separately with the SEC.

 

Schedule 2.1(a)

Commitments

 

	
  Name of Lender

  	
   

  	
  Commitment

  	
   

  	
  Commitment

  Percentage

  	
   

  
	
  JPMorgan
  Chase Bank, N.A.

  	
   

  	
  $

  	
  50,000,000.00

  	
   

  	
  20.0

  	
  %

  
	
  Royal
  Bank of Canada

  	
   

  	
  $

  	
  50,000,000.00

  	
   

  	
  20.0

  	
  %

  
	
  Wells
  Fargo Bank, N A

  	
   

  	
  $

  	
  42,500,000.00

  	
   

  	
  17.0

  	
  %

  
	
  LaSalle
  Bank Midwest, N.A.

  	
   

  	
  $

  	
  30,000,000.00

  	
   

  	
  12.0

  	
  %

  
	
  Wachovia
  Bank, N.A.

  	
   

  	
  $

  	
  30,000,000.00

  	
   

  	
  12.0

  	
  %

  
	
  Fortis
  Capital

  	
   

  	
  $

  	
  20,000,000.00

  	
   

  	
  8.0

  	
  %

  
	
  U.S.
  Bank, National Association

  	
   

  	
  $

  	
  17,500,000.00

  	
   

  	
  7.0

  	
  %

  
	
  Bank
  of America, N.A.

  	
   

  	
  $

  	
  10,000,000.00

  	
   

  	
  4.0

  	
  %

  
	
  Total

  	
   

  	
  $

  	
  250,000,000.00

  	
   

  	
  100

  	
  %

  

 

6

 

NOTE: A request for confidential treatment has been made with respect
to the portions of the following document that are marked with
[*CONFIDENTIAL*].  The redacted portions
have been filed separately with the SEC.

 

Schedule 3.2(e)

Litigation

 

None

 

7

 

NOTE: A request for confidential treatment has been made with respect
to the portions of the following document that are marked with
[*CONFIDENTIAL*].  The redacted portions
have been filed separately with the SEC.

 

Schedule 4.8

Subsidiaries

 

[*CONFIDENTIAL*]

 

5.             Allegro Coffee Company, a
Colorado corporation

 

[*CONFIDENTIAL*]

 

9.             Fresh & Wild
Holding Limited, a company incorporated in England and Wales

 

10.           Fresh & Wild
Limited, a company incorporated in England and Wales (Parent:  Fresh &
Wild Holding Limited)

 

11.           Freshlands Holdings Limited,
a company incorporated in England and Wales (Parent: Fresh & Wild
Limited)

 

12.           Freshlands Limited, a
company incorporated in England and Wales (Parent: Freshlands Holdings Limited)

 

[*CONFIDENTIAL*]

 

19.           Mrs. Gooch’s Natural
Food Markets, Inc., a California corporation

 

20.           Nature’s Heartland, Inc.,
a Massachusetts corporation (Parent: Whole Foods Market Group, Inc.)

 

[*CONFIDENTIAL*]

 

26.           The Sourdough, A European
Bakery, Inc., a Texas corporation (Parent: Whole Foods Market Southwest
Investments, Inc.)

 

[*CONFIDENTIAL*]

 

28.           WFM Beverage Corp., a Texas
corporation (Parent: WFM Beverage Holding Company)

 

29.           WFM Beverage Holding
Company, a Texas corporation

 

[*CONFIDENTIAL*]

 

31.           WFM Gift Card, LLC, a
Virginia limited liability company (Parent: Whole Foods Market Group, Inc.

 

8

 

NOTE: A request for confidential treatment has been made with respect
to the portions of the following document that are marked with [*CONFIDENTIAL*].  The redacted portions have been filed
separately with the SEC.

 

32.           WFM Hawaii, LLC, a Hawaii
limited liability company (Parent: Mrs. Gooch’s Natural Food Markets, Inc.)

 

[*CONFIDENTIAL*]

 

34.           WFM IP Investments, Inc.,
a Delaware corporation

 

35.           WFM IP Management, Inc.,
a Delaware corporation

 

36.           WFM Northern Nevada, Inc.,
a Delaware corporation (Parent: Whole Foods Market California, Inc.)

 

37.           WFM Private Label Management, Inc.,
a Delaware corporation (Parent: Whole Foods Market Procurement, Inc.)

 

38.           WFM Private
Label, L.P., a Delaware limited partnership (General Partner (0.01%): WFM
Private Label Management, Inc.; Limited Partner (99.99%):  WFM Procurement Investments, Inc.)

 

39.           WFM Procurement Investments, Inc.,
a Delaware corporation (Parent: Whole Foods Market Procurement, Inc.)

 

[*CONFIDENTIAL*]

 

42.           WFM Properties Holdings, Inc.,
a Delaware corporation

 

43.           WFM Properties Investments, Inc.,
a Delaware corporation (Parent: WFM Properties Holdings, Inc.)

 

44.           WFM Properties Management, Inc.,
a Delaware corporation (WFM Properties Holdings, Inc.)

 

[*CONFIDENTIAL*]

 

46.           WFM Properties Scottsdale,
LLC, a Delaware limited liability company (Parent: GBD Properties, Inc.)

 

47.           WFM Properties, L.P., a Texas limited partnership
(General Partner (0.01%): WFM Properties Management, Inc.; Limited Partner
(99.99%): WFM Properties Investments, Inc.)

 

48.           WFM Purchasing Management, Inc.,
a Delaware corporation (Parent: Whole Foods Market Procurement, Inc.)

 

9

 

NOTE: A request for confidential treatment has been made with respect
to the portions of the following document that are marked with
[*CONFIDENTIAL*].  The redacted portions
have been filed separately with the SEC.

 

49.           WFM Purchasing, L.P., a Delaware limited partnership
(General Partner (0.01%): WFM Purchasing Management, Inc.; Limited Partner
(99.99%): WFM Procurement Investments, Inc.)

 

50.           WFM Select Fish, Inc.,
a Delaware corporation

 

51.           WFM Southern Nevada, Inc.,
a Delaware corporation (Parent: Mrs. Gooch’s Natural Food Markets, Inc.)

 

52.           WFMI Merger Co., a Delaware
corporation

 

53.           Whole Food Company, Inc.,
a Louisiana corporation (Parent: Whole Foods Market Southwest Investments, Inc.

 

54.           Whole Foods Market Brand
365, LLC, a California limited liability company (Parent: Whole Foods Market
Services, Inc.)

 

55.           Whole Foods Market
California, Inc., a California corporation

 

56.           Whole Foods Canada, Inc.,
a Canada corporation

 

57.           Whole Foods Market
Distribution, Inc., a Delaware corporation

 

58.           Whole Foods Market Finance, Inc.,
a Delaware corporation

 

59.           Whole Foods Market Group, Inc.,
a Delaware corporation

 

60.           Whole Foods Market IP, L.P., a Delaware limited
partnership (General Partner (0.01%): WFM IP Management, Inc.; Limited
Partner (99.99%): WFM IP Investments, Inc.)

 

61.           Whole Foods Market Pacific
Northwest, Inc., a Delaware corporation

 

62.           Whole Foods Market
Procurement, Inc., a Delaware corporation

 

63.           Whole Foods Market Rocky
Mountain/Southwest I, Inc., a Delaware corporation

 

64.           Whole Foods Market Rocky
Mountain/Southwest, L.P., a Texas limited partnership (General Partner (1%):
Whole Foods Market Rocky Mountain/Southwest I, Inc.; Limited Partner
(99%): Whole Foods Market Southwest Investments, Inc.)

 

65.           Whole Foods Market Services, Inc.,
a Delaware corporation

 

66.           Whole Foods Market Southwest
Investments, Inc., a Delaware corporation

 

10

 

NOTE: A request for confidential treatment has been made with respect
to the portions of the following document that are marked with
[*CONFIDENTIAL*].  The redacted portions
have been filed separately with the SEC.

 

67.           YellowFrames Limited, a
company incorporated in England and Wales (Parent: Fresh & Wild
Limited)

 

11

 

NOTE: A request for confidential treatment has been made with respect
to the portions of the following document that are marked with
[*CONFIDENTIAL*].  The redacted portions
have been filed separately with the SEC.

 

Schedule 4.13

Assumed Names

 

Whole
Foods Market

 

Fresh
Fields

 

Fresh
Fields Whole Foods Market

 

Merchant
of Vino

 

Whole
Foods Market Southwest, L.P.

 

Whole
Foods Market Southwest

 

Whole
Foods Market Southwest Distribution Center

 

Whole
Foods Market Rocky Mountain, L.P.

 

Whole
Foods Market Rocky Mountain

 

Whole
Hearth

 

12

 

NOTE: A request for confidential treatment has been made with respect
to the portions of the following document that are marked with
[*CONFIDENTIAL*].  The redacted portions
have been filed separately with the SEC.

 

Schedule 4.16

Agreements

 

1.             All credit agreements for
borrowed money (other than the indebtedness governed hereby), indentures and
capitalized leases and all Property subject to any Lien securing such Indebtedness
or lease obligation

 

None other than as
summarized in Company’s SEC filings or with respect to liens described in Section 6.2(b) through
6.2(i)

 

2.             Letter of credit and
guaranty for which the liability or potential liability of the Company and its
Subsidiaries on a consolidated basis is in excess of $250,000

 

None other than as
summarized in Company’s SEC filings

 

3.             Other material instruments
in effect as of the date hereof providing for, evidencing, securing or
otherwise relating to any indebtedness for borrowed money of the Company or any
of its Subsidiaries (other than the Indebtedness hereunder and Indebtedness
secured by Incidental Liens)

 

None other than as
summarized in Company’s SEC filings or with respect to liens described in Section 6.2(b) through
6.2(i)

 

4.             Obligations of the Company
or any of its Subsidiaries to issuers of appeal bonds issued for account of the
Company or any of its Subsidiaries.

 

None

 

13

 

NOTE: A request for confidential treatment has been made with respect
to the portions of the following document that are marked with
[*CONFIDENTIAL*].  The redacted portions
have been filed separately with the SEC.

 

Schedule 6.2(a)

Liens

 

Mrs. Gooch
Natural Food Markets, Inc.

 

11/26/02;
Citicorp Vendor Finance (Equipment Lease); #0233660421

 

Whole
Foods Market California, Inc.

 

11/24/02;
US Bancorp (Equipment Lease); #0226860364

3/21/05;
Robert Reiser & Co. (Equipment Lease); #05-7019828060

6/29/06;
United Rentals, Inc. (Equipment Lease); #06-7075949885

5/24/07;
Bank of America Leasing & Capital (Equipment Lease); #07-7115128719

5/25/07;
Bank of America Leasing & Capital (Equipment Lease) (2 filings);
#07-7115332170

7/23/07;
Bank of America Leasing & Capital (Equipment Lease); # 07-7122379816

7/24/07;
Bank of America Leasing & Capital (Equipment Lease); #07-7122591034

 

Whole
Foods Market Distribution, Inc.

 

12/05/03;
Recycle America Alliance, LLC (Equipment Lease); #33194050

 

Whole
Foods Market Group, Inc.

 

9/3/02;
American Bank Note Company, as agent for USPS (Consignment); #22214041

9/25/02;
IBM Credit Corporation (Equipment Lease); #22469553

10/23/02;
IBM Credit Corporation (Equipment Lease); #22769119

7/17/03;
Patriot Commercial Leasing Co. (Equipment Lease); #30309347

2/28/03;
American Bank Note Company, as agent for USPS (Consignment); #30498843

2/5/03;
Crown Credit Company (Equipment Lease); #30571797

3/10/03;
Crown Credit Company (Equipment Lease); #30576762

2/28/03;
Crown Credit Company (Equipment Lease) (2 filings); #30687692, #30687734

11/13/03;
Crown Credit Company (Equipment Lease); #32987553

4/29/04;
Crown Credit Company (Equipment Lease); #41198490

9/7/04;
Crown Credit Company (Equipment Lease); #42507442

1/20/05;
Crown Credit Company (Equipment Lease); #50223173

2/14/05;
Crown Credit Company (Equipment Lease); #50494329

2/25/05;
Crown Credit Company (Equipment Lease); #50613555

4/12/05;
Crown Credit Company (Equipment Lease); #51116608

8/8/05;
Crown Credit Company (Equipment Lease) (3 filings); #52438548; 52442847

8/25/05;
Crown Credit Company (Equipment Lease); #52647692

3/10/03;
US Bancorp (Equipment Lease); #30576762

3/31/03;
US Bancorp (Equipment Lease); #30879927

4/28/03;
US Bancorp (Equipment Lease); #31260093

 

14

 

NOTE: A request for confidential treatment has been made with respect
to the portions of the following document that are marked with
[*CONFIDENTIAL*].  The redacted portions
have been filed separately with the SEC.

 

11/26/03;
US Bancorp (Equipment Lease); #33125294

3/10/04;
US Bancorp (Equipment Lease); #30576762

3/16/04;
US Bancorp (Equipment Lease); #40729923

9/7/06;
US Bancorp (Equipment Lease); #42507442

4/15/03;
IOS Capital LLC (Equipment Lease); #30972052

7/27/04;
IOS Capital LLC (Equipment Lease); #42162065

3/12/04;
Robert Reiser & Co. (Equipment Lease); #4078888

2/11/04;
IOS Capital LLC (Equipment Lease); #40511099

3/8/07;
IOS Capital LLC (Equipment Lease); #0867464

1/8/04;
Konica Minolta Business Solutions (Equipment Lease); #40044737

4/1/05;
Greater Bay Bank (Equipment Lease); #50993692

10/6/04;
First Access (Equipment Lease); #42808394

8/30/05;
Robert Reiser & Co. (Equipment Lease); #52688258

7/28/06;
Robert Reiser & Co. (Equipment Lease); #62611614

12/14/06;
Robert Reiser & Co. (Equipment Lease); #64372520

3/20/07;
Robert Reiser & Co. (Equipment Lease); #1028397

9/7/05;
Citicapital Technology Finance (Equipment Lease); #52762764

9/23/05;
Citicapital Technology Finance (Equipment Lease); #52996289

5/30/06;
NMHG Financial Services (Equipment Lease); #61817121

 

Whole
Foods Market, Inc.

 

6/10/04;
Crown Credit Company (Equipment Lease); #04-0070989027

6/15/04;
Crown Credit Company (Equipment Lease) (2 filings); #04-0071408034,
#04-0071408145

6/21/04;
Crown Credit Company (Equipment Lease) (2 filings); #04-0072049804,
#04-0072062556

6/24/04;
Crown Credit Company (Equipment Lease); #04-0072582240

6/29/04;
Crown Credit Company (Equipment Lease); #04-0072992124

10/14/04;
Crown Credit Company (Equipment Lease); #04-0085079881

10/25/04;
Crown Credit Company (Equipment Lease); #04-0086111233

5/23/05;
Crown Credit Company (Equipment Lease); #05-0016055860

5/24/05;
Crown Credit Company (Equipment Lease) (2 filings); #05-0016243415,
#05-001623526

12/19/05;
Crown Credit Company (Equipment Lease); #05-0038612843

3/18/02;
NCR Corporation (Equipment Lease); #02-0022852708

4/29/02;
NMHG Financial Services (Equipment Lease); #02-0027956536

9/11/03;
American Bank Note, as agent for USPS (Consignment); #04-0041483498

9/30/05;
IBM Credit (Equipment Lease); #05-0030547216

6/26/07;
US Express Leasing (Equipment Lease); #07-0021504998

 

Allegro
Coffee Company, Inc.

 

2/11/05;
Air Liquide Industrial US, LP (Equipment Lease); #20052016259

 

15Exhibit 10.2

 

 

 

$250 MILLION REVOLVING CREDIT AGREEMENT

 

made and entered into

 

as of August 28, 2007

 

by and among

 

WHOLE FOODS MARKET, INC.,

a Texas corporation,

 

EACH OF THE FINANCIAL INSTITUTIONS WHICH IS

A SIGNATORY HERETO OR WHICH MAY FROM TIME TO

TIME BECOME A PARTY HERETO,

 

JPMORGAN CHASE BANK, N.A.,

 

as Administrative Agent and Collateral Agent,

 

ROYAL BANK OF CANADA,

 

as Syndication Agent,

 

WELLS FARGO BANK, N.A.,  LASALLE
BANK MIDWEST, N.A., and

 

WACHOVIA BANK, N.A.,

 

as Co-Documentation Agents,

 

and

 

J. P.  MORGAN SECURITIES INC. AND
RBC CAPITAL MARKETS(1),

 

as Joint Lead Arrangers and Joint Bookrunners

 

 

 

(1) RBC Capital Markets
is a brand name for the investment banking activities of Royal Bank of Canada.

 

 

Table of Contents

 

	
  Section

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE
  I - Definitions

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 1.1

  	
  Certain Defined Terms

  	
   

  	
  1

  
	
  Section 1.2

  	
  Accounting Terms and Determinations

  	
   

  	
  20

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE
  II — LOANS; ETC.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 2.1

  	
  Loans

  	
   

  	
  21

  
	
  Section 2.2

  	
  Commitment Fees; Termination and Reductions

  	
   

  	
  22

  
	
  Section 2.3

  	
  Mandatory Prepayments; Commitment Reduction

  	
   

  	
  23

  
	
  Section 2.4

  	
  Payments

  	
   

  	
  23

  
	
  Section 2.5

  	
  Prepayments of Loans

  	
   

  	
  24

  
	
  Section 2.6

  	
  Application of Payments and Prepayments

  	
   

  	
  25

  
	
  Section 2.7

  	
  Pro Rata Treatment

  	
   

  	
  25

  
	
  Section 2.8

  	
  Payment Dates on the Loans

  	
   

  	
  25

  
	
  Section 2.9

  	
  Interest Options for Loans

  	
   

  	
  26

  
	
  Section 2.10

  	
  Special Provisions Applicable to LIBOR Rate Borrowings

  	
   

  	
  27

  
	
  Section 2.11

  	
  Payment Dates

  	
   

  	
  29

  
	
  Section 2.12

  	
  Sharing of Payments, Etc

  	
   

  	
  29

  
	
  Section 2.13

  	
  Use of Proceeds

  	
   

  	
  29

  
	
  Section 2.14

  	
  Evidence of Debt

  	
   

  	
  29

  
	
  Section 2.15

  	
  Letters of Credit

  	
   

  	
  30

  
	
  Section 2.16

  	
  Increase of Commitments

  	
   

  	
  33

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE
  III — Conditions

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 3.1

  	
  All Loans

  	
   

  	
  35

  
	
  Section 3.2

  	
  First Loan

  	
   

  	
  36

  
	
  Section 3.3

  	
  Determinations Under Section 32

  	
   

  	
  38

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE
  IV — Representations and Warranties

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 4.1

  	
  Organization

  	
   

  	
  38

  
	
  Section 4.2

  	
  Financial Statements

  	
   

  	
  38

  
	
  Section 4.3

  	
  Enforceable Obligations; Authorization

  	
   

  	
  38

  
	
  Section 4.4

  	
  Other Debt

  	
   

  	
  38

  
	
  Section 4.5

  	
  Litigation

  	
   

  	
  39

  
	
  Section 4.6

  	
  Title

  	
   

  	
  39

  
	
  Section 4.7

  	
  Taxes

  	
   

  	
  39

  
	
  Section 4.8

  	
  Subsidiaries

  	
   

  	
  39

  
	
  Section 4.9

  	
  Representations by Others

  	
   

  	
  39

  
	
  Section 4.10

  	
  Permits, Licenses, Etc

  	
   

  	
  39

  
	
  Section 4.11

  	
  ERISA

  	
   

  	
  39

  
	
  Section 4.12

  	
  Condition of Property

  	
   

  	
  40

  
	
  Section 4.13

  	
  Assumed Names

  	
   

  	
  40

  
	
  Section 4.14

  	
  Investment Company Act

  	
   

  	
  40

  
	
  Section 4.15

  	
  Margin Stock

  	
   

  	
  40

  
	
  Section 4.16

  	
  Agreements

  	
   

  	
  40

  
	
  Section 4.17

  	
  Environmental Matters

  	
   

  	
  40

  
	
  Section 4.18

  	
  Solvency

  	
   

  	
  41

  
	
  Section 4.19

  	
  Target Representations

  	
   

  	
  41

  

 

i

 

	
   

  	
  ARTICLE
  V — Affirmative Covenants

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 5.1

  	
  Taxes, Existence, Regulations, Property, Etc

  	
   

  	
  41

  
	
  Section 5.2

  	
  Financial Statements and Information

  	
   

  	
  41

  
	
  Section 5.3

  	
  Financial Tests

  	
   

  	
  42

  
	
  Section 5.4

  	
  Inspection

  	
   

  	
  42

  
	
  Section 5.5

  	
  Further Assurances

  	
   

  	
  42

  
	
  Section 5.6

  	
  Books and Records

  	
   

  	
  42

  
	
  Section 5.7

  	
  Insurance

  	
   

  	
  42

  
	
  Section 5.8

  	
  ERISA

  	
   

  	
  42

  
	
  Section 5.9

  	
  Use of Proceeds

  	
   

  	
  43

  
	
  Section 5.10

  	
  Additional Guaranties

  	
   

  	
  43

  
	
  Section 5.11

  	
  Notice of Events

  	
   

  	
  43

  
	
  Section 5.12

  	
  Environmental Matters

  	
   

  	
  44

  
	
  Section 5.13

  	
  End of Fiscal Year

  	
   

  	
  44

  
	
  Section 5.14

  	
  Consummation of Merger

  	
   

  	
  44

  
	
  Section 5.15

  	
  Maintenance of Ratings

  	
   

  	
  44

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE
  VI — Negative Covenants

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 6.1

  	
  Indebtedness

  	
   

  	
  46

  
	
  Section 6.2

  	
  Liens

  	
   

  	
  47

  
	
  Section 6.3

  	
  Contingent Obligations

  	
   

  	
  48

  
	
  Section 6.4

  	
  Mergers, Consolidations and Dispositions and Acquisitions of Assets

  	
   

  	
  48

  
	
  Section 6.5

  	
  Nature of Business

  	
   

  	
  50

  
	
  Section 6.6

  	
  Transactions with Related Parties

  	
   

  	
  50

  
	
  Section 6.7

  	
  Loans and Investments

  	
   

  	
  50

  
	
  Section 6.8

  	
  ERISA Compliance

  	
   

  	
  50

  
	
  Section 6.9

  	
  Credit Extensions

  	
   

  	
  51

  
	
  Section 6.10

  	
  Change in Accounting Method

  	
   

  	
  51

  
	
  Section 6.11

  	
  Redemption, Dividends and Distributions

  	
   

  	
  51

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE
  VII — Events of Default and Remedies

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 7.1

  	
  Events of Default

  	
   

  	
  51

  
	
  Section 7.2

  	
  Remedies Cumulative

  	
   

  	
  54

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE
  VIII — The Agent and the Issuers

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 8.1

  	
  Authorization and Action

  	
   

  	
  54

  
	
  Section 8.2

  	
  Agent’s and Issuers’
  Reliance, Etc

  	
   

  	
  54

  
	
  Section 8.3

  	
  JPMorgan and Affiliates

  	
   

  	
  55

  
	
  Section 8.4

  	
  Lender Credit Decision

  	
   

  	
  55

  
	
  Section 8.5

  	
  Indemnification

  	
   

  	
  55

  
	
  Section 8.6

  	
  Successor Agents

  	
   

  	
  56

  
	
  Section 8.7

  	
  Other Agents; Arrangers and Managers

  	
   

  	
  56

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE
  IX — Miscellaneous

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 9.1

  	
  No Waiver

  	
   

  	
  56

  
	
  Section 9.2

  	
  Notices

  	
   

  	
  57

  
	
  Section 9.3

  	
  Jurisdiction; Governing Law; Etc

  	
   

  	
  58

  
	
  Section 9.4

  	
  Survival; Parties Bound

  	
   

  	
  59

  
	
  Section 9.5

  	
  Counterparts

  	
   

  	
  59

  
	
  Section 9.6

  	
  Survival

  	
   

  	
  59

  

 

ii

 

	
  Section 9.7

  	
  Captions

  	
   

  	
  59

  
	
  Section 9.8

  	
  Expenses, Etc

  	
   

  	
  59

  
	
  Section 9.9

  	
  Indemnification

  	
   

  	
  60

  
	
  Section 9.10

  	
  Amendments, Etc

  	
   

  	
  61

  
	
  Section 9.11

  	
  Successors and Assigns

  	
   

  	
  61

  
	
  Section 9.12

  	
  Entire Agreement

  	
   

  	
  63

  
	
  Section 9.13

  	
  Severability

  	
   

  	
  63

  
	
  Section 9.14

  	
  Disclosures

  	
   

  	
  64

  
	
  Section 9.15

  	
  Capital Adequacy

  	
   

  	
  64

  
	
  Section 9.16

  	
  Withholding Tax

  	
   

  	
  64

  
	
  Section 9.17

  	
  Waiver of Claims

  	
   

  	
  64

  
	
  Section 9.18

  	
  Right of Setoff

  	
   

  	
  65

  
	
  Section 9.19

  	
  USA PATRIOT Act

  	
   

  	
  65

  
	
  Section 9.20

  	
  Non-Consenting Lenders; Other Lenders

  	
   

  	
  66

  
	
  Section 9.21

  	
  Confidentiality

  	
   

  	
  66

  

 

EXHIBITS

 

	
  A

  	
   

  	
  —

  	
   

  	
  Form of Note

  
	
  B

  	
   

  	
  —

  	
   

  	
  Notice of Assumption

  
	
  C

  	
   

  	
  —

  	
   

  	
  Officer’s Certificate

  
	
  D

  	
   

  	
  —

  	
   

  	
  Request for Extension of Credit and Certificate of
  No Default

  
	
  E

  	
   

  	
  —

  	
   

  	
  Rate Selection Notice

  
	
  F

  	
   

  	
  —

  	
   

  	
  Form of Assignment and Acceptance

  
	
  G-A

  	
   

  	
  —

  	
   

  	
  Form of Security Agreement A

  
	
  G-B

  	
   

  	
  —

  	
   

  	
  Form of Security Agreement B

  
	
  H

  	
   

  	
   

  	
   

  	
  Form of Guaranty Agreement

  

 

SCHEDULES

	
  1.1(a)

  	
  Disclosed Divestitures

  
	
  1.1(b)

  	
  EBIT/EBITDA

  
	
  1.1(c)

  	
  Guarantors

  
	
  1.1(d)

  	
  Existing Letters of Credit

  
	
  2.1(a)

  	
  Commitments

  
	
  4.8

  	
  Subsidiaries

  
	
  4.13

  	
  Assumed Names

  
	
  4.16

  	
  Agreements

  
	
  6.2(a)

  	
  Liens

  

 

iii

 

REVOLVING CREDIT AGREEMENT (this “Agreement”) dated as
of August 28, 2007 among WHOLE FOODS MARKET, INC., a Texas corporation
(the “Company”),
JPMorgan Chase Bank, N.A. (“JPMorgan”), as administrative agent (together with any
successor administrative agent appointed pursuant to Article VII, the “Agent”) and
collateral agent (together with any successor collateral agent appointed
pursuant to Security Agreement A or Security Agreement B, as applicable, the “Collateral Agent”)
for the lenders from time to time parties hereto (the “Lenders”),
Royal Bank of Canada, as syndication agent, Wells Fargo Bank, N A, Wachovia
Bank, N.A. and LaSalle Bank Midwest, N.A. as co-documentation agents, and J. P.
Morgan Securities Inc. and RBC Capital Markets, as joint lead arrangers and
joint bookrunners (in such capacities, the “Joint
Lead Arrangers”).

 

PRELIMINARY STATEMENTS:

 

(1)           Pursuant
to the agreement and plan of merger dated as of February 21, 2007 (as
amended, supplemented or otherwise modified in accordance with its terms, to
the extent permitted hereunder, the “Merger Agreement”)
among the Company, its wholly-owned subsidiary, WFMI Merger Co., a Delaware
corporation (“Merger Sub”) and Wild Oats
Markets, Inc., a Delaware corporation (the “Target”),
the Company, through Merger Sub, has commenced an offer to purchase all the
outstanding shares of the Target (the “Tender Offer”).  Following the successful consummation of the
Tender Offer,  the Company, through
Merger Sub, will acquire 100% of the outstanding shares of the Target and will
merge with and into the Target (the “Merger”).

 

(2)           The
Company has requested that the Lenders provide a $250,000,000 revolving line of
credit to the Company to (i) finance the Tender Offer and the Merger
Transactions and to pay related fees and expenses, and (ii) support new
store development, other acquisitions, the issuance of standby letters of
credit and other general corporate purposes, including but not limited to, the
repurchase of stock and refinancing of existing Indebtedness of the Target,
subject to the terms and conditions set forth herein.

 

(3)           The
Lenders have indicated their willingness to lend such amount on the terms and
conditions of this Agreement.

 

NOW, THEREFORE, in
consideration of the premises and of the mutual covenants and agreements
contained herein, the parties hereto hereby agree as follows:

 

ARTICLE I - DEFINITIONS

 

Section 1.1  Certain Defined Terms.  Unless a particular word or
phrase is otherwise defined or the context otherwise requires, capitalized
words and phrases used in the Loan Documents have the meanings provided below.

 

“Additional Collateral”
has the meaning specified in the Security Agreement B attached hereto as Exhibit G-B.

 

“Additional Collateral
Trigger” shall mean the date on which (a) the Borrower’s
corporate credit rating shall be (i) with respect to S&P’s corporate
credit rating, equal to or lower than BB-, and (ii) with respect to Moody’s
corporate rating system, equal to or lower than Ba3; or

 

1

 

(b) the Borrower’s
corporate credit rating shall be less than (i) with respect to S&P’s
corporate credit rating, BB-, or (ii) with respect to Moody’s corporate
rating system, a rating of Ba3.

 

“Additional Security Period”
shall mean the period, if any, beginning with the occurrence of the Additional
Collateral Trigger until the Maturity Date.

 

“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.

 

“Agent” shall have the meaning
ascribed to it in the recital of parties hereto.

 

“Agent’s Account” means the
Agent’s account specified by the Agent in writing to the Company and the
Lenders from time to time.

 

“Aggregate Commitment” shall
mean, on any day, the aggregate of all of the Commitments of the Lenders on
such day.

 

“Agreement” shall have the
meaning ascribed to it in the recital of parties hereto.

 

“Agreement Value”
means, for each Hedging Agreement, on any date of determination, an amount
determined by the Agent equal to the amount, if any, (a) that would be
payable by any Loan Party or any of its Subsidiaries to its counterparty to
such Hedging Agreement as if (i) such Hedging Agreement was being
terminated early on such date of determination, (ii) such Loan Party or
Subsidiary was the sole “Affected Party” and (iii) the Agent was the sole
party determining such payment amount (with the Agent making such determination
pursuant to the terms of
the governing documentation); (b) in
the case of a Hedge Agreement traded on an exchange, the mark-to-market value
of such Hedge Agreement, which will be the unrealized loss on such Hedge
Agreement to the Loan Party or any of its Subsidiaries party to such Hedge
Agreement based on the settlement price of such Hedge Agreement on such date of
determination; or (c) in all other cases, the mark-to-market value of such
Hedge Agreement, which will be the unrealized loss on such Hedge Agreement to
the Loan Party or Subsidiary of a Loan Party to such Hedge Agreement as the
amount, if any, by which (i) the present value of the future cash flows to
be paid by such Loan Party or Subsidiary exceeds (ii) the present value of
the future cash flows to be received by such Loan Party or Subsidiary pursuant
to such Hedge Agreement.

 

“Alternate Base Rate” shall
mean for any day (a) the greater of (i) the
Prime Rate, and (ii) the Federal Funds Rate plus
0.50% per annum, plus (b) the Applicable Margin in effect on
such day.  For purposes of this Agreement
any change in the Alternate Base Rate due to a change in the Prime Rate or the
Federal Funds Rate shall be effective on the effective date of such change in
the Prime Rate or Federal Funds Rate, respectively.  If for any reason the Agent shall have
determined (which determination shall be conclusive and binding, absent
manifest error) that it is unable to ascertain the Federal Funds Rate for any
reason, including the inability or failure of the Agent to obtain sufficient
quotations in accordance with the terms hereof, the Alternate Base Rate shall
be the Prime Rate plus the Applicable Margin.

 

2

 

“Alternate Base Rate
Borrowing” shall mean that portion of the principal balance of
the Loans at any time bearing interest at the Alternate Base Rate.

 

“Annual Audited Financial Statements”
shall mean, with respect to each fiscal year of the Company, the Company’s 10-K
Report filed with the Securities Exchange Commission for such fiscal year,
prepared in conformity with Generally Accepted Accounting Principles and
accompanied by a report and opinion of independent certified public accountants
with an accounting firm of national standing and reputation, which shall state
that such financial statements, in the opinion of such accountants, present
fairly, in all material respects, the financial position of the Company and its
Subsidiaries, on a consolidated basis, as of the date thereof and the results
of its operations and cash flows for the period covered thereby in conformity
with Generally Accepted Accounting Principles.

 

“Applicable Commitment Fee Percentage”
shall mean with respect to any Loan on any date of determination, the
applicable rate per annum for the corresponding rating of the Company’s
corporate family ratings, and determined in accordance with the following grid:

 

	
  Moody’s and S&P

  	
   

  	
  Percentage

  (Per Annum)

  	
   

  
	
  BBB+ or Baa1

  	
   

  	
  0.09

  	
  %

  
	
  BBB or Baa2

  	
   

  	
  0.125

  	
  %

  
	
  BBB- and
  Baa3

  	
   

  	
  0.15

  	
  %

  
	
  BBB- or Baa3

  	
   

  	
  0.175

  	
  %

  
	
  BB+ and Ba1

  	
   

  	
  0.20

  	
  %

  
	
  BB+ or Ba1

  	
   

  	
  0.225

  	
  %

  
	
  BB and Ba2

  	
   

  	
  0.25

  	
  %

  
	
  BB or Ba2

  	
   

  	
  0.30

  	
  %

  
	
  Otherwise

  	
   

  	
  0.35

  	
  %

  

 

For
purposes of determining the Applicable Commitment Fee Percentage in the case of
split ratings, where applicable, (i) in the event of a single category
split in ratings, the higher of the two ratings shall apply, (ii) in the
event of a two-category split in ratings, the rating that is in the middle of
the two ratings shall apply and (iii) in the event that there is more than
a two-category split in ratings, the rating that is one category above the
lower rating will apply.

 

“Applicable Margin” shall mean
with respect to any Loan on any date of determination, the applicable rate per
annum for the corresponding rating of the Company’s corporate family ratings,
and determined in accordance with the following grid:

 

3

 

	
  Moody’s and S&P

  	
   

  	
  LIBOR Margin 

  (Per Annum)

  	
   

  	
  ABR Margin 

  (Per Annum)

  	
   

  
	
  BBB+ or Baa1

  	
   

  	
  0.375

  	
  %

  	
  0.00

  	
  %

  
	
  BBB or Baa2

  	
   

  	
  0.500

  	
  %

  	
  0.00

  	
  %

  
	
  BBB- and
  Baa3

  	
   

  	
  0.625

  	
  %

  	
  0.00

  	
  %

  
	
  BBB- or Baa3

  	
   

  	
  0.875

  	
  %

  	
  0.00

  	
  %

  
	
  BB+ and Ba1

  	
   

  	
  1.00

  	
  %

  	
  0.00

  	
  %

  
	
  BB+ or Ba1

  	
   

  	
  1.25

  	
  %

  	
  0.25

  	
  %

  
	
  BB and Ba2

  	
   

  	
  1.375

  	
  %

  	
  0.375

  	
  %

  
	
  BB or Ba2

  	
   

  	
  1.50

  	
  %

  	
  0.50

  	
  %

  
	
  Otherwise

  	
   

  	
  1.75

  	
  %

  	
  0.75

  	
  %

  

 

For
purposes of determining the Applicable Margin in the case of split ratings, where
applicable, (i) in the event of a single category split in ratings, the
higher of the two ratings shall apply, (ii) in the event of a two-category
split in ratings, the rating that is in the middle of the two ratings shall
apply and (iii) in the event that there is more than a two-category split
in ratings, the rating that is one category above the lower rating will apply.

 

“Applications”
shall mean all applications and agreements for Letters of Credit, or similar
instruments or agreements, in Proper Form, now or hereafter executed by any
Person in connection with any Letter of Credit now or hereafter issued or to be
issued under the terms hereof at the request of any Person.

 

“Approved Fund” means any
Person (other than a natural person) that is engaged in making, purchasing,
holding or investing in bank loans and similar extensions of credit in the
ordinary course of its business and that is administered or managed by (a) a
Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate
of an entity that administers or manages a Lender.

 

“Borrowing” shall mean an
Alternate Base Rate Borrowing or a LIBOR Rate Borrowing.

 

“Business Day” shall mean a
day when the main office of the Agent is open for business and banks in New
York, New York are generally open for business.

 

“Business Entity” shall mean
corporations, partnerships, joint ventures, joint stock associations, business
trusts and other business entities.

 

“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 

 

4

 

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).

 

“Change of Control” shall mean
any change so that any Unrelated Person (or any Unrelated Persons acting
together which would constitute a Group) together with any Affiliate or Related
Persons of such Unrelated Person or Unrelated Persons (in each case also
constituting Unrelated Persons) shall at any time after the date hereof either (i) Beneficially
Own more than fifty percent (50%) of the aggregate voting power of all classes
of Voting Stock of the Company, or (ii) succeed in having enough of its or
their nominees elected by the stockholders to the Board of Directors of the
Company so as to constitute a majority of the Board of Directors of the
Company.  As used herein, (a) “Beneficially
Own” shall mean “beneficially own” as defined in Rule 13d-3 of the
Securities and Exchange Act of 1934, as amended (the “34
Act”) or any successor provision thereto; (b) “Group” shall
mean a “group” for purposes of Section 13(d) of the 34 Act or any
successor provision; (c) “Unrelated Person” shall mean any Person other
than any trust for any employee stock ownership plan of the Company or any
Subsidiary of the Company; (d) “Related Person” shall mean as to any
Person, any other Person owning (1) five percent (5%) or more of the
outstanding common stock of such Person or (2) five percent (5%) or more of
the Voting Stock of such Person, and (e) “Voting Stock” shall mean as to
any Person, the Stock of such Person which ordinarily has voting power for the
election of directors (or persons performing similar functions) of such Person,
whether at all times or only so long as no senior class of securities has such
voting power by reason of any contingency.

 

“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.

 

“Collateral”  has the meaning specified in the Security
Agreement A attached hereto as Exhibit G-A.

 

“Collateral Agent”
shall have the meaning ascribed to it in the recital of parties hereto.

 

“Commitment” shall mean, as to
any Lender, the obligation of such Lender to make Loans and incur liability for
the Letters of Credit Exposure Amount in an aggregate principal amount at any
one time outstanding up to, but not exceeding, the amount set forth opposite
such Lender’s name on Schedule 2.1(a) hereto under the caption “Commitment”,
or as to any Lender that becomes a Party hereto by executing an Assignment and
Acceptance, the amount set forth in such Assignment and Acceptance (in each
case, as the same may be reduced from time to time pursuant to Section 2.2
hereof and increased from time to time pursuant to Section 2.16 hereof).

 

“Commitment Fee”, with respect
to any Lender, shall have the meaning assigned to it in Section 2.2.

 

“Commitment
Increase Agreement” shall have the meaning assigned to it in Section 2.16(c).

 

“Commitment
Increase Notice” shall have the meaning assigned to it in Section 2.16(a).

 

5

 

“Commitment Percentage” shall
mean, with respect to any Lender, the ratio, expressed as a percentage, of (a) such
Lender’s Commitment to (b) the Aggregate Commitment.

 

“Confidential
Information” means non-public information that any Loan Party
furnishes to the Agent or any Lender, unless such information is or becomes (a) generally
available to the public (other than as a result of a breach by the Agent or any
Lender of its obligations hereunder) or that is or becomes available to the
Agent or such Lender from a source other than the Loan Parties that is not, to
the best of the Agent’s or such Lender’s knowledge, acting in violation of a
confidentiality agreement with a Loan Party or (b) designated in writing
by any Loan Party as non-confidential.

 

“Consequential Loss” shall
mean, with respect to (a) the Company’s payment of principal of a LIBOR
Rate Borrowing on a day other than the last day of the applicable LIBOR
Interest Period, (b) the Company’s failure to borrow a LIBOR Rate
Borrowing on the date specified by the Company for any reason, (c) the
Company’s failure to make any prepayment of the Loans (other than Alternate
Base Rate Borrowings) on the date specified by the Company, or (d) any
cessation of the LIBOR Rate to apply to the Loans or any part thereof pursuant
to Section 2.10 hereof, in each case whether voluntary or involuntary, any
loss, expense, penalty, premium or liability incurred by any of the Lenders or
the Agent, including any interest paid by any of the Lenders to lenders of
funds borrowed by them to make or carry the Loans; a “Consequential
Loss” shall mean, with respect to the termination or
cancellation of any LIBOR Rate Borrowing pursuant to Section 2.10 hereof,
in each case whether voluntary or involuntary, any loss, expense, penalty,
premium or liability incurred by any of the Lenders or the Agent on account of
any reduction resulting from such premature termination or cancellation of such
borrowing in such Person’s margins or spreads between its cost of funds and the
interest earned on the principal of the borrowing so terminated or canceled,
including an amount equal to the excess (if any) of (x) interest that
would have accrued on any such borrowing during the remainder of the applicable
LIBOR Interest Period had such borrowing not been terminated or canceled early,
over (y) the interest actually accrued on the principal amount of that
terminated or canceled borrowing for such remainder of such LIBOR Interest
Period.

 

“Consolidated Net Worth” shall
mean, at any time, shareholder’s equity of the Company as set forth in the most
recent consolidated Annual Audited Financial Statements of the Company and its
Subsidiaries, determined in accordance with Generally Accepted Accounting
Principles, consistently applied.

 

“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 

 

6

 

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 in Section 6.1(f) hereof, and (z) the obligations and
liabilities of each Guarantor to the Agent and the Lenders under the
Guaranties.  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) as determined by the Agent in
good faith.

 

“Contribution Agreement” shall
mean that certain Contribution Agreement of even effective date herewith, by
and among the Company and the Guarantors, as the same may have been or may
hereafter be amended, modified, supplemented, restated and joined in pursuant
to a Joinder Agreement, from time to time.

 

“Convertible Senior
Debentures” shall mean those certain the 3.25% Convertible
Senior Debentures due 2034 which are governed by that certain Indenture dated June 1,
2004, by and between Target and U.S. Bank National Association as trustee.

 

“Credit Facility Hedging
Agreements” shall mean any Hedging Agreement now existing or
hereafter entered into between the Company and any Lender and/or any of their
respective Affiliates in connection with all or any portion of the Loans and/or
any of the loans under the Term Loan Facility for purposes of hedging the risk
of variable interest rate volatility or fluctuations of interest rates, as any
such Hedging Agreement may be modified, supplemented and in effect from time to
time.

 

“Current Sum” shall mean on
any day, as to a particular Lender, the sum of (a) the then outstanding
principal balance of such Lender’s Loans on such day plus (b) the product
of (i) such Lender’s Commitment Percentage times (ii) the Letter of
Credit Exposure Amount on such day.

 

“Current Sum Percentage”
shall mean, with respect to any Lender, the ratio, expressed as a percentage of
(a) such Lender’s Current Sum to (b) the aggregate Current Sum of all
Lenders.

 

“Default” means any Event of
Default or any other event or circumstance that with the passing of time or the
giving of notice, or both, would constitute an Event of Default.

 

“Disclosed Divestitures” shall
mean the proposed divestitures of the Company and its Subsidiaries set forth in
Schedule 1.1(a) hereto.

 

“Discontinued Operations”
shall mean, as of any day, operations of the Company or its Subsidiaries which
have been discontinued, as reflected on the most recent Form 10-K or 10-Q
for the Company filed with the Security and Exchange Commission, and which, as
of such day, have been fully disposed of or liquidated.

 

“EBIT” shall mean for any
period for which EBIT is calculated, Net Income of the Company and its
Subsidiaries on a consolidated basis for such period plus, without duplication,
(a) non-recurring, non-cash charges of the Company and its Subsidiaries on
a consolidated basis for such period, (b) non-cash pre-opening rent
expenses of the Company and its Subsidiaries on a consolidated basis for such
period, (c) taxes of the Company and its Subsidiaries on a consolidated
basis for such period, (d) interest expense of the Company and its
Subsidiaries on a consolidated basis for such period and (e) non-cash
stock compensation expense of the Company 

 

7

 

and
its Subsidiaries on a consolidated basis for such period; provided that EBIT
for the three quarters immediately prior to the Effective Date shall be as set
forth in Schedule 1.1(b).  All components
of EBIT shall be determined in accordance with Generally Accepted Accounting
Principles, consistently applied.

 

“EBITDA” shall mean for any
period for which EBITDA is calculated, Net Income of the Company and its
Subsidiaries on a consolidated basis for such period plus, without duplication,
(a) taxes of the Company and its Subsidiaries on a consolidated basis for
such period (calculated after excluding any gain or loss attributable to
Discontinued Operations as of such day), (b) depreciation, depletion,
obsolescence and amortization of Property of the Company and its Subsidiaries
on a consolidated basis for such period (calculated after excluding any
depreciation, depletion, obsolescence and amortization applicable to
Discontinued Operations as of such day), (c) interest expense of the
Company and its Subsidiaries on a consolidated basis for such period
(calculated after excluding any interest expense paid in connection with
Discontinued Operations as of such day), (d) non-recurring, non-cash
charges of the Company and its Subsidiaries on a consolidated basis for such
period, (e) non-cash pre-opening rent expenses of the Company and its
Subsidiaries on a consolidated basis for such period and (f) non-cash
stock compensation expense of the Company and its Subsidiaries on a
consolidated basis for such period; provided that EBITDA for the three quarters
immediately prior to the Effective Date shall be as set forth in Schedule
1.1(b).  All components of EBITDA shall
be determined in accordance with Generally Accepted Accounting Principles,
consistently applied.

 

“Effective Date” has the
meaning ascribed thereto in Section 3.2.

 

“Eligible Assignee” shall mean
(a) a Lender, (b) an Affiliate of a Lender, (c) an Approved Fund
or (d) any other Person (other than an individual) approved by the Agent
and, except during the continuance of an Event of Default, the Company (each
such consent not to be unreasonably withheld or delayed); it being understood
that none of the Company nor any of its Affiliates shall, in any event, be an
Eligible Assignee.

 

“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 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 

 

8

 

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, reissuance 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.

 

“Equipment” shall have the
meaning assigned to it in the Texas Business and Commerce Code in force on the
date the document using such term was executed.

 

“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.

 

“Eurocurrency
Liabilities” has the meaning specified in Regulation D.

 

“Event of Default” shall mean
any of the events specified in Section 7.1 hereof or otherwise specified
as an Event of Default in any other Loan Document, provided there has been
satisfied any requirement in connection with such event for the giving of notice,
or the lapse of time, or the happening of any further condition, event or act,
and Default shall mean any of such events, whether or not any such requirement
has been satisfied.

 

“Extraordinary Receipt” means any cash received by or
paid to or for the account of any Person not in the ordinary course of
business, including, without limitation, tax refunds (provided that, for
greater clarity and without limiting the foregoing, ordinary tax refunds on
account of cash taxes actually paid would be considered ordinary course),
pension plan reversions, proceeds of insurance (including, without limitation,
any key man life insurance but excluding proceeds of business interruption
insurance to the extent such proceeds constitute compensation for lost earnings),
condemnation awards (and payments in lieu thereof), indemnity payments and any
purchase price adjustment received in connection with any purchase agreement; provided, however, that an Extraordinary Receipt shall not include cash
receipts received from proceeds of insurance, condemnation awards (or payments
in lieu thereof) or indemnity payments to the extent that such proceeds, awards
or payments are received by any Person in respect of any third party claim
against such Person and applied to pay (or to reimburse such Person for its
prior payment of) such claim and the costs and expenses of such Person with
respect thereto.

 

“Federal Funds Rate” means,
for any period, a fluctuating interest rate per annum equal for each day during
such period to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers, as published for such day (or, if such day is not a Business
Day, for the next preceding Business Day) by the Federal Reserve Bank of
New York, or, if such rate is not so published for any day that is a
Business Day, the average of the quotations for such day for such transactions
received by the Agent from three Federal funds brokers of recognized standing
selected by it.

 

9

 

“Fee Letter” shall mean that
certain fee letter dated as of March 16, 2007 among JPMorgan, J. P. Morgan
Securities Inc., Royal Bank of Canada, and the Company.

