10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C.  20549

FORM 10-Q

xQuarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

for the period ended July 4, 2010;

or

oTransition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

for the transition period from                                    to                                   .

Commission File Number:  0-19797

WHOLE FOODS MARKET, INC.

(Exact name of registrant as specified in its charter)

Texas	74-1989366
(State of	(IRS employer
incorporation)	identification no.)

550 Bowie St.

Austin, Texas 78703

(Address of principal executive offices)

512-477-4455

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes x  No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes x  No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company (as defined in Rule 12b-2 of the Exchange Act).

Large accelerated filer x	Accelerated filer o
Non-accelerated filer o	Smaller reporting company o
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.)  Yes o  No x

The number of shares of the registrant’s common stock, no par value, outstanding as of July 4, 2010 was 171,898,661 shares.

Whole Foods Market, Inc.

Form 10-Q

Table of Contents

	Page
	Number
Part I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets (unaudited), July 4, 2010 and September 27, 2009	3
Consolidated Statements of Operations (unaudited), for the twelve and forty weeks ended July 4, 2010 and July 5, 2009	4
Consolidated Statements of Shareholders’ Equity and Comprehensive Income (unaudited), for the forty weeks ended July 4, 2010 and fiscal year ended September 27, 2009	5
Consolidated Statements of Cash Flows (unaudited), for the forty weeks ended July 4, 2010 and July 5, 2009	6
Notes to Consolidated Financial Statements (unaudited)	7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
Item 3. Quantitative and Qualitative Disclosures About Market Risk	22
Item 4. Controls and Procedures	22
Part II. Other Information
Item 1. Legal Proceedings	23
Item 5. Other Information	23
Item 6. Exhibits	24
Signature	25

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Part I. Financial Information

Item 1. Financial Statements

Whole Foods Market, Inc.

Consolidated Balance Sheets (unaudited)

July 4, 2010 and September 27, 2009

(In thousands)

	2010			2009
Assets
Current assets:
Cash and cash equivalents	$	136,144		$	430,130
Short-term investments — available-for-sale securities	294,926			—
Restricted cash	86,814			71,023
Accounts receivable	122,421			104,731
Merchandise inventories	333,554			310,602
Prepaid expenses and other current assets	44,940			51,137
Deferred income taxes	103,508			87,757
Total current assets	1,122,307			1,055,380
Property and equipment, net of accumulated depreciation and amortization	1,888,310			1,897,853
Long-term investments — available-for-sale securities	57,364			—
Goodwill	665,210			658,254
Intangible assets, net of accumulated amortization	69,363			73,035
Deferred income taxes	76,525			91,000
Other assets	9,586			7,866
Total assets	$	3,888,665		$	3,783,388
Liabilities and Shareholders’ Equity
Current liabilities:
Current installments of long-term debt and capital lease obligations	$	402		$	389
Accounts payable	203,294			189,597
Accrued payroll, bonus and other benefits due team members	235,934			207,983
Dividends payable	—			8,217
Other current liabilities	281,371			277,838
Total current liabilities	721,001			684,024
Long-term debt and capital lease obligations, less current installments	513,196			738,848
Deferred lease liabilities	284,950			250,326
Other long-term liabilities	69,600			69,262
Total liabilities	1,588,747			1,742,460
Series A redeemable preferred stock, $0.01 par value, 425 shares authorized, zero and 425 shares issued and outstanding in 2010 and 2009, respectively	—			413,052
Shareholders’ equity:
Common stock, no par value, 300,000 shares authorized, 171,899 and 140,542 shares issued and outstanding in 2010 and 2009, respectively	1,763,559			1,283,028
Accumulated other comprehensive loss	(4,713		)	(13,367		)
Retained earnings	541,072			358,215
Total shareholders’ equity	2,299,918			1,627,876
Commitments and contingencies
Total liabilities and shareholders’ equity	$	3,888,665		$	3,783,388

The accompanying notes are an integral part of these consolidated financial statements.

3

Whole Foods Market, Inc.

Consolidated Statements of Operations (unaudited)

(In thousands, except per share amounts)

	Twelve weeks ended						Forty weeks ended
	July 4,			July 5,			July 4,			July 5,
	2010			2009			2010			2009
Sales	$	2,163,181		$	1,878,338		$	6,908,400		$	6,202,391
Cost of goods sold and occupancy costs	1,402,847			1,218,029			4,499,421			4,074,047
Gross profit	760,334			660,309			2,408,979			2,128,344
Direct store expenses	567,191			499,830			1,821,702			1,654,196
General and administrative expenses	68,153			52,592			206,629			192,024
Pre-opening expenses	8,692			10,763			33,137			38,616
Relocation, store closure and lease termination costs	728			18,209			10,452			27,937
Operating income	115,570			78,915			337,059			215,571
Interest expense	(7,421		)	(7,688		)	(25,757		)	(28,964		)
Investment and other income	1,543			1,326			5,236			2,528
Income before income taxes	109,692			72,553			316,538			189,135
Provision for income taxes	43,963			29,746			128,203			78,741
Net income	65,729			42,807			188,335			110,394
Preferred stock dividends	—			7,839			5,478			20,306
Income available to common shareholders	$	65,729		$	34,968		$	182,857		$	90,088
Basic earnings per share	$	0.38		$	0.25		$	1.11		$	0.64
Weighted average shares outstanding	171,653			140,439			164,529			140,385
Diluted earnings per share	$	0.38		$	0.25		$	1.10		$	0.64
Weighted average shares outstanding, diluted basis	172,601			140,439			171,395			140,385

The accompanying notes are an integral part of these consolidated financial statements.

4

Whole Foods Market, Inc.

Consolidated Statements of Shareholders’ Equity and Comprehensive Income (unaudited)

Forty weeks ended July 4, 2010 and fiscal year ended September 27, 2009

(In thousands)

					Accumulated
					other						Total
	Shares	Common			comprehensive			Retained			shareholders’
	outstanding	stock			income (loss)			earnings			equity
Balances at September 28, 2008	140,286	$	1,266,141		$	422		$	239,461		$	1,506,024
Net income	—	—			—			146,804			146,804
Foreign currency translation adjustments	—	—			(8,748		)	—			(8,748		)
Reclassification adjustments for amounts included in income, net of income taxes	—	—			8,440			—			8,440
Change in unrealized losses, net of income taxes	—	—			(13,481		)	—			(13,481		)
Comprehensive income											133,015
Redeemable preferred stock dividends	—	—			—			(28,050		)	(28,050		)
Issuance of common stock pursuant to team member stock plans	256	4,286			—			—			4,286
Excess tax benefit related to exercise of team member stock options	—	54			—			—			54
Share-based payment expense	—	12,795			—			—			12,795
Other	—	(248		)	—			—			(248		)
Balances at September 27, 2009	140,542	1,283,028			(13,367		)	358,215			1,627,876
Net income	—	—			—			188,335			188,335
Foreign currency translation adjustments	—	—			(1,009		)	—			(1,009		)
Reclassification adjustments for amounts included in income, net of income taxes	—	—			10,019			—			10,019
Change in unrealized losses, net of income taxes	—	—			(356		)	—			(356		)
Comprehensive income											196,989
Redeemable preferred stock dividends	358	5,195			—			(5,478		)	(283		)
Conversion of preferred stock	29,311	413,052			—			—			413,052
Issuance of common stock pursuant to team member stock plans	1,688	43,953			—			—			43,953
Excess tax benefit related to exercise of team member stock options	—	2,960			—			—			2,960
Share-based payment expense	—	15,371			—			—			15,371
Balances at July 4, 2010	171,899	$	1,763,559		$	(4,713	)	$	541,072		$	2,299,918

The accompanying notes are an integral part of these consolidated financial statements.

5

Whole Foods Market, Inc.

Consolidated Statements of Cash Flows (unaudited)

(In thousands)

	Forty weeks ended
	July 4,			July 5,
	2010			2009
Cash flows from operating activities
Net income	$	188,335		$	110,394
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	211,073			204,291
Loss (gain) on disposition of fixed assets	(756		)	2,138
Impairment of long-lived assets	2,020			22,164
Share-based payment expense	15,371			8,829
LIFO benefit	(6,519		)	(2,177		)
Deferred income tax expense (benefit)	(7,178		)	32,488
Excess tax benefit related to exercise of team member stock options	(2,817		)	—
Deferred lease liabilities	31,322			39,338
Other	(1,679		)	5,141
Net change in current assets and liabilities:
Accounts receivable	(17,613		)	8,912
Merchandise inventories	(14,558		)	14,165
Prepaid expenses and other current assets	7,610			24,711
Accounts payable	13,722			(9,495		)
Accrued payroll, bonus and other benefits due team members	27,771			9,728
Other current liabilities	12,023			(270		)
Net change in other long-term liabilities	2,803			4,364
Net cash provided by operating activities	460,930			474,721
Cash flows from investing activities
Development costs of new locations	(143,379		)	(196,949		)
Other property and equipment expenditures	(56,388		)	(55,182		)
Purchase of available-for-sale securities	(888,947		)	—
Sale of available-for-sale securities	536,794			—
Increase in restricted cash	(15,791		)	(70,397		)
Payment for purchase of acquired entities, net of cash acquired	(14,450		)	—
Other investing activities	(1,075		)	(884		)
Net cash used in investing activities	(583,236		)	(323,412		)
Cash flows from financing activities
Preferred stock dividends paid	(8,500		)	(19,833		)
Issuance of common stock	43,896			2,705
Excess tax benefit related to exercise of team member stock options	2,817			—
Proceeds from issuance of redeemable preferred stock, net	—			413,052
Proceeds from long-term borrowings	—			123,000
Payments on long-term debt and capital lease obligations	(210,228		)	(320,980		)
Net cash provided by (used in) financing activities	(172,015		)	197,944
Effect of exchange rate changes on cash and cash equivalents	335			(2,752		)
Net change in cash and cash equivalents	(293,986		)	346,501
Cash and cash equivalents at beginning of period	430,130			30,534
Cash and cash equivalents at end of period	$	136,144		$	377,035
Supplemental disclosures of cash flow information:
Interest paid	$	38,494		$	42,059
Federal and state income taxes paid	$	136,195		$	27,647
Non-cash transaction:
Conversion of redeemable preferred stock into common stock	$	418,247		$	—

The accompanying notes are an integral part of these consolidated financial statements.

6

Whole Foods Market, Inc.

Notes to Consolidated Financial Statements (unaudited)

July 4, 2010

(1) Basis of Presentation

The accompanying unaudited consolidated financial statements of Whole Foods Market, Inc. and its consolidated subsidiaries (collectively “Whole Foods Market,” “Company,” or “We”) have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial statements and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. The information included in this Form 10-Q should be read in conjunction with Management’s Discussion and Analysis, the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 27, 2009. In the opinion of management, the accompanying consolidated financial statements reflect all adjustments, consisting of normal recurring accruals, considered necessary for a fair presentation. Interim results are not necessarily indicative of results for any other interim period or for a full fiscal year. The Company reports its results of operations on a fifty-two or fifty-three week fiscal year ending on the last Sunday in September. The first fiscal quarter is sixteen weeks, the second and third quarters each are twelve weeks, and the fourth quarter is twelve or thirteen weeks. Fiscal years 2010 and 2009 are fifty-two week fiscal years. We have one operating segment and a single reportable segment, natural and organic foods supermarkets. The following is a summary of percentage sales by geographic area for the periods indicated:

	Twelve weeks ended				Forty weeks ended
	July 4,		July 5,		July 4,		July 5,
	2010		2009		2010		2009
Sales:
United States	97.0	%	97.1	%	97.0	%	97.3	%
Canada and United Kingdom	3.0	%	2.9	%	3.0	%	2.7	%
Total sales	100.0	%	100.0	%	100.0	%	100.0	%

The following is a summary of the percentage of net long-lived assets by geographic area:

	July 4,		September 27,
	2010		2009
Long-lived assets, net:
United States	96.6	%	96.5	%
Canada and United Kingdom	3.4	%	3.5	%
Total long-lived assets, net	100.0	%	100.0	%

(2) Summary of Significant Accounting Policies

Fair Value Measurements

The Company records its financial assets and liabilities at fair value in accordance with the framework for measuring fair value in generally accepted accounting principles. This framework establishes a fair value hierarchy that prioritizes the inputs used to measure fair value:

·Level 1: Observable inputs that reflect unadjusted quoted prices for identical assets or liabilities traded in active markets.

·Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

·Level 3: Inputs that are generally unobservable. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value.

The Company holds money market fund investments that are classified as cash equivalents or restricted cash and available-for-sale securities generally consisting of state and local government obligations that are measured at fair value on a recurring basis based on quoted prices in active markets for identical assets. Investments are stated at fair value, based on quoted prices in active markets for identical assets, with unrealized gains and losses included as a component of shareholders’ equity until realized. The carrying amount of the Company’s interest rate swap agreement is measured at fair value on a recurring basis using a standard valuation model that incorporates inputs other than quoted prices that are observable, including interest rate curves. Declines in fair value below the Company’s carrying value deemed to be other than temporary are charged against net earnings.

The carrying amounts of trade and other accounts receivable, trade accounts payable, accrued payroll, bonuses and team member benefits, and other accrued expenses approximate fair value because of the short maturity of those instruments. Store

7

closure reserves and estimated workers’ compensation claims are recorded at net present value to approximate fair value. The carrying amount of our five-year term loan approximates fair value because it has a variable interest rate which reflects market changes to interest rates and contains variable risk premiums based on the Company’s corporate ratings.

Effective September 28, 2009, the Company adopted the provisions of Accounting Standards Codification (“ASC”) 820, “Fair Value Measurements and Disclosures,” for nonfinancial assets and liabilities. Specifically, the Company measures certain property and equipment and intangible assets at fair value resulting from impairment as applicable. The fair value is determined using management’s best estimate based on a discounted cash flow model based on future store operating results using internal projections. When the Company determines assets related to an operating location are impaired, a charge to write down the related assets to fair value is included in the “Direct store expenses” line item on the Consolidated Statements of Operations. When the Company commits to relocate, close, or dispose of a location, a charge to write down the related assets is included in the “Relocation, store closure and lease termination costs” line item on the Consolidated Statements of Operations.

Effective January 18, 2010, the Company adopted the provisions of Accounting Standards Update (“ASU”) No. 2010-06, “Improving Disclosures about Fair Value Measurements.” Specifically, the Company updated the determination of a class of assets or liabilities for which separate fair value measurement should be disclosed and the need to disclose valuation techniques used to measure both recurring and nonrecurring Level 2 or Level 3 fair value measurements, based on clarified guidance. Expanded disclosures related to significant transfers in and out of Level 1 and Level 2, and the requirement related to the presentation of the Level 3 reconciliation are not applicable to the Company at July 4, 2010 as we had no transfers in valuation levels or Level 3 financial assets and liabilities.

Details on the fair value of the Company’s assets and liabilities recorded at fair value are included in Note 3 to the consolidated financial statements, “Fair Value Measurements.”

Recent Accounting Pronouncements

In December 2007, the Financial Accounting Standards Board (“FASB”) issued new guidance within ASC 805, “Business Combinations,” which replaces previous guidance on this topic and applies to all transactions or other events in which an entity obtains control of one or more businesses, including those sometimes referred to as “true mergers” or “mergers of equals” and combinations achieved without the transfer of consideration. The new provisions establish principles and requirements for how the acquirer recognizes and measures identifiable assets acquired, liabilities assumed, any noncontrolling interest and goodwill acquired, and also provide for disclosures to enable users of the financial statements to evaluate the nature and financial effects of the business combination. Additional amendments address the recognition and initial measurement, subsequent measurement, and disclosure of assets and liabilities arising from contingencies acquired as part of a business combination. The newly issued guidance is effective for fiscal years beginning after December 15, 2008 and is applied prospectively to business combinations completed on or after that date. The provisions are effective for the Company’s fiscal year ending September 26, 2010. We do not expect the adoption of these provisions to have a significant effect on our consolidated financial statements.

In April 2008, the FASB issued amendments to ASC 350, “Intangibles — Goodwill and Other.” These provisions amend the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset. The intent of the position is to improve the consistency between the determination of the useful life of a recognized intangible asset and the period of expected cash flows used to measure the fair value of the asset. The amended guidance is effective for fiscal years beginning after December 15, 2008. These provisions are effective for the Company’s fiscal year ending September 26, 2010. We do not expect the adoption of these provisions to have a significant effect on our consolidated financial statements.

In March 2010, the FASB issued ASU No. 2010-11, “Derivatives and Hedging,” which amends ASC 815, “Derivatives and Hedging.” The amended guidance clarifies the scope exception for embedded credit derivative features related to the transfer of credit risk in the form of subordination of one financial instrument to another. The amendments address how to determine which embedded credit derivative features, including those in collateralized debt obligations and synthetic collateralized debt obligations, are considered to be embedded derivatives that should not be analyzed for potential bifurcation and separate accounting as well as under which circumstances embedded credit derivative features would not qualify for the scope exception and would be subject to potential bifurcation and separate accounting. The guidance provided in ASU No. 2010-11 is effective at the beginning of the Company’s first fiscal quarter beginning after June 15, 2010. ASU No. 2010-11 is effective for the Company’s fourth quarter of fiscal year ending September 26, 2010. We do not expect the adoption of this provision to affect our future consolidated financial statements.

8

(3) Fair Value Measurements

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The Company holds money market fund investments that are classified as either cash equivalents or restricted cash and available-for-sale marketable securities generally consisting of state and local government obligations that are measured at fair value on a recurring basis, based on current market prices. The Company’s interest rate swap agreement is measured at fair value on a recurring basis using a standard valuation model that incorporates expected interest rate curves. The Company held the following financial assets and liabilities at fair value, based on the hierarchy input levels indicated, on a recurring basis (in thousands):

July 4, 2010	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total
Assets:
Money market fund investments	$	112,701	$	—	$	—	$	112,701
Marketable securities — available-for-sale	352,290		—		—		352,290
Total	$	464,991	$	—	$	—	$	464,991
Liabilities:
Interest rate swap	$	—	$	5,177	$	—	$	5,177

September 27, 2009	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total
Assets:
Money market fund investments	$	509,395	$	—	$	—	$	509,395
Liabilities:
Interest rate swap	$	—	$	20,588	$	—	$	20,588

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

During the twelve and forty weeks ended July 4, 2010, the Company recorded fair value adjustments totaling approximately $0.1 million and $2.0 million, respectively, reducing the carrying value of related property and equipment to zero. Fair value adjustments were included in the following line items on the Consolidated Statements of Operations for the periods indicated (in thousands):

	Twelve weeks ended				Forty weeks ended
	July 4,		July 5,		July 4,		July 5,
	2010		2009		2010		2009
Direct store expenses	$	127	$	125	$	1,106	$	14,494
Relocation, store closure and lease termination costs	18		5,782		914		6,483
Total impairment of fixed assets	$	145	$	5,907	$	2,020	$	20,977

(4) FTC Settlement Agreement

The Federal Trade Commission (“FTC”) challenged the Company’s August 28, 2007 acquisition of Wild Oats Markets, Inc. The Company reached a settlement agreement with the FTC and received final approval of the settlement agreement by the FTC Commissioners on June 1, 2009 after a 30-day public comment period. Under the terms of the agreement, a third-party divestiture trustee was appointed to market for sale until September 8, 2009:  leases and related assets for 19 non-operating former Wild Oats stores; leases and related fixed assets (excluding inventory) for 12 operating acquired Wild Oats stores and one operating Whole Foods Market store; and Wild Oats trademarks and other intellectual property associated with the Wild Oats stores.

Pursuant to the settlement agreement, the divestiture period was extended by the FTC until March 8, 2010 to allow for good faith offers that were not finalized for six operating and two non-operating former Wild Oats stores as well as Wild Oats trademarks and other intellectual property associated with the Wild Oats stores. At the conclusion of the divestiture period, the divestiture trustee submitted buyers awaiting FTC approval for a total of two operating and one non-operating former Wild Oats stores, as well as the Wild Oats trademarks and intellectual property. The FTC approved the sale of those properties and related intangible on June 18, 2010. These transactions were completed during the twelve weeks ended July 4, 2010. The 11 remaining operating stores and 18 non-operating stores have been retained by the Company without further obligation to attempt to divest.

Pursuant to the FTC’s approval of the final consent order, the Company recorded adjustments during the second half of fiscal year 2009 totaling approximately $4.8 million to measure long-lived assets and certain lease liabilities related to certain of the operating stores for which sale and transfer of the assets was determined to be probable or more likely than not at the lower of carrying amount or fair value less costs to sell. Additionally, the Company recorded adjustments totaling approximately $0.2 million and $3.0 million during the twelve and forty weeks ended July 4, 2010, respectively, to measure the disposed assets and liabilities at fair value.

9

(5) Business Combination

Greenlife Grocery

On May 24, 2010, we completed the acquisition of certain assets of Greenlife Grocery, LLC (“Greenlife”) in exchange for approximately $14.5 million in cash plus the assumption of certain liabilities. The transaction has been recorded in accordance with ASC 805, “Business Combinations.” The assets acquired are all assets related to two natural foods supermarkets in Chattanooga, Tennessee and Asheville, North Carolina. Assets acquired included, but were not limited to, inventory, fixed assets, and the Greenlife trade name. The purchase price has been preliminarily allocated to tangible and identifiable intangible assets totaling approximately $5.4 million based on their estimated fair values at the date of acquisition. Total costs in excess of tangible and identifiable intangible assets acquired of approximately $9.5 million have been recorded as goodwill. Results of these acquired operations are included in our consolidated statements of operations for the period beginning May 25, 2010 through July 4, 2010.

(6) Property and Equipment

Balances of major classes of property and equipment are as follows (in thousands):

	July 4,			September 27,
	2010			2009
Land	$	48,928		$	48,928
Buildings and leasehold improvements	1,792,856			1,687,103
Capitalized real estate leases	24,874			24,874
Fixtures and equipment	1,299,582			1,187,195
Construction in progress and equipment not yet in service	80,334			130,068
	3,246,574			3,078,168
Less accumulated depreciation and amortization	(1,358,264		)	(1,180,315		)
	$	1,888,310		$	1,897,853

Depreciation expense related to property and equipment totaled approximately $61.8 and $203.1 million for the twelve and forty weeks ended July 4, 2010, respectively. During the same periods of the prior fiscal year, depreciation expense related to property and equipment totaled approximately $59.2 million and $195.6 million, respectively. Property and equipment included accumulated accelerated depreciation and other asset impairments totaling approximately $7.8 million and $9.6 million at July 4, 2010 and September 27, 2009, respectively. During the second quarter of fiscal year 2010, the Company sold certain land and idle buildings that had been held for sale totaling approximately $4.8 million at September 27, 2009. Total proceeds, net of closing costs, were approximately $8.0 million, resulting in a gain on the sale of assets of approximately $3.2 million. The gain was included in the “Relocation, store closure and lease termination costs” line item on the Consolidated Statements of Operations. Additionally, at July 4, 2010, the Company held approximately $1.8 million, net of accumulated depreciation, primarily related to certain leasehold improvements and fixtures held for sale included in the pending United Natural Foods, Inc. asset purchase agreement. These amounts are included in the “Prepaid expenses and other current assets” line item on the Consolidated Balance Sheets.

(7) Goodwill and Other Intangible Assets

Goodwill is reviewed for impairment annually at the beginning of the fourth fiscal quarter, or more frequently if impairment indicators arise. We allocate goodwill to one reporting unit for goodwill impairment testing. There were no impairments of goodwill during the forty weeks ended July 4, 2010 or July 5, 2009. During the twelve weeks ended July 4, 2010, the Company acquired goodwill totaling approximately $9.5 million related to the Greenlife acquisition. The Company recorded goodwill adjustments of approximately $2.6 million and $2.3 million, primarily related to actual exit costs of certain restructuring reserves related to the Wild Oats acquisition, during the forty weeks ended July 4, 2010 and July 5, 2009, respectively.

Indefinite-lived intangible assets are evaluated for impairment quarterly, or whenever events or changes in circumstances indicate the carrying amount may not be recoverable. There were no impairments of indefinite-lived intangible assets during the forty weeks ended July 4, 2010. During the forty weeks ended July 5, 2009, the Company recognized impairment charges totaling $0.4 million for liquor licenses related to locations included in the FTC settlement.

Definite-lived intangible assets are amortized over the useful life of the related agreement. We acquired definite-lived intangible assets totaling approximately $0.4 million, primarily consisting of intangibles associated with the Greenlife acquisition, and $0.9 million, primarily consisting of acquired leasehold rights, during the twelve and forty weeks ended July 4, 2010, respectively. During the twelve and forty weeks ended July 5, 2009 we acquired definite-lived intangible assets totaling approximately $0.9 million and $1.4 million, respectively, primarily consisting of acquired leasehold rights. There were no impairments of definite-lived intangible assets during the forty weeks ended July 4, 2010. The Company recorded

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impairment charges related to certain definite-lived intangible assets during the twelve and forty weeks ended July 5, 2009 totaling approximately $0.5 million and $0.8 million, respectively. Asset impairment charges of approximately $0.5 million were related to the FTC settlement and included in the “Relocation, store closure and lease termination costs” line item on the Consolidated Statements of Operations, while approximately $0.3 million related to certain favorable lease assets and were included in the “Direct store expenses” line item on the Consolidated Statements of Operations. Amortization associated with intangible assets totaled approximately $1.4 million and $4.6 million for the twelve and forty weeks ended July 4, 2010, respectively, and approximately $2.4 million and $6.1 million for the same periods in the prior fiscal year, respectively.

The components of intangible assets were as follows (in thousands):

	July 4, 2010					September 27, 2009
	Gross carrying		Accumulated			Gross carrying		Accumulated
	amount		amortization			amount		amortization
Indefinite-lived contract-based	$	1,646	$	—		$	1,566	$	—
Definite-lived contract-based	96,767		(29,430		)	96,515		(25,105		)
Definite-lived marketing-related and other	591		(211		)	225		(166		)
	$	99,004	$	(29,641	)	$	98,306	$	(25,271	)

Amortization associated with the net carrying amount of intangible assets at July 4, 2010 is estimated to be $1.4 million for the remainder of fiscal year 2010, $5.8 million in fiscal year 2011, $5.8 million in fiscal year 2012, $4.9 million in fiscal year 2013, $4.8 million in fiscal year 2014, and $4.5 million in fiscal year 2015.

(8) Reserves for Closed Properties

Following is a summary of store closure reserves activity during the forty weeks ended July 4, 2010 and fiscal year ended September 27, 2009 (in thousands):

	July 4,			September 27,
	2010			2009
Beginning balance	$	69,228		$	69,269
Additions	4,148			8,276
Usage	(14,645		)	(17,841		)
Adjustments	4,990			9,524
Ending balance	$	63,721		$	69,228

Additions to store closure reserves relate to the accretion of interest on existing reserves and new closures. During the forty weeks ended July 4, 2010, the Company did not record any additional reserves related to new closures. The Company recorded reserves totaling approximately $2.7 million related to five new closures during the fiscal year ended September 27, 2009. Usage included approximately $4.6 million and $4.2 million in termination fees related to certain idle properties, and approximately $10.1 million and $13.7 million in ongoing cash rental payments during the forty weeks ended July 4, 2010 and fiscal year ended September 27, 2009, respectively. During the forty weeks ended July 4, 2010 and fiscal year ended September 27, 2009, the Company recognized charges for net adjustments of approximately $7.6 million and $12.9 million, respectively, related to increases in reserves primarily due to changes in certain subtenant income estimates related to the continued depression in the commercial real estate market, which are included on the accompanying Consolidated Statements of Operations under the caption “Relocation, store closure and lease termination costs.” Additionally, the Company recorded goodwill adjustments of approximately $2.6 million during the forty weeks ended July 4, 2010 and fiscal year ended September 27, 2009.

(9) Long-Term Debt

The Company entered into a $700 million, five-year term loan agreement that expires in 2012. During the twelve weeks ended July 4, 2010 the Company repaid the $210 million portion of the term loan that was not subject to an interest rate swap agreement. At July 4, 2010, the Company has outstanding $490 million under this agreement. The loan bears interest at our option of the alternative base rate (“ABR”) plus an applicable margin, currently 0.75%, or LIBOR plus an applicable margin, currently 1.75%, based on the Company’s Moody’s and S&P rating. These applicable margins are currently the maximum allowed under these agreements. The interest period on LIBOR borrowings may range from one to six months at our option. The participating banks hold security interests in certain of the Company’s assets to collateralize amounts outstanding under the term loan. The term loan agreement contains certain affirmative covenants including maintenance of certain financial ratios and certain negative covenants including limitations on additional indebtedness and payments as defined in the agreement. At July 4, 2010 we were in compliance with all applicable debt covenants.

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The Company also has outstanding a $350 million revolving line of credit that extends to 2012. All outstanding amounts borrowed under this agreement bear interest at our option of the ABR plus an applicable margin, currently 0.875%, or LIBOR plus an applicable margin, currently 1.875%, based on the Company’s Moody’s and S&P rating. These applicable margins are currently the maximum allowed under these agreements. The participating banks hold security interests in certain of the Company’s assets to collateralize amounts outstanding under the revolving credit facility. The credit agreement contains certain affirmative covenants including maintenance of certain financial ratios and certain negative covenants including limitations on additional indebtedness and payments as defined in the agreement. Commitment fees on the undrawn amount, reduced by outstanding letters of credit, are payable under this agreement. At July 4, 2010 and September 27, 2009 the Company had no amounts drawn under this agreement. The amount available to the Company under the agreement was effectively reduced to approximately $341.4 million and $335.2 million by outstanding letters of credit totaling approximately $8.6 million and $14.8 million at July 4, 2010 and September 27, 2009, respectively.

During fiscal year 2008, the Company entered into an interest rate swap agreement, which expires in October 2010, with a notional amount of $490 million to effectively fix the interest rate on $490 million of the term loan at 4.718%, excluding the applicable margin and associated fees, to help manage cash flow exposure related to interest rate fluctuations. The interest rate swap was designated as a cash flow hedge. Hedge ineffectiveness was not material during the forty weeks ended July 4, 2010 or the same period of the prior fiscal year.

The interest rate swap agreement does not contain a credit-risk-related contingent feature. The carrying amount of the Company’s interest rate swap totaled approximately $5.2 million and $20.6 million at July 4, 2010 and September 27, 2009, respectively. The Company had accumulated net derivative losses of approximately $3.1 million and $12.6 million, net of taxes, in accumulated other comprehensive income as of July 4, 2010 and September 27, 2009, respectively, related to this cash flow hedge. These losses are being recognized as an adjustment to interest expense over the same period in which the interest costs on the related debt are recognized. During the twelve and forty weeks ended July 4, 2010 the Company had reclassified approximately $5.0 million and $16.9 million, respectively, from accumulated other comprehensive income related to ongoing interest payments that was included in the “Interest expense” line item on the Consolidated Statements of Operations. During the twelve and forty weeks ended July 5, 2009 the Company had reclassified approximately $4.1 million and $9.7 million, respectively, from accumulated other comprehensive income related to ongoing interest payments. The Company expects to reclass approximately $5.2 million from accumulated other comprehensive income to interest expense over the remaining life of the agreement.

(10) Equity

Redeemable Preferred Stock

During the first quarter of fiscal year 2009, the Company issued 425,000 shares of Series A 8% Redeemable, Convertible Exchangeable Participating Preferred Stock, $0.01 par value per share (“Series A Preferred Stock”) to affiliates of Leonard Green & Partners, L.P., for approximately $413.1 million, net of approximately $11.9 million in closing and issuance costs. The Series A Preferred Stock was classified as temporary shareholders’ equity at September 27, 2009 since the shares were (i) redeemable at the option of the holder and (ii) had conditions for redemption which are not solely within the control of the Company. The holders of the Series A Preferred Stock were entitled to an 8% dividend, payable quarterly on the first day of each calendar quarter in cash. The Company paid cash dividends on the Series A Preferred Stock totaling zero and $8.5 million during the twelve and forty weeks ended July 4, 2010. During the twelve and forty weeks ended July 5, 2009 the Company paid cash dividends on the Series A Preferred Stock totaling $8.5 million and approximately $19.8 million, respectively.

On October 23, 2009 the Company announced its intention to call all 425,000 outstanding shares of the Series A Preferred Stock for redemption on November 27, 2009 in accordance with the terms governing such Series A Preferred Stock. On November 26, 2009 the holders converted all 425,000 outstanding shares of the Series A Preferred Stock. The Series A Preferred Stock was converted to common stock based on the quotient of (i) the liquidation preference plus accrued dividends and (ii) 1,000, multiplied by the conversion rate of 68.9655. At the conversion date, the liquidation preference of the Series A Preferred Stock of $425 million and accrued dividends of approximately $5.2 million converted into approximately 29.7 million shares of common stock of the Company.

Restricted Stock Issuance

On May 14, 2010 the Company awarded approximately 98,000 shares of restricted common stock pursuant to the Whole Foods Market 2009 Stock Incentive Plan. Fair value of the restricted share issuance on grant date totaled approximately $4.0 million. The stock will fully vest and all restrictions will lapse on August 14, 2010. The Company recorded approximately $2.3 million of share-based payment expense related to this transaction during the twelve weeks ended July 4, 2010. For further information, see Note 13 to the consolidated financial statements, “Share-Based Payments.”

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(11) Comprehensive Income

Our comprehensive income was comprised of net income; unrealized gains and losses on investments; unrealized gains and losses on cash flow hedge instruments, including reclassification adjustments of unrealized losses to net income related to ongoing interest payments; and foreign currency translation adjustments, net of income taxes. Comprehensive income, net of related tax effects, was as follows (in thousands):

	Twelve weeks ended						Forty weeks ended
	July 4,			July 5,			July 4,			July 5,
	2010			2009			2010			2009
Net income	$	65,729		$	42,807		$	188,335		$	110,394
Foreign currency translation adjustments, net	(2,803		)	6,113			(1,009		)	(9,588		)
Reclassification adjustments for amounts included in net income	2,994			2,391			10,019			5,674
Unrealized gains (losses), net	277			(1,669		)	(356		)	(11,667		)
Comprehensive income	$	66,197		$	49,642		$	196,989		$	94,813

Unrealized gains on investments, net of tax, totaled approximately $230,000 and $280,000 for the twelve and forty weeks ended July 4, 2010, respectively. Unrealized losses on investments, net of tax, totaled approximately $60,000 and $170,000 over the same periods. At July 4, 2010, accumulated other comprehensive loss consisted of foreign currency translation adjustment losses of approximately $1.7 million and unrealized losses on cash flow hedge instruments and investments of approximately $3.0 million, net of related income tax effect of approximately $2.1 million.