 

“Fixed Charge Coverage Ratio”
shall mean as of any day that the Fixed Charge Coverage Ratio is being
calculated, the ratio of (a) EBIT plus Operating Lease Expense to (b) interest
expense plus Operating Lease Expense. 
All components of the Fixed Charge Coverage Ratio shall be computed for
the Rolling Four Quarters as of such day and determined for the Company and its
Subsidiaries on a consolidated basis in accordance with Generally Accepted
Accounting Principles, consistently applied; provided,
that for purposes of determining interest expense and Operating Lease
Expense in the Fixed Charge Coverage Ratio for the (a) fiscal quarter
ended September 30, 2007, such interest expense and Operating Lease
Expense for the measurement period then ended shall equal such items for such
fiscal quarter multiplied by 52/13, (b) fiscal quarter ended January 20,
2008, such interest expense and Operating Lease Expense for the measuring
period then ended shall equal such items for the two fiscal quarters then ended
multiplied by 52/29, and (c) fiscal quarter ended April 30, 2008,
such interest expense and Operating Lease Expense for the measuring period then
ended shall equal such items for the three fiscal quarters then ended
multiplied by 52/41; provided  also that EBIT for the three quarters immediately prior to
the Effective Date shall be as set forth in Schedule 1.1(b).

 

“Funded Indebtedness” shall
mean (a) all Indebtedness of the Company and its Subsidiaries on a
consolidated basis which by its terms matures more than one year after the
applicable date of calculation of Funded Indebtedness (including without
limitation, current maturities or scheduled principal payments of Funded
Indebtedness for the applicable period for which Funded Indebtedness is being
calculated), and any Indebtedness of the Company and its Subsidiaries on a
consolidated basis maturing within one year from such date and (b) without
duplication, Capital Lease Obligations of the Company and its Subsidiaries on a
consolidated basis.  All components of
Funded Indebtedness shall be determined in accordance with Generally Accepted
Accounting Principles, consistently applied.

 

“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 Agent and the Lenders, 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 Agent, any of the Lenders or the Company, any of the
Company’s Subsidiaries or their respective Property.

 

“Guaranties” shall mean that
certain Guaranty, substantially in the form of Exhibit H hereto, by the
Guarantors party thereto in favor of the Agent dated as of the date hereof, as
the same may be amended, supplemented, modified, joined in pursuant to a
Joinder Agreement and restated from time to time, and each and every other
guaranty executed by any or all of the Guarantors from time to time; each a “Guaranty”.

 

10

 

“Guarantors” shall mean the
Persons listed on Schedule 1.1(c) hereto, each Subsidiary that shall
hereafter be required to execute and deliver a Guaranty pursuant to the terms
of this Agreement and each and every other Person executing a guaranty from
time to time guaranteeing the Indebtedness of the Company owing from time to
time to the Lenders pursuant to this Agreement or the Notes.

 

“Hazardous Substance” shall
mean any hazardous or toxic waste, substance or product or material defined or
regulated from time to time by any applicable law, rule, regulation or order
described in the definition of “Requirements of Environmental Law,” including
solid waste (as defined under RCRA or its regulations, as amended from time to
time), petroleum and any fraction thereof, 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) deposits not in excess at any time of $25,000,000 in the
aggregate to secure insurance in the ordinary course of business, the
performance of bids, tenders, contracts (other than contracts for the payment
of money), leases, licenses, franchises, statutory obligations, surety and
appeal bonds and performance bonds and other obligations of a like nature
incurred in the ordinary course of business and Liens to secure progress or
partial payments made to the Company or any Subsidiary and other Liens of like
nature made in the ordinary course of business; (v) 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 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; (vi) bankers’ liens arising by
operation of law; (vii) 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; (viii) inchoate Liens arising under ERISA to
secure contingent liabilities of the Company; and (ix) rights of lessees
and sublessees in assets leased by the Company or any Subsidiary not prohibited
elsewhere herein.

 

11

 

“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 (including without limitation, the 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) net liabilities of such Person under Hedging
Agreements (determined by reference to the Agreement Value thereof) and (g) all
Contingent Obligations and Synthetic Indebtedness of such Person; provided, that such term shall not mean or include any
Indebtedness in respect of which monies sufficient to pay and discharge the
same in full (either on the expressed date of maturity thereof or on such earlier
date as such Indebtedness may be duly called for redemption and payment) shall
be deposited with a depository, agency or trustee acceptable to the Agent in
trust for the payment thereof.

 

“Interest Option” shall have
the meaning ascribed to it in Section 2.9(a) hereof.

 

“Interest Payment Dates” shall
mean (a) for Alternate Base Rate Borrowings, (1) at all times while
the Notes are outstanding, the last Business Day of each March, June, September and
December, and (2) the Maturity Date; and (b) for LIBOR Rate
Borrowings, (1) if the LIBOR Interest Period applicable to such LIBOR Rate
Borrowing is equal to or less than three (3) months, the end of such LIBOR
Interest Period, and (2) in all other cases, on that day which is three (3) calendar
months following the first day of the applicable LIBOR Interest Period (or, if
such day is not a Business Day, on the next succeeding day that is a Business
Day) and at the end of such LIBOR Interest Period.

 

“Investment” shall mean the
purchase or other acquisition of any securities or Indebtedness of, or the
making of any loan, advance, transfer of Property or capital contribution to,
or the incurring of any liability, contingently or otherwise, in respect of the
Indebtedness of, any Person.

 

“Investment Grade” shall mean
with respect to the Moody’s corporate credit rating system a rating of Baa3 or
higher and with respect to the S&P corporate credit rating system a rating
of BBB- or higher.

 

“Issuer”
shall mean any Lender which is an issuer of a Letter of Credit. The initial
Issuers will be JPMorgan and Bank of America, N.A; provided
that Bank of America, N.A. shall only be an Issuer with respect to any
outstanding Letters of Credit described in Schedule 1.1(d) issued by Bank
of America, N.A., and as such Letters of Credit issued by Bank of America, N.A.
expire and are required to be renewed or replaced, then subject to the
applicable terms of this Agreement, such Letters of Credit will be replaced
with Letters of Credit issued by JPMorgan.

 

“Joinder Agreement” shall mean
any agreement, in Proper Form, executed by a Subsidiary of the Company from
time to time, pursuant to which such Subsidiary joins in the execution and
delivery of a Guaranty and the Contribution Agreement.

 

“Joint Lead Arrangers” shall
have the meaning ascribed to such term in the recitals hereto.

 

12

 

“JPMorgan”
shall have the meaning ascribed to it in the recital of parties hereto.

 

“Legal Requirement” shall mean
any law, statute, ordinance, decree, requirement, order, judgment, rule,
regulation (or interpretation of any of the foregoing) of, and the terms of any
license or permit issued by, any Governmental Authority.

 

“Lenders” shall have the
meaning ascribed to it in the recital of parties hereto.

 

“Letter of
Credit Advances” shall mean all sums which may from time to time
be paid by any and all of the Lenders pursuant to the Letters of Credit, or any
of them, together with all other sums, fees, reimbursements or other
obligations which may be due to any or all of the Lenders pursuant to the
Letters of Credit, or any of them.

 

“Letter of
Credit Exposure Amount” shall mean at any time the sum of (i) the
aggregate undrawn amount of all Letters of Credit outstanding at such time plus
(ii) the aggregate amount of all Letter of Credit Advances for which the
Lenders have not been reimbursed and which remain unpaid at such time.

 

“Letter of
Credit Fee Payment Date” shall mean, with respect to any Letter
of Credit, the date of issuance thereof and the last Business Day of each
March, June, September and December which occurs after the date of
issuance, but prior to the expiry date of said Letter of Credit.

 

“Letter of
Credit Termination Date” shall mean a date which is three (3) months
prior to the Maturity Date.

 

“Letters of
Credit” shall mean (a) all irrevocable standby letters of
credit and all commercial letters of credit issued by any Issuer pursuant to
the terms set forth in this Agreement and (b) all outstanding letters of
credit issued by JPMorgan or Bank of America, N.A. prior to the date hereof for
the account of the Company or any of its Subsidiaries (including the Target)
described as “Revolving Credit Facility Letters of Credits” on Schedule 1.1(d).

 

“Leverage Ratio” shall mean as
of any day that the Leverage Ratio is calculated, the ratio of Funded
Indebtedness of the Company and its Subsidiaries on a consolidated basis as of
such day to EBITDA of the Company and its Subsidiaries on a consolidated basis
for the Rolling Four Quarters as of such day; provided
that EBITDA for the three quarters immediately prior to the Effective Date
shall be as set forth in Schedule 1.1(b).

 

“LIBOR Business Day” shall
mean a Business Day on which transactions in United States Dollar deposits
between banks may be carried on in the London, England interbank market.

 

“LIBOR Interest
Period” shall mean, for each LIBOR Rate Borrowing, a period
commencing:

 

(a)                                  on the date of such LIBOR
Rate Borrowing, or

 

(b)                                 on the last day
of the immediately preceding LIBOR Interest Period in the case of a rollover to
a successive LIBOR Interest Period, and ending on the numerically corresponding
day one, two, three or (as available) six months thereafter, as the Company
shall elect in accordance herewith; provided, (w) any LIBOR Interest Period
which would otherwise end on a day which is not a LIBOR Business Day shall be
extended to the next succeeding LIBOR 

 

13

 

Business
Day, unless such LIBOR Business Day falls in another calendar month, in which
case such LIBOR Interest Period shall end on the next preceding LIBOR Business
Day; (x) any LIBOR Interest Period which begins on the last LIBOR Business
Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such LIBOR Interest
Period) shall end on the last LIBOR Business Day of the appropriate calendar
month; (y) no LIBOR Interest Period shall ever extend beyond the Maturity
Date; and (z) LIBOR Interest Periods shall be selected by the Company in
such a manner that the LIBOR Interest Period with respect to any portion of the
Loans which shall become due shall not extend beyond such due date.

 

“LIBOR Rate” means, for any
LIBOR Interest Period for all LIBOR Rate Borrowings comprising part of the same
Borrowing, (a) an interest rate per annum equal to the rate per annum
obtained by dividing (i) the rate per annum (rounded upwards, if
necessary, to the nearest 1/100 of 1%) appearing on the Reuters Screen LIBOR 01
(or any successor page) as the London interbank offered rate for deposits in
U.S. dollars at 11:00 A.M. (London time) two Business Days before the
first day of such LIBOR Interest Period for a period equal to such LIBOR
Interest Period (provided that,
if for any reason such rate is not available, the term “LIBOR” shall mean, for
any LIBOR Interest Period for all LIBOR Rate Borrowings comprising part of the
same Borrowing, the rate per annum (rounded upwards, if necessary, to the
nearest 1/100 of 1%) appearing on Reuters Screen LIBOR 01 as the London
interbank offered rate for deposits in Dollars at approximately 11:00 A.M.
(London time) two Business Days prior to the first day of such LIBOR Interest
Period for a term comparable to such LIBOR Interest Period; provided, however, if more than one rate
is specified on Reuters Screen LIBOR 01, the applicable rate shall be the
arithmetic mean of all such rates) by (ii) a percentage equal to 100%
minus the LIBOR Reserve Percentage for such LIBOR Interest Period plus (b) the
Applicable Margin from time to time in effect during such term.

 

“LIBOR  Rate
Borrowing” shall mean each portion of the principal balance of
the Loans at any time bearing interest at the LIBOR Rate.

 

“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.

 

“Loan Documents” shall mean
this Agreement, the Notes, the Guaranties, the Contribution Agreement, the
Joinder Agreements, Letters of Credit, the Applications, the Fee Letter,
Security Agreement A, Security Agreement B, the Credit Facility Hedging
Agreement, all instruments, certificates and agreements now or hereafter
executed or delivered to the Agent and/or the Lenders pursuant to any of the
foregoing, and all amendments, modifications, renewals, extensions, increases
and rearrangements of, and substitutions for, any of the foregoing.

 

“Loan Party” means the Company
or any Guarantor.

 

“Loans” shall mean the
advances of funds described in Section 2.1 hereof.  Loan shall mean any one of the Loans.

 

“Margin Stock” has the meaning
specified in Regulation U.

 

“Material Adverse Effect”
means a material adverse effect on the validity or 

 

14

 

enforceability
of any material provision of the Loan Documents, on the ability of the Company
to consummate the Transactions, on the financial condition of the Company
(either individually or taken as a whole with its Subsidiaries), or on the
property, business, operations or liabilities of the Company (either
individually or taken as a whole with its Subsidiaries).

 

“Maturity Date” shall mean the
earlier of (a) August 28, 2012 and (b) the date specified by the
Agent pursuant to Section 7.1 hereof.

 

“Merger” shall have the
meaning ascribed to it in the Preliminary Statements hereto.

 

“Merger Agreement” shall have
the meaning ascribed to it in the Preliminary Statements hereto.

 

“Moody’s”
shall mean Moody’s Investors Service, Inc.

 

“Net Income” shall mean gross
revenues and other proper income credits, less all proper income charges, including
taxes on income, all determined in accordance with Generally Accepted
Accounting Principles; provided, that there shall not be included in such
revenues (i) any income representing the excess of equity in any
Subsidiary at the date of acquisition over the investment in such Subsidiary, (ii) any
equity in the undistributed earnings of any Person which is not a Subsidiary, (iii) any
earnings of any Subsidiary for any period prior to the date such Subsidiary was
acquired, except as may be permitted under Generally Accepted Accounting
Principles in connection with the pooling of interest method of accounting, and
(iv) any gains resulting from the write-up of assets.  Net Income shall be determined on a
consolidated basis.

 

“Net Proceeds” shall mean:

 

(a)                                  with respect to
any sale, lease, transfer or other disposition of any asset of the Company or
any of its Subsidiaries (except in the case of Disclosed Divestitures listed in
part A of Schedule 1.1(a)), the excess, if any, of (i) the sum of cash and
Permitted Investment Securities received in connection with such sale, lease,
transfer or other disposition (including any cash or Permitted Investment
Securities received by way of deferred payment pursuant to, or by monetization
of, a note receivable or otherwise, but only as and when so received) less (ii) the
sum of (A) the principal amount of any Indebtedness (other than
Indebtedness under the Loan Documents) that is required to be repaid in
connection with such sale, lease, transfer or other disposition thereof, (B) the
reasonable and customary out-of-pocket costs, fees, commissions, premiums and
expenses incurred by the Company or its Subsidiaries, (C) federal, state,
provincial, foreign and local taxes reasonably estimated (on a consolidated
basis) to be actually payable within the current or the immediately succeeding
tax year as a result of any gain recognized in connection therewith and (D) a
reasonable reserve for any purchase price adjustment or any indemnification
payments (fixed and contingent) attributable to the seller’s obligations to the
purchaser undertaken by the Company or any of its Subsidiaries in connection
with such sale, lease, transfer or other disposition; provided, however,
that Net Proceeds shall not include any such amounts to the extent such amounts
are reinvested or contracted to be so reinvested in capital assets used or
useful in the business of the Company and its Subsidiaries within 270 days
after the date of receipt thereof or the date such contact is entered into; and

 

(b)                                 with respect to
any Extraordinary Receipt that is not otherwise included in clause (a) above,
the sum of the cash and Permitted Investment Securities received in 

 

15

 

connection
therewith (including any cash or Permitted Investment Securities received by
way of deferred payment pursuant to, or by monetization of, a note receivable
or otherwise, but only as and when so received) less fees, costs, out of pocket expenses and commissions
incurred in connection with the receipt thereof; provided, however,
that Net Proceeds shall not include any such amounts from Extraordinary
Receipts (other than in respect of Customer Penalties) to the extent such
amounts are reinvested or contracted to be so reinvested in capital assets used
or useful in the business of the Company and its Subsidiaries within 270 days
after the date of receipt thereof or the date such contract is entered into.

 

“New Lender”
shall have the meaning assigned to it in Section 2.16(b).

 

“New Lender
Agreement” shall have the meaning assigned to it in Section 2.16(b).

 

“Non-Consenting
Lender” means, in the event that the Required Lenders have
agreed to any consent, waiver or amendment pursuant to Section 9.10 that
requires the consent of one or more Lenders in addition to the Required
Lenders, any Lender who is entitled to agree to such consent, waiver or
amendment but who does not so agree.

 

“Non-Guarantor Subsidiaries”
means (a) Subsidiaries of the Company organized under the laws of a
jurisdiction located outside of the United States, (b) prior to
consummation of the Merger, the Target and its Subsidiaries, and (c) any
one or more Subsidiaries of the Company designated by the Company in writing to
the Agent from time to time that do not represent, in the aggregate, (i) five
percent (5%) or more of the consolidated EBITDA of the Company and its
Subsidiaries or (ii) five percent (5%) or more of the consolidated
tangible assets of the Company and its Subsidiaries; provided,
that no Subsidiary of the Company shall be a Non-Guarantor Subsidiary to the
extent that such Subsidiary guaranties any other Indebtedness of the Company.

 

“Notes” shall mean the
promissory notes, each substantially in the form of Exhibit A attached
hereto, of the Company evidencing the Loans, payable to the order of the
respective Lenders in the amount of the sum of said Lender’s Unused Commitment
and the Current Sum owing to said Lender, and all renewals, extensions,
modifications, rearrangements and replacements thereof and substitutions therefor.  Note shall mean any one of them.

 

“Notice of Assumption” shall
mean a Notice of Assumption in favor of the Agent, substantially in the form of
Exhibit B attached hereto and otherwise in Proper Form.

 

“Officer’s Certificate” shall
mean a certificate substantially in the form of Exhibit C attached hereto.

 

“Operating Lease Expense”
shall mean for any period for which Operating Lease Expense is calculated, the
aggregate amount of fixed and contingent rentals (exclusive of payments of
Capital Lease Obligations) payable by the Company and its Subsidiaries for such
period with respect to leases of Property. 
Operating Lease Expense shall be determined for the Company and its
Subsidiaries on a consolidated basis in accordance with Generally Accepted
Accounting Principles, consistently applied.

 

“Organizational Documents”
shall mean, with respect to a corporation, the certificate of incorporation,
articles of incorporation and bylaws of such corporation; with respect to a
partnership, the partnership agreement establishing such partnership; with
respect to a joint venture, the joint venture agreement establishing such joint
venture, and with respect to a trust, 

 

16

 

the
instrument establishing such trust; in each case including any and all
modifications thereof as of the date of the Loan Document referring to such
Organizational Document and any and all future modifications thereof which are
consented to by the Agent.

 

“Parties” shall mean all
Persons, other than the Agent, any Lender or any Issuer, executing any Loan
Document.

 

“Past Due Rate” shall mean, on
any day, the Alternate Base Rate plus two percent (2%).

 

“Permitted Asset Dispositions”
shall have the meaning attributed to such terms in Section 6.4(z) hereof.

 

“Permitted Investment Securities”
shall mean:  (1) readily marketable
securities issued or fully guaranteed by the United States of America or any
agency or wholly owned corporation thereof; (2) commercial paper rated “Prime
1” by Moody’s Investors Service, Inc. 
or A-1 by Standard and Poor’s Corporation with maturities of not more
than one hundred eighty (180) days and short term notes payable of any Business
Entity where said notes are rated at least “Prime 1” by Moody’s Investors
Service, Inc.  or “A-1” by Standard &
Poor’s Corporation with maturities of not more than ninety (90) days; (3) certificates
of deposit or repurchase certificates issued by any Lender or any other
financial institution acceptable to the Agent, all of the foregoing not having
a maturity of more than one (1) year from the date of issuance thereof; (4) securities
issued by municipalities rated AA or better by Standard & Poor’s
Corporation not having a maturity of more than one (1) year from the date
of issuance thereof; and (5) money market mutual funds having capital
surplus of at least $1,000,000,000 and deemed acceptable by the Agent,
substantially all of the assets of which are comprised of securities,
commercial paper, certificates of deposit or repurchase certificates of the
type described in subclauses (1) through (4) above.

 

“Permitted Stock Dispositions”
shall have the meaning attributed to such terms in Section 6.4(z) hereof.

 

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

 

“Plan” shall mean any plan
subject to Title IV of ERISA and maintained for employees of the Company or of
any member of a “controlled group of corporations”, as such term is defined in
the Code, of which the Company or any of its Subsidiaries it may acquire from
time to time is a part, or any such 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.

 

“Prime Rate”
shall mean, for any day, the prime rate as determined from time to time by
JPMorgan as being its prime rate for that day. 
Without notice to the Company or any other Person, the Prime Rate shall
automatically fluctuate upward and downward as and in the amount by which said
Prime Rate fluctuates, with each change to be effective as of the date of each
change in said Prime Rate.  The Prime
Rate is a reference rate and does not necessarily represent the lowest or best
rate actually charged to any customer, and JPMorgan disclaims any statement,
representation, or warranty to the contrary. 
JPMorgan may make commercial loans or other loans at rates of interest
at, above, or below the Prime Rate.

 

“Proper Form” shall mean in
form and substance satisfactory to the Agent and, in the case of any
Application, the applicable Issuer.

 

17

 

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

 

“Quarterly Unaudited Financial Statements”
shall mean, with respect to each fiscal quarter of the Company (except for the
last fiscal quarter), the Company’s 10-Q Report filed with the Securities
Exchange Commission for such fiscal quarter. 
All of the Quarterly Unaudited Financial Statements of the Company are
to be prepared in accordance with Generally Accepted Accounting Principles and
certified as true and correct by a Responsible Officer of the Company.

 

“Rate Selection Date” shall
mean that Business Day which is (a) in the case of Alternate Base Rate
Borrowings, the Business Day of such borrowing or (b) in the case of LIBOR
Rate Borrowings, the date three (3) Business Days preceding the first day
of any proposed LIBOR Interest Period.

 

“Rate Selection Notice” shall
have the meaning ascribed to it in Section 2.9(b)(i) hereof.

 

“Re-Allocation Date” shall
have the meaning assigned to it in Section 2.16(e).

 

“Register” shall have the
meaning assigned to such term in Section 9.11(e).

 

“Regulation D” shall mean
Regulation D of the Board of Governors of the Federal Reserve System from time
to time in effect and shall include any successor or other regulation relating
to reserve requirements applicable to member banks of the Federal Reserve
System.

 

“Regulatory Change” shall
mean, with respect to any Lender, any change on or after the date of this
Agreement in any Legal Requirement (including Regulation D) or the adoption or
making on or after such date of any interpretation, directive or request
applying to a class of banks including such Lender under any Legal Requirement
(whether or not having the force of law) by any Governmental Authority charged
with the interpretation or administration thereof.

 

“Request for Extension of Credit
and  Certificate
of No Default” shall mean a written request for extension of
credit substantially in the form of Exhibit D attached hereto.

 

“Required Lenders” shall mean
two (2) or more Lenders having a majority or greater of the Aggregate
Commitment or, if the Aggregate Commitment has been terminated, the aggregate
Current Sum for all Lenders.

 

“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 now or hereafter in effect 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.

 

“Responsible Officer” shall
mean the chief executive officer, chief financial officer, 

 

18

 

president
of a Loan Party and the general counsel of the Company.  Any document delivered hereunder that is
signed by a Responsible Officer of a Loan Party shall be conclusively presumed
to have been authorized by all necessary corporate, partnership and/or other
action on the part of such Loan Party and such Responsible Officer shall be
conclusively presumed to have acted on behalf of such Loan Party.

 

“Rolling Four Quarters” shall
mean the then most recently ended four (4) consecutive fiscal quarters of
the Company for which, as of such day, financial statements are required to
have been given to the Agent and Lenders pursuant to this Agreement.

 

“S&P”
shall mean Standard & Poor’s, a division of The McGraw-Hill Companies, Inc.

 

“Security Agreement  A”  means a security and pledge agreement
substantially in the form of Exhibit G-A hereto.

 

“Security Agreement B”  means a security and pledge agreement
substantially in the form of Exhibit G-B hereto.

 

“Solvent”
and “Solvency” shall mean, with respect
to any Person on a particular date, that on such date (a) the fair value
(taken on a going concern basis) of the property of such Person is greater than
the total amount of liabilities, including, without limitation, contingent
liabilities, of such Person, (b) the present fair salable value (taken on
a going concern basis) of the assets of such Person is not less than the amount
that will be required to pay the probable liability of such Person on its debts
as they become absolute and matured, (c) such Person does not intend to,
and does not believe that it will, incur debts or liabilities beyond such
Person’s ability to pay such debts and liabilities as they mature and (d) such
Person is not engaged in business or a transaction, and is not about to engage
in business or a transaction, for which such Person’s property would constitute
an unreasonably small capital.  The
amount of contingent liabilities at any time shall be computed as the amount
that, in the light of all the facts and circumstances existing at such time,
represents the amount that can reasonably be expected to become an actual or
matured liability.  In determining the Solvency
of any Loan Party the contribution rights that such Loan Party will have
against the other Loan Parties and the subrogation rights that each Guarantor
will have against the Company shall be taken into account.

 

“Stock” shall mean as to a
Business Entity, all capital stock or other indicia of equity rights issued by
such Business Entity from time to time.

 

“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

 

19

 

extent functioning as debt
for borrowed money, would be characterized as the indebtedness of such Person
(without regard to accounting treatment).

 

“Target” shall have the
meaning ascribed to it in the Preliminary Statements hereto.

 

“Target Representations” shall
mean the representations and warranties made by or on behalf of the Target and
its Subsidiaries and contained in the Merger Agreement and the representations
and warranties of the Company with respect to the Target and its Subsidiaries
set forth in Sections 4.1, 4.3, 4.14, 4.15, 4.18 and 4.19

 

“Target Representation Limitations”
means that, on the date of the initial Borrowing hereunder until the earlier of
the date of consummation of the Merger and the Commitment Termination Date (as
defined in the Term Loan Facility), the representations and warranties of the
Company set forth in Article IV in respect of the Target and its
Subsidiaries shall be limited to the Target Representations.

 

“Taxes” shall have the meaning
ascribed to it in Section 2.10(b) hereof.

 

“Tender Offer” shall have the
meaning ascribed to it in the Preliminary Statements hereto.

 

“Term Loan Facility” shall
mean the senior term loan facility of the Company dated as of the date hereof
among the Company, the financial institutions from time to time parties
thereto, and Royal Bank of Canada, as administrative agent, as the same may be
amended from time to time in accordance with the terms of this Agreement.

 

“Transactions” means the
consummation of the Merger and the entering into and borrowings under this
Agreement.

 

“Uncommitted
Money Market Borrowings” shall mean any Indebtedness for
borrowed funds advanced by any lender to the Company under any “discretionary
guidance,” “bid line” or other type of uncommitted money market loan facility.

 

“Unsecured Borrowed Debt”
shall mean all Indebtedness resulting from borrowings of the Company (exclusive
of intercompany borrowings) from time to time owing to Persons which is not secured
by any Liens (other than borrowings from trade creditors in the ordinary course
of business).

 

“Unused Commitment” shall
mean, as to a particular Lender, the difference of such Lender’s Commitment on
such day less the Current Sum applicable to such Lender on such day.

 

Section 1.2  Accounting Terms and
Determinations.

 

Except where specifically
otherwise provided:

 

(a)           The symbol “$” and the word “dollars” shall mean
lawful money of the United States of America.

 

(b)           Any accounting term not otherwise defined shall have the
meaning ascribed to it under Generally Accepted Accounting Principles.

 

20

 

(c)           Unless otherwise expressly provided, any accounting
concept and all financial covenants shall be determined on a consolidated
basis, and financial measurements shall be computed without duplication.

 

(d)           Wherever the term “including” or any of its correlatives
appears in the Loan Documents, it shall be read as if it were written “including
(by way of example and without limiting the generality of the subject or
concept referred to)”.

 

(e)           Wherever the word “herein” or “hereof” is used in any Loan
Document, it is a reference to that entire Loan Document and not just to the
subdivision of it in which the word is used.

 

(f)            References in any Loan Document to Section numbers
are references to the Sections of such Loan Document.

 

(g)           References in any Loan Document to Exhibits, Schedules,
Annexes and Appendices are to the Exhibits, Schedules, Annexes and Appendices to
such Loan Document, and they shall be deemed incorporated into such Loan
Document by reference.

 

(h)           Any term defined in the Loan Documents which refers to a
particular agreement, instrument or document shall also mean, refer to and
include all modifications, amendments, supplements, restatements, renewals,
extensions and substitutions of the same; provided that nothing in this
subsection shall be construed to authorize any such modification, amendment,
supplement, restatement, renewal, extension or substitution except as may be
permitted by other provisions of the Loan Documents.

 

(i)            All times of day used in the Loan Documents mean local
time in New York, New York.

 

(j)            Defined terms may be used in the singular or plural, as
the context requires.

 

ARTICLE II - — LOANS;
ETC.

 

Section 2.1  Loans.

 

(a)           Subject to the terms and conditions hereof, each
Lender severally agrees to make  Loans to
the Company from time to time prior to the Maturity Date, in an aggregate
principal amount at any one time outstanding (including its liability for the
Letter of Credit Exposure Amount at such time) up to but not exceeding such
Lender’s Commitment on such date.  Loans
repaid prior to the Maturity Date may be reborrowed pursuant to the terms of
this Agreement.  Each Loan which is not
made to repay a Letter of Credit Advance pursuant to Section 2.4 hereof
shall be in an amount of at least (i) $5,000,000 or (ii) the Unused
Commitment of the Lenders, whichever is less. 
Each repayment of the Loans shall be in an amount of at least $5,000,000
or, if less, the Current Sum.

 

(b)           The Company shall give the Agent notice of a request for a
Loan in accordance with Section 3.1 hereof.  Upon receipt of each such notice, the Agent
shall promptly give each of the Lenders notice of receipt thereof, which notice
may be by telephone or facsimile.  Not
later than 1:30 P.M. (New York Time) on the date specified for the making
of such Loan, each Lender shall make available to the Agent, at the Agent’s
Account, such Lender’s Commitment Percentage of such Loan in immediately
available funds for the account of the Company. 
The amount so received by the Agent shall, subject to the terms and
conditions of this Agreement, be made available to the Company by depositing
same, in immediately available funds, in an account designated by the Company
maintained with the Agent or with another financial institution reasonably
acceptable to the Agent.  If a requested
Loan shall

 

21

 

not occur on any date specified by the
Company as set forth in the applicable Request for Extension of Credit and
Certificate of No Default because all of the conditions for such Loan set forth
herein or in any of the other Loan Documents shall have not been met, the Agent
shall return the amounts so received from the Lenders in respect of such
requested Loan to the applicable Lenders as soon as practicable; provided, however, if and to the extent that the Agent fails
to return any such amounts to any applicable Lender by the Business Day
following the date that the requested Loan was to have been made, the Agent
shall pay interest on such unreturned amounts for each date from such date that
the requested Loan was to have been made, to the date that such unreturned
amounts are returned to such Lender, such interest to accrue at the Federal
Funds Rate and to be payable upon written request from such Lender.

 

(c)           Unless the Agent shall have received notice from a Lender
prior to the date of any Borrowing that such Lender will not make available to
the Agent such Lender’s ratable portions of such Borrowing, the Agent may
assume that such Lender has made such portion available to the Agent on the
date of such Borrowing in accordance with subsection (b) of this Section 2.1
and the Agent may, in reliance upon such assumption, make available to the
Company on such date a corresponding amount. 
If and to the extent that such Lender shall not have so made such
ratable portion available to the Agent, such Lender and the Company severally
agree to repay or pay to the Agent forthwith on demand such corresponding
amount and to pay interest thereon, for each day from the date such amount is
made available to the Borrower until the date such amount is repaid or paid to
the Agent, at (i) in the case of the Company, the interest rate applicable
at such time under Section 2.9 to Loans comprising such Borrowing and (ii) in
the case of such Lender, the Federal Funds Rate.  If such Lender shall pay to the Agent such
corresponding amount, such amount so paid shall constitute such Lender’s Loan
as part of such Borrowing for all purposes.

 

(d)           The obligations of the Lenders hereunder are several and
not joint; therefore, notwithstanding anything herein to the contrary, (i) no
Lender shall be required to make Loans at any one time outstanding in excess of
such Lender’s Commitment, (ii) if a Lender fails to make a Loan as and
when required hereunder and the Company subsequently makes a repayment on the
Loans, such repayment shall be split among the non-defaulting Lenders in
accordance with their respective Current Sum Percentages until each Lender has
its Commitment Percentage of all of the outstanding Loans, then the balance of
such repayment shall be divided among all of the Lenders in accordance with
their respective Commitment Percentages (it being understood that any such
repayment to a defaulting Lender shall not be deemed to relieve such defaulting
Lender from any liability to the Company resulting from such defaulting Lender’s
failure to make a Loan as and when required hereunder) and (iii) the
failure of any Lender to make any Loan shall not in itself relieve any other
Lender of its obligation to lend hereunder (provided, that no Lender shall be
responsible for the failure of any other Lender to make a Loan such other
Lender is obligated to make hereunder).

 

(e)           Notwithstanding anything to the contrary contained in this
Section 2.1 or any other provision of this Agreement, the Company
covenants and agrees that in no event shall the aggregate amount of the Loans
and the Letter of Credit Exposure Amount outstanding on any day ever exceed the
amount of the Aggregate Commitment then in effect as of such day less the
aggregate amount of Uncommitted Money Market Borrowings then outstanding as of
such day.

 

Section 2.2  Commitment Fees; Termination
and Reductions.  In
consideration of each Lender’s Unused Commitment, the Company agrees to pay to
the Agent for the account of each Lender a commitment fee (each a “Commitment Fee”)
(computed on the basis of the actual number of days elapsed in a year composed
of 360 days) in an amount equal to the product of (A) the Applicable
Commitment Fee Percentage in effect for the period for which the Commitment Fee
is being computed times (B) such
Lender’s Unused Commitment.  The Commitment
Fee shall be due and payable in arrears on the last Business Day of each March,
June, September and December prior to the Maturity Date and on

 

22

 

the Maturity Date, with each Commitment Fee
to commence as of the date hereof and to be effective as to any reduction in
the Commitment or change in the Applicable Commitment Fee Percentage as of the
date of any such decrease or change, and each Commitment Fee shall cease to
accrue (except with respect to past due interest on any unpaid portion thereof)
on the Maturity Date.  All past due
Commitment Fees shall bear interest at the Past Due Rate and shall be payable
upon demand by the Agent.  The Aggregate
Commitment may be permanently terminated or reduced as follows, which such
reductions shall be applied pro rata:

 

(a)           the Company may, upon three (3) Business Days’
prior written notice to the Agent, permanently terminate or reduce the
Aggregate Commitment in an amount of at least $10,000,000 or the amount of the
Aggregate Commitment at such time, whichever is less; and

 

(b)           any prepayment of the Loans and Letter of Credit Advances
in accordance with the provisions of Section 2.3 hereof shall permanently
and automatically reduce the Aggregate Commitment in an amount equal to any
such prepayment.

 

Section 2.3  Mandatory Prepayments;
Commitment Reduction.

 

(a)           If the Current Sum applicable to a Lender at any time
exceeds such Lender’s Commitment, the Agent shall notify the Company in writing
of the deficiency by overnight priority delivery service provided by a
nationally recognized delivery service or, if the officer of the Agent
providing such notice to the Company is located in Austin, Texas, by hand
delivery confirmed by written receipt. Within three Business Days after the
actual receipt of such notice, the Company shall make a prepayment on such
Lender’s Note or otherwise reimburse the Agent for Letter of Credit Advances or
cause the one or more Letters of Credit to be canceled and surrendered in an
amount sufficient to reduce such Current Sum to an amount no greater than such
Commitment.

 

(b)           The Company shall, not later than five Business Days
following the date of receipt of any Net Proceeds by any Loan Party or any of
its Subsidiaries, by notice to the Agent, prepay the Indebtedness outstanding
under the Term Loan Facility and the Loans in an amount equal to the amount of
such Net Proceeds, to be applied in the following order:  (i) first, to be
applied against the Indebtedness outstanding under the Term Loan Facility; and (ii) second,
the balance of such Net Proceeds, if any, shall be applied against the
aggregate principal amount of the Loans, such prepayment to be applied to the
Loans on a pro rata basis; provided that
this subsection shall not apply to the first $10,000,000 of Net Proceeds
received by the Company and its Subsidiaries in any fiscal year of the Company.

 

(c)           The Company shall, on the date that is 90 days
following the Effective Date, prepay an aggregate principal amount of the
Indebtedness outstanding under the Term Loan Facility in an amount equal to the
excess above $10,000,000 of the aggregate principal amount of the Target’s
Convertible Senior Debentures outstanding on such date.

 

Section 2.4  Payments.  All sums payable by the Company to the Agent
hereunder or pursuant to Notes for its own account or the account of the
Lenders shall be payable in United States dollars in immediately available
funds not later than 12:00 noon on the date such payment or prepayment is due
and shall be made without set-off, counterclaim or deduction of any kind.  Any such payment received and accepted by the
Agent or any Issuer after such time shall be considered for all purposes
(including the payment of interest, to the extent permitted by law) as having
been made on the next succeeding Business Day. 
All such payments shall be made to the Agent at the Agent’s
Account.  If any payment or prepayment
becomes due and payable on a day which is not a Business Day, then the date for

 

23

 

the payment thereof shall be extended to the
next succeeding Business Day and interest shall be payable thereon at the then
applicable rate per annum during such extension.

 

Section 2.5  Prepayments of Loans.

 

(a)           In addition to the mandatory prepayments required by
Section 2.3 hereof, the Company shall have the right, at its option, to
prepay the Loans in whole at any time or in part from time to time, without
premium or penalty, except as provided in this Section or subsections (a),
(b) or (c) of Section 2.10 hereof.  Each partial prepayment under this subsection
shall be a principal amount of not less than $10,000,000 or an integral
multiple of $1,000,000 in excess thereof. 
Each prepayment under this subsection shall be applied to the prepayment
of the aggregate unpaid principal amount of the Notes.  Prepayments under this Agreement shall be
subject to the following additional conditions:

 

i.              In giving
notice of prepayment as hereinafter provided, the Company shall specify, for
the purpose of paragraphs (ii) and (iii) immediately following, the
manner of application of such prepayment as between any outstanding Alternate
Base Rate Borrowings and LIBOR Rate Borrowings; provided, that in no event
shall any LIBOR Rate Borrowing be partially prepaid.

 

ii.             Prepayments
applied to any LIBOR Rate Borrowing may be made on any LIBOR Business Day,
provided, that (A) the Company shall have given the Agent at least two (2) LIBOR
Business Days’ prior irrevocable written or facsimile notice of such prepayment,
specifying the principal amount of the LIBOR Rate Borrowing to be prepaid, the
particular LIBOR Rate Borrowing to which such prepayment is to be applied and
the prepayment date; and (ii) if such prepayment is made on any day other
than the last day of the LIBOR Interest Period corresponding to the LIBOR Rate
Borrowing to be prepaid, the Company shall pay directly to the Agent for the
account of the Lenders, on the last day of such LIBOR Interest Period, the
Consequential Loss as a result of such prepayment.

 

iii.            Prepayments
applied to any Alternate Base Rate Borrowing may be made on any Business Day,
provided that the Company shall have given the Agent at least five (5) Business
Days prior irrevocable written notice or notice by telephone or facsimile
(which is to be promptly confirmed in writing) of such prepayment, specifying
the principal amount of the Alternate Base Rate Borrowing to be prepaid and the
prepayment date.

 

(b)           Notice of any prepayment having been given, the
principal amount specified in such notice, together with (in the case of any
prepayment of a LIBOR Rate Borrowing) interest thereon to the date of
prepayment, shall be due and payable on such prepayment date.

 

(c)           Any Lender may, if it so elects, fulfill its obligation as
to any LIBOR Rate Borrowing by causing a branch, foreign or otherwise, or
Affiliate of such Lender to make such Loans and may transfer and carry such
Loans at, to or for the account of any branch office or Affiliate of such
Lender; provided, that in such event for the
purposes of this Agreement such Loans shall be deemed to have been made by such
Lender and the obligation of the Company to repay such Loans shall nevertheless
be to such Lender and shall be deemed held by it, to the extent of such
portions of the Loan, for the account of such branch or affiliate.

 

(d)           Notwithstanding any provision of this Agreement to the
contrary, each Lender shall be entitled to fund and maintain its funding of all
or any part of the Loans hereunder in any manner it sees fit, it being
understood, however, that for the purposes of this Agreement all determinations
hereunder shall be made as if such Lender had actually funded and maintained
its portion of each LIBOR

 

24

 

Rate Borrowing during each LIBOR Interest
Period for the Loans through the purchase of deposits having a maturity
corresponding to such LIBOR Interest Period and bearing an interest rate equal
to the London Interbank Rate for such LIBOR Interest Period.

 

(e)           The Company’s obligation to pay increased costs and
Consequential Loss with regard to each LIBOR Rate Borrowing as specified in
this Section 2.5 hereof shall survive termination of this Agreement.

 

Section 2.6  Application of Payments and
Prepayments.  Prepayments
of the Loans shall be applied first to the principal amount thereof, with the
balance to accrued interest.  Regularly
scheduled  payments of the Loans shall be
applied first to accrued interest, the
balance to the principal.  If the Agent
receives funds on a date when payments of the Loans are due and such funds are
not sufficient to pay all of the obligations of the Company hereunder then due,
or if the Agent receives any payments or other amounts owing to Agent or any
Lender under any Loan Document, including without limitation, proceeds obtained
from the enforcement of the Guaranties, then such funds shall be applied (a) first,
to fees or expenses of the Agent then due hereunder or any other Loan Document
which are to be paid by the Company or the applicable Guarantor, (b) second,
to fees or expenses of the Lenders then due hereunder or any other Loan
Document (other than fees or expenses owing under Credit Facility Hedging
Agreements) which are to be paid by the Company or the applicable Guarantor,
including without limitation, Commitment Fees to the extent then due, (c) third,
to the accrued interest on and, to the extent then due, principal of the Loans
and any Letter of Credit Advances then outstanding, and (d) fourth, to
amounts owing under Credit Facility Hedge Agreements.  Each payment received by the Agent hereunder
or under any Note for the account of a Lender shall be paid promptly to such
Lender, in immediately available funds. 
If the Agent fails to send to any Lender the product of such Lender’s
Current Sum Percentage times the aggregate amount of any such payment timely
received by the Agent for the account of all the Lenders by the close of
business on the Business Day following the date such payment was received by
the Agent, the Agent shall pay to such Lender interest on such Lender’s
pro-rata portion of such payment timely received by the Agent from such date of
receipt by the Agent to the date that such Lender receives its pro-rata portion
of such payment, such interest to accrue at the Federal Funds Rate and to be
payable upon written request from such Lender.

 

Section 2.7  Pro Rata Treatment.  Except to the extent otherwise provided
herein:  (a) each borrowing from the
Lenders under Section 2.1 hereof shall be made, each payment of commitment
fees shall be made and applied for the account of the Lenders, and each
termination or reduction of the Unused Commitments of the Lenders under Section 2.2
hereof shall be applied, pro rata, according to each Lender’s Commitment
Percentage; (b) each payment by the Company of principal of or interest on
Loans shall be made to the Agent for the account of the Lenders pro rata in
accordance with the respective Current Sum Percentage of the Lenders; (c) each
Letter of Credit will be issued for the account of the Lenders severally and
ratably among the Lenders in accordance with their respective Commitment
Percentages, and (d) the Lenders (other than the applicable Issuer) shall
purchase from any Issuer participations in the Letters of Credit issued by such
Issuer, to the extent of their respective Commitment Percentages.

 

Section 2.8  Payment Dates on the Loans.  Accrued interest on the unpaid balance of the
Loans shall be payable on the Interest Payment Dates and at the Maturity Date,
commencing with the first of such dates to occur after the date hereof.  After the Maturity Date, accrued interest on
the Loans shall be payable on demand.  On
the Maturity Date, the outstanding principal balance of the Loans shall be
fully due and payable.

 

25

 

Section 2.9  Interest Options for Loans.

 

(a)           Options Available.  The Loans shall bear interest at the
Alternate Base Rate; provided, that (1) all
past due principal and interest shall bear interest at the Past Due Rate which
shall be payable on demand, and (2) subject to the provisions hereof, the
Company shall have the option of having all or any portion of the outstanding
principal amount of the Loans bear interest until their respective maturities
at a rate per annum equal to the LIBOR Rate (together with the Alternate Base
Rate, individually herein called an “Interest
Option” and collectively called “Interest Options”). 
The records of the Agent with respect to Interest Options, LIBOR
Interest Periods and the amounts of Loans to which they are applicable shall be
binding and conclusive, absent manifest error. 
Interest on the Loans shall be calculated at the Alternate Base Rate
except where it is expressly provided pursuant to this Agreement that the LIBOR
Rate is to apply.

 

(b)           Designation and Conversion.  The Company shall have the right to designate
or convert its Interest Options in accordance with the provisions hereof.  Provided no Event of Default has occurred and
is continuing and subject to the provisions of the last sentence of Subsection
2.09(a) hereinabove and of Section 2.10 hereof, the Company may elect
to have the LIBOR Rate apply or continue to apply to all or any portion of the
outstanding principal balance of the Loans. 
Each change in Interest Options shall be a conversion of the rate of
interest applicable to the specified portion of the Loans, but such conversion
alone shall not change the outstanding principal amount of the Loans.  The Interest Options shall be designated or
converted in the manner provided below:

 

i.              The Company
shall give the Agent notice by telephone or facsimile promptly confirmed by
written notice (the “Rate
Selection Notice”) substantially in the form of Exhibit E
hereto.  Each such telephone or facsimile
and written notice shall specify the amount and type of borrowings which are
the subject of the designation, if any; the amount and type of borrowings into
which such borrowings are to be converted or for which an Interest Option is
designated; the proposed date for the designation or conversion (which, in the
case of conversion of LIBOR Rate Borrowings, shall be the last day of the LIBOR
Interest Period applicable thereto) and the LIBOR Interest Period or Periods,
if any, selected by the Company.  Such
notice by telephone or facsimile shall be irrevocable and shall be given to the
Agent no later than the applicable Rate Selection Date.  If (a) a new Loan is to be a LIBOR Rate
Borrowing, (b) an existing LIBOR Rate Borrowing is maturing at the time
that a new Loan is being requested and the Company is electing to have such
existing portion of the outstanding principal balance of the Loans going
forward bear interest at the same Interest Option and for the same LIBOR
Interest Period as the new Loan, or (c) a portion of an Alternate Base
Rate Borrowing is to be converted so as to bear interest at the same Interest
Option and for the same LIBOR Interest Period as the new Loan, then the Rate
Selection Notice shall be included in the Request for Extension of Credit and
Certificate of No Default applicable to the new Loan, which shall be given to
the Agent no later than the applicable Rate Selection Date.

 

ii.             No
more than five (5) LIBOR Interest Periods shall be in effect at any one
time.  Each LIBOR Rate Borrowing shall be
in the amount of at least $5,000,000.

 

iii.            Principal
included in any borrowing shall not be included in any other borrowing which
exists at the same time.

 

iv.            Each
designation or conversion shall occur on a Business Day (and, for LIBOR Rate
Borrowings, on a LIBOR Business Day).

 

v.             Except
as provided in Section 2.10 hereof, no LIBOR Rate Borrowing shall be
converted on any day other than the last day of the applicable LIBOR Interest
Period.

 

26

 

(c)           Computations.  Interest based on the Alternate Base Rate, to
the extent determined by reference to the Prime Rate, will be computed on the
basis of 365 (or 366) days and actual days elapsed (including the first day but
excluding the last day) occurring in the period for which payable.  All other interest and fees shall be computed
on the basis of a year of 360 days and actual days elapsed (including the first
day but excluding the last day) occurring in the period for which payable.

 

Section 2.10  Special Provisions
Applicable to LIBOR Rate Borrowings.

 

(a)           Options Unlawful.  If, after the date of this Agreement, the
adoption of any applicable Legal Requirement or any change in any applicable
Legal Requirement or in the interpretation or administration thereof by any
Governmental Authority or compliance by the Agent or any Lender with any
request or directive (whether or not having the force of law) of any
Governmental Authority shall at any time make it unlawful or impossible for any
Lender to permit the establishment of or to maintain any LIBOR Rate Borrowing,
the commitment of the Lenders to establish or maintain the LIBOR Rate affected
by such adoption or change shall forthwith be canceled and the Company shall
forthwith, upon demand by the Agent to the Company, (1) convert the LIBOR
Rate with respect to which such demand was made to the Alternate Base Rate; (2) pay
all accrued and unpaid interest to date on the amount so converted; and (3) pay
any amounts required to compensate the Agent and the Lenders for any additional
cost or expense which the Agent or any Lender may incur as a result of such
adoption of or change in such Legal Requirement or in the interpretation or
administration thereof and any Consequential Loss which the Agent or any Lender
may incur as a result of such conversion to the Alternate Base Rate.  If, when the Agent so notifies the Company,
the Company has given a Rate Selection Notice specifying one or more borrowings
of the type with respect to which such demand was made but the selected LIBOR
Interest Period or LIBOR Interest Periods has not yet begun, such Rate
Selection Notice shall be deemed to be of no force and effect, as if never
made, and the balance of the Loans specified in such Rate Selection Notice
shall bear interest at the Alternate Base Rate until a different available
Interest Option shall be designated in accordance herewith.