(12) Earnings per Share

The computation of basic earnings per share is based on the number of weighted average common shares outstanding during the period. The computation of diluted earnings per share for the twelve and forty weeks ended July 4, 2010 includes the dilutive effect of common stock equivalents consisting of incremental common shares deemed outstanding from the assumed exercise of stock options. Additionally, the computation of diluted earnings per share for the forty weeks ended July 4, 2010 includes the assumed conversion of Series A Preferred Stock.

A reconciliation of the numerators and denominators of the basic and diluted earnings per share calculations follows (in thousands, except per share amounts):

	Twelve weeks ended				Forty weeks ended
	July 4,		July 5,		July 4,		July 5,
	2010		2009		2010		2009
Income available to common shareholders (numerator for basic earnings per share)	$	65,729	$	34,968	$	182,857	$	90,088
Preferred stock dividends	—		—		5,478		—
Adjusted income available to common shareholders (numerator for diluted earnings per share)	$	65,729	$	34,968	$	188,335	$	90,088
Weighted average common shares outstanding (denominator for basic earnings per share)	171,653		140,439		164,529		140,385
Potential common shares outstanding:
Incremental shares from assumed exercise of stock options	948		—		690		—
Assumed conversion of redeemable preferred stock	—		—		6,176		—
Weighted average common shares outstanding and potential additional common shares outstanding (denominator for diluted earnings per share)	172,601		140,439		171,395		140,385
Basic earnings per share	$	0.38	$	0.25	$	1.11	$	0.64
Diluted earnings per share	$	0.38	$	0.25	$	1.10	$	0.64

The computation of diluted earnings per share for the twelve and forty weeks ended July 4, 2010 does not include options to purchase approximately 13.6 million shares and 12.7 million shares of common stock, respectively, due to their antidilutive effect. For the twelve and forty weeks ended July 5, 2009, the computation of diluted earnings per share does not include options to purchase approximately 16.0 million shares and 16.7 million shares of common stock, respectively, or the conversion of Series A Preferred Stock to approximately 29.3 million shares and 22.5 million shares of common stock, respectively, due to their antidilutive effect.

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(13) Share-Based Payments

Our Company maintains several stock based incentive plans. We grant options to purchase common stock under our Whole Foods Market 2009 Stock Incentive Plan. Under this plan, options are granted at an option price equal to the closing price of the Company’s common stock on the grant date and generally vest ratably over a four-year period beginning one year from grant date and have a five or seven year term. During the twelve weeks ended July 4, 2010, the Company also granted options that vest over a nine-year period beginning one year from grant date, and have a ten year term. On July 4, 2010 and September 27, 2009 there were approximately 12.7 million and 15.4 million shares of our common stock, respectively, available for future stock option grants.

Our Company also offers a team member stock purchase plan to all full-time team members with a minimum of 400 hours of service. Participating team members may purchase Company common stock through payroll deductions. The plan provides for a 5% discount from the shares market value on the share purchase date which meets the share-based payment “Safe Harbor” provisions, and therefore is non-compensatory.

As of July 4, 2010 there was approximately $65.9 million of unrecognized share-based payment expense related to nonvested stock options, net of estimated forfeitures, related to approximately 5.7 million shares. We anticipate this expense to be recognized over a weighted average period of 3.44 years. To the extent the forfeiture rate is different than what we have anticipated, share-based payment expense related to these awards will differ from our expectations.

Share-based payment expense recognized during the twelve and forty weeks ended July 4, 2010 totaled approximately $6.2 million and $15.4 million, respectively, which included approximately $3.9 million and $13.1 million, respectively, related to stock options. Share-based payment expense for the twelve and forty weeks ended July 4, 2010 also included approximately $2.3 million associated with awards of restricted common stock and is included in the “General and administrative expenses” line item on the Consolidated Statements of Operations. Share-based payment expense recognized during the twelve and forty weeks ended July 5, 2009 totaled approximately $2.7 million and $8.8 million, respectively, and related entirely to stock options. Share-based payment expense was included in the following line items on the Consolidated Statements of Operations for the periods indicated (in thousands):

	Twelve weeks ended						Forty weeks ended
	July 4,			July 5,			July 4,			July 5,
	2010			2009			2010			2009
Cost of goods sold and occupancy costs	$	194		$	102		$	579		$	274
Direct store expenses	2,047			1,416			7,342			4,883
General and administrative expenses	3,957			1,169			7,450			3,672
Share-based payment expense before income taxes	6,198			2,687			15,371			8,829
Income tax benefit	(2,547		)	(1,121		)	(6,202		)	(3,612		)
Net share-based payment expense	$	3,651		$	1,566		$	9,169		$	5,217

On May 14, 2010, the Company issued its annual grant of options to team members and directors. The following table summarizes option activity during the first three quarters of fiscal year 2010:

					Weighted
	Number				average	Aggregate
	of options		Weighted		remaining	intrinsic
	outstanding		average		contractual life	value
	(in thousands)		exercise price		(in years)	(in thousands)
Outstanding options at September 27, 2009	18,317		$	45.24
Options granted	3,128		40.80
Options exercised	(1,501	)	27.49
Options forfeited	(238	)	28.08
Options expired	(379	)	55.68
Outstanding options at July 4, 2010	19,327		$	45.91	3.21	$	53,455
Options vested and expected to vest	18,670		$	46.31	3.09	$	47,811
Exercisable options at July 4, 2010	12,967		$	52.71	1.91	$	14,855

The weighted average fair value of options granted during fiscal year 2010 was $16.60. The aggregate intrinsic value of stock options at exercise, represented in the table above, for the forty weeks ended July 4, 2010 was approximately $12.3 million.

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The fair value of stock option grants has been estimated at the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions:

	2010		2009
Expected dividend yield	0.00	%	0.00	%
Risk-free interest rate	2.26	%	1.56	%
Expected volatility	46.19	%	52.31	%
Expected life, in years	4.56		3.97

Risk-free interest rate is based on the US Treasury yield curve on the date of the grant for the time period equal to the expected term. Expected life is calculated in tranches based on weighted average percentage of unexpired options and exercise-after-vesting information over the last four years. Unvested options are included in the term calculation using the “mid-point scenario” which assumes that unvested options will be exercised halfway between vest and expiration date. Expected volatility is calculated using a ratio of implied volatility, derived through the Newton-Raphson method of bisection, and four or six-year historical volatilities based on the expected life of each tranche of options. The Company determined the use of both implied volatility and historical volatility represents a more consistent and accurate calculation of option fair value. The assumptions used to calculate the fair value of options granted are evaluated and revised, as necessary, to reflect market conditions and experience.

In addition to the above valuation assumptions, the Company is required to estimate an annual forfeiture rate for unvested options and true up fair value expense accordingly. The Company monitors actual forfeiture experience and adjusts the rate from time to time as necessary.

(14) Commitments and Contingencies

The Company uses a combination of insurance and self-insurance plans to provide for the potential liabilities for workers’ compensation, general liability, property insurance, director and officers’ liability insurance, vehicle liability, and employee health care benefits. Liabilities associated with the risks that are retained by the Company are estimated, in part, by considering historical claims experience, demographic factors, severity factors and other actuarial assumptions. While we believe that our assumptions are appropriate, the estimated accruals for these liabilities could be significantly affected if future occurrences and claims differ from these assumptions and historical trends.

From time to time we are a party to legal proceedings including matters involving personnel and employment issues, personal injury, intellectual property, real estate and other proceedings arising in the ordinary course of business. The Company has established loss provisions for matters in which losses are probable and the amount of loss can be reasonably estimated. The Company does not believe that any of these proceedings arising in the ordinary course of business, either alone or in the aggregate, will have a material adverse effect on the Company’s results of operations, cash flows or financial condition. Although management does not expect that the outcome in these proceedings will have a material adverse effect on our financial condition or results of operations, litigation is inherently unpredictable. Therefore, we could incur judgments or enter into settlements of claims that could materially impact our results.

On October 27, 2008, Whole Foods Market was served with the complaint in Kottaras v. Whole Foods Market, Inc., a putative class action filed in the United States District Court for the District of Columbia, seeking treble damages, equitable, injunctive, and declaratory relief and alleging that the acquisition and merger between Whole Foods Market and Wild Oats violates various provisions of the federal antitrust laws. This case is in the preliminary stages. Whole Foods Market cannot at this time predict the likely outcome of this judicial proceeding or estimate the amount or range of loss or possible loss that may arise from it. The Company has not accrued any loss related to the outcome of this case as of July 4, 2010.

(15) Subsequent Events

The Company evaluated subsequent events and transactions for potential recognition or disclosure in the financial statements through the date the financial statements were issued.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

We wish to caution you that there are risks and uncertainties that could cause our actual results to be materially different from those indicated by forward-looking statements that we make from time to time in filings with the Securities and Exchange Commission (“SEC”), news releases, reports, proxy statements, registration statements and other written communications, as well as oral forward-looking statements made from time to time by representatives of our Company. These risks and uncertainties include those listed in the Company’s Annual Report on Form 10-K for the fiscal year ended September 27, 2009. These risks and uncertainties and additional risks and uncertainties not presently known to us or that we currently deem immaterial may cause our business, financial condition, operating results and cash flows to be materially adversely affected. Except for the historical information contained herein, the matters discussed in this analysis are forward-looking statements that involve risks and uncertainties, including general business conditions, changes in overall economic conditions that impact consumer spending, including fuel prices and housing market trends, the impact of competition, and other factors which are often beyond the control of the Company. The Company does not undertake any obligation to update forward-looking statements except as required by law.

General

Whole Foods Market, Inc. is the leading natural and organic foods supermarket and America’s first national “Certified Organic” grocer. Our Company mission is to promote vitality and well-being for all individuals by supplying the highest quality, most wholesome foods available. Through our growth, we have had a significant and positive impact on the natural and organic foods movement throughout the United States, helping lead the industry to nationwide acceptance. We opened our first store in Texas in 1980 and, as of July 4, 2010, we operated 298 stores: 287 stores in 38 U.S. states and the District of Columbia; six stores in Canada; and five stores in the United Kingdom. We have one operating segment, natural and organic foods supermarkets.

Our results of operations have been and may continue to be materially affected by the timing and number of new store openings. Stores typically open within two years after entering the store development pipeline. New stores generally become profitable during their first year of operation; although some new stores may incur operating losses for the first several years of operation. The Company historically has experienced lower average weekly sales in the fourth quarter, which typically results in lower gross profit and higher direct store expenses as a percentage of sales.

Sales of a store are deemed to be comparable commencing in the fifty-third full week after the store was opened or acquired. Identical store sales exclude sales from relocated stores and remodeled stores with changes in square footage greater than 20% from the comparable calculation to reduce the impact of square footage growth on the comparison. Stores closed for eight or more days are excluded from the comparable and identical store base from the first fiscal week of closure until re-opened for a full fiscal week.

The Company reports its results of operations on a fifty-two or fifty-three week fiscal year ending on the last Sunday in September. Fiscal years 2010 and 2009 are fifty-two week years.

Economic and Industry Factors

Food retailing is a large, intensely competitive industry. Our competition varies across the Company and includes but is not limited to local, regional, national and international conventional and specialty supermarkets, natural foods stores, warehouse membership clubs, smaller specialty stores, farmers’ markets, and restaurants, each of which competes with us on the basis of product selection, quality, customer service, price or a combination of these factors. Natural and organic food continues to be one of the fastest growing segments of food retailing today.

Our 8.4% identical store sales growth for the twelve weeks ended July 4, 2010 was driven primarily by transaction count along with a 1% increase in basket size. We believe our transaction count increases are being driven by a combination of our loyal customers shopping with us more frequently, prior customers returning to shop with us, and an increasing number of new customers entering our doors. Our increase in basket size was driven entirely by customers putting more items in their baskets. We have worked hard to improve our value image and believe our success in this regard has played a large role in the sales momentum we are seeing. The pass-through of select product cost increases was more than offset by our continued strategic price investments. Customers are still seeking value as demonstrated by continued strong sales growth in promotional and private label items; however, branded product sales growth is outpacing private label growth, and customers are selectively trading up to higher-priced items in certain areas.

Our internal benchmarking research indicates continued improvement in our price competitiveness during the twelve weeks ended July 4, 2010 relative to our regional and national competitors. Whole Foods Market is being looked at differently in

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this area according to our Nielsen study which shows improving trends in consumer sentiment around our value efforts and, even more importantly, as reflected in our continued strong sales growth relative to most other food retailers.

Outlook for Fiscal Year 2010

The following table provides additional information on the Company’s results through July 4, 2010 and expectations for the fourth quarter and fiscal year 2010:

		Estimated
	Forty weeks ended	fourth quarter	Estimated
	July 4, 2010	fiscal year 2010	fiscal year 2010
Sales growth	11.4%	12.8% — 13.8%	11.7% — 11.9%
Comparable store sales growth	6.7%	6.5% — 7.5%	6.6% — 6.8%
Identical store sales growth	5.9%	6.5% — 7.5%	6.0% — 6.2%
General and administrative expenses excluding FTC-related legal costs	2.9%	3.2%	3.0%
Pre-opening and relocation costs	$43.6 million	$8.0 — $9.5 million	$51 — $53 million
Diluted earnings per share	$1.10	$0.27 — $0.29	$1.37 — $1.39
Capital expenditures	$199.8 million	$50 — $60 million	$250 — $260 million

Results of Operations

The following table sets forth the Company’s statements of operations data expressed as a percentage of sales:

	Twelve weeks ended				Forty weeks ended
	July 4,		July 5,		July 4,		July 5,
	2010		2009		2010		2009
Sales	100.0	%	100.0	%	100.0	%	100.0	%
Cost of goods sold and occupancy costs	64.9		64.8		65.1		65.7
Gross profit	35.1		35.2		34.9		34.3
Direct store expenses	26.2		26.6		26.4		26.7
General and administrative expenses	3.2		2.8		3.0		3.1
Pre-opening expenses	0.4		0.6		0.5		0.6
Relocation, store closure and lease termination costs	—		1.0		0.2		0.5
Operating income	5.3		4.2		4.9		3.5
Interest expense	(0.3	)	(0.4	)	(0.4	)	(0.5	)
Investment and other income	0.1		0.1		0.1		—
Income before income taxes	5.1		3.9		4.6		3.0
Provision for income taxes	2.0		1.6		1.9		1.3
Net income	3.0		2.3		2.7		1.8
Preferred stock dividends	—		0.4		0.1		0.3
Income available to common shareholders	3.0	%	1.9	%	2.6	%	1.5	%

Figures may not sum due to rounding.

Sales increased approximately 15.2% and 11.4% for the twelve and forty weeks ended July 4, 2010, respectively, over the same periods of the prior fiscal year. Comparable store sales increased 8.8% and 6.7% for the twelve and forty weeks ended July 4, 2010, respectively, and identical store sales increased 8.4% and 5.9%, respectively. As of July 4, 2010, there were 280 locations in the comparable store base. Identical store sales for the twelve weeks ended July 4, 2010 exclude three relocated stores from the comparable calculation to reduce the impact of square footage growth on the comparison. Identical store sales for the forty weeks ended July 4, 2010 exclude five relocated stores and two major expansions. The number of stores open or acquired fifty-two weeks or less equaled 20 at July 4, 2010. The sales increase contributed by stores open or acquired fifty-two weeks or less totaled approximately $164.0 million and $244.8 million for the twelve and forty weeks ended July 4, 2010, respectively.

The Company’s gross profit as a percentage of sales for the twelve and forty weeks ended July 4, 2010 was approximately 35.1% and 34.9%, respectively, compared to approximately 35.2% and 34.3% for the same periods of the prior fiscal year, respectively. For the twelve and forty weeks ended July 4, 2010, the Company recognized LIFO credits totaling approximately $3.7 million and $6.5 million, respectively, compared to credits totaling approximately $5.8 million and $2.2 million for the same periods of the prior fiscal year, respectively. Excluding the impact of LIFO, gross margin increased 13 basis points for the twelve weeks ended July 4, 2010 compared to the same period of the prior fiscal year due to an

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improvement in occupancy costs which helped offset slightly higher cost of goods sold as a percentage of sales. Now that we have fully cycled over the shift in our pricing strategy that occurred in the first half of 2009, we are not generating the same level of year-over-year improvement in gross margin as we saw in the first half of the year. In addition, we made strategic pricing decisions on select teams during the twelve weeks ended July 4, 2010 to position ourselves competitively in the marketplace. Our gross profit may vary throughout the year depending on the mix of sales from new stores, seasonality, the impact of weather or a host of other factors, including inflation or deflation.

Direct store expenses as a percentage of sales for the twelve and forty weeks ended July 4, 2010 were approximately 26.2% and 26.4%, respectively, compared to approximately 26.6% and 26.7% for the same periods of the prior fiscal year, respectively. The decrease in direct store expenses as a percentage of sales for the twelve weeks ended July 4, 2010 was driven by reductions in salaries and benefits and depreciation expense as a percentage of sales. During the forty weeks ended July 5, 2009 the Company recorded impairment charges on long-lived assets related to operating locations totaling approximately $14.5 million.

General and administrative expenses as a percentage of sales for the twelve and forty weeks ended July 4, 2010 were approximately 3.2% and 3.0%, respectively, compared to approximately 2.8% and 3.1% for the same periods of the prior fiscal year, respectively. FTC-related legal costs incurred during the twelve and forty weeks ended July 4, 2010 totaled approximately $1.4 million and $3.0 million, respectively, compared to approximately $0.4 million and $14.2 million for the same periods of the prior fiscal year, respectively.

Share-based payment expense was included in the following line items on the Consolidated Statements of Operations for the periods indicated (in thousands):

	Twelve weeks ended						Forty weeks ended
	July 4,			July 5,			July 4,			July 5,
	2010			2009			2010			2009
Cost of goods sold and occupancy costs	$	194		$	102		$	579		$	274
Direct store expenses	2,047			1,416			7,342			4,883
General and administrative expenses	3,957			1,169			7,450			3,672
Share-based payment expense before income taxes	6,198			2,687			15,371			8,829
Income tax benefit	(2,547		)	(1,121		)	(6,202		)	(3,612		)
Net share-based payment expense	$	3,651		$	1,566		$	9,169		$	5,217

Pre-opening expenses as a percentage of sales for the twelve and forty weeks ended July 4, 2010 were approximately 0.4% and 0.5%, respectively, compared to approximately 0.6% for each of the same periods of the prior fiscal year. Currently, rent expense generally has been incurred beginning approximately 11 months prior to a store’s opening date as compared to approximately 13 months for stores opened during fiscal year 2009.

Relocation, store closure and lease termination costs as a percentage of sales for the twelve and forty weeks ended July 4, 2010 were approximately 0.0% and 0.2%, respectively, compared to approximately 1.0% and 0.5% for the same periods of the prior fiscal year, respectively. During the twelve weeks ended July 4, 2010, the Company recorded credit adjustments to reduce expected future lease termination costs totaling approximately $0.8 million due to lower estimated future lease-related costs on certain properties. During the forty weeks ended July 4, 2010, the Company recorded net adjustments to lease termination costs totaling approximately $7.6 million. Adjustments totaling approximately $9.7 million and $13.5 million were recorded for the twelve and forty weeks ended July 5, 2009, respectively, to increase reserves for closed properties due to the downturn in the real estate market and actual exit costs. During the forty weeks ended July 4, 2010 the Company recognized a gain of approximately $3.2 million from the sale of a non-operating property and a reduction in store closure reserve liabilities of approximately $2.5 million related to two stores to be sold under the FTC settlement and one early lease termination. During the twelve and forty weeks ended July 5, 2009, the Company recorded non-cash asset impairment charges included in store closure costs totaling approximately $6.7 million and $7.4 million, respectively, including approximately $5.2 million during the third quarter related to the potential sale of certain operating store assets under the FTC settlement agreement. The Company continues to evaluate store closure reserve adjustments primarily related to changes in certain subtenant income estimates driven by the outlook for the commercial real estate market.

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The number of stores opened and relocated were as follows:

	Twelve weeks ended		Forty weeks ended
	July 4,	July 5,	July 4,	July 5,
	2010	2009	2010	2009
New stores	6	1	15	6
Relocated stores	—	3	—	6

Interest expense for the twelve and forty weeks ended July 4, 2010 totaled approximately $7.4 million and $25.8 million, respectively, compared to approximately $7.7 million and $29.0 million for the same periods of the prior fiscal year, respectively. The decrease in interest expense for the forty weeks ended July 4, 2010 compared to the same period of the prior year is due primarily to interest expense related to amounts outstanding on the Company’s revolving line of credit during the first quarter of fiscal year 2009 as well as the repayment of the $210 million portion of the Company’s $700 million term loan during the twelve weeks ended July 4, 2010. The Company had no amounts outstanding on its revolving line of credit during the forty weeks ended July 4, 2010.

Investment and other income, which includes investment gains and losses, interest income, rental income and other income, totaled approximately $1.5 million and $5.2 million for the twelve and forty weeks ended July 4, 2010, respectively, compared to approximately $1.3 million and $2.5 million for the same periods of the prior fiscal year, respectively. The increases were due primarily to investment income earned on investments in available-for-sale securities during fiscal year 2010.

Income taxes for the twelve and forty weeks ended July 4, 2010 resulted in an effective tax rate of approximately 40.1% and 40.5%, respectively, compared to approximately 41.0% and 41.6% for the same periods of the prior fiscal year, respectively.

Liquidity and Capital Resources and Changes in Financial Condition

The following table summarizes the Company’s cash and short-term investments (in thousands):

	July 4,		September 27,
	2010		2009
Cash and cash equivalents	$	136,144	$	430,130
Short-term investments – available-for-sale securities	294,926		—
Restricted cash	86,814		71,023
Total	$	517,884	$	501,153

We generated cash flows from operating activities totaling approximately $460.9 million during the forty weeks ended July 4, 2010 compared to approximately $474.7 million during the same period of the prior fiscal year. Cash flows from operating activities resulted primarily from our net income plus non-cash expenses and changes in operating working capital.

Net cash used in investing activities totaled approximately $583.2 million for the forty weeks ended July 4, 2010 compared to approximately $323.4 million for the same period of the prior fiscal year. Approximately $352.1 million of the use in cash for the forty weeks ended July 4, 2010 resulted from our investment of a portion of our available cash balances in available-for-sale securities. At July 4, 2010 we had short-term investments in available-for-sale securities totaling approximately $294.9 million and long-term investments in available-for-sale securities totaling approximately $57.4 million. Our principal historical capital requirements have been the funding of the development or acquisition of new stores and acquisition of property and equipment for existing stores. The required cash investment for new stores varies depending on the size of the new store, geographic location, degree of work performed by the landlord and complexity of site development issues. Capital expenditures for the forty weeks ended July 4, 2010 totaled approximately $199.8 million, of which approximately $143.4 million was for new store development and approximately $56.4 million was for remodels and other additions. Capital expenditures for the forty weeks ended July 5, 2009 totaled approximately $252.1 million, of which approximately $196.9 million was for new store development and approximately $55.2 million was for remodels and other additions. During the third quarter of fiscal year 2010, the Company acquired two stores in Chattanooga, TN and Asheville, NC for a net purchase price totaling approximately $14.4 million.