 

(b)           Increased Cost of Borrowings.  If the adoption of any applicable Legal
Requirement or any change in any applicable Legal Requirement or in the
interpretation or administration thereof by any Governmental Authority or
compliance by the Agent or any Lender with any request or directive (whether or
not having the force of law) from any Governmental Authority shall at any time
as a result of any portion of the principal balance of the Loans being
maintained on the basis of the LIBOR Rate:

 

i.              subject any
Lender (or make it apparent that any Lender is subject) to any tax (including
any United States interest equalization tax), levy, impost, duty, charge, fee
(collectively, “Taxes”),
or any deduction or withholding for any Taxes on or from the payment due under
any LIBOR Rate Borrowing or other amounts due hereunder, other than income and
franchise taxes of the United States and its political subdivisions; or

 

ii.             change
the basis of taxation of payments due from the Company to the Agent or any
Lender under any LIBOR Rate Borrowing (otherwise than by a change in the rate
of taxation of the overall net income of the Agent or any Lender); or

 

iii.            impose,
modify, increase or deem applicable any reserve requirement (excluding that
portion of any reserve requirement included in the calculation of the
Eurocurrency Reserve Requirement, special deposit requirement or similar
requirement (including state law requirements and Regulation D) imposed,
modified, increased or deemed applicable by any Governmental Authority against
assets held by the Agent or any Lender, or against deposits or accounts in or
for the account of the Agent or

 

27

 

any Lender, or against loans made by the Agent or any Lender, or
against any other funds, obligations or other Property owned or held by the
Agent or any Lender; or

 

iv.            impose
on the Agent or any Lender any other condition regarding any LIBOR Rate
Borrowing;

 

and the result of any of the
foregoing is to increase the cost to any Lender of agreeing to make or of
making, renewing or maintaining such borrowing on the basis of the LIBOR Rate,
or reduce the amount of principal or interest received by any Lender, then,
upon demand by the Agent, the Company shall pay to the Agent, from time to time
as specified by the Agent, additional amounts which shall compensate such
Lender for such increased cost or reduced amount.  The Agent will promptly notify the Company in
writing of any event, upon becoming actually aware of it, which will entitle
any Lender to additional amounts pursuant to this paragraph.  The Agent’s determination of the amount of
any such increased cost, increased reserve requirement or reduced amount shall
be conclusive and binding, absent manifest error, provided that the calculation
thereof is set forth in reasonable detail in such notice.

 

The Company shall have the
right, if it receives from the Agent any notice referred to in the preceding
paragraph, upon three (3) Business Days’ notice to the Agent, either (i) to
repay in full (but not in part) any borrowing with respect to which such notice
was given, together with any accrued interest thereon, or (ii) to convert
the LIBOR Rate in effect with respect to such borrowing to the Alternate Base
Rate; provided, that any such repayment or
conversion shall be accompanied by payment of (x) the amount required to
compensate the appropriate Lender or Lenders for the increased cost or reduced
amount referred to in the preceding paragraph; (y) all accrued and unpaid
interest to date on the amount so repaid or converted, and (z) any
Consequential Loss which may be incurred as a result of such repayment or
conversion.

 

(c)           Inadequacy of Pricing and Rate Determination.  If for any reason with respect to any LIBOR
Interest Period the Agent shall have determined (which determination shall be
conclusive and binding upon the Company, and, in the case of clause (2) below,
shall be presumed to be made upon notice from such Lender) that:  (1) the Agent is unable through its
customary general practices to determine a rate at which the Agent is offered
deposits in United States dollars by prime banks in the interbank market in
London, England in the appropriate amount for the appropriate period, or by
reason of circumstances affecting the interbank market in London, England,
generally, prime banks are not being offered deposits in United States dollars
in the interbank market in London, England, for the applicable LIBOR Interest
Period and in an amount equal to the amount of the LIBOR Rate Borrowing
requested by the Company, or (2) the LIBOR Rate will not adequately and
fairly reflect the cost to any Lender of making and maintaining any LIBOR Rate
Borrowing hereunder for any proposed LIBOR Interest Period, then the Agent
shall give the Company notice thereof and thereupon, (A) any Rate
Selection Notice previously given by the Company designating a LIBOR Rate which
has not commenced as of the date of such notice from the Agent shall be deemed
for all purposes hereof to be of no force and effect, as if never given, and (B) until
the Agent shall notify the Company that the circumstances giving rise to such
notice from the Agent no longer exist, each Rate Selection Notice requesting a
LIBOR Rate Borrowing shall be deemed a request for an Alternate Base Rate
Borrowing, and each outstanding LIBOR Rate Borrowing then in effect shall be
converted, without any notice to or from the Company, upon the termination of
the LIBOR Interest Period then in effect, to an Alternate Base Rate Borrowing.

 

(d)           Indemnification. 
The Company shall indemnify the Agent and each of the Lenders against
and hold each of them harmless from any loss or expense which they may incur or
sustain as a consequence of any untimely payment (mandatory or optional) or
default by the Company in the payment of any principal amount of or interest on
the Loans, or any failure by the Company to convert or to borrow any LIBOR Rate
Borrowing on the date specified by the Company, in each case including any

 

28

 

interest payable by any Lender to the lenders
of the funds obtained by it in order to make or maintain any LIBOR Rate
Borrowing (or any portion thereof), and, to the extent not covered above, any
Consequential Loss.  This agreement shall
survive the payment of the Loans.  A
certificate as to any additional amounts payable pursuant to this paragraph
submitted by the Agent or any Lender to the Company shall be conclusive and
binding upon the Company, absent manifest error, provided the calculation
thereof is set forth in reasonable detail in such notice.

 

Section 2.11  Payment Dates.  Whenever any payment to be made hereunder in
respect of the Loans shall be stated to be due on a day which is neither a
Business Day nor a LIBOR Business Day, such payment may be made on the next
succeeding Business Day, or, subject to the definition of LIBOR Interest Period
in the case of any payment of the Loans to which the LIBOR Rate applies, on the
next succeeding LIBOR Business Day, and such extension of time shall in each
such case be included in computing interest and commitment fees in connection
with such payment.

 

Section 2.12  Sharing of Payments, Etc.  The Company agrees that, in addition to (and
without limitation of) any right of set-off, bankers’ lien or counterclaim a
Lender may otherwise have, upon the occurrence and during the continuance of
any Event of Default, each Lender shall be entitled, at its option, to offset
balances held by it for the account of the Company at any of its offices
against any principal of or interest on any of such Lender’s Loans to the
Company hereunder, such Lender’s Commitment Percentage of the Letter of Credit
Exposure Amount or any other obligation of the Company hereunder, which is not
paid (regardless of whether such balances are then due to the Company), in
which case it shall promptly notify the Company and the Agent thereof, provided
that such Lender’s failure to give such notice shall not affect the validity
thereof.  If a Lender shall obtain
payment of any principal of or interest on any Loan made by it under this
Agreement, any Letter of Credit Exposure Amount or other obligation then due to
such Lender hereunder, through the exercise of any right of set-off (including,
without limitation, any right of setoff or lien granted under Section 9.18
hereof), banker’s lien, counterclaim or similar right, or otherwise, it shall
promptly purchase from the other Lenders participations in the Loans made by,
the Letter of Credit Exposure Amount of, or the other obligations of the
Company hereunder of, the other Lenders in such amounts, and make such other
adjustments from time to time as shall be equitable to the end that all the Lenders
shall share the benefit of such payment (net of any expenses which may be
incurred by such Lender in obtaining or preserving such benefit) pro rata in
accordance with their respective Commitment Percentages.  To such end all the Lenders shall make appropriate
adjustments among themselves (by the resale of participations sold or
otherwise) if such payment is rescinded or must otherwise be restored.  The Company agrees, to the fullest extent it
may effectively do so under applicable law, that any Lender so purchasing a
participation in the Loans made by, Letter of Credit Exposure Amount of, or
other obligations hereunder of, the other Lenders may exercise, upon the
occurrence and during the continuance of any Event of Default, all rights of
set-off, bankers’ lien, counterclaim or similar rights with respect to such
participation as fully as if such Lender were a direct holder of said Loans,
Letter of Credit Exposure Amount or other obligations in the amount of such
participation.  Nothing contained herein
shall require any Lender to exercise any such right or shall affect the right
of any Lender to exercise, and retain the benefits of exercising, any such
right with respect to any other indebtedness or obligation of the Company.

 

Section 2.13  Use of Proceeds.  The proceeds of the Loans shall be used
solely (i) to finance the Transactions, (ii) to refinance
certain existing Indebtedness of the Target, (c) to pay costs and expenses
relating to the Transactions, and (d) to support new store
development, other acquisitions, the issuance of standby Letters of Credit and
other general corporate purposes, including but not limited to, the repurchase
of Stock.

 

Section 2.14  Evidence of Debt.  (a)  Each Lender shall maintain in
accordance with its usual practice an account or accounts evidencing the
indebtedness of the Company to such Lender

 

29

 

resulting from each Loan owing to such Lender
from time to time, including the amounts of principal and interest payable and
paid to such Lender from time to time hereunder.  The Company agrees that upon notice by any
Lender to the Company (with a copy of such notice to the Agent) to the effect
that a Note or other evidence of indebtedness is required or appropriate in
order for such Lender to evidence (whether for purposes of enforcement or
otherwise) the Loans owing to, or to be made by, such Lender, the Company shall
promptly execute and deliver to such Lender Party, with a copy to the Agent, a
Note, in substantially the form of Exhibit A hereto, payable to the order
of such Lender in a principal amount equal to the Commitment of such
Lender.  All references to Notes in the
Loan Documents shall mean Notes, if any, to the extent issued hereunder.

 

(b)           The Register maintained by the Agent pursuant to Section 9.11(e) shall
include a control account, and a subsidiary account for each Lender, in which
accounts (taken together) shall be recorded (i) the date and amount of
each Borrowing made hereunder, the Type of Loans comprising such Borrowing and,
if appropriate, the LIBOR Interest Period applicable thereto, (ii) the
terms of each Assignment and Acceptance delivered to and accepted by it, (iii) the
amount of any principal or interest due and payable or to become due and
payable from the Borrower to each Lender hereunder, and (iv) the amount of
any sum received by the Agent from the Borrower hereunder and each Lender’s
share thereof.

 

(c)           Entries made in good faith by the Agent in the Register
pursuant to subsection (b) above, and by each Lender in its account or
accounts pursuant to subsection (a) above, shall be prima facie evidence of the amount of
principal and interest due and payable or to become due and payable from the
Company to, in the case of the Register, each Lender and, in the case of such
account or accounts, such Lender, under this Agreement, absent manifest error; provided, however, that the failure of the Agent or such Lender to make an
entry, or any finding that an entry is incorrect, in the Register or such
account or accounts shall not limit or otherwise affect the obligations of the
Borrower under this Agreement.

 

Section 2.15  Letters of Credit.

 

(a)           Subject to the terms and conditions contained herein, the
Company shall have the right to utilize the Aggregate Commitment from time to
time prior to the Letter of Credit Termination Date, by obtaining from any
Issuer one or more Letters of Credit for the account of the Company or any of
its Subsidiaries (with the Company being jointly and severally liable under the
terms of the applicable Application for any Letter of Credit issued for the
account of any of the Company’s Subsidiaries) in such amounts and in favor of
such beneficiaries as the Company from time to time shall request; provided,
that in no event shall any Issuer have any obligation to issue any Letter of
Credit if (i) the face amount of such Letter of Credit plus the
Letter of Credit Exposure Amount at such time would exceed $200,000,000, (ii) the
face amount of such Letter of Credit plus the aggregate of each Lender’s
Current Sum at such time, would exceed the Aggregate Commitment, (iii) such
Letter of Credit would have an expiry date later than the Maturity Date, (iv) either
such Letter of Credit is not in such form and does not contain such terms as
shall be satisfactory to the Agent in its sole and absolute discretion or the
Company has not executed and delivered such Applications and other instruments
and agreements relating to such Letter of Credit as the Agent shall have
requested or (v) an event has occurred and is continuing which constitutes
a Default as provided in Section 7 of this Agreement.  The Company promises to pay to the order of
an Issuer the amount of all Letter of Credit Advances made by such Issuer,
together with accrued interest thereon (if any).  Each Letter of Credit Advance shall be
considered for all purposes as a demand obligation owing by the Company to the
applicable Issuer of the Letter of Credit to which it relates, and each Letter
of Credit Advance shall bear interest from the date thereof at the Past Due
Rate, without notice of presentment, demand, protest or other formalities of
any kind (said past due interest on such Letter of Credit Advance being payable
on demand).  To effect repayment of any
such Letter of Credit Advance and any interest accrued thereon, the Agent may,
but shall not be obligated to, at any time deem that the

 

30

 

Company has requested an additional Loan as
an Alternate Base Rate Borrowing under this Agreement to be made to satisfy
such Letter of Credit Advance and any interest accrued thereon (if any), and if
the Agent deems that the Company has requested an additional Loan as an
Alternate Base Rate Borrowing to be made under this Agreement to satisfy such Letter
of Credit Advance and any interest accrued thereon (if any), the Lenders shall
satisfy such Letter of Credit Advance and any interest accrued thereon (if any)
by (subject to the terms and conditions of Section 2.1 hereof) making an
additional Loan as an Alternate Base Rate Borrowing  under this Agreement, if such Letter of
Credit Advance is (and such Loan is to be) made prior to the Maturity
Date.  Each Issuer will pay to each
Lender such Lender’s Commitment Percentage of all amounts received from the Company
by such Issuer, if any, for application, in whole or in part, against the
Letter of Credit Advances or Loans made by such Lender in respect to any Letter
of Credit, but only to the extent such Lender has made its full pro rata
payment of each drawing under the Letter of Credit to which such Letter of
Credit Advance relates.  All rights,
powers, benefits and privileges of this Agreement with respect to the Loans,
all security therefor and guaranties thereof (including the Guaranties) and all
restrictions, provisions for repayment or acceleration and all other covenants,
warranties, representations and agreements of the Company contained in this
Agreement with respect to the Loans shall apply to each such Letter of Credit
Advance.

 

(b)           In consideration of the issuance of each Letter of Credit
pursuant to the provisions of this Section 2.15, the Company agrees to pay
to the applicable Issuer a letter of credit fee in arrears on each Letter of
Credit Fee Payment Date equal to the product of (A) the Applicable Margin
then in effect for LIBOR Rate Borrowings times (B) the amount available
for drawings under such Letter of Credit issued by such Issuer on such Letter
of Credit Fee Payment Date times (C) the number of days from, but not
including, such Letter of Credit Fee Payment Date through and including the
next to occur Letter of Credit Fee Payment Date (or expiry date, if sooner)
applicable to such Letter of Credit divided by 360; provided, that in no event
shall the fee to be paid on any Letter of Credit Fee Payment Date for any such
Letter of Credit ever be less than $500. 
In addition, with respect to each Letter of Credit, the Company shall
pay to the applicable Issuer, for the benefit of such Issuer only, a fronting
fee, in advance, on such Letter of Credit, which shall be due and payable on
each Letter of Credit Fee Payment Date. 
The fronting fee amount so payable shall be equal to the product of (A) one-eighth
of one percent (1/8%) times (B) the amount available for drawings under
such Letter of Credit on such Letter of Credit Fee Payment Date times (C) the
number of days from, but not including, such Letter of Credit Fee Payment Date
through and including the next to occur Letter of Credit Fee Payment Date (or
expiry date, if sooner) applicable to such Letter of Credit divided by 360.

 

(c)           Each Issuer will pay to each Lender, as soon as
practicable after receiving any payment of letter of credit fees (other than
any fronting fee payable only for the benefit of such Issuer), an amount equal
to the product of (A) such Lender’s Commitment Percentage times (B) the
amount of such fees received (other than any fronting fee payable only for the
benefit of such Issuer).  If any Issuer
fails to send to any Lender such Lender’s pro-rata portion of any payment of letter
of credit fees timely received by such Issuer hereunder by the close of
business on the Business Day such payment was received by such Issuer, such
Issuer shall pay to such Lender interest on such Lender’s pro-rata portion of
the letter of credit fees timely received by such Issuer from such date of
receipt by such Issuer to the date that such Lender receives its pro-rata
portion of such payment, such interest to accrue at the Federal Funds Rate and
to be payable upon written request from such Lender.  The obligations of the Company under this
Agreement in respect of the Letters of Credit and Letter of Credit Advances
shall be absolute, unconditional and irrevocable, and shall be paid strictly in
accordance with the terms of this Agreement, under all circumstances
whatsoever, including the following circumstances:

 

(1)           any
lack of validity or enforceability of this Agreement, any Letter of Credit or
any Loan Document;

 

31

 

(2)           any
amendment or waiver of default under or any consent to departure from the terms
of this Agreement or any Letter of Credit without the express prior written
consent of the Agent and the Issuer of such Letter of Credit;

 

(3)           the
existence of any claim, set-off, defense or other right which any beneficiary
or any transferee of any Letter of Credit (or any entities for whom any such
beneficiary or any such transferee may be acting), or any Person (other than
the Agent or the Lenders) may have, whether in connection with this Agreement,
the Letters of Credit, the transactions contemplated hereby or any unrelated
transaction;

 

(4)           any
statement, draft, certificate, or any other document presented under any Letter
of Credit proving to be forged, fraudulent, invalid or insufficient in any respect
or any statement therein being untrue or inaccurate in any respect whatsoever;
provided that each Issuer will examine each document presented under each
Letter of Credit issued by such Issuer to ascertain that such document appears
on its face to comply with the terms thereof; and

 

(5)           any
other circumstance or happening whatsoever, whether or not similar to any of
the foregoing.

 

In the event that any restriction or limitation is imposed upon or
determined or held to be applicable to the Agent, any Lender, any Issuer or the
Company by, under or pursuant to any Legal Requirement now or hereafter in
effect or by reason of any interpretation thereof by any Governmental
Authority, which in the respective sole judgment of the Agent, any Lender or
any Issuer would prevent any Lender or Issuer from legally incurring liability
under a Letter of Credit issued or proposed to be issued hereunder, then the
Agent shall give prompt written notice thereof to the Company, whereupon the
Lenders and the Issuers shall have no obligation to issue any additional
Letters of Credit then or at any time thereafter.  In addition, if as a result of any Regulatory
Change which imposes, modifies or deems applicable (x) any tax, reserve,
special deposit or similar requirement against letters of credit issued by any
Issuer or participated in by any Lender; (y) any fee, expense or
assessment against Letters of Credit issued by any Issuer, the Agent or any
Lender for deposit insurance, or (z) any other charge, expense or
condition which increases the actual cost to any Issuer, the Agent or any
Lender of issuing or maintaining the Letters of Credit, or reduces any amount
receivable by the Agent, any Lender or any Issuer hereunder in respect of any
Letter of Credit or any participation therein (which increase in cost, or
reduction in amount receivable, shall be the result of such Issuer’s, the Agent’s
or such Lender’s reasonable allocation of the aggregate of such increases or
reductions resulting from such event), then the Company shall pay to such
Issuer, the Agent or such Lender, upon demand and from time to time, amounts
sufficient to compensate such Person for each such increase from the effective
date of such increase to the date of demand therefor.  Each such demand shall be accompanied by a
certificate setting forth in reasonable detail the calculation of the amount
then being demanded in accordance with the preceding sentence and each such
certificate shall be conclusive absent manifest error.

 

(d)           THE COMPANY HEREBY INDEMNIFIES AND HOLDS HARMLESS EACH
ISSUER, EACH LENDER AND THE AGENT FROM AND AGAINST ANY AND ALL CLAIMS AND
DAMAGES, LOSSES, LIABILITIES, COSTS OR EXPENSES WHICH SUCH ISSUER, SUCH LENDER
OR THE AGENT MAY INCUR (OR WHICH MAY BE CLAIMED AGAINST SUCH ISSUER,
SUCH LENDER OR THE AGENT BY ANY PERSON WHATSOEVER) IN CONNECTION WITH THE
EXECUTION AND DELIVERY OR TRANSFER OF OR PAYMENT OR FAILURE TO PAY UNDER ANY
LETTER OF CREDIT, INCLUDING ANY CLAIMS, DAMAGES, LOSSES, LIABILITIES, COSTS OR
EXPENSES WHICH SUCH ISSUER, THE AGENT OR SUCH LENDER, AS THE CASE MAY BE, MAY INCUR
(WHETHER INCURRED AS A RESULT OF ITS OWN NEGLIGENCE OR OTHERWISE) BY REASON OF
OR IN CONNECTION WITH THE FAILURE OF

 

32

 

ANY OTHER LENDER (WHETHER AS A RESULT OF ITS
OWN NEGLIGENCE OR OTHERWISE) TO FULFILL OR COMPLY WITH ITS OBLIGATIONS TO SUCH
ISSUER, THE AGENT OR SUCH LENDER, AS THE CASE MAY BE, HEREUNDER (BUT
NOTHING HEREIN CONTAINED SHALL AFFECT ANY RIGHTS THE COMPANY MAY HAVE
AGAINST SUCH DEFAULTING LENDER); PROVIDED, THAT THE COMPANY SHALL NOT BE
REQUIRED TO INDEMNIFY ANY ISSUER, ANY LENDER OR THE AGENT FOR ANY CLAIMS,
DAMAGES, LOSSES, LIABILITIES, COSTS OR EXPENSES TO THE EXTENT, BUT ONLY TO THE
EXTENT, CAUSED BY (I) THE WILLFUL MISCONDUCT OR GROSS NEGLIGENCE OF THE
PARTY SEEKING INDEMNIFICATION OR (II) SUCH ISSUER’S, SUCH LENDER’S OR THE
AGENT’S (AS THE CASE MAY BE) FAILURE TO PAY UNDER ANY LETTER OF CREDIT
AFTER THE PRESENTATION TO IT OF A REQUEST REQUIRED TO BE PAID UNDER APPLICABLE
LAW.  NOTHING IN THIS SECTION 2.4(C) IS
INTENDED TO LIMIT THE OBLIGATIONS OF THE COMPANY UNDER ANY OTHER PROVISION OF
THIS AGREEMENT.

 

(e)           The Company shall give the Agent the Application for a
Letter of Credit in accordance with the terms of Section 3.1 hereof.  Upon receipt of any such Application (which
such Application, when so received by the Agent, shall be deemed received by
JPMorgan in its capacity as an Issuer if JPMorgan will be the Issuer of the
applicable Letter of Credit), the Agent shall promptly notify each Lender that
a Letter of Credit has been requested in the amount reflected in such
Application and inform such Lender of the amount of its pro-rata portion of
such proposed Letter of Credit (based upon such Lender’s Commitment
Percentage).

 

(f)            If at any time any Issuer shall have made a payment to a
beneficiary of a Letter of Credit in respect of a drawing or in respect of an
acceptance created in connection with a drawing under any Letter of Credit
issued by such Issuer, each other Lender will pay to such Issuer immediately
upon demand by the Issuer at any time during the period commencing after such
payment until reimbursement thereof in full by the Company, an amount equal to
the product of (A) such Lender’s Commitment Percentage times (B) the
amount of such payment made by such Issuer to a beneficiary under such Letter
of Credit, together with interest on such amount for each day from the date of
demand by such Issuer for such payment (or, if such demand is made after 11:00 a.m.
on such date, from the next succeeding Business Day) to the date of payment by
such Lender to such Issuer of such amount at a rate of interest per annum equal
to the Federal Funds Rate for such period. 
Nothing herein shall be deemed to require any Lender to pay to any
Issuer any amount as reimbursement for any payment made by any Issuer to
acquire (discount) for its own account prior to maturity thereof any acceptance
created under a Letter of Credit.

 

(g)           Simultaneously with any Issuer’s issuance and delivery of
any Letter of Credit, such Issuer shall be deemed, without further action, to
have sold to each other Lender, and such other Lender shall be deemed, without
further action by any party hereto, to have purchased from such Issuer, a
participation interest equal to such other Lender’s Commitment Percentage at
such time in such Letter of Credit and all of the Letter of Credit Exposure
Amount related to such Letter of Credit; provided, that no such Lender shall be
obligated to participate in a particular Letter of Credit if such Letter of
Credit was issued or honored solely as a result of such Issuer’s gross
negligence or willful misconduct.

 

Section 2.16  Increase of Commitments.

 

(a)           At any time, provided that no Event of Default shall have
occurred and be continuing, the Company may request from time to time one or
more increases of the Aggregate Commitment by notice to the Agent in writing of
the amount of each such proposed increase (each such notice, a “Commitment
Increase Notice”).  Any such Commitment
Increase Notice must offer each Lender the opportunity to subscribe for its pro
rata share of the requested increase in the Aggregate

 

33

 

Commitment, and the Agent shall promptly
provide to each Lender a copy of any Commitment Increase Notice received by the
Agent. Within 10 days after receipt by the Agent of the applicable Commitment
Increase Notice, each Lender wishing to subscribe for its pro rata share of the
requested increase in the Aggregate Commitment must deliver written notice of
such fact to the Agent.  If any portion
of the requested increase in the Aggregate Commitment is not subscribed for by
the Lenders within such 10-day period, the Company may, in its sole discretion,
but with the consent of the Agent as to any Person that is not at such time a
Lender (which consent shall not be unreasonably withheld or delayed so long as
such Person is an Eligible Assignee), offer to any existing Lender or to one or
more additional banks or financial institutions the opportunity to participate
in all or a portion of such unsubscribed portion of the requested increase in
the Aggregate Commitment pursuant to Section 2.16 (b) or (c) below,
as applicable;

 

(b)           Any additional bank or financial institution that the
Company selects to offer a participation in the unsubscribed portion of the
increased Aggregate Commitment, and that elects to become a party to this
Agreement and obtain a Commitment, shall execute an agreement (a “New Lender
Agreement”), in Proper Form, with the Company and the Agent, whereupon such
bank or financial institution (a “New Lender”) shall become a Lender for all
purposes hereunder to the same extent as if originally a party hereto and shall
be bound by and entitled to the benefits of this Agreement, and the signature pages hereof
shall be deemed to add the name of such New Lender and Schedule 2.1(a) 
attached hereto shall be deemed amended to add the name and Commitment of such
New Lender, provided that the Commitment of any such New Lender shall be in an
amount not less than $5,000,000;

 

(c)           Any Lender that accepts an offer by the Company to
increase its Commitment pursuant to this Section 2.16 shall, in each case,
execute a commitment increase agreement (a “Commitment Increase Agreement”), in
Proper Form, with the Company and the Agent, whereupon such Lender shall be
bound by and entitled to the benefits of this Agreement with respect to the
full amount of its Commitment as so increased, and Schedule 2.1(a) attached
hereto shall be deemed to be amended to reflect such increase in the Commitment
of such Lender;

 

(d)           The effectiveness of any New Lender Agreement or
Commitment Increase Agreement shall be contingent upon receipt by the Agent of
such corporate resolutions of the Company and legal opinions of counsel to the
Company, if any, as the Agent shall reasonably request with respect thereto, in
each case in Proper Form;

 

(e)           If any bank or financial institution becomes a New Lender
pursuant to Section 2.16(b) or if any Lender’s Commitment is
increased pursuant to Section 2.16(c), additional Loans and additional
liability for the Letter of Credit Exposure Amount made or incurred on or after
the effectiveness thereof (the “Re-Allocation Date”) shall be made pro rata
based on each Lender’s (including each New Lender’s) respective Commitment
Percentage in effect on and after such Re-Allocation Date (except to the extent
that any such pro rata borrowings or incurring of liability would result in any
Lender making an aggregate principal amount of Loans and incurring liability
for the Letter of Credit Exposure Amount in excess of its Commitment, in which
case such excess amount will be allocated to, and made or incurred by, such New
Lender and/or Lenders with such increased Commitments to the extent of, and pro
rata based on, their respective Commitment Percentages), and continuations of
LIBOR Rate Borrowings outstanding on such Re-Allocation Date shall be effected
by repayment of such LIBOR Rate Borrowings on the last day of the LIBOR
Interest Period applicable thereto and the extension of new LIBOR Rate
Borrowings pro rata based on the Lenders’ respective Commitment Percentages in
effect on and after such Re-Allocation Date. 
In the event that on any such Re-Allocation Date there are Alternate Base
Rate Borrowings outstanding, the Company shall make prepayments thereof and
borrow new Alternate Base Rate Borrowings so that, after giving effect thereto,
the Alternate Base Rate Borrowings outstanding are held pro rata based on the
Lenders’ respective Commitment Percentages in effect on and after such
Re-Allocation Date.  In the event that on
any such Re-Allocation Date there are LIBOR Rate Borrowings

 

34

 

outstanding, such LIBOR Rate Borrowings shall
remain outstanding with the respective holders thereof until the expiration of
their respective LIBOR Interest Periods (unless the Company elects to prepay
any thereof in accordance with the applicable provisions of this Agreement),
and interest on and repayments of such LIBOR Rate Borrowings will be paid
thereon to the respective Lenders holding such LIBOR Rate Borrowings pro rata
based on the respective principal amounts thereof outstanding;

 

(f)            Notwithstanding anything to the contrary in this Section 2.16,
(i) no Lender shall have any obligation to increase its Commitment under
this Section 2.16 unless it agrees in writing to do so in its sole
discretion, (ii) no Lender shall have any right to decrease the amount of
its Commitment as a result of any requested increase of the Aggregate Commitment
pursuant to this Section 2.16, (iii) neither the Agent nor any Lender
shall have any obligation to find or locate any New Lender to participate in
any unsubscribed portion of any increase in the Aggregate Commitment requested
by the Company, (iv) each increase in the Aggregate Commitment requested
by the Company shall not be less than $10,000,000, (v) after giving effect
to any increase in the Aggregate Commitment pursuant to this Section 2.16,
the Aggregate Commitment shall not exceed $350,000,000, and (vi) in the
event of any reduction in the Aggregate Commitment pursuant to Section 2.2
or any other provision of this Agreement, the ability of the Company to request
increases in the Aggregate Commitment pursuant to this Section 2.16 shall
automatically terminate; and

 

(g)           The Company shall execute and deliver to the Agent (for
delivery by the Agent to each applicable Lender) a new Note payable to each
applicable Lender (including each New Lender) participating in any increase of
the Aggregate Commitment in the original principal amount of such Lender’s
Commitment after giving effect to any increase of the Aggregate Commitment.

 

ARTICLE III -  — CONDITIONS

 

Section 3.1  All Loans.  The obligation of each Lender to make any
Loan or of any Issuer to issue any Letter of Credit (including without
limitation, any extension of the expiry date of any Letter of Credit or
increase in the face amount of any Letter of Credit) is subject to the accuracy
of all representations and warranties of the Company on the date of such Loan
or issuance of such Letter of Credit, to the performance by the Company of its
obligations under the Loan Documents and to the satisfaction of the following
further conditions:

 

(a)           the Agent shall have received the following, all of
which shall be duly executed and in Proper Form: (1) in the case of a
Loan, other than a Loan to be made to repay a Letter of Credit Advance pursuant
to Section 2.4 hereof,:

 

i.              by no later
than 12:00 noon (New York City time) on the applicable Rate Selection Date, notice
by telephone or facsimile from the Company of the proposed date and amount of
such Loan, and

 

ii.             no
later than 2:00 p.m. (New York City time) on the applicable Rate Selection
Date, a Request for Extension of Credit and Certificate of No Default, signed
by a Responsible Officer;

 

or, in the case of issuance of a Letter of Credit, a completed
Application (as may be required by the Agent or the applicable Issuer) signed
by a Responsible Officer of the Company by 10:00 a.m. five (5) Business
Days prior to the proposed date of issuance of such Letter of Credit and
payment of the first quarterly letter of credit fee as and by the time required
in Section 2.15(b) of this Agreement, along with, in each case, such
financial information as the Agent may reasonably require to substantiate
compliance with all financial covenants contained herein by the Company;

 

35

 

and (2) such other Applications, certificates and other documents
as the Agent may reasonably require;

 

(b)           no Default shall have occurred and be continuing, or
would result therefrom;

 

(c)           the representations and warranties contained in the Loan
Documents are true and correct on and as of such date (except any
representation and warranty that expressly indicates that it is being made as
of a specific date, and then as of such date);

 

(d)           the making of such Loan or the issuance of such Letter of
Credit, shall not be prohibited by, or subject the Agent, the applicable Issuer
or any Lender to any penalty or onerous condition under, any Legal Requirement;
and

 

(e)           the Company shall have paid all legal fees and
expenses of the type described in Section 9.8 hereof through the date of
such Loan or the issuance of such Letter of Credit.

 

Section 3.2  First Loan.  In addition to the matters described in Section 3.1
hereof, the obligation of any Lender to make the initial Loan or of any Issuer
to issue the first Letter of Credit on the date thereof (the “Effective Date”) is
subject to the satisfaction of the following conditions precedent:

 

(a)           The Agent shall have received on or before the
Effective Date the following, each dated such day (unless otherwise specified),
in Proper Form and (except for the Notes) in sufficient copies for each
Lender:

 

i.              Counterparts to
this Agreement executed by the Company and each Lender;

 

ii.             The
Notes payable to the order of the Lenders to the extent requested by the
Lenders pursuant to the terms hereof;

 

iii.            The
Guaranty and the Contribution Agreement duly executed and delivered by each
Guarantor as of the Effective Date;

 

iv.            Certified copies of the resolutions of the board of
directors (or equivalent body) of each Loan Party approving the Transaction and
each Loan Document to which it is or is to be a party.

 

v.             A security agreement in substantially the form of Exhibit G-A
authorized and executed by the parties thereto.

 

vi.            Copies of proper financing statements in respect of all
the Loan Parties, together with evidence that such financing statements have
been presented for filing on or before the Effective Date in all jurisdictions
that the Agent may deem necessary or desirable in order to perfect and protect
the first priority liens and security interests created under the Security
Agreement A, covering the Collateral described therein.

 

vii.           A
copy of a certificate of the Secretary of State of the jurisdiction of
incorporation of each Loan Party, dated reasonably near the Effective Date
certifying (A) as to a true and correct copy of the charter of such Loan
Party and each amendment thereto on file in such Secretary’s office and (B) that
(1) such amendments are the only amendments to such Loan Party’s charter
on file in such Secretary’s office, (2) such Loan Party has paid all
franchise taxes

 

36

 

to the date of such certificate and (3) such Loan Party is duly
incorporated and in good standing or presently subsisting under the laws of the
State of the jurisdiction of its incorporation.

 

viii.          A
certificate of each Loan Party signed on behalf of such Loan Party by its
secretary or any assistant secretary, dated the Effective Date (the statements
made in which certificate shall be true on and as of the Effective Date),
certifying as to (A) the absence of any amendments to the charter of such
Loan Party since the date of the Secretary of State’s certificate referred to
in Section 3.2(a)(v), (B) a true and correct copy of the bylaws of
such Loan Party as in effect on the date on which the resolutions referred to
in Section 3.2(a)(iv) were adopted and on the Effective Date, (C) the
absence of any proceeding for the dissolution or liquidation of such Loan
Party, (D) the truth in all material respects of the representations and
warranties contained in the Loan Documents as though made on and as of the
Effective Date, (E) the absence of any event occurring and continuing, or
resulting from the initial Borrowing hereunder, that constitutes a Default, and
(F) certifying the names and true signatures of the officers of such Loan
Party authorized to sign each Loan Document to which it is or is to be a party
and the other documents to be delivered hereunder and thereunder.

 

ix.            A
certificate, in form and substance reasonably satisfactory to the Lenders,
attesting to the Solvency of the Company and its Subsidiaries, on a
consolidated basis, both before and after giving effect to the Transactions,
from its chief financial officer.

 

x.             Audited
annual financial statements of the Company and the Target for the three fiscal
years most recently ended and interim financial statements for the fiscal
quarters ended thereafter and prior to the Effective Date and for the most
recent quarter for which financial statements are available, pro forma financial statements as to the Company and its
Subsidiaries giving effect to the Transactions, and forecasts prepared by
management of the Company, each in form and substance reasonably satisfactory
to the Lenders, of balance sheets, income statements and cash flow statements
on an annual basis for each year following the Effective Date until the
Termination Date.

 

xi.            A
favorable opinion of counsel for the Loan Parties, in form and substance
reasonably satisfactory to the Lenders.

 

(b)           The Tender Offer shall have been consummated, or
shall be consummated substantially concurrently with the initial Borrowing
hereunder, on substantially the terms and conditions set forth in the Merger
Agreement, without any amendment or waiver of any material term thereof that is
adverse, in any material respect, to the interests of the Lenders, and the Company
shall have acquired not less than a majority of the capital stock of the
Target.

 

(c)           The Target’s existing credit and letter of credit
facilities with Bank of America, N.A. shall have been terminated and all loans,
if any, outstanding thereunder, as well as all accrued interest and fees
thereunder, if any, shall have been paid in full.

 

(d)           There shall exist no action, suit, investigation,
litigation or proceeding affecting any Loan Party or any of its Subsidiaries
pending or, to the knowledge of the Loan Parties or any of their Subsidiaries,
threatened before any Governmental Authority that has had or could reasonably
be expected to have a Material Adverse Effect on the legality, validity or
enforceability of any Loan Document or the consummation of the Transactions.

 

(e)           All governmental authorizations and third-party consents
and approvals required to be obtained under the Merger Agreement in connection
with the Transactions shall have been obtained

 

37

 

(without the imposition of any conditions
that materially and adversely impair the rights and remedies of the Lenders
under the Loan Documents) and shall remain in effect.

 

(f)            The Company shall have paid all accrued fees and expenses
of the Agent that are due and payable in accordance herewith (including the
accrued fees and expenses of counsel to the Agent and fees due and payable to
the Joint Lead Arrangers pursuant to the Fee Letter).

 

Section 3.3  Determinations Under Section 3.2.  For purposes of
determining compliance with the conditions specified in Section 3.2, each
Lender shall be deemed to have consented to, approved or accepted or to be
satisfied with each document or other matter required thereunder to be
consented to or approved by or acceptable or satisfactory to the Lenders unless
an officer of the Agent responsible for the transactions contemplated by the
Loan Documents shall have received notice from such Lender prior to the initial
Borrowing hereunder specifying its objection thereto and shall
not have made available to the Agent such Lender’s ratable portion of such
Borrowing.

 

ARTICLE IV — REPRESENTATIONS AND WARRANTIES

 

To induce the Agent and the
Lenders to enter into this Agreement, subject to the Target Representation
Limitations, the Company represents and warrants to the Agent and the Lenders
as follows:

 

Section 4.1  Organization.  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 power and authority to 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 could not
reasonably be expected to have a Material Adverse Effect.

 

Section 4.2  Financial Statements.  The financial statements of the Company and
its Subsidiaries on a consolidated basis delivered to the Agent and the Lenders
in connection with this Agreement fairly present, 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.  Since the date of the
last audited financial statements of the Company, no event, development or
circumstance has occurred or exists that could reasonably be expected to have a
Material Adverse Effect.

 

Section 4.3  Enforceable Obligations;
Authorization.  The Loan
Documents are legal, valid and binding obligations of the Company and the
Guarantors, enforceable in accordance with their respective terms, except as
may be limited by bankruptcy, insolvency and other similar laws affecting
creditors rights generally and by general equitable principles.  The execution, delivery and performance of
the Loan Documents have all been duly authorized by all necessary action; are
within the power and authority of the Company and the Guarantors; do not and
will not contravene or violate any Legal Requirement or the Organizational
Documents of the Company or any Guarantors; do not and will not result in the
breach of, or constitute a default under, any agreement or instrument by which
the Company or any Guarantors or any of their respective Property may be bound
or affected; and do not and will not result in the creation of any Lien upon
any Property of the Company or any Guarantors except as expressly contemplated
therein.  All necessary permits, registrations
and consents for the execution, delivery and performance by the Company
and its Subsidiaries of the Loan Documents have been obtained.

 

Section 4.4  Other Debt.  Neither the Company nor any of its
Subsidiaries is in default in the payment of any other Indebtedness or under
any agreement, mortgage, deed of trust, security

 

38

 

agreement or lease to which it is a party,
the result of which has, would or could reasonably be expected to have a
Material Adverse Effect.

 

Section 4.5  Litigation.  There is no litigation or administrative
proceeding pending or, to the knowledge of the Company, threatened against, nor
any outstanding judgment, order or decree affecting, 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, could reasonably be expected to
have a Material Adverse Effect.  Neither
the Company nor any of its Subsidiaries is in default with respect to any material
judgment, order or decree of any Governmental Authority.

 

Section 4.6  Title.  Each of the Company and its Subsidiaries has
good and marketable title to its 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.

 

Section 4.7  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 if adequate reserves with respect thereto are maintained in
accordance with Generally Accepted Accounting Principles.

 

Section 4.8  Subsidiaries.  As of the date hereof, the Company has no
Subsidiaries other than as listed on Schedule 4.8 attached hereto.  Except as expressly indicated on Schedule 4.8
attached hereto, each of the Company’s Subsidiaries is wholly owned by the
Company.

 

Section 4.9  Representations by Others.  All representations and warranties made by or
on behalf of the Company or any of its Subsidiaries in any Loan Document shall
constitute representations and warranties of the Company hereunder.

 

Section 4.10  Permits, Licenses, Etc.  The Company and each of its Subsidiaries
possess all permits, licenses, patents, patent rights or licenses, trademarks,
trademark rights, trade names, trade name rights and copyrights which are
required to conduct its business, and which the failure of the Company or any
of its Subsidiaries to so possess would or could reasonably be expected to have
a material adverse affect on the financial condition or operations of the
Company and its Subsidiaries on a consolidated basis.

 

Section 4.11  ERISA.  No Reportable Event (as defined in Section 4043(b) of
ERISA but excluding those events as to which the 30-day notice period is waived
by applicable 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 respect to each Plan.  The Company
has no knowledge of any event which could result in a liability of the Company
or any of its Subsidiaries to the Pension Benefit Guaranty Corporation other
than for applicable premiums.  No
accumulated funding deficiency (as defined in Section 302 of ERISA and Section 412
of the Code), whether or not waived, exists with respect to any Plan.  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 302 of ERISA or Section 412 of the Code to
attach to any Property of the Company or any of its Subsidiaries.

 

39

 

Section 4.12  Condition of Property.  The Property used or to be used in the
continuing operations of the Company and its Subsidiaries, when taken as a
whole, is in good repair, working order and condition.

 

Section 4.13  Assumed Names.  Neither the Company nor any of its
Subsidiaries is currently conducting its business under any assumed name or
names, except as set forth on Schedule 4.13 attached hereto.

 

Section 4.14  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.

 

Section 4.15  Margin Stock.  The Company is not engaged in the business of
extending credit for the purpose of purchasing or carrying Margin Stock, and no
proceeds of any Loan will be used to purchase or carry any Margin Stock or to
extend credit to others for the purpose of purchasing or carrying any Margin
Stock, other than in respect of the Transaction.

 

Section 4.16  Agreements.  Schedule 4.16 attached hereto is a complete
and correct list of (i) all credit agreements for borrowed money (other
than the indebtedness governed hereby), indentures and capitalized leases and
all Property subject to any Lien securing such Indebtedness or lease
obligation, (ii) each letter of credit and guaranty for which the
liability or potential liability of the Company and its Subsidiaries on a
consolidated basis is in excess of $250,000, (iii) all other material
instruments in effect as of the date hereof providing for, evidencing, securing
or otherwise relating to any indebtedness for borrowed money of the Company or
any of its Subsidiaries (other than the Indebtedness hereunder and Indebtedness
secured by Incidental Liens), and (iv) all obligations of the Company or
any of its Subsidiaries to issuers of appeal bonds issued for account of the
Company or any of its Subsidiaries.  The
Company shall, upon request by the Agent, deliver to the Agent and the Lenders
a complete and correct copy of all such credit agreements, indentures,
capitalized leases, letters of credit, guarantees and other instruments or
leases described in Schedule 4.16 or arising after the date hereof, including
any modifications or supplements thereto, as in effect on the date hereof.

 

Section 4.17  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 could not reasonably be expected to have a
Material Adverse Effect.  The Company and
its Subsidiaries are in compliance with all 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 could not
reasonably be expected to have a Material Adverse Effect.  The Company and its Subsidiaries (and, to the
best knowledge of the Company, each of the prior owners or operators and
predecessors in interest with respect to any of its or its Subsidiaries’
Property) (i) have obtained and maintained in effect all Environmental
Permits, the failure to obtain which could reasonably be expected to have a
Material Adverse Effect, (ii) along with their respective Property have
been and are in compliance with all applicable Requirements of Environmental
Law and Environmental Permits where such failure to comply therewith could
reasonably be expected to have a Material Adverse Effect, (iii) along with
their Property are not subject to any (A) Environmental Claims or (B) Environmental
Liabilities, in either case direct or contingent, and whether known or unknown,
arising from or based upon any act, omission, event, condition or circumstance
occurring or existing on or prior to the date hereof which could reasonably be
expected to have a Material Adverse Effect, and (iv) have not received
individually or collectively any notice of any violation or alleged violation
of any Requirements of Environmental Law or Environmental Permit or any
Environmental Claim in connection 

 

40

 

with their respective Property which could
reasonably be expected to have a Material Adverse Effect.  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.

 

Section 4.18  Solvency.  The Company and its Subsidiaries are, on a
consolidated basis, Solvent.

 

Section 4.19  Target Representations.  As to any date of determination prior to the
consummation of the Merger, the Company makes the Target Representations,
except where the failure of any Target Representation to be true and correct on
such date would not be material and adverse to the interests of the Lenders.

 

ARTICLE V — AFFIRMATIVE COVENANTS

 

The Company covenants and
agrees with the Agent and the Lenders that prior to the termination of this
Agreement it will do, cause each of its Subsidiaries to do, and if necessary cause
to be done, each and all of the following:

 

Section 5.1  Taxes, Existence,
Regulations, Property, Etc.  At all times (a) pay when due all taxes
and governmental charges of every kind upon it or against its income, profits
or property, unless and only to the extent that the same shall be contested in
good faith and reserves deemed adequate by the Agent have been established
therefor; (b) do all things necessary to preserve its corporate existence,
qualifications, rights and franchises in all States where such qualification is
necessary or desirable; (c) comply in all material respects with all
applicable Legal Requirements (including all applicable Requirements of
Environmental Laws) in respect of the conduct of its business and the ownership
of its Property; and (d) cause its Property to be protected, maintained
and kept in good repair and make all replacements and additions to its Property
as may be reasonably necessary to conduct its business properly and
efficiently.

 

Section 5.2  Financial Statements and
Information.  Furnish to
the Agent and each Lender copies of each of the following:  (a) as soon as available and in any
event within ninety (90) days after the end of each fiscal year of the Company,
Annual Audited Financial Statements of the Company and its Subsidiaries,
prepared on a consolidated basis; (b) as soon as available and in any
event within forty-five (45) days after the end of each quarter (excluding the
fourth quarter) of each fiscal year of the Company, Quarterly Unaudited
Financial Statements of the Company and its Subsidiaries, prepared on a
consolidated basis; (c) concurrently with the financial statements
provided for in clauses (a) and (b) hereof, an Officer’s Certificate
which shall include such schedules, computations and other information, in
reasonable detail, as may be reasonably required by the Agent or any Lender to
demonstrate compliance with the covenants set forth herein or reflecting any
non-compliance therewith as of the applicable date, all certified as true,
correct and complete by a Responsible Officer of the Company; (d) promptly
upon their becoming available, all financial statements (other than the Annual
Audited Financial Statements and Quarterly Unaudited Financial Statements),
registration statements, reports and proxy statements which the Company or any
of its Subsidiaries may file with the Securities and Exchange Commission, and (e) such
other information relating to the financial condition and affairs of the
Company and any of its Subsidiaries as from time to time may be reasonably
requested by the Agent or any Lender.  In
addition to the financial information and reports to be delivered in accordance
with the prior sentence, if the most recent Annual Audited Financial Statements
or Quarterly Unaudited Financial Statements of 

 

41

 

the Company, as applicable, demonstrate that
the financial condition of the Company and its Subsidiaries, on a consolidated
basis, has been negatively impacted as at the end of the immediately preceding
fiscal quarter or fiscal year represented by such Annual Audited Financial
Statements or Quarterly Unaudited Financial Statements, as applicable, for one
or more reasons (said determination of negative impact to be made by the Agent
in its reasonable discretion), upon the periodic request of the Agent (until
the conditions attributable to such negative impact have been addressed and
rectified to the reasonable satisfaction of the Agent), the Company agrees that
it shall promptly provide the Agent and the Lenders with additional information
relating to the financial condition and affairs of the Company and its
Subsidiaries as may be reasonably requested by the Agent, including, but not
limited to, reports setting out in sufficient detail the financial performance
of each retail location for any and all stores and operations maintained by the
Company and/or any of its Subsidiaries.