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The following table provides information about the Company’s store development activities during fiscal year 2009 and fiscal year-to-date through August 3, 2010:

					Properties	Total
	Stores opened		Stores opened		tendered	leases signed
	during fiscal		during fiscal		as of	as of
	year 2009		year 2010		August 3, 2010	August 3, 2010(1)
Number of stores (including relocations)	15		15		11	48
Number of relocations	6		—		2	10
Number of lease acquisitions, ground leases and owned properties	4		—		4	4
New areas	1		4		1	5
Average store size (gross square feet)	53,500		42,300		40,000	41,600
Total square footage	801,800		634,800		439,800	2,045,500
Average tender period in months	12.6		11.0
Average pre-opening expense per store(2)	$	3.0 million	$	2.3 million
Average pre-opening rent per store	$	1.3 million	$	1.1 million

(1)Includes leases for properties tendered

(2)Includes rent

The following table provides additional information about the Company’s estimated store openings for the remainder of fiscal year 2010 through 2014 based on the Company’s current development pipeline. We believe we will produce operating cash flows in excess of the capital expenditures needed to open the 48 stores in our store development pipeline. We believe the investments we are making in our new, acquired and existing stores will result in substantial earnings growth in the near future. These openings reflect estimated tender dates which are subject to change and do not incorporate any potential new leases, terminations or square footage reductions:

			Average		Ending
			new store	Ending	square
	Total		square	square	footage
	openings	Relocations	footage	footage(1)	growth
Fiscal year 2010 remaining stores in development	1	—	48,300	11,232,300	6.3	%
Fiscal year 2011 stores in development	17	6	39,500	11,755,900	4.7	%
Fiscal year 2012 stores in development	19	—	40,400	12,523,100	6.5	%
Fiscal year 2013 stores in development	9	4	46,800	12,783,600	2.1	%
Fiscal year 2014 stores in development	2	—	44,500	12,872,600	0.7	%
Total	48	10	41,600

(1)Reflects year-to-date store openings, acquisitions and closures in 2010 and three major expansions in development in 2011.

Net cash used in financing activities was approximately $172.0 million for the forty weeks ended July 4, 2010 compared to net cash provided by financing activities totaling approximately $197.9 million for the same period of the prior fiscal year. The Company made no borrowings on its revolving line of credit for the forty weeks ended July 4, 2010 compared to $123.0 million for the same period of the prior fiscal year. Payments on debt and capital lease obligations totaled approximately $210.2 million for the forty weeks ended July 4, 2010 compared to approximately $321.0 million for the same period of the prior fiscal year. Net proceeds from the issuance of redeemable preferred stock for the forty weeks ended July 5, 2009 totaled approximately $413.1 million.

On December 2, 2008, the Company issued 425,000 shares of Series A 8% Redeemable, Convertible Exchangeable Participating Preferred Stock, $0.01 par value per share (“Series A Preferred Stock”) to affiliates of Leonard Green & Partners, L.P., for approximately $413.1 million, net of approximately $11.9 million in closing and issuance costs. On October 23, 2009 the Company announced its intention to call all 425,000 outstanding shares of the Series A Preferred Stock for redemption in accordance with the terms governing such Series A Preferred Stock. Subject to conversion of the Series A Preferred Stock by its holders, the Company planned to redeem such Series A Preferred Stock on November 27, 2009 at a price per share equal to $1,000 plus accrued and unpaid dividends. In accordance with the terms governing the Series A Preferred Stock, at any time prior to the redemption date, the Series A Preferred Stock could be converted by the holders thereof. On November 26, 2009 the holders converted all 425,000 outstanding shares of Series A Preferred Stock into approximately 29.7 million shares of common stock of the Company. The Company paid cash dividends on the Series A Preferred Stock totaling $8.5 million during the first quarter of fiscal year 2010.

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The Company entered into a $700 million, five-year term loan agreement due in 2012. During the third quarter of fiscal year 2010, the Company repaid the $210 million portion of the term loan that was not subject to an interest rate swap agreement. The interest rate swap agreement on the $490 million balance of our term loan expires October 1, 2010. We expect to be in a position to repay the term loan prior to it coming due in August 2012, but our timing will depend on the economic outlook and our continued generation of free cash flow. The Company also has outstanding a $350 million revolving line of credit, secured by a pledge of substantially all of the stock in our subsidiaries, that extends to 2012. No amounts were drawn under the agreement at July 4, 2010 and September 27, 2009. The amount available to the Company under the agreement at July 4, 2010 was effectively reduced to approximately $341.4 million by outstanding letters of credit totaling approximately $8.6 million. Standard & Poor’s credit rating agency currently rates the Company BB- with a positive rating outlook, and Moody’s credit rating agency currently rates the Company Ba3 with a positive rating outlook.

Net proceeds to the Company from team members’ stock plans for the forty weeks ended July 4, 2010 totaled approximately $43.9 million compared to approximately $2.7 million for the same period of the prior fiscal year. The Company intends to keep its broad-based stock option program in place, but also intends to limit the number of shares granted in any one year so that annual earnings per share dilution from share-based payment expense will not exceed 10%. The Company believes this strategy is best aligned with its stakeholder philosophy because it limits future earnings per share dilution from options and at the same time retains the broad-based stock option plan, which the Company believes is important to team member morale, its unique corporate culture and its success. At July 4, 2010 and September 27, 2009 there were approximately 12.7 million and 15.4 million shares, respectively, of our common stock available for future grants.

On July 31, 2008, the Company’s Board of Directors approved a $100 million increase in the Company’s stock repurchase program, bringing the total authorization to $400 million through November 8, 2009. During fiscal year 2008, the Company retired approximately 4.5 million shares held in treasury that had been repurchased for a total of approximately $200 million. The Company’s remaining authorization under the stock repurchase program at September 27, 2009 was approximately $200 million. On November 8, 2009, the Company’s stock repurchase program expired in accordance with its terms.

The Company is committed under certain capital leases for rental of certain equipment, buildings and land. These leases expire or become subject to renewal clauses at various dates through 2054.

The effect of exchange rate changes on cash included in the Consolidated Statements of Cash Flows resulted in an increase in cash and cash equivalents totaling approximately $0.3 million for the forty weeks ended July 4, 2010 compared to a decrease totaling approximately $2.8 million for the same period of the prior fiscal year. This increase is primarily due to the relative strengthening or weakening of the Canadian and United Kingdom currencies compared to the U.S. dollar during the forty weeks ended July 4, 2010 as compared to the relative weakening of these currencies against the U.S. dollar during the same period of the prior fiscal year.

Our principal historical sources of liquidity have been cash generated by operations, available cash and cash equivalents, short-term investments, and amounts available under our revolving line of credit. Absent any significant change in market condition, we expect planned expansion and other anticipated working capital and capital expenditure requirements for the next twelve months will be funded by these sources. There can be no assurance, however, that the Company will continue to generate cash flows at or above current levels or that our revolving line of credit and other sources of capital will be available to us in the future.

Contractual Obligations

The following table shows payments due by period on contractual obligations as of July 4, 2010 (in thousands):

			Less than 1		1-3		3-5		More than 5
	Total		year		years		years		years
Long-term debt obligations	$	490,000	$	—	$	490,000	$	—	$	—
Estimated interest on long-term debt obligations	30,783		17,111		13,672		—		—
Capital lease obligations (including interest)	37,646		2,061		4,166		4,239		27,180
Operating lease obligations(1)	5,878,441		273,447		629,886		659,051		4,316,057
Total	$	6,436,870	$	292,619	$	1,137,724	$	663,290	$	4,343,237

(1)Amounts exclude taxes, insurance and other related expense

Gross unrecognized tax benefits and related interest and penalties at July 4, 2010 were approximately $16.6 million. These amounts have been excluded from the contractual obligations table because a reasonably reliable estimate of the period of cash settlement with the respective taxing authorities cannot be determined due to the high degree of uncertainty regarding the timing of future cash outflows associated with these liabilities.

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We periodically make other commitments and become subject to other contractual obligations that we believe to be routine in nature and incidental to the operation of the business. Management believes that such routine commitments and contractual obligations do not have a material impact on our business, financial condition or results of operations.

Off-Balance Sheet Arrangements

Our off-balance sheet arrangements at July 4, 2010 consist of operating leases disclosed in the above contractual obligations table and outstanding letters of credit discussed in Note 9 to the consolidated financial statements, “Long-Term Debt.” We have no other off-balance sheet arrangements that have had, or are reasonably likely to have, a material current or future effect on our consolidated financial statements or financial condition.

Recent Accounting Pronouncements

Recent accounting pronouncements are included in Note 2 to the consolidated financial statements, “Summary of Significant Accounting Policies.”

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Interest Rate Risk

The Company holds money market fund investments that are classified as cash equivalents and restricted cash. Additionally, the Company holds available-for-sale securities generally consisting of state and local government obligations. We had cash equivalent investments and restricted cash investments totaling approximately $25.9 million and $86.8 million at July 4, 2010, respectively. We had short-term investments totaling approximately $294.9 million and long-term investments totaling approximately $57.4 million at July 4, 2010. The Company had no available-for-sale securities at September 27, 2009. Interest rate fluctuations would affect the amount of interest income earned on these investments. All investments are recorded at fair value and are generally short-term in nature, and therefore changes in interest rates would not have a material impact on the valuation of these investments.

Item 4. Controls and Procedures

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our Co-Chief Executive Officers (principal executive officers) and Chief Financial Officer (principal financial officer), to allow timely decisions regarding required disclosure. The Company’s management, with the participation of the Company’s Co-Chief Executive Officers and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. Based on such evaluation, the Company’s Co-Chief Executive Officers and Chief Financial Officer have concluded that, as of the end of such period, the Company’s disclosure controls and procedures were effective of the end of the period covered by this report.

There have been no changes in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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Part II. Other Information

Item 1. Legal Proceedings

From time to time we are a party to legal proceedings including matters involving personnel and employment issues, personal injury, intellectual property and other proceedings arising in the ordinary course of business which have not resulted in any material losses to date. Although management does not expect that the outcome in these proceedings will have a material adverse effect on our financial condition or results of operations, litigation is inherently unpredictable. Therefore, we could incur judgments or enter into settlements of claims that could materially impact our results.

The Federal Trade Commission (“FTC”) challenged the Company’s August 28, 2007 acquisition of Wild Oats Markets, Inc. The Company reached a settlement agreement with the FTC and received final approval of the settlement agreement by the FTC Commissioners on June 1, 2009 after a 30-day public comment period. Under the terms of the agreement, a third-party divestiture trustee was appointed to market for sale until September 8, 2009:  leases and related assets for 19 non-operating former Wild Oats stores; leases and related fixed assets (excluding inventory) for 12 operating acquired Wild Oats stores and one operating Whole Foods Market store; and Wild Oats trademarks and other intellectual property associated with the Wild Oats stores.

Pursuant to the settlement agreement, the divestiture period was extended by the FTC until March 8, 2010 to allow for good faith offers that were not finalized for six operating and two non-operating former Wild Oats stores as well as Wild Oats trademarks and other intellectual property associated with the Wild Oats stores. At the conclusion of the divestiture period, the divestiture trustee submitted buyers awaiting FTC approval for a total of two operating and one non-operating former Wild Oats stores, as well as the Wild Oats trademarks and intellectual property. The FTC approved the sale of those properties and related intangible on June 18, 2010. These transactions were completed during the twelve weeks ended July 4, 2010. The 11 remaining operating stores and 18 non-operating stores have been retained by the Company without further obligation to attempt to divest.

Pursuant to the FTC’s approval of the final consent order, the Company recorded adjustments during the second half of fiscal year 2009 totaling approximately $4.8 million to measure long-lived assets and certain lease liabilities related to certain of the operating stores for which sale and transfer of the assets was determined to be probable or more likely than not at the lower of carrying amount or fair value less costs to sell. Additionally, the Company recorded adjustments totaling approximately $0.2 million and $3.0 million during the twelve and forty weeks ended July 4, 2010, respectively, to measure the disposed assets and liabilities at fair value.

On October 27, 2008, Whole Foods Market was served with the complaint in Kottaras v. Whole Foods Market, Inc., a putative class action filed in the United States District Court for the District of Columbia, seeking treble damages, equitable, injunctive, and declaratory relief and alleging that the acquisition and merger between Whole Foods Market and Wild Oats violates various provisions of the federal antitrust laws. This case is in the preliminary stages. Whole Foods Market cannot at this time predict the likely outcome of this judicial proceeding or estimate the amount or range of loss or possible loss that may arise from it. The Company has not accrued any loss related to the outcome of this case as of July 4, 2010.

Item 5. Other Information

Whole Foods Executive Retention Plan and Non-Compete Arrangement

As previously disclosed, the Board of Directors of Whole Foods Market Inc. approved a plan, the Whole Foods Executive Retention Plan (the “Plan”), and associated form of retention agreement (the “Agreement”) to certain members of the Company’s management, including one of the Co-Chief Executive Officers, Chief Financial Officer, and the two other most highly compensated executive officers of the Company for fiscal year 2009. Pursuant to the Plan, if at any time after the earlier to occur of a change of control or March 1, 2012, a covered person’s employment is terminated (a) other than for “cause” (as defined in the Plan) or (b) by the covered person, and, within 45 days of such termination, the covered person signs a release, then, subject to the covered person’s continued compliance with the confidentiality provisions, non-compete and other restrictions of the Plan and Agreement, the covered person will receive the following:

·up to a designated amount, for a maximum of 5 years, paid in equal semiannual installments; provided that if the covered person voluntarily terminates employment without “good reason” (as defined in the Plan), then unless the covered person has held his current position or one of several other designated positions with the Company for 15 years or more, such payment will be reduced by 20% for each year below 15 years of employment;

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·all stock options granted to the covered person will vest and become immediately exercisable and remain exercisable until the earlier of the fifth anniversary of termination or the original expiration date of the stock option; and

·reimbursement by the Company of COBRA premiums paid by the covered person.

On August 12, 2010, the Board of Directors approved an amendment to the Plan and the form of Agreement for Executive Team Members to change the name of the Plan to the “Whole Foods Executive Retention Plan and Non-Compete Arrangement” and to clarify the conditions under which the benefits described in the bullets above will be made to an Executive Team Member in the event of a voluntary termination of employment.

The Company also entered into amended Agreements with Glenda Chamberlain, A.C. Gallo, and Jim Sud to revise their previous Agreements to be consistent with the amended form of Agreement for Executive Team Members. Pursuant to these amended Agreements, if the covered person voluntarily terminates employment for a reason other than a “good reason” (as defined in the Plan), “disability” (as defined in the Plan) or death, the benefits, if any, described in the bullets above are subject to future negotiation between either one of the two Co-Chief Executive Officers of the Company and the covered person, except in the event either of the two Co-Chief Executive Officers of the Company are involuntarily terminated or if both of the Co-Chief Executive Officers die and/or otherwise terminate employment with the Company within 45 days of each other and the Covered Executive subsequently terminates employment with the Company the benefits described in the bullets above will be payable. The annual non-compete payment shall not exceed $1.6 million for A.C. Gallo, nor $1.2 million for Glenda Chamberlain or Jim Sud, adjusted to reflect the increase, if any,  in the Consumer Price Index.

The Company also entered into an amended Agreement with Walter Robb to revise his previous Agreement to be consistent with the amended form of Agreement for Executive Team Members. Pursuant to his amended Agreement, if Walter Robb voluntarily terminates employment for a reason other than a “good reason” (as defined in the Plan), “disability” (as defined in the Plan) or death, the benefits, if any, described in the bullets above are subject to future negotiation between him and the other Co-Chief Executive Officer of the Company, except in the event that John Mackey dies or terminates employment with the Company for any reason and Walter Robb subsequently terminates his employment with the Company the benefits described in the bullets above will be payable. The annual non-compete payment shall not exceed $1.6 million for Walter Robb, adjusted to reflect the increase, if any, in the Consumer Price Index.

Item 6. Exhibits

Exhibit	10.1	First Amendment, dated June 2, 2010, to the Agreement for Distribution of Products by and between Whole Foods Market Distribution, Inc. and United Natural Foods, Inc. (Portions of this agreement have been omitted pursuant to a request for Confidential Treatment filed with the Securities Exchange Commission)
Exhibit	10.2	Form of Executive Retention Plan and Non-Compete Arrangement by and between the executive leadership team of the Registrant and the Registrant
Exhibit	31.1	Certification of Co-Chief Executive Officer Pursuant to 17 CFR 240.13a – 14(a)
Exhibit	31.2	Certification of Co-Chief Executive Officer Pursuant to 17 CFR 240.13a – 14(a)
Exhibit	31.3	Certification of Chief Financial Officer Pursuant to 17 CFR 240.13a – 14(a)
Exhibit	32.1	Certification of Co-Chief Executive Officer Pursuant to 18 U.S.C. Section 1350
Exhibit	32.2	Certification of Co-Chief Executive Officer Pursuant to 18 U.S.C. Section 1350
Exhibit	32.3	Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350
Exhibit	101	The following financial information from the Company’s Quarterly Report on Form 10-Q, for the period ended July 4, 2010, formatted in eXtensible Business Reporting Language: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Shareholders’ Equity, (iv) Consolidated Statements of Cash Flows, (v) Notes to Consolidated Financial Statements (1)

   (1) Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		WHOLE FOODS MARKET, INC.
Date:	August 13, 2010	By:	/s/ Glenda Chamberlain
		Glenda Chamberlain
		Executive Vice President and Chief Financial Officer
		(Duly authorized officer and principal financial officer)

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EX-10.1

Exhibit 10.1

*A request for confidential treatment has been made with respect to portions of the following documents that are marked with [*CONFIDENTIAL*].  The redacted portions have been filed separately with the Securities and Exchange Commission.

First Amendment to the Agreement for Distribution of Products

The Agreement for Distribution of Products dated September 26, 2006 between Whole Foods Market Distribution, Inc., a Delaware corporation and United Natural Foods, Inc., a Delaware corporation (the “Agreement”) is hereby amended effective June 2, 2010 (the “Amendment Date”).

All terms not defined herein shall have the meaning set forth in the Agreement.  The parties agree as follows:

1.Section 1 is deleted in its entirety and replaced with the following:

“1.Term.  This Agreement shall have an initial term of fourteen years (the “Term”) commencing as of September 26, 2006 (the “Effective Date”).”

2.Section 3(a) is hereby deleted in its entirety and replaced with the following:

“(a)The pricing terms set forth in this Agreement will remain in effect as long as WFM uses UNFI as its “Primary Distributor.”  WFM is deemed to have used UNFI as its Primary Distributor if the following two conditions are met:  (i) each WFM Region excluding [*CONFIDENTIAL*] and all WFM Stores outside the continental United States) purchases [*CONFIDENTIAL*] in Products per “WFM Fiscal Year” (as identified on Exhibit A) as were purchased in [*CONFIDENTIAL*]; and (ii) if [*CONFIDENTIAL*] of the aggregate dollar amount of Product purchases by all WFM Stores (excluding [*CONFIDENTIAL*] and all WFM Stores outside the continental United States) from wholesale natural grocery distributors during a WFM Fiscal Year are made from UNFI Parties.  Orders submitted to the UNFI Parties for Products that are out of stock (“OOS”) will be included in the calculation as purchases from UNFI Parties for determining whether both (a)(i) and (a)(ii) have been satisfied.  The following purchases by WFM Stores are not considered to be purchases from a wholesale natural grocery distributor and therefore will not be included in determining the dollar amount of WFM Store product purchases for purposes of this Section 3(a)(ii): (A) purchases by WFM Stores from WFM or any of its affiliates or subsidiaries (collectively, the “WFM Parties”), including, but not limited to, purchases from a WFM distribution center, (B) purchases by WFM Store from the manufacturer of a product, (C) purchases by WFM Stores from non natural grocery distributors including, but not limited to, broad-line food service distributors, non-food distributors and specialty distributors such as but not limited to cheese, produce, meat, seafood, or alcoholic beverage distributors.  If at any time UNFI believes that WFM has not satisfied the conditions set forth in Section 3(a)(i) or 3(a)(ii), UNFI will notify WFM in writing.  WFM will have 3 WFM Periods from receipt of such notice to adjust purchases to meet the requirements.  If WFM fails to cure the noncompliance in 3 WFM Periods (calculated on a consecutive 13 WFM Period basis) from the receipt of notice, UNFI’s sole remedy will be to renegotiate the “Gross Profit Margin Percent” identified on Exhibit B.”

3.Section 3 is amended to add the following as Section 3(e):

“(e)The parties agree that if UNFI purchases the assets or equity and/or otherwise assumes the rights and/or obligations of any entity which, at the time of such purchase/assumption, is providing products directly to WFM and/or acting as a distributor of other parties’ products to WFM, then the following provisions shall apply during the remainder of the term of this Agreement: (i) if the products being supplied to WFM by such entity are the same or similar to the Products currently being provided by UNFI to WFM, then WFM may choose to bring such products under the definition of Products and require UNFI to sell such products under the terms of this Agreement, including without limitation WFM’s purchase obligations set forth in Section 3(a) and UNFI’s pricing obligations set forth in Section 7(a) and (ii) if the products being supplied to WFM by such entity are not the same or similar to the Products currently being provided by UNFI to WFM, then UNFI and WFM may choose to negotiate in good faith to include such products under the terms of this Agreement, with such changes as may be necessary or appropriate due to the nature of the products being included.”

4.Section 6(e) is deleted in its entirety and replaced with the following:

“(e)WFM Responsibility for Inventory.

(i)Termination of Private Label SKU or Control Label SKU.  Except for (x) Rejected Inventory, (y) inventory that is out of date or damaged or in unacceptable condition due to UNFI’s acts or omissions including, but not limited to, improper storage, improper rotation, improper ordering, damage incurred during transportation by UNFI or its designees or (z) missing, short or lost Product (shrink), if WFM terminates a Private Label SKU or a Control Label SKU, WFM will be responsible for and will reimburse UNFI for the applicable Private Label SKU or Control Label SKU inventory held by UNFI not to exceed the greater of (i) a 90 day supply based upon the WFM Locations’ past purchasing practices, or, if a new Product, projections provided in writing by WFM, or (ii) the supplier’s minimum order quantity.  If WFM instructs UNFI to destroy a Private Label SKU or a Control Label SKU held in inventory, UNFI will promptly arrange for the destruction of the applicable Products and will promptly provide WFM with a certificate of destruction covering all applicable Products.

(ii)Overstock and Short-Dated Private Label SKU or Control Label SKU.  Subject to Section 6(e)(i) and UNFI’s compliance with the Code Date Policy, each party’s responsibility for overstocks and short-dated Private Label SKUs and Control Label SKUs is set forth on Exhibit H and is based on the amount of notice given to WFM and the level of inventory held by UNFI not to exceed the greater of (x) a 90 day supply based upon the WFM Locations’ past purchasing practices, or, if a new Product, projections provided in writing by WFM, or (y) the supplier’s minimum order quantity.”