 

Notwithstanding
the foregoing, information required to be delivered pursuant to clauses (a), (b) and
(d) of this Section 5.2 shall be deemed to have been delivered if
such information shall be available on the website of the Securities and
Exchange Commission at http://www.sec.gov and the Company shall have notified
the Agent of the availability of all such financial information; provided, that the Company shall deliver paper copies of
such information to the Agent or any Lender that reasonably requests such
delivery.  Information required to be
delivered pursuant to this Section 5.2 (other than a Notice of Default) may
also be delivered by electronic means pursuant to Section 9.2(b).

 

Section 5.3  Financial Tests.  (a) Have at all times a FIXED CHARGE
COVERAGE RATIO of not less than 1.50 to 1.00; and (b) have at all times a
LEVERAGE RATIO of not more than 3.00 to 1.00.

 

Section 5.4  Inspection.  Permit the Agent and the Lenders to inspect
its Property, to examine its files, books and records and make and take away
copies thereof, and to discuss its affairs with its officers and accountants,
all at such times and intervals and to such extent as the Agent or any Lender
may reasonably desire; provided
that, in the absence of an Event of Default, no more than one such visit shall
be permitted at the expense of the Company in any fiscal year.

 

Section 5.5  Further Assurances.  Promptly execute and deliver any and all
other and further instruments which may be requested by the Agent or any Lender
to cure any defect in the execution and delivery of any Loan Document or more
fully to describe particular aspects of the Company’s agreements set forth in
the Loan Documents or so intended to be.

 

Section 5.6  Books and Records.  Maintain books of record and account in
accordance with Generally Accepted Accounting Principles.

 

Section 5.7  Insurance.  Maintain at all times insurance with such
insurers, on such of its Property, officers, directors and employees, in such
amounts and against such risks as is customarily maintained by other Persons of
similar size and engaged in businesses substantially similar to its businesses,
and furnish the Agent satisfactory evidence thereof promptly upon request.

 

Section 5.8  ERISA.  At all times: 
(a) make contributions to each Plan in a timely manner and in an
amount sufficient to comply with the minimum funding standards requirements of
ERISA; (b) immediately upon acquiring knowledge of (i) any Reportable
Event in connection with any Plan for which no administrative or statutory
exemption exists or (ii) any “prohibited transaction”, as such term is
defined in Section 4975 of the Code, in connection with any Plan, that
could result in the imposition of material damages or a material excise tax on
the Company, furnish the Agent a statement executed by a Responsible Officer of
the Company setting forth the details thereof and the action which the Company
or any such Subsidiary proposes to take with respect thereto and, when known,
any action 

 

42

 

taken by the Internal Revenue Service with
respect thereto; (c) notify the Agent promptly upon receipt by the Company
or any of its Subsidiaries of any notice of the institution of any proceedings
or other actions which may result in the termination of any Plan by the Pension
Benefit Guaranty Corporation and furnish the Agent with copies of such notice; (d) pay
when due all required premium payments to the Pension Benefit Guaranty
Corporation; (e) furnish the Agent with copies of the annual report for
each Plan filed with the Internal Revenue Service not later than ten (10) days
after the Agent requests such report; (f) furnish the Agent with copies of
any request for waiver of the funding standards or extension of the
amortization periods required by Sections 303 and 304 of ERISA or Section 412
of the Code promptly after the request is submitted to the Secretary of the
Treasury, the Department of Labor or the Internal Revenue Service, as the case
may be; and (g) pay when due all installment contributions required under Section 302
of ERISA or Section 412 of the Code or within 10 days of a failure to make
any such required contributions furnish the Agent with written notice of such
failure.

 

Section 5.9  Use of Proceeds.  Subject to the terms and conditions contained
herein, use the proceeds of the Loans (a) to finance the Tender Offer and
the Merger, (b) to refinance certain existing Indebtedness of the Target, (c) to
pay costs and expenses relating to the Transactions, and (d) support new
store development, other acquisitions, the issuance of standby Letters of
Credit and other general corporate purposes, including but not limited to,
dividend payments and the repurchase of Stock.  No proceeds of the Loans shall be used in
violation of Regulation U of the Board of Governors of the Federal Reserve
System or any successor regulation thereof or of any other rule, statute or
regulation governing Margin Stock from time to time.

 

Section 5.10   Additional Guaranties.  Notify the Agent promptly upon creation or
acquisition by the Company or any of its Subsidiaries of any additional
Subsidiary of the Company after the date hereof, and in connection therewith,
furnish the Agent with the Organizational Documents of such newly acquired or
created Subsidiary and sufficient information to disclose to the Agent in
reasonable detail the ownership structure and capitalization of such Subsidiary,
and, except with respect to a Non-Guarantor Subsidiary, promptly cause such
newly created or acquired Subsidiary of the Company to execute and deliver to
the Agent, for the ratable benefit of the Lenders and the lenders under the
Term Loan Facility, a Joinder Agreement, together with such related
certificates, opinions, and documents as the Agent or any Lender may reasonably
require.

 

Section 5.11  Notice of Events.  Notify the Agent immediately upon acquiring
knowledge of the occurrence of, or if the Company or any of its Subsidiaries
causes or intends to cause, as the case may be: 
(1) the institution of any lawsuit or administrative proceeding
affecting the Company or any of its Subsidiaries, the adverse determination
under which could reasonably be expected to have a Material Adverse Effect; (2) the
occurrence of any Material Adverse Effect; (3) any Event of Default or any
Default, together with a detailed statement by an appropriate officer or other
responsible party acceptable to the Agent on behalf of the Company of the steps
being taken to cure the effect of such Event of Default or Default; (4) the
occurrence of a default or event of default by the Company or any of its
Subsidiaries under any agreement or series of related agreements to which it is
a party, which default or event of default could reasonably be expected to have
a Material Adverse Effect; and (5) any material change in the accuracy of
the representations and warranties of the Company or any of its Subsidiaries in
this Agreement or any other Loan Document. 
The Company will notify, or cause each Guarantor to notify, the Agent in
writing within 30 days prior to the date that the Company or any Guarantor
changes its name or the location of its chief executive office or principal place
of business or the place where it keeps its books and records.  Any notice of a name change delivered to the
Agent shall be accompanied by such certificates of Governmental Authorities as
the Agent or any Lender may require substantiating such name change.

 

43

 

Section 5.12  Environmental Matters.  Without limiting the generality of Section 5.1(c) hereof,
(a) comply in all material respects with all limitations, restrictions,
conditions, standards, prohibitions, requirements, obligations, schedules and
timetables contained in any applicable Requirement of Environmental Law or
Environmental Permit; (b) obtain and maintain in effect all Environmental
Permits, the failure to obtain which could reasonably be expected to have a
Material Adverse Effect; and (c) keep its Property free of any
Environmental Claims or Environmental Liabilities which could reasonably be
expected to have a Material Adverse Effect.

 

Section 5.13  End of Fiscal Year.  The Company shall cause each of its fiscal
years and each of its Subsidiaries’ fiscal years to end on the last Sunday of
each September.

 

Section 5.14  Consummation of Merger.  The Company shall use commercially reasonable
efforts to consummate the Merger within 90 days following the Effective Date.

 

Section 5.15  Maintenance of Ratings.  The Company shall use commercially reasonable
efforts to maintain corporate family (or equivalent) ratings from each of Moody’s
and S&P.

 

Section 5.16  Covenant to Guarantee Obligations and Give
Security.i.       Except in
connection with the Disclosed Divestitures listed in part A of Schedule 1.1(a),
the Loan Parties will upon (x) the request of the Agent, (y) the
formation or acquisition of any new direct or indirect Subsidiaries by any Loan
Party or (z) the acquisition of any material property by any Loan Party,
in each case at the Loan Parties’ expense:

 

 (a)          grant to the
Collateral Agent, for the ratable benefit of the Lenders and the lenders under
the Term Loan Facility, and upon the terms and conditions set forth in the
Security Agreement A, a security interest in, each Loan Party’s right, title
and interest in and to the Collateral pursuant to the terms of the Security
Agreement A.

 

(b)           within 15 days after such request,
formation or acquisition, (i) cause each such Subsidiary to duly execute
and deliver to the Agent such guaranties or guaranty supplements so as to cause
each such Subsidiary to guarantee all Guaranteed Obligations, as defined in the
Guaranties, (ii) duly execute and deliver, and cause each such Subsidiary
and each direct and indirect parent of such Subsidiary (if it has not already
done so) to duly execute and deliver, to the Collateral Agent, pledges,
assignments, security agreement supplements and other security agreements, covering
the Collateral and as specified by and in form and substance reasonably
satisfactory to the Agent, securing payment of all the obligations of the
applicable Loan Party or such Subsidiary, as the case may be, under the Loan
Documents and the Term Loan Facility and constituting Liens on all Collateral,
or (iii) take whatever action, including to file Uniform Commercial Code
financing statements, as may be necessary or advisable in the opinion of the
Agent, to vest in the Collateral Agent (or its designee), valid and subsisting
Liens in the Collateral as provided in this Section 5.16(b).

 

(c)           within 60 days after such request,
formation or acquisition, deliver to the Agent, upon the request of the Agent
in its sole discretion, a signed copy of a favorable opinion, addressed to the
Collateral Agent and the Lenders, of counsel for the Loan Parties reasonably
acceptable to the Agent as to the matters contained in clause (b) above,
as to such guaranties, guaranty supplements, pledges, assignments, security agreement
supplements and security agreements being legal, valid and binding obligations
of each Loan Party party thereto enforceable in accordance with their terms, as
to the matters contained in clause (b)(iii) above, as to such recordings,
filings, notices, endorsements and other actions being sufficient to create
valid perfected Liens on such Collateral to the extent a Lien can be created by
filing under the Uniform Commercial Code, and as to such other matters as the
Agent may reasonably request, in each case to the extent that such Collateral
has a value in excess of $10,000,000.

 

44

 

(d)           The Loan Parties will, upon the
incurrence of inter-company debt not included in Part II of Schedule I to
Security Agreement A on the Effective Date, promptly cause each Subsidiary
payee under such inter-company debt to execute and deliver to the Collateral
Agent, pledges, assignments, and security agreement supplements and other
security agreements covering such Collateral and as specified by and in form
and substance reasonably satisfactory to the Agent, securing payment of all the
obligations of the applicable Loan Party or such Subsidiary, as the case may
be, under the Loan Documents and the Term Loan Facility and constituting Liens
on all such Collateral.

 

(e)           at any time and from time to time,
promptly execute and deliver any and all further instruments and documents and
take all such other action as the Agent may reasonably deem necessary or
desirable in obtaining the full benefits of, or in perfecting and preserving
the Liens of, such guaranties, pledges, assignments, security agreement
supplements and security agreements in the Collateral.

 

Section 5.17  Covenant to Give Additional Security.  At any time during the Additional Security
Period, the Loan Parties will upon (x) the request of the Agent, (y) the
formation or acquisition of any new direct or indirect Subsidiaries by any Loan
Party or (z) the acquisition of any material property by any Loan Party,
then the Loan Parties shall, in each case at the Loan Parties’ expense:

 

(a)           grant to the Collateral Agent
for the ratable benefit of the Lenders and the lenders under the Term Loan
Facility, and upon the terms and conditions set forth in the Security Agreement
B, a security interest in, each Loan Party’s right, title and interest in and
to the Additional Collateral pursuant to the terms of the Security Agreement B.

 

(b)           within 15 days after such request,
formation or acquisition, (i)  duly execute and deliver, and cause each
such Subsidiary and each direct and indirect parent of such Subsidiary (if it
has not already done so) to duly execute and deliver, to the Collateral Agent,
a supplement to Security Agreement B, securing payment of all the obligations
of the applicable Loan Party or such Subsidiary, as the case may be, under the
Loan Documents and the Term Loan Facility and constituting Liens on all such
properties, provided that no real property (or any interest therein) shall be
subjected to a security interest in favor of the Agent for the benefit of the
Lenders, or (ii) take whatever action contemplated by Security Agreement
B, including to file Uniform Commercial Code financing statements, as may be
necessary or advisable in the opinion of the Agent to vest in the Collateral
Agent (or its designee) valid and subsisting Liens as provided in this Section 5.17(b).

 

(c)           within 60 days after such request,
formation or acquisition, deliver to the Agent, upon the request of the
Collateral Agent in its sole discretion, a signed copy of a favorable opinion,
addressed to the Agent and the Lenders, of counsel for the Loan Parties
reasonably acceptable to the Agent as to the matters contained in clauses (a) and
(b) above, as the Agent may reasonably request, in each case to the extent
that such Additional Collateral has a value in excess of $10,000,000.

 

(d)           at any time and from time to time,
promptly execute and deliver any and all further instruments and documents and
take all such other action contemplated under the Security Agreement B as the
Agent may reasonably deem necessary or desirable in obtaining the full benefits
of, or in perfecting and preserving the Liens of, such guaranties, pledges,
assignments, security agreement supplements, intellectual property security agreement
supplements and security agreements.

 

45

 

ARTICLE VI — NEGATIVE COVENANTS

 

The Company covenants and
agrees with the Agent and the Lenders that prior to the termination of this
Agreement it will not, and will not suffer or permit any of its Subsidiaries
to, do any of the following:

 

Section 6.1  Indebtedness.  Create, incur, suffer or permit to exist, or
assume or guarantee, directly or indirectly, or become or remain liable with
respect to any Indebtedness, whether direct, indirect, absolute, contingent or
otherwise, except the following:

 

(a)           Indebtedness pursuant hereto, the Guaranties and any
other Loan Document;

 

(b)           Indebtedness under the Term Loan Facility in an aggregate
principal amount (as to the loans thereunder) not to exceed at any time
outstanding the difference between $700,000,000 and the aggregate amount of all
principal payments and prepayments made under the Term Loan Facility after the
date hereof;

 

(c)           in addition to and cumulative of any other Indebtedness
permitted in this Section 6, in the case of the Company only, Unsecured
Borrowed Debt; provided that, immediately before
and immediately after the incurrence of such Unsecured Borrowed Debt, the
Company and its Subsidiaries shall be in pro forma compliance with the
financial covenants set forth in Section 5.3 hereof;

 

(d)           Indebtedness secured by Liens permitted by Section 6.2
hereof;

 

(e)           secured Indebtedness of the Company and Indebtedness of
any one or more of the Company’s Subsidiaries, provided, that the aggregate
amount of all such Indebtedness outstanding at any time (exclusive of
Indebtedness permitted in Section 6.1(i) hereof) may not exceed five
percent (5%) of Consolidated Net Worth;

 

(f)            other liabilities existing on the date of this Agreement
and set forth on Schedule II attached hereto, and all renewals and extensions
(but not increases) thereof, provided that
there shall be no material change in the obligors thereunder;

 

(g)           current accounts payable and unsecured current
liabilities, not the result of borrowings, to vendors, suppliers and persons
providing services, for expenditures on ordinary trade terms for goods and
services normally required by the Company or any of its Subsidiaries in the
ordinary course of its business;

 

(h)           agreements of intent to acquire a Person issued by the
Company or any of its Subsidiaries in anticipation of acquiring such Person if
such acquisition is permitted under the terms and conditions of this Agreement;

 

(i)            the Indebtedness of any Subsidiary of the Company to the
Company or to any Guarantor, as permitted in Section 6.7(f) of this
Agreement;

 

(j)            guarantees by the Company or any of its Subsidiaries of
the Indebtedness of any of their respective Subsidiaries permitted to be
incurred, created or existing pursuant to Section 6.3, provided, that such
guarantees are not directly or indirectly secured by any Liens;

 

(k)           current and deferred taxes;

 

46

 

(l)            any obligation under or in respect of outstanding letters
of credit (including without limitation, the Letters of Credit), acceptances
and similar obligations created for the account of the Company or any of its
Subsidiaries, and any Hedging Agreements (other than Credit Facility Hedging
Agreements) entered into by the Company and its Subsidiaries in the ordinary
course; provided that the sum of (i) the
aggregate amount of such Indebtedness and (ii) the aggregate amount of
Contingent Obligations outstanding at any time for the Company and its
Subsidiaries, on a consolidated basis, may not exceed five percent (5%) of
Consolidated Net Worth;

 

(m)          Indebtedness or other obligations of the Company under
Capital Lease Obligations for equipment for use in new retail locations
hereafter opened and operated by the Company or any of its Subsidiaries, so
long as the capitalized amount of such obligations hereafter entered into does
not exceed five percent (5%) of Consolidated Net Worth in the aggregate,
together with guaranties of such obligations by any or all Subsidiaries of the
Company now or hereafter existing;

 

(n)           Indebtedness evidenced by those certain zero coupon
convertible subordinated debentures of the Company due 2018 which are governed
by that certain Indenture dated March 2, 1998, by and among the Company
and Chase Bank of Texas, National Association, Trustee, outstanding on the date
hereof; and

 

(o)           Indebtedness of Target under its Convertible Senior
Debentures.

 

(p)           any obligation under or in respect of outstanding letters
of credit (excluding the Letters of Credit) or other workers’ compensation
coverage payment or reimbursement obligations secured by cash or cash
equivalents created for the account of the Company or any of its Subsidiaries
as fiscal security for, or otherwise in connection with, workers’ compensation
coverage secured for the Company and/or any of its Subsidiaries (it being
agreed that any letters of credit or other such payment or reimbursement
obligations issued in accordance with the provisions of this Section 6.1(o) shall
not be included within letters of credit for purposes of determining compliance
with Section 6.1(l) hereof or included within Contingent
Obligations for purposes of determining compliance with Section 6.3
hereof).

 

The Company, the Agent, the
Lenders and each Guarantor (by its execution of a Guaranty or a Joinder
Agreement) agree that, notwithstanding anything contained in this Section 6.1,
in Section 6.7(f) or in any other provision contained in this
Agreement which may appear to be to the contrary, any and all Indebtedness of (i) the
Company from time to time owed to any Subsidiary of the Company or of (ii) any
Subsidiary of the Company from time to time owed to the Company or to any
Guarantor (together with any and all Liens from time to time securing the same
as permitted by Section 6.2(f) hereof) is hereby made and at all
times hereafter shall be inferior and subordinate in all respects to the
Indebtedness from time to time owing to the Agent or any Lender pursuant hereto
and to any Lien, if any, from time to time hereafter securing any of such
Indebtedness pursuant to the terms hereof.

 

Section 6.2  Liens.  Create or suffer to exist any Lien upon any
of its Property now owned or hereafter acquired, or acquire any Property upon
any conditional sale or other title retention device or arrangement or any
purchase money security agreement; or in any manner directly or indirectly
sell, assign, pledge or otherwise transfer any of its accounts or contract
rights; provided, however, that
the Company and its Subsidiaries (or any of them) may create or suffer to
exist:

 

(a)           Liens in effect on the date hereof and which are
described on Schedule 6.2(a) attached hereto, provided, that the Property
covered thereby does not increase either in quantity or value;

 

47

 

(b)           Liens securing any Indebtedness otherwise permitted
pursuant to Sections 6.1(e) and (l) hereof, provided
that the aggregate amount of all such secured Indebtedness outstanding at any
time may not exceed five percent (5%) of Consolidated Net Worth;

 

(c)           Liens in favor of the Collateral Agent pursuant to the
terms of Security Agreement A and/or Security Agreement B, as applicable;

 

(d)           Incidental Liens;

 

(e)           purchase money security interests and liens in Equipment
and/or real property of the Company or any of its Subsidiaries in favor of the
seller or sellers of such Equipment and/or real property or their successors
and assigns, or purchase money security interests and liens in favor of any
third-party lender which loaned the money to purchase any such Equipment and/or
real property to the Company or such Subsidiary, provided, that neither the
sales price of, nor the amount of any loan made to acquire any of, such Equipment
and/or real property is greater than the fair value of such Equipment and/or
real property so acquired;

 

(f)            Liens in favor of the Company or any Guarantor securing
any Indebtedness owed by a Subsidiary of the Company permitted pursuant to Section 6.1(i) hereof;

 

(g)           informational filings of financing statements against the
Company or any of its Subsidiaries by lessors under any operating lease or any
permitted Capital Lease Obligation now or hereafter entered into by the Company
or any of its Subsidiaries with any lessor, so long as the applicable financing
statement covers only the asset or assets leased pursuant to the applicable
operating lease or Capital Lease Obligation; and

 

(h)           Liens against cash or cash equivalents of the Company
and/or any of its Subsidiaries securing the obligations of, under or in respect
of outstanding letters of credit or other workers’ compensation coverage
payment or reimbursement obligations otherwise permitted pursuant to Section 6.1(o) hereof.

 

provided, however, that,
notwithstanding anything contained above in this Section 6.2 to the
contrary, in no event may the Company or any Subsidiary of the Company ever
create or suffer to exist any Lien upon any of the Stock of any of its
Subsidiaries, directly or indirectly, in favor of any Person other than the
Agent for the benefit of the Lenders and, subject to subsection (d) above,
under the Term Loan Facility, create or suffer to exist any agreement, whether
oral or in writing, with any Person other than the Agent and the Lenders
pursuant to this Section 6.2, and, subject to subsection (d) above,
under the Term Loan Facility, which would or could prohibit the Company or any
of its Subsidiaries from creating or permitting to exist any Lien in favor of
the Agent or the Lenders for the benefit of all of the Lenders for Indebtedness
from time to time arising under this Agreement.

 

Section 6.3  Contingent Obligations.  Except for guaranties by Subsidiaries of the
Company which are otherwise permitted by Sections 6.1(l) and 6.1(m) hereof,
and the Guaranties, create, incur, suffer or permit to exist, directly or
indirectly, any Contingent Obligations if such Contingent Obligations would
cause the sum of (a) the aggregate amount of Contingent Obligations
outstanding for the Company and its Subsidiaries, and (b) the aggregate
amount of outstanding Indebtedness permitted by Section 6.1(l), on a
consolidated basis, to exceed five percent (5%) of Consolidated Net Worth.

 

Section 6.4  Mergers, Consolidations and
Dispositions and Acquisitions of Assets.  In any single transaction or series of
related transactions, directly or indirectly:

 

48

 

(a)           Wind up its affairs, liquidate or dissolve;

 

(b)           Be a party to any merger or consolidation (other than the
Merger) and except as permitted under Section 6.4(e);

 

(c)           Sell, convey, lease or otherwise dispose of all or any
material part of the assets (except for the sale of inventory in the ordinary
course of business) of the Company and/or its Subsidiaries, or agree to take
any such action, if such sale, lease or conveyance of assets is not otherwise
permitted for the applicable fiscal year by Section 6.4(z) hereof;

 

(d)           Sell, assign, pledge, transfer or otherwise dispose of, or
in any way part with control of, any Stock of any of its Subsidiaries or any
Indebtedness or obligations of any character of any of its Subsidiaries, or
permit any such Subsidiary so to do with respect to any Stock of any other
Subsidiary or any Indebtedness or obligations of any character of the Company
or any of its other Subsidiaries, or permit any of its Subsidiaries to issue
any additional Stock other than (i) to the Company or any of its
Subsidiaries or (ii) to purchase or acquire for a consideration any Stock
of the Company or any of its other Subsidiaries to the extent permitted under Section 6.11(a) hereof;
or

 

(e)           Take any action with a view toward dissolution,
liquidation or termination;

 

provided, however, that:

 

(x)            Any
of the Company’s Subsidiaries may merge or consolidate with any one or more of
the Company’s other Subsidiaries, or with any other Business Entity or Business
Entities; provided that each
surviving Business Entity after any such merger or consolidation shall be a
wholly-owned Subsidiary of the Company or of a wholly-owned Subsidiary of the
Company, and, provided, further,
that the surviving Business Entity shall simultaneously with such merger,
execute and deliver to the Agent a Notice of Assumption, appropriately
completed;

 

(y)           Any
of the Company’s Subsidiaries may (i) sell, transfer or otherwise dispose
of any Stock of the Company or any of its Subsidiaries to the Company or
another Subsidiary of the Company or (ii) sell, lease, transfer or
otherwise dispose of any of its assets to another Subsidiary of the Company;
provided that if all or substantially all of the transferring Subsidiary’s
assets are being sold, leased, transferred or otherwise disposed of, then the
Subsidiary to whom the sale, lease, transfer or disposition was made must,
unless it is already a Guarantor, simultaneously execute and deliver to the
Agent a Notice of Assumption.  If such
transferring Subsidiary is a wholly-owned Subsidiary of the Company, it may
wind up its affairs, liquidate or dissolve following the consummation of any
such sale, lease, transfer or disposal of all or substantially all of its
assets; and

 

(z)            Subject
to the limitations set forth below, (i) (A) a proposed sale, lease or
conveyance of assets of one or more of the Subsidiaries of the Company (a “Permitted Asset Disposition”)
or (B) a proposed sale of the Stock of one or more Subsidiaries of the
Company (a “Permitted
Stock Disposition”), in a single transaction or series of
related transactions, to a Person or Persons which is not or are not an
Affiliate or Affiliates of the Company or any of its Subsidiaries, on an
arms-length basis, may occur in any fiscal year of the Company so long as the
aggregate consideration paid by such acquiring Person or Persons (inclusive of
the fair value of any non-cash Property received as consideration) from all
Permitted Asset Dispositions and all Permitted Stock Dispositions which occur
during such fiscal year does not exceed five percent (5%) of Consolidated Net
Worth and (ii) the Company may consummate the Disclosed Divestitures; provided, however, that no Permitted Asset
Disposition (other than a Disclosed 

 

49

 

Divestiture) or Permitted Stock Disposition may occur if a Default
shall have then occurred and is then continuing or would be caused by such
proposed Permitted Asset Disposition or Permitted Stock Disposition, in each
case if consummated; provided further
that the ability to consummate such Disclosed Divestiture shall not constitute
a waiver of any such Default.

 

Section 6.5  Nature of Business.  Materially change the nature of its business
or enter into any business which is substantially different from the business
in which it is presently engaged; provided,
however, that vertical integration within the natural foods industry
shall not be deemed to be a violation of this Section 6.5.

 

Section 6.6  Transactions with Related
Parties.  Enter into any transaction,
contract or agreement of any kind with any officer, director or holder of any
of the outstanding Stock of the Company or any of its Subsidiaries (or any
Affiliate of such Person), unless such transaction, contract or agreement is
made upon terms and conditions not less favorable to such Person than those
which could have been obtained from wholly independent and unrelated
sources.  Other than pursuant to
agreements of the Target in effect on the date hereof, the Company will not
permit the compensation of any officer, stockholder, director, partner or
proprietor of the Company or any of its Subsidiaries to be excessive, taking
into consideration the financial circumstances of the Company or such
Subsidiary and the position and qualifications of such Person.

 

Section 6.7  Loans and Investments.  Make, directly or indirectly, any loan or
advance to or have any Investment in any Person, or make any commitment to make
such loan, advance or Investment, except:

 

(a)           Stock of any Subsidiary, subject to the terms of Section 6.7(h) as
to Investments in internet strategy lines of business;

 

(b)           Permitted Investment Securities;

 

(c)           Stock received in the settlement of debts (created in the
ordinary course of business);

 

(d)           travel advances in the ordinary course of business to
officers and employees;

 

(e)           customer obligations and receivables owing to the Company
and arising out of sales or leases made or the rendering of services by the
Company in the ordinary course of business;

 

(f)            so long as no Default shall have occurred and is then
continuing, and subject to the terms of Section 6.1 hereof, loans by the
Company or any Guarantor to any Subsidiary of the Company;

 

(g)           so long as no Default has occurred and is then continuing
or would result therefrom, loans to any Person which is not a Subsidiary of the
Company or of any of the Company’s Subsidiaries, provided,
that the aggregate of all of such loans does not exceed at any time five
percent (5%) of Consolidated Net Worth; and

 

(h)           so long as no Default shall have occurred and is then
continuing or would result therefrom, Investments by the Company and/or any
Guarantor in internet strategy lines of business.

 

Section 6.8  ERISA Compliance.  At any time permit any Plan to engage in any “prohibited
transaction” as defined in ERISA; incur any “accumulated funding deficiency” as
defined in 

 

50

 

ERISA; or be terminated in a manner which
could result in the imposition of a Lien on any Property of the Company or any
of its Subsidiaries pursuant to ERISA.

 

Section 6.9  Credit Extensions.  Extend credit other than normal and prudent
extensions of credit to customers for goods and services in the ordinary course
of business.

 

Section 6.10  Change in Accounting Method.  Make any material change in accounting method
except as may be required by Generally Accepted Accounting Principles as they
are from time to time in effect.

 

Section 6.11  Redemption, Dividends and
Distributions.  At any time
(1) each of the Company’s Moody’s and S&P rating  have been downgraded below Investment Grade,
or (2) either of the Company’s Moody’s or S&P rating has been downgraded
by at least two categories below Investment Grade:

 

(a)           Redeem, retire or otherwise acquire, directly or
indirectly, any shares of its Stock if such redemption or repurchase would
cause the sum of (A) and (B) below to exceed the sum of (i) $150,000,000,
plus (ii) fifty percent (50%) of
the aggregate of Net Income, depreciation, amortization and non-cash stock
compensation expense of the Company and its Subsidiaries, on a consolidated
basis, for each fiscal quarter of the Company ending after August 28, 2007 (said amount to not be adjusted or
changed for a particular fiscal quarter if the aggregate Net Income,
depreciation, amortization and non-cash stock compensation expense of the
Company and its Subsidiaries, on a consolidated basis, for such fiscal quarter
is negative):  (A) the aggregate
cost paid by the Company for such Stock so redeemed or repurchased on or after July 1,
2007, as shown on the consolidated financial statements of the Company and its
Subsidiaries to be delivered pursuant to Sections 5.2(a) and (b) hereof;
and (B) the aggregate cash dividends paid by the Company to owners of
Stock in the Company on or after July 1, 2007;

 

(b)           Pay any dividend except (i) dividends paid to the
Company or any Subsidiary of the Company which is a direct parent of the
Subsidiary paying a dividend, (ii) dividends payable in Stock or in rights
or warrants to purchase Stock, or (iii) cash dividends paid by the Company
to owners of Stock in the Company if the aggregate amount of such cash
dividends payable by the Company to owners of Stock in the Company on or after August 28,
2007, together with the aggregate cost paid by the Company for Stock redeemed
or repurchased on or after July 1, 2007 (as shown on the consolidated
financial statements of the Company and its Subsidiaries to be delivered
pursuant to Sections 5.2(a) and (b) hereof), does not exceed (i) $150,000,000
plus (ii) fifty percent (50%) of
the aggregate of Net Income, depreciation, amortization and non-cash stock
compensation expense of the Company and its Subsidiaries, on a consolidated
basis, for each fiscal quarter of the Company ending after July 1, 2007
(said amount to not be adjusted or changed for a particular fiscal quarter if
the aggregate Net Income, depreciation, amortization and non-cash stock
compensation expense of the Company and its Subsidiaries, on a consolidated
basis, for such fiscal quarter is negative); or

 

(c)           Make any other distribution of any Property or cash to
stockholders as such, except as permitted under Section 6.4(e)(y).

 

ARTICLE VII — EVENTS OF DEFAULT AND REMEDIES

 

Section 7.1  Events of Default.  If any of the following events shall occur,
then the Agent may, unless directed to the contrary by the Required Lenders in
writing actually received by the Agent prior to the Agent doing so (and, if
directed by the Required Lenders, shall), do any or all of the following:  (1) without notice to the Company or any
other Person, declare the Loans and the Notes then outstanding to be, and
thereupon the Loans and the Notes shall forthwith become, immediately due and 

 

51

 

payable, together with all accrued interest
thereon, the Commitment Fees and all other amounts then payable hereunder,
without notice of any kind, notice of acceleration or of intention to
accelerate, presentment and demand or protest, or other notice of any kind all
of which are hereby expressly WAIVED by the Company; (2) without notice to
the Company, terminate the Commitments and thereupon each Issuer and all of the
Lenders shall be relieved of any obligation to issue any additional Letters of
Credit or make any additional Loans; (3) by notice in writing to the
Company, accelerate the Maturity Date to a date as early as the date of the
notice, (4) demand that the Company and the Guarantors provide the Agent,
for the ratable benefit of the Lenders, and the Company and the Guarantors
jointly and severally agree upon such demand to, provide cash collateral in an
amount equal to the aggregate Letter of Credit Exposure Amount then
outstanding, on terms and pursuant to documents and agreements satisfactory in
all respects to the Agent, and (5) exercise any and all other rights
pursuant to the Loan Documents:

 

(a)           The Company shall fail to pay or prepay any
principal of or interest of any Loan, the Commitment Fees or any other
obligation hereunder or under any Applications as and when due and, solely in
respect of interest, fees and obligations other than principal, such failure
remains uncured after three (3) Business Days, in the case of interest,
and five (5) Business Days, in the case of fees and such other
obligations, in each case from such due date; or

 

(b)           The Company or any of its Subsidiaries (i) shall fail
to pay at maturity, or within any applicable period of grace, any principal of
or interest on any other borrowed money obligation in excess of $20,000,000 in
principal amount (unless such payment is being contested in good faith by
appropriate proceedings and adequate reserves have been provided therefor), (ii) shall
otherwise be in default under the provisions of any instrument or document
evidencing, securing or guaranteeing any other borrowed money obligation of the
Company or any of its Subsidiaries, including, without limitation, in respect
of the Term Loan Facility, in excess of $20,000,000 in principal amount if such
default continues beyond any applicable grace or curative period, if any, and
such default would entitle the holder of such borrowed money obligation to
declare such obligation to be due prior to its stated maturity, or (iii) is
in default under or in violation of any Legal Requirement, which failure could
or does have a Material Adverse Effect; or

 

(c)           Any representation or warranty made in connection with any
Loan Document shall prove to have been materially incorrect, false or
misleading when made or deemed to have been made; or

 

(d)           Default shall occur in the punctual and complete
performance of (i) any of the affirmative covenants contained in Section 5
(other than Section 5.3) and such default shall not be cured within ten (10) days
after the Agent has given written notice to the Company that such default has
occurred (or immediately in the case of Sections 5.14, 5.16, or 5.17), (ii) any
of the negative covenants contained in Section 6, or (iii) any
covenant contained in Section 5.3 or any other covenant of the Company or
any other Person contained in any Loan Document; or

 

(e)           Any judgments or orders in the aggregate for the payment
of money in excess of $20,000,000 shall be rendered against the Company or any
of its Subsidiaries at any time, regardless of whether the same is being
appealed or reserves established therefor or paid in full;  provided,
however, that any such judgment
or order shall not give rise to an Event of Default under this Section 7.1(e) if
and for so long as the amount of such judgment or order is covered by a valid
and binding policy of insurance in favor of the Company or any of its
Subsidiaries as to which coverage in respect of such claim has not been
disputed; or

 

52

 

(f)            The Company or any Subsidiary of the Company shall claim,
or any court shall find or rule, that the Agent for the benefit of the Lenders
does not have a valid Lien on any Collateral or Additional Collateral, as the
case may be, having a value in the aggregate in excess of $5,000,000 which may
have been provided to secure the Indebtedness arising pursuant hereto from time
to time by the Company or any of its Subsidiaries; or

 

(g)           Any order shall be entered in any proceeding against the
Company or any of its Subsidiaries decreeing the dissolution, liquidation or
split-up thereof, and such order shall remain in effect for thirty (30) days; provided, however, the provisions of this subparagraph (g) shall
not apply to any divestiture by the Company or any of its Subsidiaries of any
Subsidiary acquired after the effective date of this Agreement as a result of
anti-trust issues or concerns; or

 

(h)           The occurrence of an event of default or default under any
Loan Document other than this Agreement; or

 

(i)            The Company or any of its Subsidiaries shall have
concealed, removed, or permitted to be concealed or removed, any part of its
Property, with intent to hinder, delay or defraud its creditors or any of them,
or made or suffered a transfer of any of its Property which may be fraudulent
under any bankruptcy, fraudulent conveyance or similar law; or shall have made
any transfer of its Property to or for the benefit of a creditor at a time when
other creditors similarly situated have not been paid; or

 

(j)            A change shall occur in the assets, liabilities,
financial condition, business or affairs of the Company or any of its
Subsidiaries which, in the reasonable opinion of the Required Lenders, would or
does have a Material Adverse Effect; provided, however,
the occurrence of any such Material Adverse Effect shall not be deemed to be an
Event of Default hereunder until the Agent shall have provided the Company with
written notice that the Required Lenders have determined that such a Material
Adverse Effect has occurred; or

 

(k)           A Change of Control shall occur.

 

In addition to the actions
permitted to be taken by the Agent under the terms of the initial paragraph of
this Section 7.1, if any of the following events shall occur, then the
Loans and the Notes together with all accrued interest thereon, the Commitment
Fees and all other amounts then payable hereunder (including contingent
obligations with respect to Letters of Credit) shall automatically, without
demand, presentment, protest, notice of intent to accelerate, notice of
acceleration or other notice to any Person of any kind, all of which are hereby
expressly WAIVED by the Company, become immediately due and payable and all
Commitments shall be immediately and automatically terminated and the Maturity
Date shall immediately and automatically be accelerated to the date of such
occurrence:

 

(x)            The
Company or any of its Subsidiaries shall make a general assignment for the
benefit of creditors or shall petition or apply to any tribunal for the
appointment of a trustee, custodian, receiver or liquidator of all or any
substantial part of its business, estate or assets or shall commence any
proceeding under any bankruptcy, reorganization, arrangement, insolvency,
readjustment of debt, dissolution or liquidation law of any jurisdiction,
whether now or hereafter in effect; or

 

(y)           Any
such petition or application shall be filed or any such proceeding shall be
commenced against the Company or any of its Subsidiaries and the Company or such
Subsidiary by any act or omission shall indicate approval thereof, consent
thereto or acquiescence therein which shall not have been
dismissed within 60 days, or an order shall be entered appointing a 

 

53

 

trustee, custodian, receiver or liquidator of all or any substantial
part of the assets of the Company or any of its Subsidiaries or granting relief
to the Company or any of its Subsidiaries or approving the petition in any such
proceeding and such order shall remain in effect for more than 60 days; or

 

(z)            The
Company or any of its Subsidiaries shall admit in writing its inability to pay
its debts as they become due or fail generally to pay its debts as they become
due or suffer any writ of attachment or execution or any similar process to be
issued or levied against it or any substantial part of its Property which is
not released, stayed, bonded or vacated within thirty (30) days after its issue
or levy.

 

Section 7.2  Remedies Cumulative.  No remedy, right or power conferred upon the
Agent or any Lender is intended to be exclusive of any other remedy, right or
power given hereunder or now or hereafter existing at law, in equity, or
otherwise, and all such remedies, rights and powers shall be cumulative.

 

ARTICLE VIII — THE AGENT AND THE ISSUERS

 

Section 8.1  Authorization and Action.  (a)  Each Lender hereby irrevocably
appoints and authorizes the Agent to take such action as agent on its behalf
and to exercise such powers and discretion under this Agreement and the other
Loan Documents as are delegated to the Agent by the terms hereof and thereof,
together with such powers and discretion as are reasonably incidental
thereto.  Each Lender hereby irrevocably
appoints and authorizes each Issuer to act as its agent under the Letters of
Credit which such Issuer has issued with such powers as are specifically
delegated to such Issuer by the terms hereof and thereof, together with such
other powers as are reasonably incidental thereto. As to any matters not expressly
provided for by the Loan Documents (including, without limitation, enforcement
or collection of the obligations of the Company or any Guarantor), neither
Agent nor any Issuer shall be required to exercise any discretion or take any
action, but shall be required to act or to refrain from acting (and shall be
fully protected in so acting or refraining from acting) upon the instructions
of the Required Lenders, and such instructions shall be binding upon all
Lenders, and all holders of Notes, and the Agent agrees to request from the
Company any information that is reasonably requested by any Lender; provided, however, that neither the Agent
nor any Issuer shall be required to take any action that exposes the Agent to
personal liability or that is contrary to this Agreement or applicable law.

 

(a)           The Agent, the Collateral Agent and/or any Issuer may
execute any of its duties under this Agreement or any other Loan Document by or
through agents, employees or attorneys-in-fact and shall be entitled to advice
of counsel and other consultants or experts concerning all matters pertaining
to such duties.

 

(b)           Each
of the Lenders hereby appoints and authorizes the Collateral Agent to take such
action as collateral agent on its behalf and to exercise such powers under the
Security Agreement A and Security Agreement B as are specifically delegated to
the Collateral Agent by the terms of such Loan Documents, together with such
other powers as are reasonably incidental thereto.

 

Section 8.2  Agents’,
Collateral Agent’s and Issuers’ Reliance, Etc.  Neither the Agent nor the
Collateral Agent nor any Issuer nor any of their respective directors,
officers, agents or employees shall be liable for any action taken or omitted
to be taken by it or them under or in connection with the Loan Documents,
except for its or their own gross negligence or willful misconduct.  Without limitation of the generality of the
foregoing, the Agent and any Issuer each: 
(a) may consult with legal counsel (including counsel for any Loan
Party), independent public accountants and other experts selected by it and
shall not be liable for any action taken or omitted to be taken in good faith
by it in accordance with 

 

54

 

the advice of such counsel, accountants or
experts; (b) makes no warranty or representation to any Lender and shall
not be responsible to any Lender for any statements, warranties or
representations (whether written or oral) made in or in connection with the
Loan Documents; (c) shall not have any duty to ascertain or to inquire as
to the performance, observance or satisfaction of any of the terms, covenants
or conditions of any Loan Document on the part of any Loan Party or the
existence at any time of any Default under the Loan Documents or to inspect the
property (including the books and records) of any Loan Party; (d) shall
not be responsible to any Lender for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of, or the perfection or
priority of any lien or security interest created or purported to be created
under or in connection with, any Loan Document or any other instrument or
document furnished pursuant thereto; and (e) shall incur no liability
under or in respect of any Loan Document by acting upon any notice, consent,
certificate or other instrument or writing (which may be by telegram, telecopy
or electronic communication) believed by it to be genuine and signed or sent by
the proper party or parties.

 

Section 8.3  JPMorgan and Affiliates.  With respect to its Commitments and its
Letter of Credit Exposure, the Loan made by it and any Note issued to it,
JPMorgan shall have the same rights and powers under the Loan Documents as any
other Lender and may exercise the same as though each were not an Agent or an
Issuer; and the term “Lender” or “Lenders” shall, unless otherwise expressly
indicated, include JPMorgan in its individual capacity.  JPMorgan and its affiliates may accept
deposits from, lend money to, act as trustee under indentures of, accept
investment banking engagements from, act as a counterparty to any Hedging
Agreements and generally engage in any kind of business with, any Loan Party,
any of its Subsidiaries and any Person that may do business with or own
securities of any Loan Party or any such Subsidiary, all as if JPMorgan were
not the Agent or an Issuer and without any duty to account therefor to the
Lenders.  No Agent or Issuer shall have
any duty to disclose any information obtained or received by it or any of its
Affiliates relating to any Loan Party or any of its Subsidiaries to the extent
such information was obtained or received in any capacity other than as the
Agent or an Issuer, respectively.

 

Section 8.4  Lender Credit Decision.  Each Lender acknowledges that it has, independently
and without reliance upon the Agent, any Issuer or any other Lender and based
on the financial statements referred to in Section 4.01 and such other
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement.  Each Lender also acknowledges that it will,
independently and without reliance upon the Agent, any Issuer or any other
Lender and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit decisions in taking or not taking
action under this Agreement.

 

Section 8.5  Indemnification.  (a)  Each Lender severally agrees to
indemnify the Agent and any Issuer (to the extent not promptly reimbursed by
the Company) from and against such Lender’s ratable share (determined as
provided below) of any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever that may be imposed on, incurred by, or asserted
against the Agent or any Issuer in any way relating to or arising out of the
Loan Documents or any action taken or omitted by the Agent or any Issuer under
the Loan Documents (collectively, the “Indemnified Costs”); provided, however, that no Lender shall be
liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from the Agent’s or any Issuer’s gross negligence or willful
misconduct as found in a final, non-appealable judgment by a court of competent
jurisdiction.  Without limitation of the
foregoing, each Lender agrees to reimburse the Agent and any Issuer promptly
upon demand for its ratable share of any costs and expenses (including, without
limitation, fees and expenses of counsel) payable by the Company under Section 9.8,
to the extent that the Agent or any Issuer is not promptly reimbursed for such
costs and expenses by the Company.  In
the case of any investigation, 

 

55

 

litigation or proceeding giving rise to any
Indemnified Costs, this Section 8.5 applies whether any such
investigation, litigation or proceeding is brought by any Lender or any other
Person.

 

For purposes of this Section 8.5, each
Lender’s ratable share of any amount shall be determined, at any time,
according to the sum of (i) the aggregate principal amount of the Loans
and Letter of Credit Exposure outstanding at such time and owing to such Lender
and (ii) the aggregate Unused Commitments at such time. The failure of any
Lender to reimburse the Agent or any Issuer promptly upon demand for its
ratable share of any amount required to be paid by the Lenders to the Agent or
any Issuer as provided herein shall not relieve any other Lender of its
obligation hereunder to reimburse the Agent or any Issuer for its ratable share
of such amount, but no Lender shall be responsible for the failure of any other
Lender to reimburse the Agent or any Issuer for such other Lender’s ratable
share of such amount.  Without prejudice
to the survival of any other agreement of any Lender hereunder, the agreement
and obligations of each Lender contained in this Section 8.6 shall survive
the payment in full of principal, interest and all other amounts payable
hereunder and under the other Loan Documents.

 

Section 8.6  Successor Agents.  The Agent may resign at any time by giving
written notice thereof to the Lenders and the Company.  Upon any such resignation, the Lenders (in
consultation with the Company) shall have the right to appoint a successor
Agent.  If no successor Agent shall have
been so appointed by the Lenders, and shall have accepted such appointment,
within 30 days after the retiring Agent’s giving of notice of resignation, then
the retiring Agent may, on behalf of the Lenders, appoint a successor Agent,
which shall be a commercial bank organized under the laws of the United States
or of any State thereof and having a combined capital and surplus of at least
$250,000,000.  Upon the acceptance of any
appointment as Agent hereunder by a successor Agent, such successor Agent shall
succeed to and become vested with all the rights, powers, discretion,
privileges and duties of the retiring Agent, and the retiring Agent shall be
discharged from its duties and obligations under the Loan Documents.  If within 30 days after written notice is
given of the retiring Agent’s resignation under this Section 8.6 no
successor Agent shall have been appointed and shall have accepted such
appointment, then on such 30th day (a) the retiring Agent’s
resignation or removal shall become effective, (b) the retiring Agent
shall thereupon be discharged from its duties and obligations under the Loan
Documents and (c) the Lenders shall thereafter perform all duties of the
retiring Agent under the Loan Documents until such time, if any, as the Lenders
appoint a successor Agent as provided above. 
After any retiring Agent’s resignation or removal hereunder as Agent as
to the Facility shall have become effective, the provisions of this Article VIII
shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was Agent under this Agreement.

 

Section 8.7  Other Agents; Arrangers and
Managers.  None of the
Lenders or other Persons identified on the facing page or signature pages of
this Agreement as a “syndication agent,” “documentation agent,” “bookrunner,”
or “lead arranger” shall have any right, power, obligation, liability,
responsibility or duty under this Agreement other than to the extent expressly set
forth herein and, in the case of such Lenders, those applicable to all Lenders
as such.  Without limiting the foregoing,
none of the Lenders or other Persons so identified shall have or be deemed to
have any fiduciary relationship with any Lender.  Each Lender acknowledges that it has not
relied, and will not rely, on any of the Lenders or other Persons so identified
in deciding to enter into this Agreement or in taking or not taking action
hereunder.

 

ARTICLE IX — MISCELLANEOUS

 

Section 9.1  No Waiver.  No waiver of any Default shall be deemed to
be a waiver of any other Default.  No
failure to exercise and no delay on the part of the Agent or any Lender in
exercising any right or power under any Loan Document or at law or in equity
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such right or power, or the abandonment or discontinuance of

 

56

 

steps to enforce any such right or power,
preclude any further or other exercise thereof or the exercise of any other
right or power.  No course of dealing
between the Company and the Agent or any Lender shall operate as a waiver of
any right or power of the Agent or any Lender. 
No amendment, modification or waiver of any provision of this Agreement
or any other Loan Document nor any consent to any departure therefrom shall be
effective unless the same is in writing and signed by the Person against whom it
is sought to be enforced, and then it shall be effective only in the specific
instance and for the purpose for which given. 
No notice to or demand on the Company or any other Person shall entitle
the Company or any other Person to any other or further notice or demand in
similar or other circumstances.

 

Section 9.2  Notices.

 

(a)           All notices and other communications provided for
hereunder shall be either (x) in writing (including facsimile or
electronic communication) and mailed, faxed or delivered or (y) as and to
the extent set forth in Section 9.2(b) and in the proviso to this Section 9.2(a),
in an electronic medium and delivered as set forth in Section 9.2(b), if
to any Loan Party, to the Company at its address at 550 Bowie Street, Austin,
Texas 78703, Attention:  Glenda
Chamberlain and Chief Financial Officer, Faxed to: 512-482-7205, with copy to
the General Counsel’s Office at the same address and faxed to 512-482-7217; if
to any initial Lender party to this Agreement on date hereof, at the address specified
for such Lender on Schedule 2.1(a) hereto; if to any other Lender, at the
address specified in the Assignment and Acceptance pursuant to which it became
a Lender; if to the Agent, at its address at 
221 W. 6th Street, 2nd Floor,
Austin, Texas 78701, Mail Code TX3-8229, Attention:  Manager, Commercial Lending Group, Fax:
512-479-2814; or, as to any Party, at such other address as shall be designated
by such party in a written notice to the other parties; provided, however,
that materials and information described in Section 9.2(b) shall be
delivered to the Agent in accordance with the provisions thereof or as
otherwise specified to the Company by the Agent.  Except as otherwise provided herein, all
notices, consents, certificates, waivers, documents and other communications
required or permitted to be delivered to any party under the terms of any Loan
Document (a) must be in writing, (b) must be personally delivered,
transmitted by a recognized courier service or transmitted by facsimile, and (c) must
be directed to such party at its address or facsimile number set forth above or
on Schedule 2.1(a) hereto.  Except
as provided in subsection (b) below, all notices will be deemed to have
been duly given and received on the date of delivery if delivered personally,
three (3) days after delivery to the courier if transmitted by courier, or
the date of transmission during normal business hours with confirmation if
transmitted by facsimile, whichever occurs first, except
that notices and communications to the Agent or the Collateral Agent pursuant
to Article II, III or VII shall not be effective until received by
the Agent.  Any party may change its
address or facsimile number for purposes hereof by notice to all other
parties.  Delivery by telecopier of an
executed counterpart of a signature page to any amendment or waiver of any
provision of this Agreement or the Notes shall be effective as delivery of an
original executed counterpart thereof.

 

(b)           The Company hereby agrees that it will provide to the
Agent all information, documents and other materials that it is obligated to
furnish to the Agent pursuant to the Loan Documents, including, without
limitation, all notices, requests, financial statements, financial and other
reports, certificates and other information materials, but excluding any such
communication that (i) relates to a request for a new, or a conversion of
an existing, Borrowing (including any election of an interest rate or LIBOR
Interest Period relating thereto), (ii) relates to the payment of any
principal or other amount due under this Agreement prior to the scheduled date
therefor, (iii) provides notice of any Default or Event of Default under
this Agreement or (iv) comprises original executed counterparts, original
governmental certificates , in each case, required to be delivered to satisfy
any condition precedent to the effectiveness of this Agreement and/or any
Borrowing thereunder (all such non-excluded communications being referred to
herein collectively as “Communications”),
by transmitting the Communications in an electronic/soft medium in a format
reasonably acceptable to the Agent to an electronic mail address specified by the Agent
to the Company.  In addition, the
Company agrees to continue to provide the 

 

57

 

Communications to the Agent in the manner
specified in the Loan Documents but only to the extent requested by the
Agent.  The Company further agrees that
the Agent may make the Communications available to the Lenders by posting the
Communications on IntraLinks or a substantially similar electronic transmission
system (the “Platform”); provided that,
unless otherwise indicated by the Company, all such information so made
available to the Lender Parties shall be treated by the Agent as confidential
information.

 

(c)           THE PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE”.  THE AGENT PARTIES (AS DEFINED BELOW) DO NOT
WARRANT THE ACCURACY OR COMPLETENESS OF THE COMMUNICATIONS, OR THE ADEQUACY OF
THE PLATFORM AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS OR OMISSIONS IN
THE COMMUNICATIONS.  NO WARRANTY OF ANY
KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING, WITHOUT LIMITATION, ANY
WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT
OF THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY
THE AGENT PARTIES IN CONNECTION WITH THE COMMUNICATIONS OR THE PLATFORM.  IN NO EVENT SHALL THE AGENT OR ANY OF ITS
AFFILIATES OR ANY OF THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, AGENTS,
ADVISORS OR REPRESENTATIVES (COLLECTIVELY, “AGENT PARTIES”) HAVE ANY LIABILITY
TO THE COMPANY, ANY LENDER OR ANY OTHER PERSON OR ENTITY FOR DAMAGES OF ANY
KIND, INCLUDING, WITHOUT LIMITATION, DIRECT OR INDIRECT, SPECIAL, INCIDENTAL OR
CONSEQUENTIAL DAMAGES, LOSSES OR EXPENSES (WHETHER IN TORT, CONTRACT OR
OTHERWISE) ARISING OUT OF THE COMPANY’S OR THE AGENT’S TRANSMISSION OF
COMMUNICATIONS THROUGH THE INTERNET, EXCEPT TO THE EXTENT THE LIABILITY OF THE
AGENT OR THE COLLATERAL AGENT PARTY IS FOUND IN A FINAL NON-APPEALABLE JUDGMENT
BY A COURT OF COMPETENT JURISDICTION TO HAVE RESULTED PRIMARILY FROM SUCH AGENT
PARTY’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.

 

(d)           The Agent agrees that the receipt of the Communications by
the Agent at its e-mail address set forth above shall constitute effective
delivery of the Communications to the Agent for purposes of the Loan
Documents.  Each Lender agrees that notice to it (as provided in the next sentence)
specifying that the Communications have been posted to the Platform shall
constitute effective delivery of the Communications to such Lender for purposes
of the Loan Documents.  Each Lender
agrees to notify the Agent in writing (including by electronic communication)
from time to time of such Lender’s e-mail address to which the foregoing notice
may be sent by electronic transmission and (ii) that the foregoing notice
may be sent to such e-mail address.  Nothing
herein shall prejudice the right of the Agent or any Lender to give any notice
or other communication pursuant to any Loan Document in any other manner
specified in such Loan Document.

 

Section 9.3  Jurisdiction; Governing Law;
Etc.

 

(a)           Each of the parties hereto hereby irrevocably and
unconditionally submits, for itself and its property, to the nonexclusive
jurisdiction of any New York State court or Federal court of the United States
of America sitting in New York City, and any appellate court from any
thereof, in any action or proceeding arising out of or relating to this
Agreement or any of the other Loan Documents to which it is a party, or for
recognition or enforcement of any judgment, and each of the parties hereto
hereby irrevocably and unconditionally agrees that all claims in respect of any
such action or proceeding may be heard and determined in any such New York State
court or, to the fullest extent permitted by law, in such Federal court.  Each of the parties hereto agrees that a
final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in 

 

58

 

any other manner provided by law.  Nothing in this Agreement shall affect any
right that any party may otherwise have to bring any action or proceeding
relating to this Agreement or any of the other Loan Documents in the courts of
any jurisdiction.

 

(b)           EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY
WAIVES, TO THE FULLEST EXTENT IT MAY LEGALLY AND EFFECTIVELY DO SO, ANY
OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY
SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY
OF THE OTHER LOAN DOCUMENTS TO WHICH IT IS A PARTY IN ANY NEW YORK STATE OR
FEDERAL COURT.  EACH OF THE PARTIES
HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE
DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR
PROCEEDING IN ANY SUCH COURT.

 

(c)           THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

 

(d)           EACH OF THE COMPANY, THE AGENT AND THE LENDERS IRREVOCABLY
WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
(WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO
ANY OF THE LOAN DOCUMENTS, THE LOANS OR THE ACTIONS OF THE AGENT OR ANY LENDER
IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT THEREOF.

 

Section 9.4  Survival; Parties Bound.  All representations, warranties, covenants
and agreements made by or on behalf of the Company in connection herewith shall
survive the execution and delivery of the Loan Documents, shall not be affected
by any investigation made by any Person, and shall bind the Company and its
successors, trustees, receivers and assigns and inure to the benefit of the
successors and assigns of the Agent and the Lenders, provided that the
undertaking of the Lenders hereunder to make Loans to the Company and to issue
Letters of Credit for the account of the Company shall not inure to the benefit
of any successor or assign of the Company. 
The term of this Agreement shall be until the final maturity of each
Note and the payment of all amounts due under the Loan Documents.

 

Section 9.5  Counterparts.  This Agreement may be executed in any number
of counterparts and by different parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.  Delivery of an executed signature page of
this Agreement by facsimile transmission or electronic transmission (i.e., a “pdf”
or “tif”) shall be effective as delivery of an original executed counterpart of
this Agreement.

 

Section 9.6  Survival.  The obligations of the Company under Sections
2.5(e), 2.10(b), 2.10(d), 2.15(d), 9.8, 9.9, 9.16 and 9.17 hereof shall survive
the repayment of the Loans and the termination of the Commitments and the
Letters of Credit.

 

Section 9.7  Captions.  The headings and captions appearing in the
Loan Documents have been included solely for convenience and shall not be
considered in construing the Loan Documents.

 

Section 9.8  Expenses, Etc.  Whether or not any Loan is ever made or any
Letter of Credit ever issued, the Company shall pay or reimburse on demand each
of the Lenders and the Agent for paying: 
(a) the reasonable fees and expenses of Locke Liddell &
Sapp LLP, counsel to the Agent or any 

 

59

 

other legal counsel engaged by the Agent, in
connection with (i) the preparation, execution and delivery of this Agreement
(including the exhibits and schedules hereto) and the Loan Documents and the
making of the Loans and the issuance of Letters of Credit hereunder and (ii) any
modification, supplement or waiver of any of the terms of this Agreement, any
of the Letters of Credit or any other Loan Document made as a result of any
request by the Company; (b) all reasonable costs and expenses (including
reasonable attorneys’ fees) of the Lenders and the Agent in connection with the
enforcement of this Agreement, the Letters of Credit or any other Loan
Document; (c) all transfer, stamp, documentary or other similar taxes,
assessments or charges levied by any governmental or revenue authority after
the effective date hereof in respect of this Agreement, any Letter of Credit or
any other Loan Document or any other document referred to herein or therein; (d) all
costs, expenses, taxes, assessments and other charges incurred after the
effective date hereof in connection with any filing, registration, recording or
perfection of any security interest contemplated by Section 5.10 of this
Agreement; and (e) expenses of mutually agreed due diligence and
syndication.

 

Section 9.9  Indemnification.  The Company shall indemnify the Agent, the
Lenders, each Issuer and each Affiliate thereof and their respective directors,
officers, employees, counsel and agents from, and hold each of them harmless
against, any and all losses, liabilities (including Environmental Liabilities),
claims (including Environmental Claims) or damages to which any of them may
become subject, insofar as such losses, liabilities, claims or damages arise
out of or result from any (a) actual or proposed use by the Company of the
proceeds of any extension of credit (whether a Loan or a Letter of Credit) by
any Lender or any Issuer hereunder, (b) breach by the Company of this
Agreement or any other Loan Document, (c) violation by the Company or any
of its Subsidiaries of any law, rule, regulation or order including any
Requirements of Environmental Law, (d) Liens or security interests granted
on any Property pursuant to or under the Loan Documents, to the extent
resulting from any Hazardous Substance, petroleum, petroleum product or
petroleum waste located in, on or under any such property, (e) ownership
by the Lenders or the Agent of any Property following foreclosure under the
Loan Documents, to the extent such losses, liabilities, claims or damages arise
out of or result from any Hazardous Substance, petroleum, petroleum product or
petroleum waste located in, on or under such Property, including losses,
liabilities, claims or damages which are imposed upon Persons under laws
relating to or regulating Hazardous Substances, petroleum, petroleum products
or petroleum wastes solely by virtue of ownership, (f) any Lender or the
Agent being deemed an operator of any such Property by a court or other
regulatory or administrative agency or tribunal or other third party, to the
extent such losses, liabilities, claims or damages arise out of or result from
any Hazardous Substance, petroleum, petroleum product or petroleum waste
located in on or under such Property, (g) the making of the
extensions of credit hereunder and the consummation of any of the transactions
contemplated in the Loan Documents or (h) investigation,
litigation or other proceeding (including any threatened investigation or
proceeding) relating to any of the foregoing, and the Company shall reimburse
the Agent and each Lender, and each Affiliate thereof and their respective
directors, officers, employees, counsel and agents, upon demand for any
expenses (including legal fees) incurred in connection with any such
investigation or proceeding, AND WHETHER ANY SUCH LOSS, LIABILITY, CLAIM OR
DAMAGE RESULTS FROM THE NEGLIGENCE OF ANY SUCH INDEMNIFIED PERSON; but
excluding any such losses, liabilities, claims, damages or expenses incurred by
a Person or any Affiliate thereof or their respective directors, officers,
employees, counsel or agents by reason of the gross negligence or willful
misconduct of such Person, affiliate, director, officer, employee or
agent.  Promptly after receipt by an
indemnified person of notice of any claim or the commencement of any action,
such indemnified person shall, if any claim in respect thereof is to be made
against the Company under this Section 9.10, notify the Company in writing
of the claim or the commencement of that action.  The Company shall not be liable for any
settlement of any such claim or action involving the payment of monetary
damages effected without its written consent not to be unreasonably
withheld.  If any such claim or action
shall be brought against an indemnified person and it shall notify the Company
thereof, the Company shall be entitled to participate in the joint defense
thereof.

 

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Section 9.10  Amendments, Etc.  No amendment or waiver of any provision of
this Agreement, the Notes or any other Loan Document (except for the Credit
Facility Hedging Agreements), nor any consent to any departure by the Company
therefrom, shall in any event be effective unless the same shall be agreed or
consented to by the Required Lenders and the Company, and each such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given; provided, that no amendment, waiver or consent shall,
unless in writing and signed by each Lender, do any of the following:  (a) increase any Commitment of any of
the Lenders or subject the Agent or any of the Lenders to any additional
obligations, other than as increased pursuant to the terms of Section 2.16;
(b) reduce the principal of, or interest on, any Loan, any Letter of
Credit Exposure Amount or any fee hereunder; (c) waive or postpone any
scheduled date fixed for any payment of principal of, or interest on, any Loan,
any Letter of Credit Exposure Amount or any fee or other sum to be paid
hereunder; (d) change the percentage of any of the Commitments or of the
aggregate unpaid principal amount of any of the Loans, any Letter of Credit
Exposure Amount, or the number of Lenders, which shall be required for the
Lenders or any of them to take any action under this Agreement; (e) change
any provision contained in Sections 2.4, 2.7, 9.8 or 9.9 hereof or this Section 9.10
or Sections 9.15 or 9.18 hereof; (f) release all or any substantial part
of the security for the obligations of the Company under this Agreement, any
Application or any Note; (g) release any Guarantor from any Guaranty
(except for Guarantors sold by the Company or any of its Subsidiaries pursuant
to the terms of Section 6.4(y) hereof); (h) change the
definition of “Required Lenders” contained herein (i) modify the
requirement of unanimous written approval by the Lenders of any unilateral
reduction by the Lenders of the Aggregate Commitment as provided for in Section 2.2;
or (j) waive or postpone any prepayment required by Section 2.3
hereof.  Anything in this Section 9.10
to the contrary, no amendment, waiver or consent shall be made with respect to Section 8
without the consent of the Agent, and anything in this Section 9.10 to the
contrary, no amendment, waiver or consent shall be made with respect to any
provisions regarding the rights and obligations of an Issuer hereunder without
the consent of the applicable Issuer(s).

 

Section 9.11  Successors and Assigns.

 

(a)           This Agreement shall be binding upon and inure to
the benefit of the Company, the Agent, the Issuers and the Lenders and their
respective successors and assigns.  The
Company may not assign or transfer any of its rights or obligations hereunder
without the prior written consent of all of the Lenders.

 

(b)           Each Lender may sell participations to any Person in all
or part of any Loan, or all or part of its Notes, the Letter of Credit Exposure
Amount or Commitments, to another bank or other entity, in which event, without
limiting the foregoing, the provisions of Sections 2.12, 9.09, 9.15 and 9.16
shall inure to the benefit of each purchaser of a participation and the pro
rata treatment of payments, as described in Section 2.9, shall be
determined as if such Lender had not sold such participation.  In the event any Lender shall sell any
participation, (i) the Company, the Agent and the other Lenders shall
continue to deal solely and directly with such selling Lender in connection
with such selling Lender’s rights and obligations under the Loan Documents
(including the Note held by such selling Lender), (ii) such Lender shall
retain the sole right and responsibility to enforce the obligations of the
Company relating to the Loans and Letter of Credit Exposure Amount, including
the right to approve any amendment, modification or waiver of any provision of
this Agreement other than (and then only if expressly permitted by the
applicable participation agreement) amendments, modifications or waivers with respect
to (A) any fees payable hereunder to the Lenders and (B) the amount
of principal or the rate of interest payable on, or the dates fixed for the
scheduled repayment of principal of, the Loans and other sums to be paid to the
Lenders hereunder, and (iii) the Company agrees, to the fullest extent it
may effectively do so under applicable law, that any participant of a Lender
may exercise all rights of set-off, bankers’ lien, counterclaim or similar
rights with respect to such participation as fully as if such 

 

61

 

participant were a direct holder of Loans if
such Lender has previously given notice of such participation to the Company
and such participant agrees to be bound by Section 2.12 as if it were a Lender.

 

(c)           Each Lender may assign to one or more Lenders or Eligible
Assignees all or a portion of its interests, rights and obligations under this
Agreement (including all or a portion of its Commitment and the same portion of
the related Loan at the time owing to it and its Letter of Credit Exposure
Amount) (a “Ratable Assignment”);
provided, however, that, (i) the
aggregate amount of the Commitment, Loan and Letter of Credit Exposure Amount
(without duplication) of the assigning Lender subject to each such assignment
(determined as of the date the Assignment and Acceptance (as defined below)
with respect to such assignment is delivered to the Agent) shall in no event be
less than $5,000,000 (unless all of the assigning Lender’s Commitment, Loan and
Letter of Credit Exposure Amount is being assigned); and (ii) the parties
to each such assignment shall execute and deliver to the Agent, for its
acceptance and recording in its records, an Assignment and Acceptance in the
form of Exhibit F attached hereto (each an “Assignment and Acceptance”) with blanks appropriately
completed, together with any Note or Notes subject to such assignment and a
processing and recordation fee of $3,500 (for which the Company shall have no
liability, and provided that only one such fee shall be required in the case of
simultaneous assignments to related entities). 
Upon such execution, delivery, acceptance and recording, from and after
the effective date specified in each Assignment and Acceptance, which effective
date shall be at least five Business Days after the execution thereof, unless a
shorter period of time may be agreed to by the Agent in its sole and absolute
discretion, (A) the assignee thereunder shall be a party hereto and, to
the extent provided in such Assignment and Acceptance, have the rights and
obligations of a Lender hereunder and (B) the Lender thereunder shall, to
the extent provided in such assignment, be released from its obligations under
this Agreement (and, in the case of an Assignment and Acceptance covering all
or the remaining portion of an assigning Lender’s rights and obligations under
this Agreement, such Lender shall cease to be a party hereto).

 

(d)           By executing and delivering an Assignment and Acceptance,
the Lender assignor thereunder and the assignee thereunder confirm to and agree
with each other and the other parties hereto as follows:  (i) other than the representation and
warranty that it is the legal and beneficial owner of the interest being
assigned thereby free and clear of any adverse claim, such Lender assignor
makes no representation or warranty and assumes no responsibility with respect
to any statements, warranties or representations made in or in connection with
any Loan Document or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of any Loan Document or any other instrument or document
furnished pursuant thereto; (ii) such assignor Lender makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of the Company or any of its Subsidiaries or the
performance or observance by the Company of any of its obligations hereunder; (iii) such
assignee confirms that it has received a copy of this Agreement and the other
Loan Documents, together with copies of the financial statements of the Company
previously delivered in accordance herewith and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into such Assignment and Acceptance; (iv) such assignee
will, independently and without reliance upon the Agent, such assignor Lender
or any other Lender and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under the Loan Documents; (v) such assignee
appoints and authorizes the Agent to take such action as agent on its behalf
and to exercise such powers under the Loan Documents as are delegated to the
Agent by the terms hereof, together with such powers as are reasonably
incidental thereto; and (vi) such assignee agrees that it will perform in
accordance with their terms all obligations that by the terms of the Loan
Documents are required to be performed by it as a Lender.

 

(e)           The Agent shall maintain at its office a copy of each
Assignment and Acceptance delivered to it and a record of the names and
addresses of the Lenders and the Commitments of, and principal amount of the
Loans owing to, and the Letter of Credit Exposure Amount of, each Lender from 

 

62

 

time to time (the “Register”).  The
entries in the register shall be conclusive, in the absence of manifest error,
and the Company, the Agent and the Lenders may treat each person the name of
which is recorded therein as a Lender hereunder for all purposes of the Loan
Documents.  Such records shall be
available for inspection by the Company or any Lender at any reasonable time
and from time to time upon reasonable prior notice.

 

(f)            Upon its receipt of an Assignment and Acceptance executed
by an assigning Lender and the assignee thereunder together with the Note, if
any, subject to such assignment, the written consent to such assignment and the
fee payable in respect thereto, the Agent shall, if such Assignment and
Acceptance has been completed with blanks appropriately filled, (i) accept
such Assignment and Acceptance, (ii) record the information contained
therein in the Register and (iii) give prompt notice thereof to the
Company and the Lenders.  Contemporaneously
with the receipt by the Company of such Assignment and Acceptance, the Company,
at its own expense, shall execute and deliver to the Agent in exchange for the
surrendered Note a new Note payable to the order of such assignee in an amount
equal to the Commitment, Loan and Letter of Credit Exposure Amount (without
duplication) assumed by it pursuant to such Assignment and Acceptance and, if
the assigning Lender has retained a Commitment, Loan and/or Letter of Credit
Exposure hereunder, a new Note to the order of the assigning Lender in an
amount equal to the Commitment, Loan and/or Letter of Credit Exposure retained
by it hereunder.  Such new Notes shall be
in an aggregate principal amount equal to the aggregate principal amount of
such surrendered Note, shall be dated the effective date of such Assignment and
Acceptance and shall otherwise be in substantially the form of the surrendered
Note.  Thereafter, such surrendered Note
shall be marked canceled and returned to the Company.

 

(g)           Any Lender may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section 9.11,
disclose to the assignee or participant or proposed assignee or participant,
any information relating to the Company furnished to such Lender by or on
behalf of the Company.

 

(h)           Each Lender agrees that, in connection with any assignment
or participation or proposed assignment or participation pursuant to this Section 9.11,
the Company will not be responsible for the accuracy and completeness of any
written materials furnished by such Lender to any actual or prospective
assignee or participant, other than copies of (i) documents furnished to
such Lender pursuant to clause (a), (b), (c) or (d) of Section 5.2
hereof, and (ii) any other documents which are prepared by the Company for
use in such connection and which contain a statement to such effect.

 

(i)            Notwithstanding anything herein to the contrary, each
Lender may pledge and assign all or any portion of its rights and interests
under the Loan Documents to any Federal Reserve Bank.

 

Section 9.12  Release of Collateral. 
Upon the sale, lease, transfer or other disposition of any item of
Collateral or Additional Collateral of any Loan Party (including, without
limitation, as a result of the sale, in accordance with the terms of the Loan
Documents, of the Loan Party that owns such Collateral or Additional
Collateral) in accordance with the terms of the Loan Documents, the Collateral
Agent will, at the Borrower’s expense, execute and deliver to such Loan Party
such documents as such Loan Party may reasonably request to evidence the
release of such item of Collateral or Additional Collateral from the assignment
and security interest granted under the Security Agreements A or B, as
applicable in accordance with the terms of the Loan Documents

 

Section 9.13  Entire Agreement.  This Agreement embodies the entire agreement
and understanding among the Company, the Agent and the Lenders relating to the
subject matter hereof and supersedes all prior proposals, agreements and
understandings relating to the subject matter hereof.  The 

 

63

 

Company certifies that it is relying on no
representation, warranty, covenant or agreement except for those set forth in this
Agreement and the other Loan Documents of even date herewith.

 

Section 9.14  Severability.  If any provision of any Loan Documents shall
be invalid, illegal or unenforceable in any respect under any applicable law,
the validity, legality and enforceability of the remaining provisions shall not
be affected or impaired thereby.

 

Section 9.15  Disclosures.  Every reference in the Loan Documents to
disclosures of the Company to the Agent and the Lenders in writing, to the
extent that such references refer to disclosures at or prior to the execution
of this Agreement, shall be deemed strictly to refer only to written
disclosures delivered to the Agent and the Lenders in an orderly manner
concurrently with the execution hereof.

 

Section 9.16  Capital Adequacy.

 

(a)           If after the date of this Agreement, any Issuer or
Lender shall have determined that the adoption or effectiveness (regardless of
whether previously announced) of any applicable Legal Requirement or treaty
regarding capital adequacy, or any change therein, or any change in the
interpretation or administration thereof by any Governmental Authority or
comparable agency charged with the interpretation or administration thereof, or
compliance by any Issuer or Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) of any such
Governmental Authority, has or would have the effect of increasing the cost of,
or reducing the rate of return on the capital of such Issuer or Lender (or any
holding company of which such Issuer or Lender is a part) as a consequence of
its obligations hereunder or under any Letter of Credit or its Note to a level
below that which such Issuer, Lender or holding company could have achieved but
for such adoption, change or compliance by an amount deemed by such Issuer or
Lender to be material, then from time to time, upon written demand to the
Company by such Issuer or Lender (with a copy to the Agent), the Company shall
pay to such Issuer or Lender, but only with respect to periods arising after
such demand by such Issuer or Lender and applicable periods prior to such
demand by such Issuer or Lender if such adoption, change or compliance is
retroactive in application, such additional amount or amounts as will
compensate such Issuer, Lender or holding company for such reduction.

 

(b)           The certificate of any Lender setting forth such amount or
amounts as shall be necessary to compensate such Lender or its holding company
as specified in Subsection 9.15(a) above (and setting forth the calculation
thereof in reasonable detail) shall be delivered as soon as practicable to the
Company and shall be conclusive and binding, absent manifest error.  The Company shall pay such Lender the amount
shown as due on any such certificate within five days after such Lender
delivers such certificate.  In preparing
such certificate, such Lender may employ such assumptions and allocations of
costs and expenses as it shall in good faith deem reasonable and may use any
reasonable averaging and attribution method.

 

Section 9.17  Withholding Tax.

 

(a)           As used in this Section 9.17, the following
terms shall have the following meanings:

 

i.              “Indemnifiable Tax” means any
Tax, but excluding, in any case, any Tax that (a) would not be imposed in
respect of a payment to a Lender under this Agreement, under the Notes held by
such Lender or under any of the other Loan Documents except for a present or
former connection between the jurisdiction of the Governmental Authority
imposing such Tax and such holder (or a shareholder or other Person with an
interest in such holder), including a connection arising from such holder’s (or
shareholder of such holder or such other Person) being or having 

 

64

 

been a citizen or resident of such jurisdiction, or being or having
been organized, present or engaged in a trade or business in such jurisdiction,
or having or having had a permanent establishment or fixed place of business in
such jurisdiction, but excluding a connection arising solely from such holder
having executed, delivered, performed its obligations or received a payment
under, or enforced, this Agreement, the Notes or any other Loan Documents, or (b) is
imposed under United States federal income tax law.

 

ii.             “Tax” means any present or future
tax, levy, impost, duty, charge, assessment or fee of any nature (including
interest thereon and penalties and additions thereto) that is imposed by any
Governmental Authority in respect of a payment to a Lender under this Agreement
or under any of the other Loan Documents.

 

(b)           If the Company is required by any applicable Legal
Requirement to make any deduction or withholding for or on account of any Tax
from any payment to be made by it under this Agreement in respect of the Loans
or under any other Loan Documents, then the Company shall (i) promptly
notify the applicable Lender hereunder that is entitled to such payment of such
requirement to so deduct or withhold such Tax, (ii) pay to the relevant
authorities the full amount required to be so deducted or withheld, (iii) promptly
forward to such Lender an official receipt (or certified copies thereof), or
other documentation reasonably acceptable to such Lender, evidencing such
payment to such Governmental Authorities and (iv) if such Tax is an Indemnifiable
Tax, pay, to the extent permitted by law, to such holder, in addition to
whatever net amount of such payment is paid to such Lender, such additional
amount as is necessary to ensure that the total amount actually received by
such Lender (free and clear of Indemnifiable Tax) will equal the full amount of
the payment such Lender would have received had no such deduction or
withholding been required.  If the
Company pays any additional amount to a Lender pursuant to the preceding
sentence and such Lender shall receive a refund of an Indemnifiable Tax with
respect to which, in the good faith opinion of such Lender, such payment was
made, such Lender shall pay to the Company the amount of such refund promptly
upon receipt thereof.

 

(c)           In the event that any Governmental Authority notifies the
Company that it has improperly failed to withhold or deduct any Tax from a
payment received by any Lender under this Agreement, the Company shall timely
and fully pay such Tax to such Governmental Authority and such Lender shall,
upon receipt of written notice of such payment, immediately pay to the Company,
an amount necessary in order that the amount of such payment to the Company
after payment of all Taxes with respect to such payment, shall equal the amount
that the Company paid to such Governmental Authority pursuant to this clause
(c).

 

(d)           Each Lender shall, upon request by the Company, take
requested measures to mitigate the amount of Indemnifiable Tax required to be
deducted or withheld from any payment made by the Company under this Agreement
or under any other Loan Documents if such measures can, in the sole and
absolute opinion of such Lender, be taken without such Lender suffering any
economic, legal, regulatory or other disadvantage (provided,
however, that no such Lender shall be required to designate a funding office
that is not located in the United States of America).

 

Section 9.18  Waiver of Claims.  The Company hereby waives and releases the
Agent and all Lenders from any and all claims or causes of action which the
Company may own, hold or claim in respect of any of them as of the date hereof.

 

Section 9.19  Right of Setoff.  Upon the occurrence and during the
continuance of any Event of Default, the Lenders each are hereby authorized at
any time and from time to time, without notice to the Company or any of the
Guarantors (any such notice being expressly waived by the Company and by the
Guarantors by their execution of a Guaranty or a Joinder Agreement), to setoff
and apply any 

 

65

 

and all deposits (general or special, time or
demand, provisional or final, whether or not such setoff results in any loss of
interest or other penalty, and including without limitation all certificates of
deposit) at any time held, and any other funds or property at any time held,
and other Indebtedness at any time owing by such Lender to or for the credit or
the account of the Company or any such Guarantor against any and all of the
Indebtedness arising in connection with this Agreement irrespective of whether
or not such Lender will have made any demand under this Agreement, the Notes or
any other Loan Document.  Each of the
Company and the Guarantors (by their execution of a Guaranty or a Joinder
Agreement) also hereby grants to each of the Lenders a security interest in and
hereby transfers, assigns, sets over, and conveys to each of the Lenders, as
security for payment of all Loans and Letter of Credit Exposure Amount, all
such deposits, funds or property of the Company or any such Guarantor or
Indebtedness of any Lender to the Company or any such Guarantor.  Should the right of any Lender to realize
funds in any manner set forth hereinabove be challenged and any application of
such funds be reversed, whether by court order or otherwise, the Lenders shall
make restitution or refund to the Company pro rata in accordance with their
respective Commitment Percentages.  Each
Lender agrees to promptly notify the Company and the Agent after any such
setoff and application, provided that the failure to give such notice will not
affect the validity of such setoff and application.  The rights of the Agent and the Lenders under
this Section are in addition to other rights and remedies (including
without limitation other rights of setoff) which the Agent or the Lenders may
have.  This Section is subject to
the terms and provisions of Section 2.12 hereof.

 

Section 9.20  USA PATRIOT Act.  Each Lender that is subject to the
requirements of the USA PATRIOT Act (Title III of Pub.  L. 
107-56 (signed into law October 26, 2001)) (the “Act”) hereby notifies
the Company that pursuant to the requirements of the Act, it is required to
obtain, verify and record information that identifies the Company, which
information includes the name and address of the Company and other information
that will allow such Lender to identify the Company in accordance with the Act,
and such notice is sufficient as to each such Lender.  The Company shall, and shall cause each of its
Subsidiaries to, provide to the extent commercially reasonable, such
information and take such actions as are reasonably requested by the Agent or
any Lender in order to assist the Agent and the Lenders in maintaining
compliance with the Act.

 

Section 9.21  Non-Consenting Lenders;
Other Lenders.  If at any
time, any Lender becomes a Non-Consenting Lender or makes a demand for
increased costs or a withholding tax gross-up under Section 2.10 or Section 9.17,
then the Company may, at its sole cost and expense, on five Business Days’
prior written notice to the Agent and such Lender, replace such Lender by
causing such Lender to (and such Lender shall be obligated to) assign pursuant
to Section 9.11 all of its rights and obligations under this Agreement to
one or more Eligible Assignees; provided
that neither the Agent nor any Lender shall have any obligation to the Company
to find a replacement Lender or other such Person; provided, further, that such Non-Consenting Lender or other
Lender shall be entitled to receive the full outstanding principal amount of
Loans so assigned, together with accrued interest and fees payable in respect
of such Loans as of the date of such assignment and any other costs payable to
such Lender under this Agreement.

 

Section 9.22  Confidentiality.  Neither the Agent nor any Lender shall
disclose any Confidential Information to any Person without the prior written
consent of the Company, other than (a) to such Agent’s or such Lender’s
Affiliates and their officers, directors, employees, agents and advisors and to
actual or prospective Eligible Assignees and participants, and then only on a
confidential basis, (b) as required by any law, rule or regulation or
judicial process, provided that
to the extent practicable and permitted by applicable law, the party requested
to disclose any information will provide prompt written notice of such request
to the Company, will allow the Company a reasonable opportunity to seek
appropriate protective measures prior to disclosure (at the Company’s sole cost
and expense), (c) as requested or required by any state, federal or
foreign authority or examiner (including the National

 

66

 

Association of Insurance Commissioners or any
similar organization or quasi-regulatory authority) regulating such Lender, (d) to
any rating agency when required by it, provided
that, prior to any such disclosure, such rating agency shall undertake to preserve
the confidentiality of any Confidential Information relating to the Loan
Parties received by it from such Lender, (e) to the extent reasonably
necessary after consultation with counsel, in connection with any litigation or
proceeding to which the Agent or such Lender or any of its Affiliates may be a
party, provided that, to the
extent reasonably practicable, the party requested to disclose any such
information will provide prompt written notice of such request to the Company
and will allow the Company a reasonable opportunity to seek appropriate
protective measures prior to such disclosure) or (f) in connection with
the exercise of any right or remedy under this Agreement or any other Loan
Document.

 

Section 9.23  Termination of Existing
Revolving Credit Facility.   
Reference is hereby made to that certain Third Amended and Restated
Credit Agreement dated effective October 1, 2004 by and between the
Borrower, the Agent and the financial institutions that are parties thereto as
a “Lender” (collectively the “Existing Facility Lenders”), as previously
amended pursuant to the terms of that certain First Amendment of Third Amended
and Restated Credit Agreement dated effective November 7, 2005, executed
by and among the Borrower, the Agent and the Existing Facility Lenders, and
that certain Second Amendment of Third Amended and Restated Credit Agreement
dated effective December 15, 2006, executed by and among the Borrower, the
Agent and the Existing Facility Lenders (said Third Amended and Restated Credit
Agreement, as now or hereafter amended, modified, restated, and supplemented
from time to time, shall hereinafter be collectively referred to as the “Existing
Facility Credit Agreement”).   By their
execution and delivery of this Agreement, the Borrower, the Agent and the
Existing Facility Lenders agree that (a) as of the Effective Date, the
Aggregate Commitment (as defined in the Existing Facility Credit Agreement) has
been permanently terminated, (b) the Agent and the Existing Facility
Lenders have no further commitments or other obligations under the terms of the
Existing Facility Credit Agreement, and (c) except for indemnification
obligations that survive the termination of the Existing Facility Credit
Agreement, the Borrower has no further obligations under the terms of the
Existing Facility Credit Agreement.

 

[THE
REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.]

 

67

 

IN WITNESS WHEREOF, the
parties hereto have executed this Agreement as of the date set forth above.

 

 

	
   

  	
  WHOLE FOODS MARKET, INC.,
  as the Company

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Glenda Chamberlain

  
	
   

  	
   

  	
  Title: 

  	
  Exec. Vice President

  

 

Whole Foods Market, Inc. – Revolving Credit Agreement Signature Page

 

 

	
   

  	
  JPMORGAN CHASE BANK, N.A.,
  as the Agent

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Joe E. Holt

  
	
   

  	
   

  	
  Title:

  	
  Chairman – Austin Region

  

 

 

	
   

  	
  JPMORGAN CHASE BANK, N.A.,
  as Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Joe E. Holt

  
	
   

  	
   

  	
  Title: 

  	
  Chairman – Austin Region

  

 

Whole Foods Market, Inc. – Revolving Credit Agreement Signature Page

 

 

	
   

  	
  ROYAL BANK OF CANADA, as
  Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

Whole
Foods Market, Inc. – Revolving Credit Agreement Signature Page

 

 

	
   

  	
  Wells Fargo Bank, N.A., as
  Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Susan L. Coulter

  
	
   

  	
   

  	
  Title: 

  	
  Vice President

  

 

Whole
Foods Market, Inc. – Revolving Credit Agreement Signature Page

 

 

	
   

  	
  LaSalle Bank Midwest

  
	
   

  	
  National Association, as
  Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Matthew R. Klein

  
	
   

  	
   

  	
  Title:

  	
  Assistant Vice President

  

 

Whole
Foods Market, Inc. – Revolving Credit Agreement Signature Page

 

 

	
   

  	
  Wachovia Bank, N.A., as
  Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Beth Rue

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  

 

Whole
Foods Market, Inc. – Revolving Credit Agreement Signature Page

 

 

	
   

  	
  Fortis Capital, as Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Gill Dickson

  
	
   

  	
   

  	
  Title:

  	
  Director

  

 

 

	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Timothy Streb

  
	
   

  	
   

  	
  Title:

  	
  Managing Director

  

 

Whole
Foods Market, Inc. – Revolving Credit Agreement Signature Page

 

 

	
   

  	
  US Bank, N.A., as Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Patrick McGraw

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  

 

Whole
Foods Market, Inc. – Revolving Credit Agreement Signature Page

 

 

	
   

  	
  Bank of America, N.A., as
  Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Thomas J. Kane

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice President

  

 

Whole
Foods Market, Inc. – Revolving Credit Agreement Signature Page

 

 

EXHIBIT A

 

FORM OF

REVOLVING NOTE

 

	
  $                            ,

  	
                              ,
  2007

  

 

FOR VALUE RECEIVED, WHOLE FOODS MARKET, INC. (herein
called “Company”), a Texas corporation, promises to pay to the order of
                                    
(herein called “Payee”), at the account specified by the Payee or at
such other place as the Payee may hereafter designate in writing, in
immediately available funds and in lawful money of the United States of
America, the principal sum of                           
Dollars ($
                      )
(or the unpaid balance of all principal advanced against this Revolving Note,
if that amount is less), together with interest on the unpaid principal balance
of this Revolving Note from time to time outstanding until maturity at the rate
or rates provided for in the Revolving Credit Agreement referred to below and
interest on all past due amounts, both principal and accrued interest, at the
Past Due Rate.

 

This Revolving Note has been issued pursuant
to the terms of, and is entitled to the benefits of, the Revolving Credit
Agreement, dated as of [                      ], 2007 (as the same may be amended, restated, modified or
supplemented from time to time, the “Revolving Credit Agreement”), by
and among the Company, JPMorgan Chase Bank, N.A., as administrative agent (in
such administrative capacity, the “Agent”), JPMorgan Chase Bank, N.A.,
as collateral agent, Royal Bank of Canada , as syndication agent, Payee and
certain other signatory financial institutions named therein or which may be a
party thereto from time to time, to which reference is made for all
purposes.  Advances against this
Revolving Note by Payee or other holders hereof, payments and prepayments hereunder
and acceleration hereof shall be governed by the Revolving Credit
Agreement.  Capitalized words and phrases
used herein and not defined herein and which are defined in the Revolving
Credit Agreement shall have the same meanings herein as are ascribed to them in
the Revolving Credit Agreement.

 

The unpaid principal balance of this
Revolving Note at any time shall be the total of all principal lent or advanced
against this Revolving Note less the sum of all principal payments and
permitted prepayments made on this Revolving Note by or for the account of
Company.  All Loans and advances and all
payments and permitted prepayments made hereon may be endorsed by the holder of
this Revolving Note on the schedule which is attached hereto (and hereby made a
part hereof for all purposes) or otherwise recorded in the holder’s records; provided,
that any failure to make notation of (a) any advance shall not cancel,
limit or otherwise affect Company’s obligations or any holder’s rights with
respect to that advance, or (b) any payment or permitted prepayment of
principal shall not cancel, limit or otherwise affect Company’s entitlement to
credit for that payment as of the date received by the holder.

 

Company and any and all
co-makers, endorsers, guarantors and sureties severally waive notice
(including, but not limited to, notice of intent to accelerate and notice of
acceleration, notice of protest and notice of dishonor), demand, presentment
for payment, protest, diligence in collecting and the filing of suit for the
purpose of fixing liability and consent that the time of payment hereof may be
extended and re-extended from time to time without notice to any of them.  Each such person agrees that his, her or its
liability on or with respect to this Revolving Note shall not be affected by
any release of or change in any guaranty or security at any time existing or by
any failure to perfect or maintain perfection of any lien against or security
interest in any such security or the partial or complete unenforceability of
any guaranty or other surety obligation, in each case in whole or in part, with
or without notice and before or after maturity.

 

 

This
Revolving Note shall be governed by, and construed in accordance with, the laws
of the State of New York.

 

 

	
   

  	
  WHOLE
  FOODS MARKET, INC.

  
	
   

  	
  a
  Texas corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 

LOANS AND PAYMENTS OF
PRINCIPAL

 

	
  Date

  	
   

  	
  Amount of Loan

  	
   

  	
  Amount of

  Principal Paid or

  Prepaid

  	
   

  	
  Unpaid Principal

  Balance

  	
   

  	
  Notation Made By

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

EXHIBIT B

 

NOTICE OF ASSUMPTION

 

Reference is made to that certain Revolving Credit
Agreement dated as of
                      ,
2007 (as the same may have heretofore been amended, restated, modified and
supplemented from time to time, the “Revolving Credit Agreement”), by
and among Whole Foods Market, Inc., certain financial institutions from
time to time a party thereto, JPMorgan Chase Bank, N.A., in its capacity as
administrative agent on behalf of said financial institutions (in such
capacity, the “Agent”), JPMorgan Chase Bank, N.A., as collateral agent,
and Royal Bank of Canada, as syndication agent. 
Terms used herein and not defined herein shall have the same meanings
herein as are ascribed to them in the Revolving Credit Agreement.

 

[Pursuant to Section 6.4(x) of the
Revolving Credit Agreement, the undersigned Subsidiary hereby gives notice to
the Agent that [the entities listed on Exhibit A attached hereto
and incorporated herein by reference (the “Merged Guarantors”) have] [                  
(the “Merged Guarantor”), a
                    
corporation, has] been merged into the undersigned Subsidiary effective as of
                    
, 20       and the undersigned Subsidiary is the
surviving Business Entity.  The
undersigned Person is liable for, and does hereby assume all of, the
obligations of the Merged Guarantor[s] under the Guaranties and the
Contribution Agreement and shall be a “Guarantor” thereunder for all purposes.]

 

[Pursuant to Section 6.4(y) of the
Revolving Credit Agreement, the undersigned Subsidiary (the  “Transferor
Subsidiary Guarantor”) hereby gives notice to the Agent that the
undersigned has acquired, purchased, leased or received all of the Stock and/or
assets of [                                    ] (the “Transferee Subsidiary Guarantor”) effective
as of
                    
, 20      . 
The undersigned does hereby assume and is hereby liable for, all of the
obligations of the Transferor Subsidiary Guarantor under the Guaranties and the
Contribution Agreement and shall be a “Guarantor” thereunder for all purposes.]

 

EXECUTED the      day of
                    ,
20      .

 

	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  

 

[Attachment: Exhibit A - List of Merged
Guarantors]

 

 

EXHIBIT C

 

OFFICER’S CERTIFICATE

 

Date:                 

 

JPMorgan Chase Bank, N.A.

221 W. 6th Street, Austin, Texas 78701

Mail Code TX3-8229

Fax: 512-479-2814

Attention: 
Manager, Commercial Lending Group

 

Re:       Financial
Statements Required under Revolving Credit Agreement (as the same may have been
amended, modified and restated from time to time, the “Revolving Credit
Agreement”) dated as of
                                ,
2007, by and among Whole Foods Market, Inc., the financial institutions or
party thereto from time to time, JPMorgan Chase Bank, N.A., as Administrative
Agent and Collateral Agent, and Royal Bank of Canada, as Syndication Agent.

 

Ladies and Gentlemen:

 

Reference is made to the above referenced Revolving
Credit Agreement.  Capitalized words and
phrases used herein and not defined herein and defined in the Revolving Credit
Agreement are used herein with the same meanings as are assigned to them in the
Revolving Credit Agreement.

 

The undersigned hereby certifies, warrants and
represents to the addressee named above that:

 

(1)  He or she is the duly appointed and
acting(1)                     
of the Company;

 

[Use
following paragraph 1 for fiscal year-end financial statements]

 

(2)  This
Certificate is delivered in conjunction with the Annual Audited Financial
Statements of the Company and its Subsidiaries for the fiscal year of the
Company ended as of                                 ,
20      , together with the annual audit report
and opinion of an independent certified public accountant for such fiscal year
that are required to be delivered by Section 5.2(a) of the
Revolving Credit Agreement.  Each such
document referred to herein is currently available on the website of the
Securities and Exchange Commission at http://www.sec.gov.

 

[Use
following paragraph 1 for fiscal quarter-end financial statements]

 

(2)  This Certificate is delivered in
conjunction with the consolidated Quarterly Unaudited Financial Statements of
the Company and its Subsidiaries required by Section 5.2(b) of
the Revolving Credit Agreement for the fiscal quarter of the Company ended as
of the above date.  Each such document
referred to herein is currently available on the website of the Securities and
Exchange Commission at http://www.sec.gov.

 

(3)  Based on my knowledge, the financial
statements do not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading with
respect to the period covered by the financial statements.

 

(1)  Must be the chief executive
officer, president, chief operating officer or chief financial officer of the
Company.

 

 

(4)  As of the end of the period covered by the
attached financial statements:

 

(a)  LEVERAGE RATIO:

 

	
  (i)

  	
  Funded
  Indebtedness: $

  	
   

  
	
   

  	
   

  	
   

  
	
  (ii)

  	
  EBIT
  of the Company and its Subsidiaries for the Rolling Four Quarters:

  	
  $             

  
	
   

  	
   

  	
   

  
	
  (iii)

  	
  Depreciation,
  depletion, obsolescence and amortization of the Company and its Subsidiaries
  for the Rolling Four Quarters:

  	
  $               

  
	
   

  	
   

  	
   

  
	
  (iv)

  	
  EBITDA
  for the Rolling, Four Quarters (the sum of (ii) plus (iii)):

  	
  $                

  
	
   

  	
   

  	
   

  
	
  (v)

  	
  Required
  Leverage Ratio (not more than):

  	
  3.00 to 1.00

  
	
   

  	
   

  	
   

  
	
  (vi)

  	
  Actual
  Leverage Ratio: ((i) to (iv))

  	
            to 1.00

  

 

(b)  FIXED CHARGE COVERAGE RATIO:

 

	
  (i)

  	
  EBIT
  for the Rolling Four Quarters (see a(ii) above)  

  	
  $              

  
	
   

  	
   

  	
   

  
	
  (ii)

  	
  Operating
  Lease Expense for the Rolling Four Quarters:(2)

  	
  $              

  
	
   

  	
   

  	
   

  
	
  (iii)

  	
  (i) plus
  (ii) =

  	
  $              

  

 

	
  (2)

  	
  For
  the fiscal quarter ended (i) September 30, 2007, such amount shall
  equal such item for such fiscal quarter multiplied by 52/13,
  (ii) January 20, 2008, such amount to equal such item for such
  fiscal quarter multiplied by 52/29, and (iii) April 30, 2008, such
  amount to equal such item for such fiscal quarter multiplied by 52/41.

  

 

 

 

	
  (iv)

  	
  Interest
  expense for the Rolling Four Quarters:(3)

  	
  $              

  
	
   

  	
   

  	
   

  
	
  (v)
  

  	
  Operating
  Lease Expense for the Rolling Four Quarters (see b(ii)):

  	
  $              

  
	
   

  	
   

  	
   

  
	
  (vi)
  

  	
  Fixed
  Charge Coverage Ratio for the applicable period (iii) to the sum of
  (iv) and (v):

  	
          
  to 1.00

  
	
   

  	
   

  	
   

  
	
  (vii)
  

  	
  Required
  Fixed Charge Coverage Ratio for the Applicable period (not less than):

  	
  1.50 to 1.00

  

 

(c)  RESTRICTED
PAYMENTS:

 

	
  (i)
  

  	
  Aggregate
  cost paid by Company for Stock redeemed or repurchased on or after
  [             , 2007]:

  	
  $                    

  
	
   

  	
   

  	
   

  
	
  (ii)

  	
  Aggregate
  cash dividends paid by Company to owners of Stock on or after
  [                ,
  2007]:

  	
  $                    

  
	
   

  	
   

  	
   

  
	
  (iii)

  	
  Amount
  of permitted “restricted payments” described in (i) & (ii) (See
  Section 6.11):

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (A)

  	
  Initial
  threshold — $[150,000,000]

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (B)

  	
  [50]% of the aggregate of Net Income, depreciation,
  amortization and non-cash stock compensation expense of the Company and its
  Subsidiaries, on a consolidated basis, for each fiscal quarter of the Company
  ending after [                        ,
  2007] —
  $                  

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (C)

  	
  Sum
  of (A) & (B):

  	
  $                  .

  

 

(4)  (Check either (a) or
(b) )

 

	
  (3)

  	
  For
  the fiscal quarter ended (i) September 30, 2007, such amount shall
  equal such item for such fiscal quarter multiplied by 52/13,  (ii) January 20, 2008, such
  amount to equal such item for such fiscal quarter multiplied by 52/29, and
  (iii) April 30, 2008, such amount to equal such item for such
  fiscal quarter multiplied by 52/41.

  

 

 

(a)                    The Company has kept,
observed, performed and fulfilled each and every one of its covenants and
obligations under the Revolving Credit Agreement during the period covered by
the attached financial statements and no Default or Event of Default has
occurred and is continuing.

 

(b)                   The Company has kept, observed, performed and
fulfilled each and every one of the covenants and obligations under the
Revolving Credit Agreement during the period covered by the attached financial
statements except for the following matters: [Describe
all such defaults, specifying the nature, duration and status thereof and what
action the Company has taken or proposes to take with respect thereto].

 

(5)  The representations and warranties of the
Company contained in Article IV of the Agreement, or which are contained in
any document furnished at any time under or in connection with the Loan
Documents, are true and correct in all material respects on and as of the date
hereof, except to the extent that such representations and warranties
specifically refer to an earlier date, in which case they are true and correct
as of such earlier date, and except that for purposes of this Officer’s
Certificate, the representations and warranties contained in Section 4.2
of the Revolving Credit Agreement shall be deemed to refer to the most recent
statements furnished pursuant to clause (a) and (b), respectively, of
Section 5.2 of the Revolving Credit Agreement, including the statements in
connection with which this Officer’s Certificate is delivered.

 

 

	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

 

EXHIBIT D

 

[Company Letterhead]

 

REQUEST FOR EXTENSION OF
CREDIT

 

Date:                   

 

JPMorgan Chase Bank, N.A.

221 W. 6th Street, Austin, Texas 78701

Mail Code TX3-8229

Fax: 512-479-2814

Attention: 
Manager, Commercial Lending Group

 

Re:          Loan under
Revolving Credit Agreement dated as of
              ,
2007, by and among Whole Foods Market, Inc., a Texas corporation, the
financial institutions a party thereto from time to time, JPMorgan Chase Bank,
N.A., as Administrative Agent (in such capacity, the “Agent”), JPMorgan
Chase Bank, N.A., as Collateral Agent, and Royal Bank of Canada, as Syndication
Agent (as the same may have been amended, modified and/or restated from time to
time, the “Revolving Credit Agreement”).

 

Ladies and Gentlemen:

 

Reference is made to the above referenced Revolving
Credit Agreement.  Capitalized words and
phrases used herein but not defined herein which are defined in the Revolving
Credit Agreement are used herein with the same meanings as are ascribed to them
in the Revolving Credit Agreement.

 

The Company requests that a Loan be made under the
Revolving Credit Agreement in the amount of $[        ],000,000  and that such Loan be made on
                ,
2007, which is a Business Day, or in the case of a LIBOR Rate Borrowing, a
LIBOR Business Day (unless this request for a Loan is received by the Agent
after 12:00 noon in which case, then on the next to occur Business Day, or in
the case of a LIBOR Rate Borrowing, the next to occur LIBOR Business Day,
hereafter).

 

The Loan is to be an (check one)
[  ] Alternate Base Rate Borrowing [  ] LIBOR Rate Borrowing.  If the Loan is to be a LIBOR Rate Borrowing,
the LIBOR Interest Period is to be (check one)
[  ] one [  ] two [ 
] three [  ] six months.

 

 

The proceeds of the
advances should be disbursed to the following account:

 

[Bank]

[Bank Address]

[Account Name]

[Account Number]

[ABA#]

 

	
   

  	
  Very
  truly yours,

  
	
   

  	
   

  
	
   

  	
  WHOLE
  FOODS MARKET, INC., a Texas corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

 

EXHIBIT E

 

RATE SELECTION NOTICE

 

Whole Foods Market, Inc., a Texas corporation,
certain financial institutions signatory thereto (collectively, the “Lenders”),
JPMorgan Chase Bank, N.A., as Administrative Agent for and on behalf of the
Lenders, JPMorgan Chase Bank, N.A., as Collateral Agent and Royal Bank of
Canada, as Syndication Agent executed and delivered that certain Revolving
Credit Agreement (as amended, supplemented and restated, the “Revolving
Credit Agreement”) dated as of
                    ,
2007.  Any term used herein and not
otherwise defined herein shall have the meaning herein ascribed to it in the
Revolving Credit Agreement.

 

In accordance with the Revolving Credit Agreement,
the Company hereby notifies the Agent of the exercise of an Interest Option.

 

	
  A.

  	
  Current borrowing

  
	
   

  	
   

  
	
   

  	
  1.

  	
  Interest Option now in
  effect:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.

  	
  Amount:

  	
   

  	
  $                

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.

  	
  Expiration of current
  Interest Period, if applicable:

  	
   

  	
  ,
  200  

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  B.

  	
  Proposed borrowing

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.

  	
  Amount:

  	
   

  	
  $                

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.

  	
  Date Interest Option is to
  be effective: 

  	
            ,
  200   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.

  	
  Interest Option to be
  applicable (check one):

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  o

  	
  Alternate Base Rate

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  o

  	
  LIBOR Rate

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.

  	
  Interest period (check one
  if applicable):

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  o

  	
  1 month

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  o

  	
  2 months

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  o

  	
  3 months

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  o

  	
  6 months

  	
   

  	
   

  

 

 

The Company represents and warrants that the
Interest Option and the interest period (if applicable) selected above comply
with all provisions of the Revolving Credit Agreement and that there exists no
Event of Default or any event which, with the passage of time, the giving of
notice or both, would be an Event of Default.

 

	
   

  	
  WHOLE
  FOODS MARKET, INC., a Texas corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
  Date:            200   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
  *

  

 

* Must be the chief
executive officer, president, chief operating officer or chief financial
officer of the Company.

 

 

EXHIBIT F

 

FORM OF

ASSIGNMENT AND ACCEPTANCE

 

Dated:                  ,
200   

 

Reference is made to the Revolving Credit Agreement
dated as of              ,
2007 (as restated, amended, modified, supplemented and in effect from time to
time, the “Revolving Credit Agreement”), among Whole Foods Market, Inc.,
a Texas corporation (the “Company”), the financial institutions from
time to time a party thereto, JPMorgan Chase Bank, N.A., as Administrative
Agent (the “Agent”), JPMorgan Chase Bank, N.A., as Collateral Agent and
Royal Bank of Canada, as Syndication Agent. 
Capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned to such terms in the Revolving Credit
Agreement.  This Assignment and
Acceptance, between the Assignor (as set forth on Schedule I attached
hereto and made a part hereof by reference for all purposes) and the Assignee
(as set forth on Schedule I hereto and made a part hereof), is dated as of the
Effective Date (as set forth on Schedule I hereto attached).

 

1.  Each
Assignor hereby irrevocably sells and assigns to each Assignee without recourse
to the Assignor, and each Assignee hereby irrevocably purchases and assumes
from such Assignor without recourse to the Assignor, as of the Effective Date,
an undivided interest (the “Assigned Interest”) in and to all such
Assignor’s rights and obligations under the Revolving Credit Agreement
respecting the credit facility and only the credit facility provided for in the
Revolving Credit Agreement (the “Facility”), in a principal amount as
set forth on Schedule I.

 

2.  Each
Assignor (i) makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with the Revolving Credit Agreement or any other Loan
Document or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of the Revolving Credit Agreement, any other Loan Document
or any other instrument or document furnished pursuant thereto, other than that
it is the legal and beneficial owner of the interest being assigned by it
hereunder and that such interest is free and clear of any adverse claim; (ii) makes
no representation or warranty and assumes no responsibility with respect to the
financial condition of the Company or its Subsidiaries or the performance or
observance by the Company or its Subsidiaries of any of its respective
obligations under the Revolving Credit Agreement, any other Loan Document or
any other instrument or document furnished pursuant thereto; and (iii) attaches
the Revolving Note (if any) held by it and requests that the Agent exchange
such Revolving Note for a new Revolving Note payable to such Assignor (if such
Assignor has retained any interest in the Facility) and a new Revolving Note
payable to such Assignee in the respective amounts which reflect the assignment
being made hereby (and after giving effect to any other assignments which have
become effective on the Effective Date).

 

3.  Each
Assignee (i) represents and warrants that it is legally authorized to
enter into this Assignment and Acceptance and that it is an Eligible Assignee
(as that term is defined in the Revolving Credit Agreement); (ii) confirms
that it has received a copy of the Revolving Credit Agreement, together with
copies of the financial statements referred to in Section 4.2 thereof, or
if later the most recent financial statements delivered pursuant to Section 5.2
thereof, and such other documents and information as it has deemed appropriate
to make its own credit analysis; (iii) agrees that it will, independently
and without reliance upon the Agent, the Assignor or any other Lender and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
the Revolving Credit Agreement; (iv) appoints and authorizes the Agent to
take such action as agent on its behalf and to exercise such powers under the
Revolving Credit Agreement as are delegated to the Agent by the terms thereof,
together with such powers as are reasonably incidental thereto; (v) agrees
that it will be bound by the provisions of the Revolving Credit Agreement and
will 

 

 

perform in accordance with
its terms all the obligations which by the terms of the Revolving Credit
Agreement are required to be performed by it as a Lender; (vi) if such
Assignee is organized under the laws of a jurisdiction outside the United States,
attaches the forms prescribed by the Internal Revenue Service of the United
States certifying as to the Assignee’s exemption from United States withholding
taxes with respect to all payments to be made to the Assignee under the
Revolving Credit Agreement or such other documents as are necessary to indicate
that all such payments are subject to such tax at a rate reduced by an
applicable tax treaty, and (vii) has supplied the information requested on
the administrative questionnaire attached hereto as Exhibit A.

 

4.  Following
the execution of this Assignment and Acceptance, it will be delivered to the
Agent, together with a processing and recordation fee of $3,500, for acceptance
by it and the Company and recording by the Agent pursuant to Section 9.11 of
the Revolving Credit Agreement, effective as of the Effective Date (which
Effective Date shall, unless otherwise agreed to by the Agent in it sole and
absolute discretion, be at least five Business Days after the execution of this
Assignment and Acceptance).

 

5.  Upon such
acceptance and recording, from and after the Effective Date, the Agent shall
make all payments in respect of the Assigned Interest (including payments of
principal, interest, fees and other amounts) to such Assignee, whether such
amounts have accrued prior to the Effective Date or accrue subsequent to the
Effective Date.  Each Assignor and each
Assignee shall make all appropriate adjustments in payments for periods prior
to the Assignment Effective Date by the Agent or with respect to the making of
this assignment directly between themselves.

 

6.  From and
after the Effective Date, (i) each Assignee shall be a party to the
Revolving Credit Agreement and, to the extent provided in this Assignment and
Acceptance, have the rights and obligations of a Lender thereunder, and (ii) each
Assignor shall, to the extent provided in this Assignment and Acceptance,
relinquish its rights and be released from its obligations under the Revolving
Credit Agreement provided that such Assignor hereby represents and warrants
that restrictions set forth in Section 9.11 of the Revolving Credit
Agreement pertaining to the minimum amount of assignments has been satisfied.

 

7.  This
Assignment and Acceptance shall be governed by, and construed in accordance
with, the laws of the State of New York.

 

8.  This Assignment and Acceptance may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement.  Delivery of an executed
counterpart of Schedule I to this Assignment and Acceptance by
telecopier or electronic format shall be effective as delivery of an original
executed counterpart of this Assignment and Acceptance.

 

IN
WITNESS WHEREOF, the parties hereto have caused this Assignment and Acceptance
to be executed by their respective duly authorized officers on Schedule I
attached hereto.

 

[The remainder of this page is intentionally left blank.]

 

 

SCHEDULE 1

TO

ASSIGNMENT AND ACCEPTANCE

 

Effective Date:

 

                                          ,
2007(4)

 

Assignor

 

	
   

  	
                      ,
  as Assignor

  
	
   

  	
  [Type or print legal name
  of Assignor]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  Dated:
                      ,
  200   

  

 

(4)   This date should be no earlier than five Business
Days after the delivery of this Assignment and Acceptance to the Agent.

 

 

Assignee

 

	
   

  	
                        ,
  as Assignee

  
	
   

  	
  [Type or print legal name
  of Assignee]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  Dated:                     ,
  200  

  
	
   

  	
  Lending Office:

  

 

 

	
  Accepted:

  	
   

  
	
   

  	
   

  
	
  JPMORGAN
  CHASE BANK, N.A., as Agent

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  WHOLE
  FOODS MARKET, INC.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
  *

  	
   

  

 

*   Must be the chief executive officer, president,
chief operating officer or chief financial officer of the Company

 

 

SCHEDULE 1

TO

ASSIGNMENT AND ACCEPTANCE

 

	
  ASSIGNORS:

  	
   

  	
   

  	
   

  
	
  Percentage
  interest assigned 

  	
   

  	
   

  	
  %

  
	
  Aggregate
  outstanding principal amount of Revolving Loans assigned

  	
   

  	
  $

  	
   

  
	
  Principal amount
  of Revolving Note payable to Assignor

  	
   

  	
  $

  	
   

  

 

 

EXHIBIT G-A

 

FORM OF

SECURITY AGREEMENT A

 

(See Attached)

 

 

SECURITY AGREEMENT A

 

Dated [                      
    ], 2007

 

From

 

WHOLE FOODS MARKET, INC.,

 

as Grantor

 

- and -

 

the other Grantors referred to herein

 

as Grantors

 

to

 

JPMORGAN CHASE BANK, N.A.

 

as Collateral Agent

 

2

 

T  A  B
L  E  O  F  C  O  N  T  E  N
T  S

 

	
  Section

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  Section 1. Grant of Security

  	
   

  	
  1

  
	
   

  	
   

  	
   

  
	
  Section 2. Security for Obligations;
  Interpretation

  	
   

  	
  2

  
	
   

  	
   

  	
   

  
	
  Section 3. Grantors Remain Liable

  	
   

  	
  3

  
	
   

  	
   

  	
   

  
	
  Section 4. Representations and Warranties

  	
   

  	
  3

  
	
   

  	
   

  	
   

  
	
  Section 5. Further Assurances

  	
   

  	
  4

  
	
   

  	
   

  	
   

  
	
  Section 6. Post-Closing Changes

  	
   

  	
  4

  
	
   

  	
   

  	
   

  
	
  Section 7. Voting Rights; Dividends; Etc.

  	
   

  	
  4

  
	
   

  	
   

  	
   

  
	
  Section 8. Transfers and Other Liens;
  Additional Shares

  	
   

  	
  5

  
	
   

  	
   

  	
   

  
	
  Section 9. Collateral Agent Appointed
  Attorney-in-Fact

  	
   

  	
  5

  
	
   

  	
   

  	
   

  
	
  Section 10. Collateral Agent May Perform

  	
   

  	
  6

  
	
   

  	
   

  	
   

  
	
  Section 11. The Collateral Agent’s Duties

  	
   

  	
  6

  
	
   

  	
   

  	
   

  
	
  Section 12. Remedies

  	
   

  	
  8

  
	
   

  	
   

  	
   

  
	
  Section 13. Indemnity and Expenses

  	
   

  	
  9

  
	
   

  	
   

  	
   

  
	
  Section 14. Amendments; Waivers; Additional
  Grantors; Etc.

  	
   

  	
  9

  
	
   

  	
   

  	
   

  
	
  Section 15. Notices, Etc.

  	
   

  	
  9

  
	
   

  	
   

  	
   

  
	
  Section 16. Continuing Security Interest;
  Assignments under the Loan Agreements

  	
   

  	
  10

  
	
   

  	
   

  	
   

  
	
  Section 17. Release; Termination

  	
   

  	
  10

  
	
   

  	
   

  	
   

  
	
  Section 18. Execution in Counterparts

  	
   

  	
  10

  
	
   

  	
   

  	
   

  
	
  Section 19. Jurisdiction; Governing Law; Etc

  	
   

  	
  10

  

 

 

SCHEDULES

 

	
  Schedule I

  	
   

  	
  -

  	
   

  	
  Initial Pledged Equity and Initial Pledged Debt

  
	
  Schedule II

  	
   

  	
  -

  	
   

  	
  Location, Chief Executive Office, Place Where
  Agreements Are Maintained, Type Of Organization, Jurisdiction Of Organization
  And Organizational Identification Number

  
	
  Schedule III

  	
   

  	
  -

  	
   

  	
  Changes in Name, Location, Etc.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  EXHIBIT

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Exhibit A

  	
  -

  	
   

  	
   

  	
  Form of Security Agreement A Supplement

  

 

ii

 

SECURITY AGREEMENT A

 

SECURITY
AGREEMENT dated [                    
    ], 2007 made by WHOLE FOODS MARKET, INC., a Texas
corporation (the “Borrower”), and the other Persons listed on the signature pages hereof
(the Borrower and the Persons so listed being, collectively, the “Grantors”),
to JPMORGAN CHASE BANK, N.A. (“JPMorgan”), as collateral agent (in such
capacity, and together with any successor collateral agent appointed pursuant
to this Agreement, the “Collateral Agent”) for the Secured Parties (as defined
below).

 

PRELIMINARY STATEMENTS.

 

1.                                       The Borrower
has entered into a Term Loan Agreement dated as of August [ ], 2007 among
the Borrower, Royal Bank of Canada, as administrative agent for the lenders
from time to time parties thereto (together with its successors and assigns in
such capacity, the “Term Loan Administrative Agent”), JPMorgan Chase
Bank, N.A., as Collateral Agent and as syndication agent, and RBC Capital
Markets and J. P. Morgan Securities Inc., as joint lead arrangers and joint
bookrunners (said agreement, as it may hereafter be amended, restated,
supplemented or otherwise modified from time to time, being the “Term Loan
Agreement”).

 

2.                                       The Borrower
has entered into a Revolving Credit Agreement dated as of August [ ], 2007
among the Borrower, JPMorgan Chase Bank, N.A., as Collateral Agent and as
administrative agent for the lenders from time to time parties thereto
(together with its successors and assigns in such capacity, the “Revolving Loan
Administrative Agent”), Royal Bank of Canada,, as syndication agent, and J. P.
Morgan Securities Inc. and RBC Capital Markets, as joint lead arrangers and
joint bookrunners (said agreement, as it may hereafter be amended, restated,
supplemented or otherwise modified from time to time, being the “Revolving Loan
Agreement”). The Term Loan Agreement and the Revolving Loan Agreement shall
sometimes hereinafter be collectively referred to as the “Loan Agreements.”

 

3.                                       In
connection with the Term Loan Agreement, certain of the Grantors (other than
the Borrower) and other affiliated entities have executed and delivered a
Master Guaranty Agreement to the Term Loan Administrative Agent dated as of August [
], 2007, and in connection with the Revolving Loan Agreement, the Grantors
(other than the Borrower) and other affiliated entities have executed and
delivered a Master Guaranty Agreement to the Revolving Loan Administrative
Agent dated as of August [ ], 2007 (both of said Master Guaranty
Agreements, as each of the same may hereafter be amended, restated,
supplemented or otherwise modified from time to time, being the “Master Guaranty
Agreements”).

 

4.                                       It is a
condition precedent to the making of Loans by the Lenders under the Loan
Agreements that the Grantors shall have granted the security interest
contemplated by this Agreement. Each Grantor will derive substantial direct and
indirect benefit from the transactions contemplated by the Loan Agreements.

 

5.                                       Terms
defined in the Loan Agreements and not otherwise defined in this Agreement are
used in this Agreement as defined in the Loan Agreements. Further, unless
otherwise defined in this Agreement or in the Loan Agreements, terms defined in
Article 8 or 9 of the UCC (as defined below) are used in this Agreement as
such terms are defined in such Article 8 or 9. “UCC” means the Uniform
Commercial Code as in effect from time to time in the State of New York;
provided that, if perfection or the effect of perfection or non-perfection or
the priority of the security interest in any Collateral is governed by the
Uniform Commercial Code as in effect in a jurisdiction other than the State of New
York, “UCC” means the Uniform Commercial Code as in effect from time to time in
such other jurisdiction for purposes of the provisions hereof relating to such
perfection, effect of perfection or non-perfection or priority.

 

NOW,
THEREFORE, in consideration of the premises and in order to induce the Lenders
to make Loans under the Loan Agreements, each Grantor hereby agrees with the
Collateral Agent for the ratable benefit of the Secured Parties under each of
the Loan Agreements as follows:

 

Section 1. Grant of Security. Each Grantor
hereby grants to the Collateral Agent, for the ratable benefit of the lenders
from time to time party to either or both of the Loan Agreements (together with
the Collateral Agent, the Term Loan Administrative Agent and the Revolving Loan
Administrative Agent, the “Secured Parties”) ,

 

 

a security interest in such Grantor’s right, title and
interest in and to the following, in each case, as to each type of property
described below, whether now owned or hereafter acquired by such Grantor,
wherever located, and whether now or hereafter existing or arising
(collectively, the “Collateral”):

 

(a)  (i) 
all of such shares of capital stock, partnership interests, membership
interests in a limited liability company, beneficial interests in a trust or
other equity interests in any Person, or any obligations convertible into or
exchangeable for, or giving any Person a right, option or warrant to acquire,
such equity interests or such convertible or exchangeable obligations (any and
all such interests being the “Equity Interests”) owned by each Grantor,
including without limitation, the initial pledged equity listed in Part I
of Schedule I hereof, (the “Initial Pledged Equity”), and the
certificates, if any, representing any of the foregoing, and all dividends,
distributions, return of capital, cash, instruments and other property from
time to time received, receivable or otherwise distributed in respect of or in
exchange for any or all of the foregoing and all subscription warrants, rights
or options issued thereon or with respect thereto; provided that, notwithstanding anything contained herein to
the contrary, such Grantor shall not be required to pledge, and the terms “Pledged Equity” and “Collateral” used in this
Agreement shall not include, any Equity Interests in any foreign subsidiary
acquired, owned, or otherwise held by such Grantor, in each case, that, when
aggregated with all of the other shares of stock in such foreign Subsidiary
pledged by such Grantor, would result in more than 66% of the shares of stock
in such foreign Subsidiary being pledged to the Collateral Agent for the
benefit of the Secured Parties under this Agreement;

 

(ii)                                  all Equity Interests from time to time
acquired by each Grantor in any manner (such Equity Interests, together with
the Initial Pledged Equity, being the “Pledged Equity”), and the
certificates, if any, representing such additional Equity Interests, and all
dividends, distributions, return of capital, cash, instruments and other
property from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of such Equity Interests and all
subscription warrants, rights or options issued thereon or with respect
thereto;

 

(iii)                               all investment property (including, without
limitation, all (A) securities, whether certificated or uncertificated, (B) security
entitlements, (C) securities accounts, (D) commodity contracts and (E) commodity
accounts) in which such Grantor has now, or acquires from time to time
hereafter, any right, title or interest in any manner, and the certificates or
instruments, if any, representing or evidencing such investment property, and
all dividends, distributions, return of capital, interest, cash, instruments
and other property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such investment
property and all warrants, rights or options issued thereon or with respect
thereto.

 

(b)                                 all indebtedness from time to time owed
to such Grantor (such indebtedness being the “Pledged Debt”) including
without limitation, the initial pledged debt listed in Part II of Schedule
I hereof, (the “Initial Pledged Debt”) and all interest, cash,
instruments and other property from time to time received, receivable or
otherwise distributed in respect of or in exchange for any of all such
indebtedness.

 

(c)                                  all proceeds of, collateral for and
supporting obligations relating to, any and all of the foregoing (including,
without limitation, proceeds, collateral and supporting obligations that
constitute property of the types described in clause (a) and (b) of
this Section 1 and this clause (c)) and, to the extent not otherwise
included, all cash.

 

Notwithstanding the
foregoing, “Collateral”
shall not include and the Grantors shall not be deemed to have granted a
security interest in any property or agreement of such Grantor to the extent
(but only so long as) (x) the granting of a security interest thereunder
is prohibited by any applicable law or (y) is prohibited by, or
constitutes a breach or default under or results in the termination of or
requires any consent not obtained under, any contract, lease, license,
agreement, instrument or other document giving rise to such property, in each
case solely to the extent that such breach or default is not rendered
ineffective by the UCC or other applicable law or, in the case of any consent,
such consent is actually required to grant such security interest under
applicable law.

 

 

Section 2. Security for Obligations; Interpretation.
This Agreement secures, in the case of each Grantor, the payment of all
Indebtedness and other obligations of such Grantor now or hereafter existing
under any of the Loan Documents (as defined in each of the Loan Agreements),
whether direct or indirect, absolute or contingent, and whether for principal,
reimbursement obligations, interest, fees, premiums, penalties,
indemnifications, contract causes of action, costs, expenses or otherwise (all
such obligations being the “Secured Obligations”). Without limiting
the generality of the foregoing, this Agreement secures, as to each Grantor,
the payment of all amounts that constitute part of the Secured Obligations and
would be owed by such Grantor to any Secured Party under any of the Loan
Documents but for the fact that they are unenforceable or not allowable due to
the existence of a bankruptcy, reorganization or similar proceeding involving a
Loan Party.

 

Section 3. Grantors Remain Liable. Anything
herein to the contrary notwithstanding, (a) each Grantor shall remain
liable under the contracts and agreements included in or related to such
Grantor’s Collateral to the extent set forth therein to perform all of its
duties and obligations thereunder to the same extent as if this Agreement had
not been executed, (b) the exercise by the Collateral Agent of any of the
rights hereunder shall not release any Grantor from any of its duties or
obligations under the contracts and agreements included in or related to the
Collateral and (c) no Secured Party shall have any obligation or liability
under the contracts and agreements included in or related to the Collateral by
reason of this Agreement or any other Loan Document, nor shall any Secured
Party be obligated to perform any of the obligations or duties of any Grantor
thereunder or to take any action to collect or enforce any claim for payment.

 

Section 4. Representations and Warranties.
Each Grantor represents and warrants as follows:

 

(a)                                  As
of the date hereof, such Grantor’s exact legal name, location, chief executive
office, type of organization, jurisdiction of organization and organizational
identification number is set forth in Schedule II hereto. Within the
five years preceding the date hereof, such Grantor has not changed its name,
location, chief executive office, type of organization, jurisdiction of
organization or organizational identification number from those set forth in Schedule
II hereto except as set forth in Schedule III hereto.

 

(b)                                 Such
Grantor is the legal and beneficial owner of the Collateral granted or
purported to be granted by it pursuant to Schedule I hereof, free and
clear of any Lien, claim, option or right of others, except for the security
interest created under this Agreement or permitted under the Loan Agreements. Except
as permitted under the Loan Agreements, no effective financing statement or
other instrument similar in effect covering all or any part of such Collateral
or listing such Grantor or any trade name of such Grantor as debtor is on file
in any recording office, except such as may have been filed in favor of the
Collateral Agent relating to the Loan Documents, filings which have not been
authorized by the applicable Grantor or as otherwise permitted under the Loan
Agreements.

 

(c)                                  If
such Grantor is an issuer of Collateral, such Grantor confirms that it has
received notice of the security interest granted hereunder.

 

(d)                                 The
Pledged Equity pledged by such Grantor hereunder has been duly authorized and
validly issued and is fully paid and non-assessable. The Pledged Debt pledged
by such Grantor hereunder has been duly authorized, authenticated or issued and
delivered, is the legal, valid and binding obligation of the issuers thereof.

 

(e)                                  This
Agreement creates in favor of the Collateral Agent for the benefit of the
Secured Parties under the Loan Agreements a valid security interest in the
Collateral granted by such Grantor (to the extent such matter is governed by
the laws of the United States, or a jurisdiction located therein), securing the
payment of the Secured Obligations; all filings and other actions necessary to
perfect the security interest in the Collateral granted by such Grantor, to the
extent required hereunder, have been or will be timely made or taken and are,
or will be, in full force and effect (to the extent perfection can be
accomplished by such filing or action); such security interest is first
priority except for the Liens permitted by the Loan Agreements.

 

(f)                                    To
such Grantor’s knowledge, no material Governmental Authorization by, and no
notice to or filing with, any Governmental Authority or other third party is
required for the grant by such Grantor of the security interest granted
hereunder or for the execution, delivery or performance of this Agreement by
such Grantor.

 

 

Section 5. Further Assurances. (a) 
Each Grantor agrees that from time to time, at the expense of such Grantor, such
Grantor will promptly execute and deliver, or otherwise authenticate, all
further instruments and documents, and take all further action that may be
necessary or reasonably desirable, or that the Collateral Agent may reasonably
request, in order to perfect and maintain perfection of any pledge or security
interest granted or purported to be granted by such Grantor hereunder or to
enable the Collateral Agent to exercise and enforce its rights and remedies
hereunder with respect to any Collateral of such Grantor. Without limiting the
generality of the foregoing, each Grantor will promptly with respect to
Collateral of such Grantor: (i) execute or authenticate and file, or
authorize the Collateral Agent to file, such financing or continuation
statements, or amendments thereto, and as permitted by the terms of this
Agreement or otherwise with the Grantor’s consent, such other instruments or
notices, as may be necessary or desirable, or as the Collateral Agent may
reasonably request, in order to perfect and preserve the security interest
granted or purported to be granted by such Grantor hereunder; (ii) upon
the occurrence and during the continuance of an Event of Default, take all
action necessary to ensure that the Collateral Agent has control of Collateral
consisting of investment property as provided in Section 9-106 of the UCC;
and (iii) deliver to the Collateral Agent evidence that all other actions
that the Collateral Agent may deem reasonably necessary or desirable in order
to perfect and protect the security interest granted or purported to be granted
by such Grantor under this Agreement has been taken. Notwithstanding anything
to the contrary set forth in this Section 5 or in this Agreement, unless
an Event of Default shall have occurred and be continuing, the Grantors shall
not be required to take any action to perfect the security interests granted
under this Agreement in any Collateral other than (A) executing, authenticating
and filing, or authorizing the Collateral Agent to file, financing or
continuation statements, or amendments thereto, and (B) delivering any
certificated stock certificates (and blank stock powers) representing the
Pledged Equity.

 

(b)                                 Each
Grantor hereby authorizes the Collateral Agent to file one or more financing or
continuation statements, and amendments thereto, including, without limitation,
one or more financing statements indicating that such financing statements
cover the Collateral listed in Section 1 of this Agreement of such
Grantor, in each case without the signature of such Grantor, and regardless of
whether any particular asset described in such financing statements falls
within the scope of the UCC or the granting clause of this Agreement. A
photocopy or other reproduction of this Agreement shall be sufficient as a
financing statement where permitted by law. Each Grantor ratifies its
authorization for the Collateral Agent to have filed such financing statements,
continuation statements or amendments filed prior to the date hereof.

 

(c)                                  Upon
the occurrence and continuance of an Event of Default, upon the written request
of the Collateral Agent, each Grantor will furnish to the Collateral Agent from
time to time statements and schedules further identifying and describing the
Collateral of such Grantor and such other reports in connection with such
Collateral as the Collateral Agent may reasonably request, all in reasonable
detail.

 

Section 6. Post-Closing Changes. (a) 
No Grantor will change its name, type of organization, jurisdiction of organization,
organizational identification number or location from those set forth in Section 4(a) of
this Agreement without first giving at least 15 days’ prior written notice to
the Collateral Agent and taking all action reasonably required by the
Collateral Agent for the purpose of perfecting or protecting the security
interest granted by this Agreement. Each Grantor will hold and preserve its
records relating to the Collateral and will permit representatives of the
Collateral Agent at any reasonable time during normal business hours upon
reasonable advance notice to inspect and make abstracts from such records and
other documents. If any Grantor does not have an organizational identification
number and later obtains one, it will forthwith notify the Collateral Agent of
such organizational identification number.

 

Section 7. Voting Rights; Dividends; Etc. (a) 
So long as no Event of Default shall have occurred and be continuing:

 

(i)                                     Each
Grantor shall be entitled to exercise any and all voting and other consensual
rights pertaining to the Collateral of such Grantor or any part thereof for any
purpose.

 

(ii)                                  Each
Grantor shall be entitled to receive and retain any and all dividends, interest
and other distributions paid in respect of the Collateral of such Grantor if
and to the extent that the payment thereof is not otherwise prohibited by the
terms of the Loan Documents, provided,
however, that any and all
dividends and other distributions paid or payable in cash in

 

 

respect of any
Collateral in connection with a partial or total liquidation or dissolution or
in connection with a reduction of capital, capital surplus or paid-in-surplus
shall be received in trust for the benefit of the Collateral Agent, be
segregated from the other property or funds of such Grantor and be forthwith
delivered to the Collateral Agent as Collateral in the same form as so received
(with any necessary indorsement), together with any instruments or certificates
evidencing all related Collateral (with any necessary indorsement).

 

(iii)                               The
Collateral Agent will execute and deliver (or cause to be executed and
delivered) to each Grantor all such proxies and other instruments as such
Grantor may reasonably request for the purpose of enabling such Grantor to
exercise the voting and other rights that it is entitled to exercise pursuant
to paragraph (i) above and to receive the dividends or interest
payments that it is authorized to receive and retain pursuant to
paragraph (ii) above.

 

(b)                                 Upon
the occurrence and during the continuance of an Event of Default:

 

(i)                                     All
rights of each Grantor (x) to exercise or refrain from exercising the
voting and other consensual rights that it would otherwise be entitled to
exercise pursuant to Section 7(a)(i) shall, upon five Business Days’
notice to such Grantor by the Collateral Agent, cease and (y) to receive
the dividends, interest and other distributions that it would otherwise be
authorized to receive and retain pursuant to Section 7(a)(ii) shall
automatically cease, and all such rights shall thereupon become vested in the
Collateral Agent, which shall thereupon have the sole right to exercise or
refrain from exercising such voting and other consensual rights and to receive
and hold as Collateral such dividends, interest and other distributions.

 

(ii)                                  All
dividends, interest and other distributions that are received by any Grantor
contrary to the provisions of paragraph (i) of this Section 7(b) shall
be received in trust for the benefit of the Collateral Agent, shall be
segregated from other funds of such Grantor and shall be forthwith paid over to
the Collateral Agent as Collateral in the same form as so received (with any
necessary indorsement), together with any instruments or certificates evidencing
all related Collateral (with any necessary indorsement).

 

Section 8. Transfers and Other Liens;
Additional Shares. Each Grantor agrees that:

 

(a)                                  It
will not (i) sell, assign or otherwise dispose of, or grant any option
with respect to, any of the Collateral, other than sales, assignments and other
dispositions of Collateral, and options relating to Collateral, permitted under
the terms of this Agreement or the Loan Agreements, or (ii) create or
suffer to exist any Lien upon or with respect to any of the Collateral of such
Grantor except for the pledge, assignment and security interest created under
this Agreement and Liens permitted under the Loan Agreements.

 

(b)                                 It
will (i) cause each issuer of the Pledged Equity pledged by such Grantor
not to issue any Equity Interests or other securities in addition to or in
substitution for the Pledged Equity issued by such issuer, except to such
Grantor or except as permitted by the Loan Agreements, and (ii) pledge
hereunder, immediately upon its acquisition (directly or indirectly) thereof,
any and all additional Equity Interests or other securities.

 

Section 9. Collateral Agent Appointed
Attorney-in-Fact. Each Grantor hereby irrevocably appoints the Collateral Agent
such Grantor’s attorney-in-fact (such appointment to cease upon the payment in
full of all the Secured Obligations other than contingent indemnification
claims as to which no demand has been made), with full authority in the place
and stead of such Grantor and in the name of such Grantor or otherwise, from
time to time, upon the occurrence and during the continuance of an Event of
Default, in the Collateral Agent’s reasonable discretion, to take any action
and to execute any instrument that the Collateral Agent may deem reasonably
necessary or advisable to accomplish the purposes of this Agreement, including,
without limitation:

 

 

(a)                                  to
ask for, demand, collect, sue for, recover, compromise, receive and give
acquittance and receipts for moneys due and to become due under or in respect
of any of the Collateral,

 

(b)                                 to
receive, indorse and collect any drafts or other instruments, documents and
chattel paper, in connection with clause (a) or (b) above, and

 

(c)                                  to
file any claims or take any action or institute any proceedings that the
Collateral Agent may deem necessary or desirable for the collection of any of
the Collateral or otherwise to enforce the rights of the Collateral Agent with
respect to any of the Collateral.

 

Section 10. Collateral Agent May Perform.
If any Grantor fails to perform any agreement contained herein, the Collateral
Agent may, as the Collateral Agent deems necessary to protect the security
interest granted hereunder in the Collateral or to protect the value thereof,
but without any obligation to do so and without notice, itself perform, or
cause performance of, such agreement, and the expenses of the Collateral Agent
incurred in connection therewith shall be payable by such Grantor under Section 13.

 

Section 11. The Collateral Agent’s Duties.
(a)  The powers conferred on the Collateral Agent hereunder are solely to
protect the Secured Parties’ interest in the Collateral and shall not impose
any fiduciary relationship or any duty upon it to exercise any such powers. Except
for the exercise of reasonable care in the safe custody of any Collateral in
its possession or in the possession of an Affiliate of the Collateral Agent or
any designee (including without limitation, a Subagent (as defined in clause (b) below))
of the Collateral Agent acting on its behalf and the accounting for moneys
actually received by it or its Affiliates hereunder in accordance with the
express terms hereof, the Collateral Agent shall have no fiduciary relationship
or other duty as to any Collateral, as to ascertaining or taking action with
respect to calls, conversions, exchanges, maturities, tenders or other matters
relative to any Collateral, whether or not any Secured Party has or is deemed
to have knowledge of such matters, or as to the taking of any necessary steps
to preserve rights against any parties or any other rights pertaining to any
Collateral. The Collateral Agent and any of its Affiliates or any designee
(including without limitation, a Subagent) on its behalf shall be deemed to
have exercised reasonable care in the custody and preservation of any
Collateral in its possession or in the possession of an Affiliate or any
designee (including without limitation, a Subagent) on its behalf if such
Collateral is accorded treatment substantially equal to that which it accords
its own property.

 

(b)                                 Anything
contained herein to the contrary notwithstanding, the Collateral Agent may from
time to time, when the Collateral Agent deems it to be necessary, appoint one
or more subagents (each a “Subagent”) for the
Collateral Agent hereunder with respect to all or any part of the Collateral. In
the event that the Collateral Agent so appoints any Subagent with respect to
any Collateral, (i) the assignment and pledge of such Collateral and the
security interest granted in such Collateral by each Grantor hereunder shall be
deemed for purposes of this Security Agreement A to have been made to such
Subagent, in addition to the Collateral Agent, for the ratable benefit of the
Secured Parties, as security for the Secured Obligations of such Grantor, (ii) such
Subagent shall automatically be vested, in addition to the Collateral Agent,
with all rights, powers, privileges, interests and remedies of the Collateral
Agent hereunder and pursuant to the terms hereof, with respect to such
Collateral, and (iii) the term “Collateral Agent,” when used herein in
relation to any rights, powers, privileges, interests and remedies of the
Collateral Agent with respect to such Collateral, shall include such Subagent; provided, however,
that no such Subagent shall be authorized to take any action with respect to
any such Collateral unless and except to the extent expressly authorized in
writing by the Collateral Agent.

 

(c)                                  Each
Secured Party by its acceptance thereof hereby appoints and authorizes the
Collateral Agent to take such action as agent on its behalf and to exercise
such powers hereunder and under the other Loan Documents as are specifically
delegated to the Collateral Agent by the terms of this Agreement and the Loan
Documents, together with such other powers as are reasonably incidental
thereto. The Collateral Agent shall not have any duties or responsibilities
except those expressly set forth in this Agreement and the Loan Documents.

 

(d)                                 As
to any matters not expressly provided for by the Loan Documents, the Collateral
Agent shall not be required to exercise any discretion or take any action, but
shall be required to act or to refrain from acting (and shall be fully
protected in so acting or refraining from acting) upon the written instructions
signed by the Term Loan Administrative Agent and the Revolving Loan
Administrative Agent provided, however, that the Collateral Agent shall not be
required to take any action that exposes the Collateral Agent to personal
liability or that

 

 

is contrary to
this Agreement or applicable law. The Collateral Agent shall in all cases be
fully protected in acting or refraining from acting under this Agreement or any
of the Loan Documents upon written directions signed by the Term Loan
Administrative Agent and the Revolving Loan Administrative Agent, except for
any such actions (or restraint of actions) which constitute gross negligence or
willful misconduct on the part of the Collateral Agent. Any such directions by
the Collateral Agent and any action taken by the Collateral Agent and any
failure by the Collateral Agent to act, in each case pursuant to such
directions, shall be binding on all the Secured Parties and their respective
successors and assigns. The Collateral Agent shall not be responsible to any
Secured Party for any recitals, statements, representations, or warranties
(other than any thereof made by the Collateral Agent or any officer thereof)
contained in this Agreement or in any of the Loan Documents, for the value,
validity, effectiveness, genuineness, enforceability, or sufficiency of this
Agreement, of any of the Loan Documents, or of the Collateral, or for the
creation, maintenance, priority or perfection of any Lien created by the Loan
Documents.

 

(e)                                  Subject
to the provisions of Section 11(d), the Collateral Agent may consult with
independent legal counsel and the advice of such counsel shall be full and
complete authorization and protection in respect of any action to be taken,
suffered, or omitted by it hereunder in good faith and in reliance thereon. The
Collateral Agent may execute any of the rights or powers hereunder or perform
any duties hereunder either directly or through other agents or attorneys
reasonably acceptable to the Required Lenders under each of the Loan
Agreements. The Collateral Agent shall not be liable for the misconduct or
negligence of any such agent or attorney appointed by it with due care. The
foregoing shall not exculpate any such agent or attorney from liability for its
own misconduct or negligence.

 

(f)                                    The
Collateral Agent, in its individual capacity and its affiliates may accept
deposits from, lend to, and generally engage in any kind of lending, banking,
or trust business with, any Grantor or their respective affiliates as if it
were not acting as the Collateral Agent. With respect to its commitment and in
its capacity as a Lender under each of the Loan Agreements, the Collateral
Agent shall have and may exercise the same rights and powers under this
Agreement and is subject to the same obligations and liabilities as applicable
to any other Lender.

 

(g)                                 To
the extent that Grantors fail to do so under the terms of the Loan Documents,
and without limiting the primary obligation of Grantors to do so, the Secured
Parties will reimburse the Collateral Agent upon demand and hold the Collateral
Agent, its directors, officers, employees, and agents harmless against any and
all losses, liabilities, or expenses incurred by the Collateral Agent arising
out of or in connection with any action taken pursuant to and consistently with
the express written direction of the applicable Secured Parties given under Section 11(d),
including any costs and expenses incurred in connection with any investigation,
suit (whether or not the Collateral Agent or any other such indemnified person
is named as a party thereto), or claim arising out of or related to such
action, in proportion to the respective principal amounts of the Indebtedness
under the Loan Agreements at the time held by them, provided, that no Secured
Party shall be liable under this Section 11(g) for any such losses,
liabilities, or expenses incurred by the Collateral Agent as a result of its
own breach of this Agreement, gross negligence or willful misconduct.

 

(h)                                 The
Collateral Agent may resign at any time by giving at least forty-five (45) days’
prior written notice of resignation to Grantors and each Secured Party, such
resignation to be effective upon the appointment of a successor Collateral
Agent as provided in this Section 11. The Collateral Agent may be removed
at any time, for or without cause, by an instrument or instruments in writing
delivered to the Collateral Agent and Grantors and signed by the Required
Lenders under both of the Loan Agreements. In case the office of Collateral
Agent shall become vacant for any reason, a successor Collateral Agent may be
appointed to fill such vacancy by an instrument or instruments in writing
delivered to such successor Collateral Agent, the departing Collateral Agent,
each Lender under any Loan Agreement and Grantors. After any such resignation
or removal, the provisions of this Section 11 shall continue in effect for
the benefit of the departing Collateral Agent with respect to any actions taken
or omitted by it while acting as Collateral Agent.

 

(i)                                     Any
corporation or national banking association into which the Collateral Agent may
be merged or with which it may be consolidated, or any corporation or national
banking association resulting from any merger or consolidation to which the
Collateral Agent is a party, or any state or national bank or trust company in
any manner succeeding to all or substantially all of the business of the
Collateral Agent and shall automatically succeed to all of the rights and
obligations of the Collateral Agent hereunder and under the Loan Documents
without

 

 

further action
on the part of any of the parties hereto. Such surviving or succeeding
corporation or national banking association (if other than the Collateral
Agent) shall forthwith deliver to each Secured Party and Grantors written
notice of such succession to the rights and obligations of the Collateral Agent
hereunder and under the Loan Documents.

 

Section 12. Remedies. If any Event of
Default shall have occurred and be continuing:

 

(a)                                  The
Collateral Agent may exercise in respect of the Collateral, in addition to
other rights and remedies provided for herein or otherwise available to it, all
the rights and remedies of a secured party upon default under the UCC and also
may: (i) without notice except as specified below, sell the Collateral or
any part thereof in one or more parcels at public or private sale, at any of
the Collateral Agent’s offices or elsewhere, for cash, on credit or for future
delivery, and upon such other terms as the Collateral Agent may in its
reasonable discretion deem commercially reasonable and (ii) exercise any
and all rights and remedies of any of the Grantors under or in connection with
the Collateral, or otherwise in respect of the Collateral, including, without
limitation, (A) any and all rights of such Grantor to demand or otherwise
require payment of any amount under, or performance of any provision of or
related to the Collateral and (B) exercise all other rights and remedies
with respect to the Collateral, including, without limitation, those set forth
in Section 9-607 of the UCC. Each Grantor agrees that, to the extent
notice of sale shall be required by law, at least ten days’ notice to such
Grantor of the time and place of any public sale or three days’ notice of the
time and place of any private sale shall constitute reasonable notification. The
Collateral Agent shall not be obligated to make any sale of Collateral
regardless of notice of sale having been given. The Collateral Agent may
adjourn any public or private sale from time to time by announcement at the
time and place fixed therefor, and such sale may, without further notice, be
made at the time and place to which it was so adjourned.

 

(b)                                 Any
cash held by or on behalf of the Collateral Agent and all cash proceeds
received by or on behalf of the Collateral Agent in respect of any sale of, collection
from, or other realization upon all or any part of the Collateral shall be held
by the Collateral Agent as collateral for, and/or then or at any time
thereafter applied (after payment of any amounts payable to the Collateral
Agent pursuant to Section 13) in whole or in part by the Collateral Agent
for the benefit of the Secured Parties against, all or any part of the Secured
Obligations in the following order, (i) first, on a pari passu basis, to all Secured
Obligations (excluding Secured Obligations arising under the terms of any
Credit Facility Hedging Agreements), comparing (1) the aggregate principal
amount of the then outstanding term loans under the Term Loan Agreement to (2) the
amount of the then effective Aggregate Commitment (as defined in the Revolving
Loan Agreement), if the Aggregate Commitment has not been terminated, or the
sum of the aggregate principal amount of the then outstanding revolving loans
under the Revolving Loan Agreement and the Letter of Credit Exposure Amount (as
defined in the Revolving Loan Agreement) then outstanding under the Revolving
Loan Agreement, if the Aggregate Commitment has been terminated; provided that the
amounts set forth in this clause (i) that will be given pari passu treatment as set forth above
shall be limited to amounts (of Aggregate Commitments and Loans under the Term
Loan Agreement and Aggregate Commitments or Loans and Letter of Credit Exposure
Amount under the Revolving Credit Agreement, or as applicable) which would not
give rise to an Event of Default arising under section 7.1(d) of the Term
Loan Agreement or the Revolving Credit Agreement as a result of a breach of
section 6.1(b) of the Term Loan Agreement or the Revolving Credit
Agreement, respectively and (ii) second, on a pari passu basis, to all Secured
Obligations arising under the terms of any Credit Facility Hedging Agreements).
Any surplus of such cash or cash
proceeds held by or on the behalf of the Collateral
Agent and remaining after payment in full of all the Secured Obligations (other
than contingent indemnification claims as to which no demand has been made)
shall be paid over to the applicable Grantor or to whomsoever may be lawfully
entitled to receive such surplus.

 

(c)                                  All
payments received by any Grantor under or in respect of the Collateral shall be
received in trust for the benefit of the Collateral Agent, shall be segregated
from other funds of such Grantor and shall be forthwith paid over to the
Collateral Agent in the same form as so received (with any necessary indorsement).

 

 

 

(d)                                 The
Collateral Agent is authorized, in connection with any sale of the Collateral
pursuant to this Section 12, to deliver or otherwise disclose to any
prospective purchaser of the Collateral any information in its possession
relating to such Collateral.

 

Section 13. Indemnity and Expenses.  (a)  Each Grantor agrees to indemnify,
defend and save and hold harmless each Secured Party and each of their
Affiliates and their respective officers, directors, employees, agents and
advisors (each, an “Indemnified
Party”) from and against, and shall pay on demand, any and all
actual claims, damages, losses, liabilities and out-of-pocket expenses
(including, without limitation, reasonable fees and expenses of counsel but
excluding special, indirect, punitive or consequential damages, whether arising
in tort, contract or otherwise) that may be incurred by or asserted or awarded
against any Indemnified Party, in each case arising out of or in connection
with or by reason of (including, without limitation, in connection with any
investigation, litigation or proceeding or preparation of a defense in
connection therewith) this Agreement, except to the extent such claim, damage,
loss, liability or expense is found in a final nonappealable judgment by a
court of competent jurisdiction to have resulted from such Indemnified Party’s
gross negligence or willful misconduct. 
In the case of an investigation, litigation or other proceeding to which
the indemnity in this Section 13(a) applies, such indemnity shall be
effective whether or not such investigation, litigation or proceeding is
brought by any Grantor, its directors, shareholders or creditors or any
Indemnified Party or any other Person, whether or not any Indemnified Party is
otherwise a party thereto and whether or not the Merger is consummated.  The Grantors also agree not to assert any
claim against the Collateral Agent, any Secured Party or any of their
Affiliates, or any of their respective officers, directors, employees, agents
and advisors, on any theory of liability, for special, indirect, consequential
or punitive damages arising out of or otherwise relating to the this Agreement.

 

(b)                                 Each
Grantor agrees to pay on demand (i) all reasonable out-of-pocket costs and
expenses of the Collateral Agent in connection with the preparation, execution,
delivery, administration, modification and amendment of, or any consent or
waiver under, this Agreement (including, without limitation, the reasonable
out-of-pocket fees and expenses of counsel for the Collateral Agent with respect
thereto, with respect to advising the Collateral Agent as to its rights and
responsibilities, or the perfection, protection or preservation of rights or
interests, under this Agreement, with respect to negotiations with any Grantor
or with other creditors of any Grantor or any of its Subsidiaries arising out
of any Default or any events or circumstances that may give rise to a Default
and with respect to presenting claims in or otherwise participating in or
monitoring any bankruptcy, insolvency or other similar proceeding involving
creditors’ rights generally and any proceeding ancillary thereto) and (ii) all
costs and expenses of the Collateral Agent and each Secured Party in connection
with the enforcement of this Agreement, whether in any action, suit or
litigation, or any bankruptcy, insolvency or other similar proceeding affecting
creditors’ rights generally (including, without limitation, the reasonable fees
and expenses of counsel for the Collateral Agent and each Secured Party with
respect thereto).

 

Section 14. Amendments; Waivers; Additional
Grantors; Etc.  (a)  No
amendment or waiver of any provision of this Agreement, and no consent to any
departure by any Grantor herefrom, shall in any event be effective unless the
same shall be in writing and signed by the Collateral Agent, the Term Loan
Administrative Agent and the Revolving Loan Administrative Agent and then such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given.  No
failure on the part of the Collateral Agent or any other Secured Party to
exercise, and no delay in exercising any right hereunder, shall operate as a
waiver thereof; nor shall any single or partial exercise of any such right
preclude any other or further exercise thereof or the exercise of any other
right.

 

(b)                                 Upon
the execution and delivery by any Person of a security agreement supplement in
substantially the form of Exhibit A hereto (each a “Security Agreement A
Supplement”), such Person shall be referred to as
an “Additional
Grantor” and shall be and become a Grantor hereunder, and each
reference in this Agreement and the other Loan Documents to “Grantor” shall
also mean and be a reference to such Additional Grantor, each reference in this
Agreement and the other Loan Documents to the “Collateral” shall also mean and
be a reference to the Collateral granted by such Additional Grantor and each
reference in this Agreement to a Schedule shall also mean and be a reference to
the schedules attached to such Security Agreement A Supplement.

 

Section 15. Notices, Etc.  All notices and other communications provided
for hereunder shall be in writing (including telecopier) and mailed, telecopied
or otherwise delivered, in the case of the Borrower or the Collateral Agent,
addressed to it at its address specified in the Loan Agreements and, in the
case of each Grantor 

 

 

other than the Borrower, addressed to it at its
address set forth opposite such Grantor’s name on the signature pages hereto
or on the signature page to the Security Agreement A Supplement pursuant
to which it became a party hereto; or, as to any party, at such other address
as shall be designated by such party in a written notice to the other
parties.  All such notices and other
communications shall, when mailed, telegraphed or telecopied, be effective when
deposited in the mails, delivered to the telegraph company or transmitted by
telecopier, respectively.  Delivery by
telecopier of an executed counterpart of a signature page to any amendment
or waiver of any provision of this Agreement of any Exhibit hereto to be
executed and delivered hereunder shall be effective as delivery of an original
executed counterpart thereof.  As agreed
to among the Borrower, the Collateral Agent and the applicable Secured Parties
from time to time, notices and other communications may also be delivered by
e-mail to the e-mail address of a representative of the applicable Person
provided from time to time by such Person.

 

Section 16. Continuing Security Interest;
Assignments under the Loan Agreements. 
This Agreement shall create a continuing security interest in the
Collateral and shall (a) remain in full force and effect until the payment
in full in cash of the Secured Obligations (other than contingent
indemnification obligations as to which no demand has been made), (b) be
binding upon each Grantor, its successors and assigns and (c) inure,
together with the rights and remedies of the Collateral Agent hereunder, to the
benefit of the Secured Parties and their respective successors, transferees and
assigns.  Without limiting the generality
of the foregoing clause (c), any Lender may assign or otherwise transfer
all or any portion of its rights and obligations under the applicable Loan
Agreement(s) (including, without limitation, all or any portion of the
Loans owing to it and the Note or Notes, if any, held by it) to any other
Person, and such other Person shall thereupon become vested with all the
benefits in respect thereof granted to such Lender herein or otherwise.

 

Section 17. Release; Termination.  (a)  Upon any sale, lease, transfer or
other disposition of any item of Collateral of any Grantor in accordance with
the terms of the Loan Documents, the Collateral Agent will, at such Grantor’s
expense, execute and deliver to such Grantor such documents as such Grantor
shall reasonably request to evidence the release of such item of Collateral
from the assignment and security interest granted hereby; provided, however,
that (i) at the time of such request and such release no Event of Default
shall have occurred and be continuing, (ii) such Grantor shall have
delivered to the Collateral Agent, prior to the date of the proposed release, a
written request for release describing the item of Collateral, together with a
form of release for execution by the Collateral Agent and a certificate of such
Grantor to the effect that the transaction is in compliance with the Loan
Documents and as to such other matters as the Collateral Agent may reasonably
request and (iii) the proceeds of any such sale, lease, transfer or other
disposition required to be applied, or any payment to be made in connection
therewith, in accordance with the terms of this Agreement.

 

(b)                                 Upon
the payment in full in cash of the Secured Obligations (other than contingent
indemnification obligations as to which no demand has been made), and the
termination of the Aggregate Commitment (as defined in each of the Loan
Agreements), the pledge and security interest granted hereby shall terminate
and all rights to the Collateral shall revert to the applicable Grantor.  Upon any such termination, the Collateral
Agent will, at the applicable Grantor’s expense, execute and deliver to such
Grantor such documents as such Grantor shall reasonably request to evidence
such termination.

 

Section 18. Execution in Counterparts.  This Agreement may be executed in any number
of counterparts and by different parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.  Delivery of an executed signature page of
this Agreement by facsimile transmission or electronic transmission (i.e., a “pdf”
or “tif”) shall be effective as delivery of an original executed counterpart of
this Agreement.

 

Section 19. Jurisdiction; Governing Law; Etc.  (a) Each of the parties hereto hereby
irrevocably and unconditionally submits, for itself and its property, to the
nonexclusive jurisdiction of any New York State court or Federal court of the
United States of America sitting in New York City, and any appellate court from
any thereof, in any action or proceeding arising out of or relating to this
Agreement or any of the other Loan Documents to which it is a party, or for
recognition or enforcement of any judgment, and each of the parties hereto
hereby irrevocably and unconditionally agrees that all claims in respect of any
such action or proceeding may be heard and determined in any such New York
State court or, to the fullest extent permitted by law, in such Federal
court.  Each of the parties hereto agrees
that a final judgment in any such action or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law.  Nothing in this
Agreement 

 

 

shall affect any right
that any party may otherwise have to bring any action or proceeding relating to
this Agreement or any of the other Loan Documents in the courts of any
jurisdiction.

 

(b)                                 EACH
OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST
EXTENT IT MAY LEGALLY AND EFFECTIVELY DO SO, ANY OBJECTION THAT IT MAY NOW
OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS
TO WHICH IT IS A PARTY IN ANY NEW YORK STATE OR FEDERAL COURT.  EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE DEFENSE OF AN INCONVENIENT
FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.

 

(c)                                  THIS
AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK.

 

(d)                                 EACH OF THE GRANTORS AND THE COLLATERAL
AGENT IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING
OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF
OR RELATING TO ANY OF THE LOAN DOCUMENTS, THE LOANS OR THE ACTIONS OF THE AGENT
OR ANY LENDER IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT
THEREOF.

 

[Rest of this page intentionally left blank.]

 

 

IN
WITNESS WHEREOF, each of the undersigned have caused this Agreement to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.

 

	
   

  	
  JPMORGAN
  CHASE BANK, N.A., AS

  
	
   

  	
   

  	
  COLLATERAL AGENT

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
  WHOLE
  FOODS MARKET, INC.

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
  Address for Notices:

  	
  [OTHER GRANTORS]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

Whole Foods Market, Inc.–
Security Agreement B

 

 

Schedule I to the

Security Agreement A

 

PLEDGED INTERESTS AND PLEDGED DEBT

 

Part I

 

 Initial Pledged Interests

 

 

	
  Grantor

  	
   

  	
  Issuer

  	
   

  	
  Class of Equity

  Interest

  	
   

  	
  Par Value

  	
   

  	
  Certificate

  No(s)

  	
   

  	
  Number

  of Shares

  	
   

  	
  Percentage

  of

  Outstanding

  Shares of the Same Class of Equity Interest

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

Part II

 

Initial Pledged Debt

 

	
  Grantor

  	
   

  	
  Debt

  Issuer

  	
   

  	
  Description of

  Debt

  	
   

  	
  Debt Certificate No(s).

  	
   

  	
  Final

  Scheduled

  Maturity

  	
   

  	
  Outstanding

  Principal

  Amount

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

Schedule II
to the

Security
Agreement A

 

LOCATION, CHIEF EXECUTIVE OFFICE, TYPE OF
ORGANIZATION, JURISDICTION OF ORGANIZATION AND ORGANIZATIONAL IDENTIFICATION
NUMBER

 

	
  Grantor

  	
   

  	
  Location

  	
   

  	
  Chief

  Executive

  Office

  	
   

  	
  Type of

  Organization

  	
   

  	
  Jurisdiction

  of

  Organization

  	
   

  	
  Organizational

  I.D. No.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

Schedule III
to the

Security
Agreement A

 

CHANGES IN NAME, LOCATION, ETC.

 

 

Exhibit A to the

Security Agreement A

 

FORM OF SECURITY
AGREEMENT SUPPLEMENT

 

[Date of Security Agreement A Supplement]

 

JPMORGAN
CHASE BANK, N.A.,

as the
Collateral Agent for the

Secured
Parties referred to in the

Loan
Agreements referred to below

                                        

                                        

Attn:                           

 

WHOLE FOODS MARKET, INC.

 

Ladies and Gentlemen:

 

Reference
is made to (i) the Term Loan Agreement dated as of August [ ], 2007
(as amended, amended and restated, supplemented or otherwise modified from time
to time, the “Term Loan Agreement”), among the Borrower, Royal Bank of
Canada, as administrative agent for the lenders from time to time parties
thereto, JPMorgan Chase Bank, N.A., and               
as [joint] syndication agent[s],                     
as documentation agent,                      
as managing agent and RBC Capital Markets and J. P. Morgan Securities Inc., as
joint lead arrangers and joint bookrunners (ii)  the Revolving Credit Loan
Agreement dated as of August [ ], 2007 (as amended, amended and restated,
supplemented or otherwise modified from time to time, the “Revolving Loan
Agreement”), among the Borrower, JPMorgan Chase Bank, N.A., as
administrative agent for the lenders from time to time parties thereto, Royal
Bank of Canada, as syndication agents, and J. P. Morgan Securities Inc. and RBC
Capital Markets, as joint lead arrangers and joint bookrunners, and (iii) the
Security Agreement A dated [                      
    ], 2007 (as amended, amended and restated, supplemented
or otherwise modified from time to time, the “Security Agreement A”) made by the
Grantors from time to time party thereto in favor of JPMorgan Chase Bank, N.A.
as collateral agent (together with any successor collateral agent, the “Collateral Agent”)
for the Secured Parties under the Term Loan Agreement and the Revolving Loan
Agreement (the Term Loan Agreement and the Revolving Loan Agreement being
sometimes hereinafter collectively referred to as the “Loan Agreements”).
Terms defined in the Loan Agreements or the Security Agreement A and not
otherwise defined herein are used herein as defined in the Loan Agreements or
the Security Agreement A.

 

SECTION 1. Grant of Security. The
undersigned hereby grants to the Collateral Agent, for the ratable benefit of
the Secured Parties under the Loan Documents, a security interest in, all of
its right, title and interest in and to all of the Collateral of the
undersigned, whether now owned or hereafter acquired by the undersigned,
wherever located and whether now or hereafter existing or arising, including,
without limitation, the property and assets of the undersigned set forth on the
attached supplemental schedules to the Schedules to the Security Agreement A.

 

SECTION 2. Security for Obligations. The
grant of a security interest in the Collateral by the undersigned under this
Security Agreement A Supplement and the Security Agreement A secures the
payment of all Indebtedness and other obligations of the undersigned now or
hereafter existing under or in respect of the Loan Documents, whether direct or
indirect, absolute or contingent, and whether for principal, reimbursement
obligations, interest, premiums, penalties, fees, indemnifications, contract
causes of action, costs, expenses or otherwise. Without limiting the generality
of the foregoing, this Security Agreement A Supplement and the Security
Agreement A secure the payment of all amounts that constitute part of the
Secured Obligations and that would be owed by the undersigned to any Secured
Party under the Loan Documents but for the fact that such Secured Obligations
are

 

 

unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving a Loan Party.

 

SECTION 3. Supplements to Security Agreement A
Schedules. The undersigned has attached hereto supplemental Schedules I
through III to Schedules I through III, respectively, to the Security
Agreement A, and the undersigned hereby certifies, as of the date first above
written, that such supplemental schedules have been prepared by the undersigned
in substantially the form of the equivalent Schedules to the Security Agreement
A and are complete and correct.

 

SECTION 4. Representations and Warranties.
The undersigned hereby makes each representation and warranty set forth in Section 4
of the Security Agreement A (as supplemented by the attached supplemental
schedules) to the same extent as each other Grantor.

 

SECTION 5. Obligations Under the Security
Agreement A. The undersigned hereby agrees, as of the date first above
written, to be bound as a Grantor by all of the terms and provisions of the
Security Agreement A to the same extent as each of the other Grantors. The
undersigned further agrees, as of the date first above written, that each
reference in the Security Agreement A to an “Additional Grantor” or a “Grantor”
shall also mean and be a reference to the undersigned.

 

SECTION 6. Governing Law. This Security
Agreement A Supplement shall be governed by, and construed in accordance with,
the laws of the State of New York.

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  [NAME OF ADDITIONAL GRANTOR]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  	
  Address
  for notices:

  
	
   

  	
   

  	
   

  

 

 

EXHIBIT G-B

 

FORM OF

SECURITY AGREEMENT B

 

(See Attached)

 

 

SECURITY AGREEMENT B

 

Dated [                      
    ], 2007

 

From

 

WHOLE FOODS MARKET, INC.,

 

as Grantor

 

- and -

 

the other Grantors referred to herein

 

as Grantors

 

to

 

JPMORGAN CHASE BANK, N.A.

 

as Collateral Agent

 

 

T  A  B
L  E  O  F  C  O  N  T  E  N
T  S

 

	
  Section

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  Section 1. Grant of Security

  	
   

  	
  2

  
	
   

  	
   

  	
   

  
	
  Section 2. Security for Obligations;
  Interpretation

  	
   

  	
  4

  
	
   

  	
   

  	
   

  
	
  Section 3. Grantors Remain Liable

  	
   

  	
  4

  
	
   

  	
   

  	
   

  
	
  Section 4. Representations and Warranties

  	
   

  	
  4

  
	
   

  	
   

  	
   

  
	
  Section 5. Further Assurances

  	
   

  	
  5

  
	
   

  	
   

  	
   

  
	
  Section 6. As to Equipment and Inventory

  	
   

  	
  5

  
	
   

  	
   

  	
   

  
	
  Section 7. Insurance

  	
   

  	
  6

  
	
   

  	
   

  	
   

  
	
  Section 8. Post-Closing Changes; Collections on
  Receivables and Related Contracts

  	
   

  	
  6

  
	
   

  	
   

  	
   

  
	
  Section 9. As to Intellectual Property
  Collateral

  	
   

  	
  6

  
	
   

  	
   

  	
   

  
	
  Section 10. As to Letter-of-Credit Rights

  	
   

  	
  6

  
	
   

  	
   

  	
   

  
	
  Section 11. Commercial Tort Claims

  	
   

  	
  7

  
	
   

  	
   

  	
   

  
	
  Section 12. Transfers and Other Liens;
  Additional Shares

  	
   

  	
  7

  
	
   

  	
   

  	
   

  
	
  Section 13. Collateral Agent Appointed
  Attorney-in-Fact

  	
   

  	
  7

  
	
   

  	
   

  	
   

  
	
  Section 14. Collateral Agent May Perform

  	
   

  	
  7

  
	
   

  	
   

  	
   

  
	
  Section 15. The Collateral Agent’s Duties

  	
   

  	
  7

  
	
   

  	
   

  	
   

  
	
  Section 16. Remedies

  	
   

  	
  9

  
	
   

  	
   

  	
   

  
	
  Section 17. Indemnity and Expenses

  	
   

  	
  10

  
	
   

  	
   

  	
   

  
	
  Section 18. Amendments; Waivers; Additional
  Grantors; Etc.

  	
   

  	
  11

  
	
   

  	
   

  	
   

  
	
  Section 19. Notices, Etc.

  	
   

  	
  11

  
	
   

  	
   

  	
   

  
	
  Section 20. Continuing Security Interest;
  Assignments under the Loan Agreements

  	
   

  	
  12

  
	
   

  	
   

  	
   

  
	
  Section 21. Release; Termination

  	
   

  	
  12

  
	
   

  	
   

  	
   

  
	
  Section 22. Execution in Counterparts

  	
   

  	
  12

  
	
   

  	
   

  	
   

  
	
  Section 23. Jurisdiction; Governing Law, Etc

  	
   

  	
  12

  

 

 

SCHEDULES

 

	
  Schedule I

  	
  -

  	
  Location, Chief Executive Office, Place Where
  Agreements Are Maintained, Type Of Organization, Jurisdiction Of Organization
  And Organizational Identification Number

  
	
  Schedule II

  	
  -

  	
  Changes in Name, Location, Etc.

  
	
   

  	
   

  	
   

  
	
  EXHIBIT

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Exhibit A

  	
  -

  	
  Form of Security Agreement B Supplement

  

 

 

SECURITY AGREEMENT B

 

SECURITY
AGREEMENT dated [                    
    ], 20     made by WHOLE FOODS
MARKET, INC., a Texas corporation (the “Borrower”), and the other Persons
listed on the signature pages hereof (the Borrower and the Persons so
listed being, collectively, the “Grantors”), to JPMORGAN CHASE BANK, N.A.
(“JPMorgan”),
as collateral agent (in such capacity, and together with any successor
collateral agent appointed pursuant to this Agreement, the “Collateral Agent”)
for the Secured Parties (as defined below).

 

PRELIMINARY STATEMENTS.

 

6.                                       The Borrower
has entered into a Term Loan Agreement dated as of August [  ], 2007 among the Borrower, Royal Bank of
Canada, as administrative agent for the lenders from time to time parties
thereto (together with its successors and assigns in such capacity, the “Term
Loan Administrative Agent”), JPMorgan Chase Bank, N.A., as Collateral Agent
and as syndication agent, and RBC Capital Markets and J. P. Morgan Securities Inc.,
as joint lead arrangers and joint bookrunners (said agreement, as it may
hereafter be amended, restated, supplemented or otherwise modified from time to
time, being the “Term Loan Agreement”).

 

7.                                       The Borrower
has entered into a Revolving Credit Agreement dated as of August [  ], 2007 among the Borrower, JPMorgan Chase
Bank, N.A., as Collateral Agent and as administrative agent for the lenders
from time to time parties thereto (together with its successors and assigns in
such capacity, the “Revolving Loan Administrative Agent”), Royal Bank of
Canada,, as syndication agent, and J. P. Morgan Securities Inc. and RBC Capital
Markets, as joint lead arrangers and joint bookrunners (said agreement, as it
may hereafter be amended, restated, supplemented or otherwise modified from
time to time, being the “Revolving Loan Agreement”).  The Term Loan Agreement and the Revolving
Loan Agreement shall sometimes hereinafter be collectively referred to as the “Loan
Agreements.”

 

8.                                       In
connection with the Term Loan Agreement, certain of the Grantors (other than
the Borrower) and other affiliated entities have executed and delivered a
Master Guaranty Agreement to the Term Loan Administrative Agent dated as of August [  ], 2007, and in connection with the Revolving
Loan Agreement, the Grantors (other than the Borrower) and other affiliated
entities have executed and delivered a Master Guaranty Agreement to the
Revolving Loan Administrative Agent dated as of August [  ], 2007 (both of said Master Guaranty
Agreements, as each of the same may hereafter be amended, restated,
supplemented or otherwise modified from time to time, being the “Master
Guaranty Agreements”).

 

9.                                       In
connection with the Loan Agreements, the Grantors have executed and delivered a
Security Agreement A to the Collateral Agent dated as of August [  ], 2007 (said agreement, as it may hereafter
be amended, restated, supplemented or otherwise modified from time to time,
being the “Security Agreement A”), with the understanding that this Agreement
and the security interest granted hereunder is in addition to, and not in lieu
of, Security Agreement A.

 

10.                                 Pursuant to Section 5.17
of the Term Loan Agreement and/or Section 5.17 of the Revolving Loan
Agreement, either or both of the Term Loan Administrative Agent and/or the
Revolving Loan Administrative Agent have requested that the Grantors grant the
security interest contemplated by this Agreement.  Each Grantor will derive substantial direct
and indirect benefit from the transactions contemplated by the Loan Agreements.

 

11.                                 Upon the
request of the Collateral Agent in connection with the exercise of its remedies
hereunder, the Borrower will open a collateral deposit account (the “Collateral
Account”) pursuant to, and subject to the terms of, this Agreement.

 

12.                                 Terms
defined in the Loan Agreements and not otherwise defined in this Agreement are
used in this Agreement as defined in the Loan Agreements.  Further, unless otherwise defined in this
Agreement or in the Loan Agreements, terms defined in Article 8 or 9 of the
UCC (as 

 

 

defined below) are used
in this Agreement as such terms are defined in such Article 8 or 9.  “UCC” means the Uniform Commercial Code as in
effect from time to time in the State of New York; provided that, if perfection
or the effect of perfection or non-perfection or the priority of the security
interest in any Collateral is governed by the Uniform Commercial Code as in
effect in a jurisdiction other than the State of New York, “UCC” means the
Uniform Commercial Code as in effect from time to time in such other
jurisdiction for purposes of the provisions hereof relating to such perfection,
effect of perfection or non-perfection or priority.

 

NOW,
THEREFORE, in consideration of the premises, each Grantor hereby agrees with
the Collateral Agent for the ratable benefit of the Secured Parties under each
of the Loan Agreements as follows:

 

Section 1.  Grant of Security.  Each Grantor hereby grants to the Collateral
Agent, for the ratable benefit of the lenders from time to time party to either
or both of the Loan Agreements (together with the Collateral Agent, the Term
Loan Administrative Agent and the Revolving Loan Administrative Agent, the “Secured
Parties”) , a security interest in such Grantor’s right, title and interest
in and to the following, in each case, as to each type of property described
below, whether now owned or hereafter acquired by such Grantor, wherever
located, and whether now or hereafter existing or arising (collectively, the “Additional
Collateral”):

 

(a)                                  all
equipment in all of its forms, including, without limitation, all machinery,
tools, furniture and fixtures, and all parts thereof and all accessions
thereto, including, without limitation, computer programs and supporting
information that constitute equipment within the meaning of the UCC (any and
all such property being the “Equipment”);

 

(b)                                 all
inventory in all of its forms, including, without limitation, (i) all raw
materials, work in process, finished goods and materials used or consumed in
the manufacture, production, preparation or shipping thereof, (ii) goods
in which such Grantor has an interest in mass or a joint or other interest or
right of any kind (including, without limitation, goods in which such Grantor
has an interest or right as consignee) and (iii) goods that are returned
to or repossessed or stopped in transit by such Grantor, and all accessions
thereto and products thereof and documents therefor, including, without
limitation, computer programs and supporting information that constitute
inventory within the meaning of the UCC (any and all such property being the “Inventory”);

 

(c)                                  all
accounts, chattel paper (including, without limitation, tangible chattel paper
and electronic chattel paper), instruments (including, without limitation,
promissory notes), deposit accounts, letter-of-credit rights, general
intangibles (including, without limitation, payment intangibles) and other
obligations of any kind, whether or not arising out of or in connection with
the sale or lease of goods or the rendering of services and whether or not
earned by performance, and all rights now or hereafter existing in and to all
supporting obligations and in and to all security agreements, mortgages, Liens,
leases, letters of credit and other contracts securing or otherwise relating to
the foregoing property (any and all of such accounts, chattel paper,
instruments, deposit accounts, letter-of-credit rights, general intangibles and
other obligations, to the extent not referred to in clause (d), (e) or
(f) below, being the “Receivables,” and any and all such supporting
obligations, security agreements, mortgages, Liens, leases, letters of credit
and other contracts being the “Related Contracts”);

 

(d)                                 the
following (collectively, the “Account Collateral”):

 

(i)                                     the
Collateral Account and each other deposit account and all funds and financial
assets from time to time credited thereto (including, without limitation, all
Cash Equivalents), and all certificates and instruments, if any, from time to
time representing or evidencing the Collateral Account or such other deposit
account;

 

(ii)                                  all
promissory notes, certificates of deposit, checks and other instruments from
time to time delivered to or otherwise possessed by the Collateral Agent or an
Affiliate of the Collateral Agent on its behalf, for or on behalf of such
Grantor in substitution for or in addition to any or all of the then existing
Account Collateral; and

 

 

(iii)                               all
interest, dividends, distributions, cash, instruments and other property from
time to time received, receivable or otherwise distributed in respect of or in
exchange for any or all of the then existing Account Collateral;

 

(e)                                  the
following (collectively, the “Intellectual Property Collateral”):

 

(i)                                     all
patents, patent applications, utility models and statutory invention
registrations, all inventions claimed or disclosed therein and all improvements
thereto;

 

(ii)                                  all
trademarks, service marks, domain names, trade dress, logos, designs, slogans,
trade names, business names, corporate names and other source identifiers,
whether registered or unregistered (provided
that no security interest shall be granted in United States intent-to-use
trademark applications to the extent that, and solely during the period in
which, the grant of a security interest therein would impair the validity or
enforceability, or result in the cancellation, of such intent-to-use trademark
applications under applicable federal law), together, in each case, with the
goodwill symbolized thereby (“Trademarks”);

 

(iii)                               all
copyrights, including, without limitation, copyrights in Computer Software (as
hereinafter defined), internet web sites and the content thereof, whether
registered or unregistered;

 

(iv)                              all
computer software, programs and databases (including, without limitation,
source code, object code and all related applications and data files), firmware
and documentation and materials relating thereto, together with any and all
maintenance rights, service rights, programming rights, hosting rights, test
rights, improvement rights, renewal rights and indemnification rights and any
substitutions, replacements, improvements, error corrections, updates and new
versions of any of the foregoing (“Computer
Software”);

 

(v)                                 all
confidential and proprietary information, including, without limitation, know-how,
trade secrets, manufacturing and production processes and techniques,
inventions, research and development information, databases and data,
including, without limitation, technical data, financial, marketing and
business data, pricing and cost information, business and marketing plans and
customer and supplier lists and information, and all other intellectual,
industrial and intangible property of any type, including, without limitation,
industrial designs and mask works;

 

(vi)                              all
registrations and applications for registration for any of the foregoing,
together with all reissues, divisions, continuations, continuations-in-part,
extensions, renewals and reexaminations thereof;

 

(vii)                           all
tangible embodiments of the foregoing, all rights in the foregoing provided by
international treaties or conventions, all rights corresponding thereto
throughout the world and all other rights of any kind whatsoever of such
Grantor accruing thereunder or pertaining thereto;

 

(viii)                        all
agreements, permits, consents, orders and franchises relating to the license,
development, use or disclosure of any of the foregoing to which such Grantor,
now or hereafter, is a party or a beneficiary (“IP Agreements”);

 

(ix)                                any
and all claims for damages and injunctive relief for past, present and future
infringement, dilution, misappropriation, violation, misuse or breach with
respect to any of the foregoing, with the right, but not the obligation, to sue
for and collect, or otherwise recover proceeds arising from such damages;

 

(f)                                    all
commercial tort claims;

 

 

(g)                                 all
books and records (including, without limitation, customer lists, credit files,
printouts and other computer output materials and records) of such Grantor
pertaining to any of the Additional Collateral; and

 

(h)                                 all
proceeds of, collateral for, income, royalties and other payments now or
hereafter due and payable with respect to, and supporting obligations relating
to, any and all of the Additional Collateral (including, without limitation,
proceeds, collateral and supporting obligations that constitute property of the
types described in clauses (a) through (g) and this clause (h) of
this Section 1) and, to the extent not otherwise included, all (A) payments
under insurance (whether or not the Collateral Agent is the loss payee
thereof), or any indemnity, warranty or guaranty, in each case, payable by
reason of loss or damage to or otherwise with respect to any of the foregoing
Additional Collateral, and (B) cash.

 

Notwithstanding
the foregoing, “Additional Collateral” shall not include and the Grantors
shall not be deemed to have granted a security interest in any property or
agreement of such Grantor to the extent (but only so long as) (x) the
granting of a security interest thereunder is prohibited by any applicable law
or (y) is prohibited by, or constitutes a breach or default under or
results in the termination of or requires any consent not obtained under, any
contract, lease, license, agreement, instrument or other document giving rise
to such property, in each case solely to the extent that such breach or default
is not rendered ineffective by the UCC or other applicable law or, in the case
of any consent, such consent is actually required to grant such security
interest under applicable law.

 

Section 2. Security for Obligations;
Interpretation.  This Agreement
secures, in the case of each Grantor, the payment of all Indebtedness and other
obligations of such Grantor now or hereafter existing under any of the Loan
Documents (as defined in each of the Loan Agreements), whether direct or
indirect, absolute or contingent, and whether for principal, reimbursement
obligations, interest, fees, premiums, penalties, indemnifications, contract
causes of action, costs, expenses or otherwise (all such obligations being the “Secured
Obligations”).  Without
limiting the generality of the foregoing, this Agreement secures, as to each
Grantor, the payment of all amounts that constitute part of the Secured
Obligations and would be owed by such Grantor to any Secured Party under any of
the Loan Documents but for the fact that they are unenforceable or not
allowable due to the existence of a bankruptcy, reorganization or similar
proceeding involving a Loan Party.

 

Section 3. Grantors Remain Liable.  Anything herein to the contrary notwithstanding,
(a) each Grantor shall remain liable under the contracts and agreements
included in such Grantor’s Additional Collateral to the extent set forth
therein to perform all of its duties and obligations thereunder to the same
extent as if this Agreement had not been executed, (b) the exercise by the
Collateral Agent of any of the rights hereunder shall not release any Grantor
from any of its duties or obligations under the contracts and agreements
included in the Additional Collateral and (c) no Secured Party shall have
any obligation or liability under the contracts and agreements included in the
Additional Collateral by reason of this Agreement or any other Loan Document,
nor shall any Secured Party be obligated to perform any of the obligations or duties
of any Grantor thereunder or to take any action to collect or enforce any claim
for payment.

 

Section 4. Representations and Warranties.  Each Grantor represents and warrants as
follows:

 

(a)                                  As
of the date hereof, such Grantor’s exact legal name, location, chief executive
office, type of organization, jurisdiction of organization and organizational
identification number is set forth in Schedule I hereto.  Within the five years preceding the date
hereof, such Grantor has not changed its name, location, chief executive
office, type of organization, jurisdiction of organization or organizational
identification number from those set forth in Schedule I hereto except
as set forth in Schedule II hereto.

 

(b)                                 Such
Grantor is the legal and beneficial owner of the Additional Collateral granted
or purported to be granted by it free and clear of any Lien, claim, option or
right of others, except for the security interest created under this Agreement
or permitted under the Loan Agreements. 
Except as permitted under the Loan Agreements, no effective financing
statement or other instrument similar in effect covering all or any part of
such Additional Collateral or listing such Grantor or any trade name of such
Grantor as debtor is on file in any recording office, except such as may have
been filed in favor of the Collateral Agent relating to the Loan Documents,
filings which have not been authorized by the applicable Grantor or as
otherwise permitted under the Loan Agreements.

 

 

(c)           This Agreement creates in favor of
the Collateral Agent for the benefit of the Secured Parties under the Loan
Agreements a valid security interest in the Additional Collateral granted by
such Grantor (to the extent such matter is governed by the laws of the United
States, or a jurisdiction located therein), securing the payment of the Secured
Obligations; all filings and other actions necessary to perfect the security
interest in the Additional Collateral granted by such Grantor, to the extent
required hereunder, have been or will be timely made or taken and are, or will
be, in full force and effect (but only to the extent perfection can be
accomplished by filing a financial statement in the proper jurisdiction); such
security interest is first priority except for the Liens permitted by the Loan
Agreements.

 

(d)           To such Grantor’s knowledge, no
material Governmental Authorization by, and no notice to or filing with, any
Governmental Authority or other third party is required for the grant by such
Grantor of the security interest granted hereunder or for the execution,
delivery or performance of this Agreement by such Grantor.

 

(e)           As to itself and its material
Intellectual Property Collateral (i) to such Grantor’s knowledge, the
operation of such Grantor’s business as currently conducted or as contemplated
to be conducted and the use of the Intellectual Property Collateral in
connection therewith do not conflict with, infringe, misappropriate, dilute,
misuse or otherwise violate the intellectual property rights of any third
party, (ii) such Grantor is the exclusive owner of all right, title and
interest in and to, or has a valid right to use, all Intellectual Property
Collateral subject only to the terms of the IP Agreements and (iii) there
is no judgment or decree in respect of any Intellectual Property Collateral
that would reasonably be expected to have a Material Adverse Effect.

 

Section 5. Further Assurances.  (a)  Each Grantor agrees that from time
to time, at the expense of such Grantor, such Grantor will promptly execute and
deliver, or otherwise authenticate, all further instruments and documents, and
take all further action that may be necessary or reasonably desirable, or that
the Collateral Agent may reasonably request, in order to perfect and maintain
perfection of any pledge or security interest granted or purported to be
granted by such Grantor hereunder or to enable the Collateral Agent to exercise
and enforce its rights and remedies hereunder with respect to any Additional
Collateral of such Grantor.  Without
limiting the generality of the foregoing, each Grantor will promptly with
respect to Additional Collateral of such Grantor:  (i) execute or authenticate and file, or
authorize the Collateral Agent to file, such financing or continuation statements,
or amendments thereto, and as permitted by the terms of this Agreement or
otherwise with the Grantor’s consent, such other instruments or notices, as may
be necessary or desirable, or as the Collateral Agent may reasonably request,
in order to perfect and preserve the security interest granted or purported to
be granted by such Grantor hereunder; (ii) upon the occurrence and during
the continuance of an Event of Default, take all action necessary to ensure
that the Collateral Agent has control of Additional Collateral consisting of
deposit accounts, electronic chattel paper and letter of credit rights as
provided in Sections 9-104, 9-105 and 9-107 of the UCC; and (iii) deliver
to the Collateral Agent evidence that all other actions that the Collateral
Agent may deem reasonably necessary or desirable in order to perfect and
protect the security interest granted or purported to be granted by such
Grantor under this Agreement has been taken. Notwithstanding anything to the
contrary set forth in this Section 5 or in this Agreement, unless an Event
of Default shall have occurred and be continuing, (A) the Grantors shall
not be required to take any action to perfect the security interests granted
under this Agreement in any Additional Collateral other than executing,
authenticating and filing, or authorizing the Collateral Agent to file,
financing or continuation statements, or amendments thereto and (B) landlords
and warehousemen shall be not be required to provide access or subordination
agreements.

 

(b)           Each Grantor hereby authorizes the
Collateral Agent to file one or more financing or continuation statements, and
amendments thereto, including, without limitation, one or more financing
statements indicating that such financing statements cover all assets or all
personal property (or words of similar effect) of such Grantor, in each case
without the signature of such Grantor, and regardless of whether any particular
asset described in such financing statements falls within the scope of the UCC
or the granting clause of this Agreement. 
A photocopy or other reproduction of this Agreement shall be sufficient
as a financing statement where permitted by law.  Each Grantor ratifies its authorization for
the Collateral Agent to have filed such financing statements, continuation
statements or amendments filed prior to the date hereof.

 

(c)           Upon the occurrence and continuance
of an Event of Default, upon the written request of the Collateral Agent, each
Grantor will furnish to the Collateral Agent from time to time statements and
schedules 

 

 

further
identifying and describing the Additional Collateral of such Grantor and such
other reports in connection with such Additional Collateral as the Collateral
Agent may reasonably request, all in reasonable detail.

 

Section 6.
As to Equipment and Inventory  Each Grantor will cause its Equipment to be
maintained and preserved in the same condition, repair and working order as
when new, ordinary wear and tear and casualty and condemnation losses excepted,
and will forthwith, or in the case of any loss or damage to any of such
Equipment as soon as practicable after the occurrence thereof, make or cause to
be made all repairs, replacements and other improvements in connection
therewith that such Grantor determines are necessary or desirable to such end.

 

Section 7. Insurance.  Each Grantor will, at its own expense,
maintain insurance with respect to its Equipment and Inventory in the manner
required by the Loan Agreements.

 

Section 8. Post-Closing Changes; Collections
on Receivables and Related Contracts. 
(a)  No Grantor will change its name, type of organization,
jurisdiction of organization, organizational identification number or location
from those set forth in Section 4(a) of this Agreement without first
giving at least 15 days’ prior written notice to the Collateral Agent and
taking all action reasonably required by the Collateral Agent for the purpose
of perfecting or protecting the security interest granted by this
Agreement.  Each Grantor will hold and
preserve its records relating to the Additional Collateral and will permit
representatives of the Collateral Agent at any reasonable time during normal
business hours upon reasonable advance notice to inspect and make abstracts
from such records and other documents. 
If any Grantor does not have an organizational identification number and
later obtains one, it will forthwith notify the Collateral Agent of such
organizational identification number.

 

(b)           Except as otherwise provided in this
subsection (b), each Grantor will continue to collect, at its own expense, all
amounts due or to become due such Grantor under the Receivables and Related
Contracts.  In connection with such
collections, such Grantor may take (and, at the Collateral Agent’s direction,
upon the occurrence and during the continuance of an Event of Default, will
take) such action as such Grantor or the Collateral Agent may deem necessary or
advisable to enforce collection of the Receivables and Related Contracts; provided, however, that
the Collateral Agent shall have the right at any time, upon the occurrence and
during the continuance of an Event of Default and upon written notice to such
Grantor of its intention to do so, to notify the Obligors under any Receivables
and Related Contracts of the assignment of such Receivables and Related
Contracts to the Collateral Agent and to direct such Obligors to make payment
of all amounts due or to become due to such Grantor thereunder directly to the
Collateral Agent and, upon such notification and at the expense of such Grantor,
to enforce collection of any such Receivables and Related Contracts, to adjust,
settle or compromise the amount or payment thereof, in the same manner and to
the same extent as such Grantor might have done, and to otherwise exercise all
rights with respect to such Receivables and Related Contracts, including,
without limitation, those set forth set forth in Section 9-607 of the
UCC.  After receipt by any Grantor of the
notice from the Collateral Agent referred to in the proviso to the preceding
sentence, upon the occurrence and during the continuance of an Event of Default
(i) all amounts and proceeds (including, without limitation, instruments)
received by such Grantor in respect of the Receivables and Related Contracts of
such Grantor shall be deemed to be received in trust for the benefit of the
Collateral Agent hereunder, shall be segregated from other funds of such
Grantor and shall be forthwith paid over to the Collateral Agent in the same
form as so received (with any necessary indorsement) to be deposited in the
Collateral Account and either (A) released to such Grantor so long as no
Event of Default shall have occurred and be continuing or (B) if any Event
of Default shall have occurred and be continuing, applied as provided in Section 16(b) and
(ii) such Grantor will not adjust, settle or compromise the amount or
payment of any Receivable or amount due on any Related Contract, release wholly
or partly any Obligor thereof or allow any credit or discount thereon.  No Grantor will permit or consent to the
subordination of its right to payment under any of the Receivables and Related
Contracts to any other indebtedness or obligations of the Obligor thereof.

 

Section 9. As to Intellectual Property
Collateral.  Each Grantor shall take
such commercially reasonable actions to take all steps as are reasonable and
appropriate under the circumstances (all as determined by the Board of
Directors of the Grantor) to preserve and protect each material item of its
Intellectual Property Collateral.

 

Section 10. As to Letter-of-Credit Rights.  Each Grantor, by granting a security interest
in its Receivables consisting of letter-of-credit rights to the Collateral
Agent, intends to (and hereby does) assign to the 

 

 

Collateral Agent its rights (including its contingent
rights) to the proceeds of all Related Contracts consisting of letters of
credit of which it is or hereafter becomes a beneficiary or assignee.  Upon the occurrence and during the
continuance of an Event of Default, each Grantor will promptly use commercially
reasonable efforts to cause the issuer of each letter of credit and each
nominated person (if any) with respect thereto to consent to such assignment of
the proceeds thereof pursuant to a consent in form and substance reasonably
satisfactory to the Collateral Agent and deliver written evidence of such
consent to the Collateral Agent.

 

Section 11. Commercial Tort Claims.  Each Grantor will promptly give notice to the
Collateral Agent of any commercial tort claim that may arise after the date
hereof with an anticipated recovery of at least $5,000,000 and, upon the
request of the Collateral Agent, will promptly execute or otherwise
authenticate a supplement to this Agreement, and otherwise take all action
reasonably necessary to subject such commercial tort claim to the security
interest created under this Agreement.

 

Section 12. Transfers and Other Liens;
Additional Shares.  Each Grantor
agrees that:

 

(a)           It will not (i) sell, assign or otherwise dispose of,
or grant any option with respect to, any of the Additional Collateral, other
than sales, assignments and other dispositions of Additional Collateral, and
options relating to Additional Collateral, permitted under the terms of this
Agreement or the Loan Agreements, or (ii) create or suffer to exist any
Lien upon or with respect to any of the Additional Collateral of such Grantor
except for the pledge, assignment and security interest created under this
Agreement and Liens permitted under the Loan Agreements.

 

Section 13. Collateral Agent Appointed Attorney-in-Fact.  Each Grantor hereby irrevocably appoints the
Collateral Agent such Grantor’s attorney-in-fact (such appointment to cease
upon the payment in full of all the Secured Obligations other than contingent
indemnification claims as to which no demand has been made), with full
authority in the place and stead of such Grantor and in the name of such
Grantor or otherwise, from time to time, upon the occurrence and during the
continuance of an Event of Default, in the Collateral Agent’s reasonable discretion,
to take any action and to execute any instrument that the Collateral Agent may
deem reasonably necessary or advisable to accomplish the purposes of this
Agreement, including, without limitation:

 

(a)           to ask for, demand, collect, sue for,
recover, compromise, receive and give acquittance and receipts for moneys due
and to become due under or in respect of any of the Additional Collateral,

 

(b)           to receive, indorse and collect any
drafts or other instruments, documents and chattel paper, in connection with
clause (a) or (b) above, and

 

(c)           to file any claims or take any action
or institute any proceedings that the Collateral Agent may deem necessary or
desirable for the collection of any of the Additional Collateral or otherwise
to enforce the rights of the Collateral Agent with respect to any of the
Additional Collateral.

 

Section 14. Collateral Agent May Perform.  If any Grantor fails to perform any agreement
contained herein, the Collateral Agent may, as the Collateral Agent deems
necessary to protect the security interest granted hereunder in the Additional
Collateral or to protect the value thereof, but without any obligation to do so
and without notice, itself perform, or cause performance of, such agreement,
and the expenses of the Collateral Agent incurred in connection therewith shall
be payable by such Grantor under Section 17.

 

Section 15. The Collateral Agent’s Duties.  a.  The
powers conferred on the Collateral Agent hereunder are solely to protect the
Secured Parties’ interest in the Additional Collateral and shall not impose any
fiduciary relationship or any duty upon it to exercise any such powers.  Except for the exercise of reasonable care in
the safe custody of any Additional Collateral in its possession or in the
possession of an Affiliate of the Collateral Agent or any designee (including
without limitation, a Subagent (as defined in clause (b) below)) of the
Collateral Agent acting on its behalf and the accounting for moneys actually
received by it or its Affiliates hereunder in accordance with the express terms
hereof, the Collateral Agent shall have no fiduciary relationship or other duty
as to any Additional Collateral, as to ascertaining or taking action with
respect to calls, conversions, exchanges, maturities, tenders or other matters
relative to any Additional Collateral, whether or not any Secured Party has or
is 

 

 

deemed to have knowledge of such matters, or as to the
taking of any necessary steps to preserve rights against any parties or any
other rights pertaining to any Additional Collateral.  The Collateral Agent and any of its
Affiliates or any designee (including without limitation, a Subagent) on its
behalf shall be deemed to have exercised reasonable care in the custody and
preservation of any Additional Collateral in its possession or in the
possession of an Affiliate or any designee (including without limitation, a
Subagent) on its behalf if such Additional Collateral is accorded treatment
substantially equal to that which it accords its own property.

 

(b)           Anything contained herein to the
contrary notwithstanding, the Collateral Agent may from time to time, when the
Collateral Agent deems it to be necessary, appoint one or more subagents (each
a “Subagent”) for
the Collateral Agent hereunder with respect to all or any part of the
Additional Collateral.  In the event that
the Collateral Agent so appoints any Subagent with respect to any Additional
Collateral, (i) the assignment and pledge of such Additional Collateral
and the security interest granted in such Additional Collateral by each Grantor
hereunder shall be deemed for purposes of this Security Agreement B to have
been made to such Subagent, in addition to the Collateral Agent, for the
ratable benefit of the Secured Parties, as security for the Secured Obligations
of such Grantor, (ii) such Subagent shall automatically be vested, in
addition to the Collateral Agent, with all rights, powers, privileges,
interests and remedies of the Collateral Agent hereunder and pursuant to the
terms hereof, with respect to such Additional Collateral, and (iii) the
term “Collateral Agent,” when used herein in relation to any rights, powers,
privileges, interests and remedies of the Collateral Agent with respect to such
Additional Collateral, shall include such Subagent; provided, however, that no such Subagent shall be authorized to take any
action with respect to any such Additional Collateral unless and except to the
extent expressly authorized in writing by the Collateral Agent.

 

(c)           Each Secured Party by its acceptance
thereof hereby appoints and authorizes the Collateral Agent to take such action
as agent on its behalf and to exercise such powers hereunder and under the
other Loan Documents as are specifically delegated to the Collateral Agent by
the terms of this Agreement and the Loan Documents, together with such other
powers as are reasonably incidental thereto. 
The Collateral Agent shall not have any duties or responsibilities
except those expressly set forth in this Agreement and the Loan Documents.

 

(d)           As to any matters not expressly
provided for by the Loan Documents, the Collateral Agent shall not be required
to exercise any discretion or take any action, but shall be required to act or
to refrain from acting (and shall be fully protected in so acting or refraining
from acting) upon the written instructions signed by the Term Loan
Administrative Agent and the Revolving Loan Administrative Agent provided,
however, that the Collateral Agent shall not be required to take any action
that exposes the Collateral Agent to personal liability or that is contrary to
this Agreement or applicable law. The Collateral Agent shall in all cases be
fully protected in acting or refraining from acting under this Agreement or any
of the Loan Documents upon written directions signed by the Term Loan
Administrative Agent and the Revolving Loan Administrative Agent, except for
any such actions (or restraint of actions) which constitute gross negligence or
willful misconduct on the part of the Collateral Agent. Any such directions by
the Collateral Agent and any action taken by the Collateral Agent and any
failure by the Collateral Agent to act, in each case pursuant to such
directions, shall be binding on all the Secured Parties and their respective
successors and assigns.  The Collateral
Agent shall not be responsible to any Secured Party for any recitals,
statements, representations, or warranties (other than any thereof made by the
Collateral Agent or any officer thereof) contained in this Agreement or in any
of the Loan Documents, for the value, validity, effectiveness, genuineness,
enforceability, or sufficiency of this Agreement, of any of the Loan Documents,
or of the Additional Collateral, or for the creation, maintenance, priority or
perfection of any Lien created by the Loan Documents.

 

(e)           Subject to the provisions of Section 15(d),
the Collateral Agent may consult with independent legal counsel and the advice
of such counsel shall be full and complete authorization and protection in
respect of any action to be taken, suffered, or omitted by it hereunder in good
faith and in reliance thereon.  The
Collateral Agent may execute any of the rights or powers hereunder or perform
any duties hereunder either directly or through other agents or attorneys reasonably
acceptable to the Required Lenders under each of the Loan Agreements.  The Collateral Agent shall not be liable for
the misconduct or negligence of any such agent or attorney appointed by it with
due care.  The foregoing shall not
exculpate any such agent or attorney from liability for its own misconduct or
negligence.

 

(f)            The Collateral Agent, in its
individual capacity and its affiliates may accept deposits from, lend to, and
generally engage in any kind of lending, banking, or trust business with, any
Grantor or their 

 

 

respective
affiliates as if it were not acting as the Collateral Agent.  With respect to its commitment and in its
capacity as a Lender under each of the Loan Agreements, the Collateral Agent
shall have and may exercise the same rights and powers under this Agreement and
is subject to the same obligations and liabilities as applicable to any other
Lender.

 

(g)           To the extent that Grantors fail to
do so under the terms of the Loan Documents, and without limiting the primary
obligation of Grantors to do so, the Secured Parties will reimburse the
Collateral Agent upon demand and hold the Collateral Agent, its directors,
officers, employees, and agents harmless against any and all losses,
liabilities, or expenses incurred by the Collateral Agent arising out of or in
connection with any action taken pursuant to and consistently with the express
written direction of the applicable Secured Parties given under Section 15(d),
including any costs and expenses incurred in connection with any investigation,
suit (whether or not the Collateral Agent or any other such indemnified person
is named as a party thereto), or claim arising out of or related to such
action, in proportion to the respective principal amounts of the Indebtedness
under the Loan Agreements at the time held by them, provided, that no Secured
Party shall be liable under this Section 15(g) for any such losses,
liabilities, or expenses incurred by the Collateral Agent as a result of its
own breach of this Agreement, gross negligence or willful misconduct.

 

(h)           The Collateral Agent may resign at
any time by giving at least forty-five (45) days’ prior written notice of
resignation to Grantors and each Secured Party, such resignation to be
effective upon the appointment of a successor Collateral Agent as provided in
this Section 15.  The Collateral
Agent may be removed at any time, for or without cause, by an instrument or
instruments in writing delivered to the Collateral Agent and Grantors and
signed by the Required Lenders under both of the Loan Agreements.  In case the office of Collateral Agent shall
become vacant for any reason, a successor Collateral Agent may be appointed to
fill such vacancy by an instrument or instruments in writing delivered to such
successor Collateral Agent, the departing Collateral Agent, each Lender under
any Loan Agreement and Grantors.  After
any such resignation or removal, the provisions of this Section 15 shall
continue in effect for the benefit of the departing Collateral Agent with
respect to any actions taken or omitted by it while acting as Collateral Agent.

 

(i)            Any corporation or national banking
association into which the Collateral Agent may be merged or with which it may
be consolidated, or any corporation or national banking association resulting
from any merger or consolidation to which the Collateral Agent is a party, or
any state or national bank or trust company in any manner succeeding to all or
substantially all of the business of the Collateral Agent and shall
automatically succeed to all of the rights and obligations of the Collateral
Agent hereunder and under the Loan Documents without further action on the part
of any of the parties hereto.  Such
surviving or succeeding corporation or national banking association (if other
than the Collateral Agent) shall forthwith deliver to each Secured Party and
Grantors written notice of such succession to the rights and obligations of the
Collateral Agent hereunder and under the Loan Documents.

Section 16. Remedies.  If any Event of Default shall have occurred
and be continuing:

 

(a)           The Collateral Agent may exercise in respect of the
Additional Collateral, in addition to other rights and remedies provided for
herein or otherwise available to it, all the rights and remedies of a secured
party upon default under the UCC and also may: 
(i) require each Grantor to, and each Grantor hereby agrees that it
will at its expense and upon request of the Collateral Agent forthwith,
assemble all or part of the Additional Collateral as directed by the Collateral
Agent and make it available to the Collateral Agent at a place and time to be
designated by the Collateral Agent that is reasonably convenient to both
parties; (ii) without notice except as specified below, sell the
Additional Collateral or any part thereof in one or more parcels at public or
private sale, at any of the Collateral Agent’s offices or elsewhere, for cash,
on credit or for future delivery, and upon such other terms as the Collateral
Agent may in its reasonable discretion deem commercially reasonable; (iii) occupy
any premises owned by any of the Grantors where the Additional Collateral or
any part thereof is assembled or located for a reasonable period in order to
effectuate its rights and remedies hereunder or under law, without obligation
to such Grantor in respect of such occupation; and (iv) exercise any and
all rights and remedies of any of the Grantors under or in connection with the
Additional Collateral, or otherwise in respect of the Additional Collateral,
including, without limitation, (A) any and all rights of such Grantor to
demand or otherwise require payment of any 

 

 

amount under, or performance of
any provision of, the Receivables, the Related Contracts and the other
Additional Collateral, (B) withdraw, or cause or direct the withdrawal, of
all funds with respect to the Account Collateral and (C) exercise all
other rights and remedies with respect to the Receivables, the Related
Contracts and the other Additional Collateral, including, without limitation,
those set forth in Section 9-607 of the UCC.  Each Grantor agrees that, to the extent
notice of sale shall be required by law, at least ten days’ notice to such
Grantor of the time and place of any public sale or three days’ notice of the
time and place of any private sale shall constitute reasonable
notification.  The Collateral Agent shall
not be obligated to make any sale of Additional Collateral regardless of notice
of sale having been given.  The
Collateral Agent may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and such sale may, without
further notice, be made at the time and place to which it was so adjourned.

 

(b)           Any cash held by or on behalf of the Collateral Agent and
all cash proceeds received by or on behalf of the Collateral Agent in respect
of any sale of, collection from, or other realization upon all or any part of
the Additional Collateral shall be held by the Collateral Agent as collateral
for, and/or then or at any time thereafter applied (after payment of any
amounts payable to the Collateral Agent pursuant to Section 17) in whole
or in part by the Collateral Agent for the 
benefit of the Secured Parties against, all or any part of the Secured
Obligations in the following order: (i) first, on a pari passu basis, to all Secured
Obligations (excluding Secured Obligations arising under the terms of any
Credit Facility Hedging Agreements) comparing (1) the aggregate principal
amount of the then outstanding term loans under the Term Loan Agreement to (2) the
amount of the then effective Aggregate Commitment (as defined in the Revolving
Loan Agreement), if the Aggregate Commitment has not been terminated, or the
sum of the aggregate principal amount of the then outstanding revolving loans
under the Revolving Loan Agreement and the Letter of Credit Exposure Amount (as
defined in the Revolving Loan Agreement) then outstanding under the Revolving
Loan Agreement, if the Aggregate Commitment has been terminated; provided that the amounts set forth in this clause (i) that
will be given pari passu
treatment as set forth above shall be limited to amounts (of Aggregate
Commitments and Loans under the Term Loan Agreement and Aggregate Commitments
or Loans and Letter of Credit Exposure Amount under the Revolving Credit
Agreement, or as applicable) which would not give rise to an Event of Default
arising under section 7.1(d) of the Term Loan Agreement or the Revolving
Credit Agreement as a result of a breach of section 6.1(b) of the Term
Loan Agreement or the Revolving Credit Agreement, respectively and, (ii) second,
on a pari passu basis, to all
Secured Obligations arising under the terms of any Credit Facility Hedging
Agreements).  Any surplus of such cash or cash proceeds held by
or on the behalf of the Collateral Agent and remaining after
payment in full of all the Secured Obligations (other than contingent
indemnification claims as to which no demand has been made) shall be paid over
to the applicable Grantor or to whomsoever may be lawfully entitled to receive
such surplus.

 

(c)           All payments received by any Grantor under or in respect
of the Additional Collateral shall be received in trust for the benefit of the
Collateral Agent, shall be segregated from other funds of such Grantor and
shall be forthwith paid over to the Collateral Agent in the same form as so received
(with any necessary indorsement).

 

(d)           The Collateral Agent may, without notice to any Grantor
except as required by law and at any time or from time to time, charge, set-off
and otherwise apply all or any part of the Secured Obligations then due and
owing against any funds held with respect to the Account Collateral or in any
other deposit account.

 

(e)           In the event of any sale or other disposition of any of
the Intellectual Property Collateral of any Grantor, the goodwill symbolized by
any Trademarks subject to such sale or other disposition shall be included
therein, and such Grantor shall supply to the Collateral Agent or its designee
such Grantor’s know-how and expertise, and documents and things relating to any
Intellectual Property Collateral subject to such sale or other disposition, and
such Grantor’s customer lists and other records and documents relating to such
Intellectual Property Collateral and to the manufacture, distribution,
advertising and sale of products and services of such Grantor.

 

 

Section 17. Indemnity and Expenses.  (a)  Each Grantor agrees to indemnify,
defend and save and hold harmless each Secured Party and each of their
Affiliates and their respective officers, directors, employees, agents and
advisors (each, an “Indemnified
Party”) from and against, and shall pay on demand, any and all
actual claims, damages, losses, liabilities and out-of-pocket expenses
(including, without limitation, reasonable fees and expenses of counsel but
excluding special, indirect, punitive or consequential damages, whether arising
in tort, contract or otherwise) that may be incurred by or asserted or awarded
against any Indemnified Party, in each case arising out of or in connection
with or by reason of (including, without limitation, in connection with any
investigation, litigation or proceeding or preparation of a defense in
connection therewith) this Agreement, except to the extent such claim, damage,
loss, liability or expense is found in a final nonappealable judgment by a
court of competent jurisdiction to have resulted from such Indemnified Party’s
gross negligence or willful misconduct. 
In the case of an investigation, litigation or other proceeding to which
the indemnity in this Section 17(a) applies, such indemnity shall be
effective whether or not such investigation, litigation or proceeding is
brought by any Grantor, its directors, shareholders or creditors or any
Indemnified Party or any other Person, whether or not any Indemnified Party is
otherwise a party thereto and whether or not the Merger is consummated.  The Grantors also agree not to assert any
claim against the Collateral Agent, any Secured Party or any of their
Affiliates, or any of their respective officers, directors, employees, agents
and advisors, on any theory of liability, for special, indirect, consequential
or punitive damages arising out of or otherwise relating to the this Agreement.

 

(b)           Each Grantor agrees to pay on demand (i) all
reasonable out-of-pocket costs and expenses of the Collateral Agent in
connection with the preparation, execution, delivery, administration,
modification and amendment of, or any consent or waiver under, this Agreement
(including, without limitation, the reasonable out-of-pocket fees and expenses
of counsel for the Collateral Agent with respect thereto, with respect to
advising the Collateral Agent as to its rights and responsibilities, or the
perfection, protection or preservation of rights or interests, under this
Agreement, with respect to negotiations with any Grantor or with other creditors
of any Grantor or any of its Subsidiaries arising out of any Default or any
events or circumstances that may give rise to a Default and with respect to
presenting claims in or otherwise participating in or monitoring any
bankruptcy, insolvency or other similar proceeding involving creditors’ rights
generally and any proceeding ancillary thereto) and (ii) all costs and
expenses of the Collateral Agent and each Secured Party in connection with the
enforcement of this Agreement, whether in any action, suit or litigation, or
any bankruptcy, insolvency or other similar proceeding affecting creditors’
rights generally (including, without limitation, the reasonable fees and
expenses of counsel for the Collateral Agent and each Secured Party with
respect thereto).

 

Section 18. Amendments; Waivers; Additional
Grantors; Etc.  (a)  No
amendment or waiver of any provision of this Agreement, and no consent to any
departure by any Grantor herefrom, shall in any event be effective unless the
same shall be in writing and signed by the Collateral Agent, the Term Loan
Administrative Agent and the Revolving Loan Administrative Agent, and then such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given.  No
failure on the part of the Collateral Agent or any other Secured Party to
exercise, and no delay in exercising any right hereunder, shall operate as a
waiver thereof; nor shall any single or partial exercise of any such right
preclude any other or further exercise thereof or the exercise of any other
right.

 

(b)           Upon the execution and delivery by
any Person of a security agreement supplement in substantially the form of Exhibit A
hereto (each a “Security Agreement B Supplement”), such Person shall be
referred to as an “Additional
Grantor” and shall be and become a Grantor hereunder, and each
reference in this Agreement and the other Loan Documents to “Grantor” shall
also mean and be a reference to such Additional Grantor, each reference in this
Agreement and the other Loan Documents to the “Additional Collateral” shall
also mean and be a reference to the Additional Collateral granted by such
Additional Grantor and each reference in this Agreement to a Schedule shall
also mean and be a reference to the schedules attached to such Security
Agreement B Supplement.

 

Section 19. Notices, Etc.  All notices and other communications provided
for hereunder shall be in writing (including telecopier) and mailed, telecopied
or otherwise delivered, in the case of the Borrower or the Collateral Agent,
addressed to it at its address specified in the Revolving Agreements and, in
the case of each Grantor other than the Borrower, addressed to it at its
address set forth opposite such Grantor’s name on the signature pages hereto
or on the signature page to the Security Agreement B Supplement pursuant
to which it became a party hereto; or, as to any party, at such other address
as shall be designated by such party in a written 

 

 

notice to the other parties.  All such notices and other communications
shall, when mailed, telegraphed or telecopied, be effective when deposited in
the mails, delivered to the telegraph company or transmitted by telecopier,
respectively.  Delivery by telecopier of
an executed counterpart of a signature page to any amendment or waiver of
any provision of this Agreement of any Exhibit hereto to be executed and
delivered hereunder shall be effective as delivery of an original executed
counterpart thereof.  As agreed to among
the Borrower, the Collateral Agent and the applicable Secured Parties from time
to time, notices and other communications may also be delivered by e-mail to
the e-mail address of a representative of the applicable Person provided from
time to time by such Person.

 

Section 20. Continuing Security Interest;
Assignments under the Loan Agreements. 
This Agreement shall create a continuing security interest in the
Additional Collateral and shall (a) remain in full force and effect until
the payment in full in cash of the Secured Obligations (other than contingent
indemnification obligations as to which no demand has been made), (b) be
binding upon each Grantor, its successors and assigns and (c) inure,
together with the rights and remedies of the Collateral Agent hereunder, to the
benefit of the Secured Parties and their respective successors, transferees and
assigns.  Without limiting the generality
of the foregoing clause (c), any Lender may assign or otherwise transfer
all or any portion of its rights and obligations under the applicable Loan
Agreement(s) (including, without limitation, all or any portion of the
Loans owing to it and the Note or Notes, if any, held by it) to any other
Person, and such other Person shall thereupon become vested with all the
benefits in respect thereof granted to such Lender herein or otherwise.

 

Section 21. Release; Termination.  (a)  Upon any sale, lease, transfer or
other disposition of any item of Additional Collateral of any Grantor in
accordance with the terms of the Loan Documents, the Collateral Agent will, at
such Grantor’s expense, execute and deliver to such Grantor such documents as
such Grantor shall reasonably request to evidence the release of such item of
Additional Collateral from the assignment and security interest granted hereby;
provided, however, that (i) at the time of such
request and such release no Event of Default shall have occurred and be
continuing, (ii) such Grantor shall have delivered to the Collateral
Agent, prior to the date of the proposed release, a written request for release
describing the item of Additional Collateral, together with a form of release
for execution by the Collateral Agent and a certificate of such Grantor to the
effect that the transaction is in compliance with the Loan Documents and as to
such other matters as the Collateral Agent may reasonably request, (iii) the
proceeds of any such sale, lease, transfer or other disposition required to be
applied, or any payment to be made in connection therewith, in accordance with
the terms of this Agreement and (iv) with respect to sales of Equipment
and Inventory in the ordinary course of business and other sales and
dispositions that are explicitly permitted by the Loan Agreements, the Liens
granted herein shall be deemed to be released with no further action on the
part of any Person.

 

(b)           Upon the payment in full in cash of
the Secured Obligations (other than contingent indemnification obligations as
to which no demand has been made) and the termination of the Aggregate
Commitment (as defined in each of the Loan Agreements), the pledge and security
interest granted hereby shall terminate and all rights to the Additional
Collateral shall revert to the applicable Grantor.  Upon any such termination, the Collateral
Agent will, at the applicable Grantor’s expense, execute and deliver to such
Grantor such documents as such Grantor shall reasonably request to evidence
such termination.

 

Section 22. Execution in Counterparts.  This Agreement may be executed in any number
of counterparts and by different parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.  Delivery of an executed signature page of
this Agreement by facsimile transmission or electronic transmission (i.e., a “pdf”
or “tif”) shall be effective as delivery of an original executed counterpart of
this Agreement.

 

Section 23. Jurisdiction; Governing Law, Etc.
(a) Each of the parties hereto hereby irrevocably and unconditionally
submits, for itself and its property, to the nonexclusive jurisdiction of any
New York State court or Federal court of the United States of America sitting
in New York City, and any appellate court from any thereof, in any action or
proceeding arising out of or relating to this Agreement or any of the other
Loan Documents to which it is a party, or for recognition or enforcement of any
judgment, and each of the parties hereto hereby irrevocably and unconditionally
agrees that all claims in respect of any such action or proceeding may be heard
and determined in any such New York State court or, to the fullest extent
permitted by law, in such Federal court. 
Each of the parties hereto agrees that a final judgment in any such
action or proceeding shall be conclusive and may be enforced 

 

 

in other jurisdictions by suit on the judgment or in
any other manner provided by law. 
Nothing in this Agreement shall affect any right that any party may
otherwise have to bring any action or proceeding relating to this Agreement or
any of the other Loan Documents in the courts of any jurisdiction.

 

(b)           EACH OF THE PARTIES HERETO
IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT IT MAY LEGALLY
AND EFFECTIVELY DO SO, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO
THE LAYING OF VENUE OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS TO WHICH IT IS A
PARTY IN ANY NEW YORK STATE OR FEDERAL COURT. 
EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE
MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.

 

(c)           THIS AGREEMENT AND THE NOTES SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK.

 

(d)           EACH
OF THE GRANTORS AND THE COLLATERAL AGENT IRREVOCABLY WAIVES ALL RIGHT TO TRIAL
BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT,
TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO ANY OF THE LOAN DOCUMENTS, THE
LOANS OR THE ACTIONS OF THE AGENT OR ANY LENDER IN THE NEGOTIATION,
ADMINISTRATION, PERFORMANCE OR ENFORCEMENT THEREOF.

 

[Rest of this page intentionally left blank.]

 

 

IN
WITNESS WHEREOF, each of the undersigned have caused this Agreement to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.

 

	
   

  	
   

  	
  JPMORGAN CHASE BANK, N.A., AS

  
	
   

  	
   

  	
  COLLATERAL AGENT

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
  WHOLE FOODS MARKET, INC.

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
  Address for Notices:

  	
       [OTHER GRANTORS]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
       By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
				

 

 

Schedule I
to the

Security Agreement B

 

LOCATION, CHIEF EXECUTIVE OFFICE, TYPE OF
ORGANIZATION, JURISDICTION OF ORGANIZATION AND ORGANIZATIONAL IDENTIFICATION
NUMBER

 

	
  Grantor

  	
   

  	
  Location

  	
   

  	
  Chief

  Executive

  Office

  	
   

  	
  Type of

  Organization

  	
   

  	
  Jurisdiction

  of

  Organization

  	
   

  	
  Organizational

  I.D. No.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

Schedule II
to the

Security Agreement B

CHANGES IN NAME, LOCATION, ETC.

 

 

Exhibit A to the

Security Agreement B

 

FORM OF SECURITY
AGREEMENT B SUPPLEMENT

 

[Date of Security Agreement B Supplement]

 

JPMORGAN CHASE BANK, N.A.,

as the Collateral Agent for the

Secured Parties referred to in the

Loan Agreements  referred to below

 

Attn: 

 

WHOLE FOODS MARKET, INC.

 

Ladies and Gentlemen:

 

Reference
is made to (i) the Term Loan Agreement dated as of August [  ], 2007 (as amended, amended and restated,
supplemented or otherwise modified from time to time, the “Term Loan
Agreement”), among the Borrower, Royal Bank of Canada, as administrative
agent for the lenders from time to time parties thereto, JPMorgan Chase Bank,
N.A., and            as
[joint] syndication agent[s],            
as documentation agent,                 
as managing agent and RBC Capital Markets and J. P. Morgan Securities Inc., as
joint lead arrangers and joint bookrunners, (ii)  the Revolving Credit
Loan Agreement dated as of August [ 
], 2007 (as amended, amended and restated, supplemented or otherwise
modified from time to time, the “Revolving Loan Agreement”), among the
Borrower, JPMorgan Chase Bank, N.A., as administrative agent for the lenders
from time to time parties thereto, Royal Bank of Canada, as syndication agents,
and J. P. Morgan Securities Inc. and RBC Capital Markets, as joint lead
arrangers and joint bookrunners, and (iii) the Security Agreement B dated
[                   ],
2007 (as amended, amended and restated, supplemented or otherwise modified from
time to time, the “Security Agreement B”) made by the Grantors from time to
time party thereto in favor of JPMorgan Chase Bank, N.A. as collateral agent
(together with any successor collateral agent, the “Collateral Agent”) for the Secured
Parties under the Term Loan Agreement and the Revolving Loan Agreement (the
Term Loan Agreement and the Revolving Loan Agreement being sometimes
hereinafter collectively referred to as the “Loan Agreements”).  Terms defined in the Loan Agreements or the
Security Agreement B and not otherwise defined herein are used herein as
defined in the Loan Agreements or the Security Agreement B.

 

SECTION 1. 
Grant of Security.  The
undersigned hereby grants to the Collateral Agent, for the ratable benefit of
the Secured Parties under the Loan Documents, a security interest in, all of
its right, title and interest in and to all of the Additional Collateral of the
undersigned, whether now owned or hereafter acquired by the undersigned,
wherever located and whether now or hereafter existing or arising, including,
without limitation, the property and assets of the undersigned set forth on the
attached supplemental schedules to the Schedules to the Security Agreement B.

 

SECTION 2. 
Security for Obligations. 
The grant of a security interest in the Additional Collateral by the
undersigned under this Security Agreement B Supplement and the Security
Agreement B secures the payment of all Indebtedness and other obligations of
the undersigned now or hereafter existing under or in respect of the Loan
Documents, whether direct or indirect, absolute or contingent, and whether for
principal, reimbursement obligations, interest, premiums, penalties, fees, indemnifications,
contract causes of action, costs, expenses or otherwise.  Without limiting the generality of the
foregoing, this Security Agreement B Supplement and the Security Agreement B
secure the payment of all amounts that constitute part of the Secured
Obligations and that would be owed by the undersigned to any Secured Party
under the Loan Documents but for the fact that such 

 

 

Secured Obligations are unenforceable or not allowable due to the
existence of a bankruptcy, reorganization or similar proceeding involving a
Loan Party.

 

SECTION 3. 
Supplements to Security Agreement B Schedules.  The undersigned has attached hereto
supplemental Schedules I and II to Schedules I and II, respectively, to
the Security Agreement B, and the undersigned hereby certifies, as of the date
first above written, that such supplemental schedules have been prepared by the
undersigned in substantially the form of the equivalent Schedules to the
Security Agreement B and are complete and correct.

 

SECTION 4. 
Representations and Warranties. 
The undersigned hereby makes each representation and warranty set forth
in Section 4 of the Security Agreement B (as supplemented by the attached
supplemental schedules) to the same extent as each other Grantor.

 

SECTION 5. 
Obligations Under the Security Agreement B.  The undersigned hereby agrees, as of the date
first above written, to be bound as a Grantor by all of the terms and
provisions of the Security Agreement B to the same extent as each of the other
Grantors.  The undersigned further
agrees, as of the date first above written, that each reference in the Security
Agreement B to an “Additional Grantor” or a “Grantor” shall also mean and be a
reference to the undersigned.

 

SECTION 6. 
Governing Law.  This
Security Agreement B Supplement shall be governed by, and construed in
accordance with, the laws of the State of New York.

 

	
   

  	
   

  	
  Very truly yours,

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  [NAME OF ADDITIONAL GRANTOR]

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Address for notices:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
					

 

 

NOTE: A request for confidential
treatment has been made with respect to the portions of the following document
that are marked with [*CONFIDENTIAL*]. 
The redacted portions have been filed separately with the SEC.

 

Schedule 1.1(a)

Disclosed Divestitures

 

Part A

 

1.             Sale of Henry’s and Sun Harvest
stores, and related Southern California distribution center.

 

Part B

 

2.             Divestiture of such of the Wild
Oats stores as may be mandated by the FTC/DOJ in connection with their legal
challenge to consummation of the Transactions.

 

 

NOTE: A request for confidential
treatment has been made with respect to the portions of the following document
that are marked with [*CONFIDENTIAL*]. 
The redacted portions have been filed separately with the SEC.

 

Schedule 1.1(b)

 

EBIT/EBITDA

(in millions)

 

For
the Fiscal Quarter ending on 1/14/07

 

·      EBIT shall be:  $95.2

·      EBITDA shall be:  $154.4

 

For
the Fiscal Quarter ending on 4/08/07

 

·      EBIT shall be:  $86.1

·      EBITDA shall be:  $135.2

 

For the Fiscal Quarter
ending on 6/01/07

 

·      EBIT shall be:  $89.5

·      EBITDA shall be:  $138.2

 

2

 

NOTE: A request for confidential
treatment has been made with respect to the portions of the following document
that are marked with [*CONFIDENTIAL*]. 
The redacted portions have been filed separately with the SEC.

 

Schedule 1.1(c)

Guarantors

 

[*CONFIDENTIAL*]

 

Allegro
Coffee Company, a Colorado corporation

 

Mrs. Gooch’s
Natural Food Markets, Inc., a California corporation

 

Nature’s
Heartland, Inc., a Massachusetts corporation

 

The
Sourdough, A European Bakery, Inc., a Texas corporation

 

WFM
Beverage Corp., a Texas corporation

 

WFM
Beverage Holding Company, a Texas corporation

 

WFM
Gift Card, LLC, a Virginia limited liability company

 

WFM
Hawaii, LLC, a Hawaii limited liability company

 

WFM
IP Investments, Inc., a Delaware corporation

 

WFM
IP Management, Inc., a Delaware corporation

 

WFM
Northern Nevada, Inc., a Delaware corporation

 

WFM
Private Label Management, Inc., a Delaware corporation

 

WFM
Private Label, L.P., a Delaware limited partnership

 

WFM
Procurement Investments, Inc., a Delaware corporation

 

WFM
Properties Scottsdale, LLC, a Delaware limited liability company

 

WFM
Properties, L.P., a Texas limited partnership

 

WFM
Purchasing Management, Inc., a Delaware corporation

 

WFM
Purchasing, L.P., a Delaware limited partnership

 

WFM
Select Fish, Inc., a Delaware corporation

 

WFM
Southern Nevada, Inc., a Delaware corporation

 

WFMI
Merger Co., a Delaware corporation

 

3

 

NOTE: A request for confidential
treatment has been made with respect to the portions of the following document
that are marked with [*CONFIDENTIAL*]. 
The redacted portions have been filed separately with the SEC.

 

Whole
Food Company, Inc., a Louisiana corporation

 

Whole
Foods Market Brand 365, LLC, a California limited liability company

 

Whole
Foods Market California, Inc., a California corporation

 

Whole
Foods Market Distribution, Inc., a Delaware corporation

 

Whole
Foods Market Finance, Inc., a Delaware corporation

 

Whole
Foods Market Group, Inc., a Delaware corporation

 

Whole
Foods Market IP, L.P., a Delaware limited partnership

 

Whole
Foods Market Pacific Northwest, Inc., a Delaware corporation

 

Whole
Foods Market Procurement, Inc., a Delaware corporation

 

Whole
Foods Market Rocky Mountain/Southwest I, Inc., a Delaware corporation

 

Whole
Foods Market Rocky Mountain/Southwest, L.P., a Texas limited partnership

 

Whole
Foods Market Services, Inc., a Delaware corporation

 

Whole
Foods Market Southwest Investments, Inc., a Delaware corporation

 

4

 

NOTE: A request for confidential
treatment has been made with respect to the portions of the following document
that are marked with [*CONFIDENTIAL*]. 
The redacted portions have been filed separately with the SEC.

 

SCHEDULE 1.1 (d)

EXISTING LETTERS OF CREDIT

 

I.              WHOLE FOODS MARKET, INC.

 

	
  LOC #

  	
   

  	
  ISSUER

  	
   

  	
  BENEFICIARY

  	
   

  	
  AMOUNT

  	
   

  	
  EXPIRATION

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  a.

  	
   

  	
  i-463934

  	
   

  	
  JPMorgan
  Chase Bank, N.A.

  	
   

  	
  *CONFIDENTIAL*

  	
   

  	
  *CONFIDENTIAL*

  	
   

  	
  *CONFIDENTIAL*

  	
   

  
	
  b.

  	
   

  	
  SBD-231337

  	
   

  	
  JPMorgan
  Chase Bank, N.A.

  	
   

  	
  *CONFIDENTIAL*

  	
   

  	
  *CONFIDENTIAL*

  	
   

  	
  *CONFIDENTIAL*

  	
   

  
	
  c.

  	
   

  	
  TDTS-636991

  	
   

  	
  JPMorgan
  Chase Bank, N.A.

  	
   

  	
  *CONFIDENTIAL*

  	
   

  	
  *CONFIDENTIAL*

  	
   

  	
  *CONFIDENTIAL*

  	
   

  
	
  d.

  	
   

  	
  TDTS-230794

  	
   

  	
  JPMorgan
  Chase Bank, N.A.

  	
   

  	
  *CONFIDENTIAL*

  	
   

  	
  *CONFIDENTIAL*

  	
   

  	
  *CONFIDENTIAL*

  	
   

  

 

II.            WILD OATS MARKETS, INC.

 

	
  LOC #

  	
   

  	
  ISSUER

  	
   

  	
  BENEFICIARY

  	
   

  	
  AMOUNT

  	
   

  	
  EXPIRATION

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  a.

  	
   

  	
  3085815

  	
   

  	
  Bank
  of America

  	
   

  	
  Capitol
  Indemnity 

  Corporation and/or 

  Platte River Ins. Co.

  	
   

  	
  $

  	
  1,075,000.00

  	
   

  	
  11/30/2007

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  b.

  	
   

  	
  3078322

  	
   

  	
  Bank
  of America

  	
   

  	
  Liberty
  Mutual 

  Insurance Company

  	
   

  	
  $

  	
  7,448,000.00

  	
   

  	
  9/30/2007

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  c.

  	
   

  	
  3076234

  	
   

  	
  Bank
  of America

  	
   

  	
  Park
  Blvd Holdings,

  a California Limited

  Partnership

  	
   

  	
  $

  	
  100,000.00

  	
   

  	
  11/30/2007

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  d.

  	
   

  	
  3076235

  	
   

  	
  Bank
  of America

  	
   

  	
  Pinecrest
  Plaza LLC,

  a Florida Ltd

  Liability Company

  	
   

  	
  $

  	
  549,514.00

  	
   

  	
  11/30/2007

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  e.

  	
   

  	
  3076236

  	
   

  	
  Bank
  of America

  	
   

  	
  Travelers
  Indemnity

  Company

  	
   

  	
  $

  	
  6,035,000.00

  	
   

  	
  9/30/2007

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  f.

  	
   

  	
  3076237

  	
   

  	
  Bank
  of America

  	
   

  	
  Travelers
  Indemnity

  Company

  	
   

  	
  $

  	
  422,000.00

  	
   

  	
  9/30/2007

  	
   

  

 

5

 

NOTE: A request for confidential
treatment has been made with respect to the portions of the following document
that are marked with [*CONFIDENTIAL*]. 
The redacted portions have been filed separately with the SEC.

 

Schedule 2.1(a)

Commitments

 

	
  Name of Lender

  	
   

  	
  Commitment

  	
   

  	
  Commitment

  Percentage

  	
   

  
	
  JPMorgan Chase Bank, N.A.

  	
   

  	
  $

  	
  50,000,000.00

  	
   

  	
  20.0

  	
  %

  
	
  Royal Bank of Canada

  	
   

  	
  $

  	
  50,000,000.00

  	
   

  	
  20.0

  	
  %

  
	
  Wells Fargo Bank, N A

  	
   

  	
  $

  	
  42,500,000.00

  	
   

  	
  17.0

  	
  %

  
	
  LaSalle Bank Midwest, N.A.

  	
   

  	
  $

  	
  30,000,000.00

  	
   

  	
  12.0

  	
  %

  
	
  Wachovia Bank, N.A.

  	
   

  	
  $

  	
  30,000,000.00

  	
   

  	
  12.0

  	
  %

  
	
  Fortis Capital

  	
   

  	
  $

  	
  20,000,000.00

  	
   

  	
  8.0

  	
  %

  
	
  U.S. Bank, National Association

  	
   

  	
  $

  	
  17,500,000.00

  	
   

  	
  7.0

  	
  %

  
	
  Bank of America, N.A.

  	
   

  	
  $

  	
  10,000,000.00

  	
   

  	
  4.0

  	
  %

  
	
  Total

  	
   

  	
  $

  	
  250,000,000.00

  	
   

  	
  100

  	
  %

  

 

6

 

NOTE: A request for confidential
treatment has been made with respect to the portions of the following document
that are marked with [*CONFIDENTIAL*]. 
The redacted portions have been filed separately with the SEC.

 

Schedule 3.2(e)

Litigation

 

None

 

7

 

NOTE: A request for confidential
treatment has been made with respect to the portions of the following document
that are marked with [*CONFIDENTIAL*]. 
The redacted portions have been filed separately with the SEC.

 

Schedule 4.8

Subsidiaries

 

[*CONFIDENTIAL*]

 

5.             Allegro Coffee Company, a
Colorado corporation

 

[*CONFIDENTIAL*]

 

9.             Fresh & Wild
Holding Limited, a company incorporated in England and Wales

 

10.           Fresh & Wild
Limited, a company incorporated in England and Wales (Parent: Fresh &
Wild Holding Limited)

 

11.           Freshlands Holdings Limited,
a company incorporated in England and Wales (Parent: Fresh & Wild
Limited)

 

12.           Freshlands Limited, a
company incorporated in England and Wales (Parent: Freshlands Holdings Limited)

 

[*CONFIDENTIAL*]

 

19.           Mrs. Gooch’s Natural
Food Markets, Inc., a California corporation

 

20.           Nature’s Heartland, Inc.,
a Massachusetts corporation (Parent: Whole Foods Market Group, Inc.)

 

[*CONFIDENTIAL*]

 

26.           The Sourdough, A European
Bakery, Inc., a Texas corporation (Parent: Whole Foods Market Southwest
Investments, Inc.)

 

[*CONFIDENTIAL*]

 

28.           WFM Beverage Corp., a Texas
corporation (Parent: WFM Beverage Holding Company)

 

29.           WFM Beverage Holding
Company, a Texas corporation

 

[*CONFIDENTIAL*]

 

31.           WFM Gift Card, LLC, a
Virginia limited liability company (Parent: Whole Foods Market Group, Inc.

 

8

 

NOTE: A request for confidential
treatment has been made with respect to the portions of the following document
that are marked with [*CONFIDENTIAL*]. 
The redacted portions have been filed separately with the SEC.

 

32.           WFM Hawaii, LLC, a Hawaii
limited liability company (Parent: Mrs. Gooch’s Natural Food Markets, Inc.)

 

[*CONFIDENTIAL*]

 

34.           WFM IP Investments, Inc.,
a Delaware corporation

 

35.           WFM IP Management, Inc.,
a Delaware corporation

 

36.           WFM Northern Nevada, Inc.,
a Delaware corporation (Parent: Whole Foods Market California, Inc.)

 

37.           WFM Private Label Management, Inc.,
a Delaware corporation (Parent: Whole Foods Market Procurement, Inc.)

 

38.           WFM Private Label, L.P., a Delaware limited
partnership (General Partner (0.01%): WFM Private Label Management, Inc.;
Limited Partner (99.99%): WFM Procurement Investments, Inc.)

 

39.           WFM Procurement Investments, Inc.,
a Delaware corporation (Parent: Whole Foods Market Procurement, Inc.)

 

[*CONFIDENTIAL*]

 

42.           WFM Properties Holdings, Inc.,
a Delaware corporation

 

43.           WFM Properties Investments, Inc.,
a Delaware corporation (Parent: WFM Properties Holdings, Inc.)

 

44.           WFM Properties Management, Inc.,
a Delaware corporation (WFM Properties Holdings, Inc.)

 

[*CONFIDENTIAL*]

 

46.           WFM Properties Scottsdale,
LLC, a Delaware limited liability company (Parent: GBD Properties, Inc.)

 

47.           WFM Properties, L.P., a Texas limited partnership
(General Partner (0.01%): WFM Properties Management, Inc.; Limited Partner
(99.99%): WFM Properties Investments, Inc.)

 

48.           WFM Purchasing Management, Inc.,
a Delaware corporation (Parent: Whole Foods Market Procurement, Inc.)

 

9

 

NOTE: A request for confidential
treatment has been made with respect to the portions of the following document
that are marked with [*CONFIDENTIAL*]. 
The redacted portions have been filed separately with the SEC.

 

49.           WFM Purchasing, L.P., a Delaware limited partnership
(General Partner (0.01%): WFM Purchasing Management, Inc.; Limited Partner
(99.99%): WFM Procurement Investments, Inc.)

 

50.           WFM Select Fish, Inc.,
a Delaware corporation

 

51.           WFM Southern Nevada, Inc.,
a Delaware corporation (Parent: Mrs. Gooch’s Natural Food Markets, Inc.)

 

52.           WFMI Merger Co., a Delaware
corporation

 

53.           Whole Food Company, Inc.,
a Louisiana corporation (Parent: Whole Foods Market Southwest Investments, Inc.

 

54.           Whole Foods Market Brand
365, LLC, a California limited liability company (Parent: Whole Foods Market
Services, Inc.)

 

55.           Whole Foods Market
California, Inc., a California corporation

 

56.           Whole Foods Canada, Inc.,
a Canada corporation

 

57.           Whole Foods Market
Distribution, Inc., a Delaware corporation

 

58.           Whole Foods Market Finance, Inc.,
a Delaware corporation

 

59.           Whole Foods Market Group, Inc.,
a Delaware corporation

 

60.           Whole Foods Market IP, L.P., a Delaware limited
partnership (General Partner (0.01%): WFM IP Management, Inc.; Limited
Partner (99.99%): WFM IP Investments, Inc.)

 

61.           Whole Foods Market Pacific
Northwest, Inc., a Delaware corporation

 

62.           Whole Foods Market
Procurement, Inc., a Delaware corporation

 

63.           Whole Foods Market Rocky
Mountain/Southwest I, Inc., a Delaware corporation

 

64.           Whole Foods Market Rocky
Mountain/Southwest, L.P., a Texas limited partnership (General Partner (1%):
Whole Foods Market Rocky Mountain/Southwest I, Inc.; Limited Partner
(99%): Whole Foods Market Southwest Investments, Inc.)

 

65.           Whole Foods Market Services, Inc.,
a Delaware corporation

 

66.           Whole Foods Market Southwest
Investments, Inc., a Delaware corporation

 

10

 

NOTE: A request for confidential
treatment has been made with respect to the portions of the following document
that are marked with [*CONFIDENTIAL*]. 
The redacted portions have been filed separately with the SEC.

 

67.           YellowFrames Limited, a
company incorporated in England and Wales (Parent: Fresh & Wild
Limited)

 

11

 

NOTE: A request for confidential
treatment has been made with respect to the portions of the following document
that are marked with [*CONFIDENTIAL*]. 
The redacted portions have been filed separately with the SEC.

 

Schedule 4.13

Assumed Names

 

Whole
Foods Market

 

Fresh
Fields

 

Fresh
Fields Whole Foods Market

 

Merchant
of Vino

 

Whole
Foods Market Southwest, L.P.

 

Whole
Foods Market Southwest

 

Whole
Foods Market Southwest Distribution Center

 

Whole
Foods Market Rocky Mountain, L.P.

 

Whole
Foods Market Rocky Mountain

 

Whole
Hearth

 

12

 

NOTE: A request for confidential
treatment has been made with respect to the portions of the following document
that are marked with [*CONFIDENTIAL*]. 
The redacted portions have been filed separately with the SEC.

 

Schedule 4.16

Agreements

 

1.             All credit agreements for
borrowed money (other than the indebtedness governed hereby), indentures and
capitalized leases and all Property subject to any Lien securing such Indebtedness
or lease obligation

 

None other than as
summarized in Company’s SEC filings or with respect to liens described in Section 6.2(b) through
6.2(i)

 

2.             Letter of credit and
guaranty for which the liability or potential liability of the Company and its
Subsidiaries on a consolidated basis is in excess of $250,000

 

                None other than as
summarized in Company’s SEC filings

 

3.             Other material instruments
in effect as of the date hereof providing for, evidencing, securing or
otherwise relating to any indebtedness for borrowed money of the Company or any
of its Subsidiaries (other than the Indebtedness hereunder and Indebtedness
secured by Incidental Liens)

 

                None other than as
summarized in Company’s SEC filings or with respect to liens described in Section 6.2(b) through
6.2(i)

 

4.             Obligations of the Company
or any of its Subsidiaries to issuers of appeal bonds issued for account of the
Company or any of its Subsidiaries.

 

None

 

13

 

NOTE: A request for confidential
treatment has been made with respect to the portions of the following document
that are marked with [*CONFIDENTIAL*]. 
The redacted portions have been filed separately with the SEC.

 

Schedule 6.2(a)

Liens

 

Mrs. Gooch
Natural Food Markets, Inc.

 

11/26/02;
Citicorp Vendor Finance (Equipment Lease); #0233660421

 

Whole
Foods Market California, Inc.

 

11/24/02;
US Bancorp (Equipment Lease); #0226860364

3/21/05;
Robert Reiser & Co. (Equipment Lease); #05-7019828060

6/29/06;
United Rentals, Inc. (Equipment Lease); #06-7075949885

5/24/07;
Bank of America Leasing & Capital (Equipment Lease); #07-7115128719

5/25/07;
Bank of America Leasing & Capital (Equipment Lease) (2 filings);
#07-7115332170

7/23/07;
Bank of America Leasing & Capital (Equipment Lease); # 07-7122379816

7/24/07;
Bank of America Leasing & Capital (Equipment Lease); #07-7122591034

 

Whole
Foods Market Distribution, Inc.

 

12/05/03;
Recycle America Alliance, LLC (Equipment Lease); #33194050

 

Whole
Foods Market Group, Inc.

 

9/3/02;
American Bank Note Company, as agent for USPS (Consignment); #22214041

9/25/02;
IBM Credit Corporation (Equipment Lease); #22469553

10/23/02;
IBM Credit Corporation (Equipment Lease); #22769119

7/17/03;
Patriot Commercial Leasing Co. (Equipment Lease); #30309347

2/28/03;
American Bank Note Company, as agent for USPS (Consignment); #30498843

2/5/03;
Crown Credit Company (Equipment Lease); #30571797

3/10/03;
Crown Credit Company (Equipment Lease); #30576762

2/28/03;
Crown Credit Company (Equipment Lease) (2 filings); #30687692, #30687734

11/13/03;
Crown Credit Company (Equipment Lease); #32987553

4/29/04;
Crown Credit Company (Equipment Lease); #41198490

9/7/04;
Crown Credit Company (Equipment Lease); #42507442

1/20/05;
Crown Credit Company (Equipment Lease); #50223173

2/14/05;
Crown Credit Company (Equipment Lease); #50494329

2/25/05;
Crown Credit Company (Equipment Lease); #50613555

4/12/05;
Crown Credit Company (Equipment Lease); #51116608

8/8/05;
Crown Credit Company (Equipment Lease) (3 filings); #52438548; 52442847

8/25/05;
Crown Credit Company (Equipment Lease); #52647692

3/10/03;
US Bancorp (Equipment Lease); #30576762

3/31/03;
US Bancorp (Equipment Lease); #30879927

4/28/03;
US Bancorp (Equipment Lease); #31260093

 

14

 

NOTE: A request for confidential
treatment has been made with respect to the portions of the following document
that are marked with [*CONFIDENTIAL*]. 
The redacted portions have been filed separately with the SEC.

 

11/26/03;
US Bancorp (Equipment Lease); #33125294

3/10/04;
US Bancorp (Equipment Lease); #30576762

3/16/04;
US Bancorp (Equipment Lease); #40729923

9/7/06;
US Bancorp (Equipment Lease); #42507442

4/15/03;
IOS Capital LLC (Equipment Lease); #30972052

7/27/04;
IOS Capital LLC (Equipment Lease); #42162065

3/12/04;
Robert Reiser & Co. (Equipment Lease); #4078888

2/11/04;
IOS Capital LLC (Equipment Lease); #40511099

3/8/07;
IOS Capital LLC (Equipment Lease); #0867464

1/8/04;
Konica Minolta Business Solutions (Equipment Lease); #40044737

4/1/05;
Greater Bay Bank (Equipment Lease); #50993692

10/6/04;
First Access (Equipment Lease); #42808394

8/30/05;
Robert Reiser & Co. (Equipment Lease); #52688258

7/28/06;
Robert Reiser & Co. (Equipment Lease); #62611614

12/14/06;
Robert Reiser & Co. (Equipment Lease); #64372520

3/20/07;
Robert Reiser & Co. (Equipment Lease); #1028397

9/7/05;
Citicapital Technology Finance (Equipment Lease); #52762764

9/23/05;
Citicapital Technology Finance (Equipment Lease); #52996289

5/30/06;
NMHG Financial Services (Equipment Lease); #61817121

 

Whole
Foods Market, Inc.

 

6/10/04;
Crown Credit Company (Equipment Lease); #04-0070989027

6/15/04;
Crown Credit Company (Equipment Lease) (2 filings); #04-0071408034,
#04-0071408145

6/21/04;
Crown Credit Company (Equipment Lease) (2 filings); #04-0072049804,
#04-0072062556

6/24/04;
Crown Credit Company (Equipment Lease); #04-0072582240

6/29/04;
Crown Credit Company (Equipment Lease); #04-0072992124

10/14/04;
Crown Credit Company (Equipment Lease); #04-0085079881

10/25/04;
Crown Credit Company (Equipment Lease); #04-0086111233

5/23/05;
Crown Credit Company (Equipment Lease); #05-0016055860

5/24/05;
Crown Credit Company (Equipment Lease) (2 filings); #05-0016243415,
#05-001623526

12/19/05;
Crown Credit Company (Equipment Lease); #05-0038612843

3/18/02;
NCR Corporation (Equipment Lease); #02-0022852708

4/29/02;
NMHG Financial Services (Equipment Lease); #02-0027956536

9/11/03;
American Bank Note, as agent for USPS (Consignment); #04-0041483498

9/30/05;
IBM Credit (Equipment Lease); #05-0030547216

6/26/07;
US Express Leasing (Equipment Lease); #07-0021504998

 

Allegro
Coffee Company, Inc.

 

2/11/05;
Air Liquide Industrial US, LP (Equipment Lease); #20052016259

 

15

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