5.The Agreement is amended to add a Section 6(g) that reads as follows:

“(g)[*CONFIDENTIAL*].   [*CONFIDENTIAL*].  All items that require breakdown or “fingerprinting”, as defined in Exhibit J (“UNFI Unloading Policy”) will be assessed

the same fees as all other items received at UNFI, pursuant to UNFI’s applicable fee schedules.  [*CONFIDENTIAL*]

6.Section 7(a)(iii) is deleted in its entirety and replaced with the following:

“(iii)EDLC Program.   Certain Products will be included in a new program known as the WFM Everyday Low Cost Program (the “EDLC Program”).  A Product will be included in the EDLC Program if WFM and the Product supplier or manufacturer agrees upon an every day low cost (an “EDLC Cost”) for a Product that is resold by UNFI to WFM Locations (“EDLC Products”).  If a bulk Product meets the criteria set forth on Exhibit I, the bulk Product will be included in the EDLC Program.  For EDLC Products, the invoice price (the “EDLC Invoice Price”) will equal [*CONFIDENTIAL*].  A Freight Charge will not be applied to Products that include freight in the EDLC Cost.  UNFI will report to the supplier or manufacturer the applicable EDLC Product sales and deduct from or credit to the supplier or manufacturer the appropriate EDLC reconciliation amount (the “EDLC Reconciliation Amount”).  The EDLC Reconciliation Amount will be equal to [*CONFIDENTIAL*].  The parties will work together to create forms and procedures to support the EDLC Program, including, but not limited to, a WFM EDLC Reconciliation Process and a WFM EDLC Program Form. WFM may change the amount of the [*CONFIDENTIAL*] at any time by giving UNFI written notice.  The foregoing change will be reflected in the next EDI cost files transmitted to WFM and the new [*CONFIDENTIAL*] becomes effective at the start of the next UNFI Pricing Period for such EDI cost files, not to exceed nine weeks.”

7.Section 8(a) is deleted in its entirety and replaced with the following:

“(a)Purpose.  The parties acknowledge that UNFI may realize income from sales of Products to WFM Locations through various means including, but not limited to, (i) [*CONFIDENTIAL*] and (ii) [*CONFIDENTIAL*]. [*CONFIDENTIAL*].  UNFI represents to WFM that it will not attempt to circumvent the intent of this Section 8.”

8.The following sentence is added to the end of Section 8(b):

[*CONFIDENTIAL*].

9.The first sentence of Section 8(c)(i)(y) is deleted in its entirety and replaced with the following:

“Total Cost of Goods Sold” means [*CONFIDENTIAL*].

10.The following language is added to the end of Section 8(d):

[*CONFIDENTIAL*].

11.The sentence in Section 10(d) that reads: [*CONFIDENTIAL*] is hereby deleted and replaced with the following: [*CONFIDENTIAL*]

12.Section 12 is deleted in its entirety and replaced with the following:

“12.Fill Rate.UNFI agrees to use commercially reasonable efforts to maintain a “fill rate” for each UNFI DC of at least [*CONFIDENTIAL*] meaning that [*CONFIDENTIAL*]  or more of Products ordered by WFM Locations will be delivered on time and in good condition with the correct invoice and selection of Products.  UNFI will provide a report to WFM once a week by UNFI DC of the actual dollar amount of Product filled and delivered on time by that UNFI DC and the dollar amount of the Products that would have been filled and delivered if that UNFI DC had a 100% fill rate.  UNFI guarantees a “Minimum Fill Rate” of [*CONFIDENTIAL*] for each UNFI DC, excluding Products that are unable to be procured because of events outside UNFI and UNFI’s supplier’s reasonable control such as Acts of God, supplier strikes or national emergencies (“Applicable Products”).  If any given UNFI DC fails to meet the Minimum Fill Rate for [*CONFIDENTIAL*] consecutive weeks, every week following until that UNFI DC meets the Minimum Fill Rate for a week, UNFI will pay each WFM Location affected (i.e. serviced by that UNFI DC) an amount equal to [*CONFIDENTIAL*] of the difference between the [*CONFIDENTIAL*] times the dollar amount of Products ordered that week and the dollar amount of the Products actually delivered pursuant to those orders (“Fill Rate Penalty Fee”).

For example, if a UNFI DC fails to meet the Minimum Fill Rate for [*CONFIDENTIAL*]  weeks in a row, each WFM Location that placed orders for Products from the UNFI DC that were due to be delivered during the [*CONFIDENTIAL*]  week would be entitled to a payment calculated as follows.  If the dollar amount of Applicable Products received by the WFM Location from the UNFI DC during week [*CONFIDENTIAL*] was $90,000 and there were $100,000 of Products ordered in corresponding purchase orders that were due to be delivered that week, the resulting fill rate would be [*CONFIDENTIAL*] for that WFM Location for that week.  The difference between the actual fill rate dollar amount that week ($90,000) and the Minimum Fill Rate dollar amount [*CONFIDENTIAL*].   UNFI would owe that WFM Location a payment equal to [*CONFIDENTIAL*].

13.Section 13(a) is deleted in its entirety and replaced with the following:

“(a)          Select Nutrition. If the total purchase price of Select Nutrition Product ordered (including OOS products meets the $[*CONFIDENTIAL*] minimum order amount, UNFI will ship the Select Nutrition Products without a shipping fee. If WFM does not order the above minimum amount of Select Nutrition Products, WFM will be charged the cost of shipping to be a minimum of $[*CONFIDENTIAL*]. The new $[*CONFIDENTIAL*] minimum and effective cost of freight charges imposed will not take place until 6 months after the Amendment Date. Until such time the prevailing contract language and $[*CONFIDENTIAL*] minimum will continue.”

14.Section 15 is amended to add the following as Section 15(f):

“(f)Promotions Administration.

(i)Administration Activity.  [*CONFIDENTIAL*].

(ii)Administration Fee.  [*CONFIDENTIAL*].

15.Section 18(b) is deleted in its entirety and replaced with the following:

“(b)         WFM Indemnity.  WFM shall indemnify, defend and hold harmless UNFI and its parent, subsidiaries and affiliates, together with their stockholders, general and limited partners, members, managers, directors, officers, employees, agents, representatives, successors and assigns from and against any and all Liabilities arising out of, relating to or otherwise based upon (i) any actual or alleged violation by WFM of any federal, state or local law, including any statute, ordinance, administrative order, rule or regulation; (ii) any negligence or willful misconduct of WFM or any of its employees or agents; (iii) the breach or alleged breach of any term of this Agreement; (iv) WFM’s failure to purchase UNFI’s Private Label SKU inventory and/or Control Label SKU inventory on condition that UNFI is in compliance with Section 6 of the Agreement and UNFI has no greater than (x) a 90 day supply of the Product based upon the WFM Locations’ past purchasing practices, or, if a new Product, projections provided in writing by WFM, or (y) the Product supplier’s minimum order quantity; and (v) the employment, presence or activities of WFM or its employee or contractor on any UNFI premises related to this Agreement (including, but not limited to, all personal injury, wage and hour, wrongful termination, harassment, discrimination, workers compensation, disability, tort, strict liability or contract claims or demands).”

16.Section 23(e) of the Agreement is deleted in its entirety and replaced with the following:

“(e)Amendment; Assignment; Binding Effect.  This Agreement may not be amended or modified except by a writing signed by an authorized officer of each party specifically referencing this Agreement and the intent to amend or modify.  It is agreed that neither party shall transfer or assign this Agreement or any part hereof or any right arising hereunder, by operation of law or otherwise, without the prior written consent of the other party.  A “Change of Control” shall be deemed to be an assignment for purposes of this Agreement.  Any purported assignment (including a Change of Control) without consent shall be void and of no force or effect.  Subject to the foregoing, this Agreement shall be binding on the respective parties and their permitted successors and assigns.  A “Change of Control” means (A) any transaction or series of related transactions in which a party or group, acting in concert, acquires beneficial ownership of more than 50% of the equity interests in a party or its direct or indirect parent, or (B) a merger or consolidation of another entity with or into a party or its direct or indirect parent, with the effect that any third party becomes beneficial owner of more than 50% of the equity interests of a party or its direct or indirect parent.  Notwithstanding anything to the contrary stated above, WFM may assign this Agreement to any direct or indirect affiliate (whether or not such assignment results in a Change of Control) without obtaining the consent of UNFI.”

17.The Agreement is amended to add a Section 23(o) that reads as follows:

“(o)Third-Party Outsourcing.    UNFI shall not outsource any internal functions or services that would result in a direct or indirect pass-through charge to Product manufacturers or suppliers without the prior written consent of WFM.  For example, third-party transportation, customer service, IT and accounting.”

18.The Agreement is amended to add a Section 23(p) that reads as follows:

“(p)Without the prior written consent of WFM, UNFI shall not [*CONFIDENTIAL*] Nothing in this section shall prevent UNFI from adjusting costs to reflect government mandates.

19.Exhibit A is deleted in its entirety and replaced with the attached Exhibit A.

20.Exhibit B is deleted in its entirety and replaced with the attached Exhibit B.

21.Exhibit C is amended to add the attached addendum for the Southern Pacific Region Stores located in the state of Hawaii.

22.This Amendment may be executed in any number of counterparts, each of which will be deemed an original and all of which together will constitute one and the same instrument. Fax, email and other electronic transmissions are considered originals for all purposes.

23.All other terms of the Agreement shall remain in full force and effect

[Signature page follows]

The parties have entered into this First Amendment as of the date set forth in the opening paragraph.

Whole Foods Market Distribution, Inc.,
	a Delaware corporation
By:
		Walter Robb, CEO
	United Natural Foods, Inc.
By:
		Steven L. Spinner, President and CEO

Whole Foods Market

Exhibit A Fiscal Period Calendar

Period	Week	Fiscal 2006	Fiscal 2007	Fiscal 2008	Fiscal 2009	Fiscal 2010	Fiscal 2011
1	1	10/02/05	10/01/06	10/07/07	10/05/08	10/04/09	10/03/10
	2	10/09/05	10/08/06	10/14/07	10/12/08	10/11/09	10/10/10
	3	10/16/05	10/15/06	10/21/07	10/19/08	10/18/09	10/17/10
	4	10/23/05	10/22/06	10/28/07	10/26/08	10/25/09	10/24/10
2	5	10/30/05	10/29/06	11/04/07	11/02/08	11/01/09	10/31/10
	6	11/06/05	11/05/06	11/11/07	11/09/08	11/08/09	11/07/10
	7	11/13/05	11/12/06	11/18/07	11/16/08	11/15/09	11/14/10
	8	11/20/05	11/19/06	11/25/07	11/23/08	11/22/09	11/21/10
3	9	11/27/05	11/26/06	12/02/07	11/30/08	11/29/09	11/28/10
	10	12/04/05	12/03/06	12/09/07	12/07/08	12/06/09	12/05/10
	11	12/11/05	12/10/06	12/16/07	12/14/08	12/13/09	12/12/10
	12	12/18/05	12/17/06	12/23/07	12/21/08	12/20/09	12/19/10
4	13	12/25/05	12/24/06	12/30/07	12/28/08	12/27/09	12/26/10
	14	01/01/06	12/31/06	01/06/08	01/04/09	01/03/10	01/02/11
	15	01/08/06	01/07/07	01/13/08	01/11/09	01/10/10	01/09/11
1st Qtr	16	01/15/06	01/14/07	01/20/08	01/18/09	01/17/10	01/16/11
5	17	01/22/06	01/21/07	01/27/08	01/25/09	01/24/10	01/23/11
	18	01/29/06	01/28/07	02/03/08	02/01/09	01/31/10	01/30/11
	19	02/05/06	02/04/07	02/10/08	02/08/09	02/07/10	02/06/11
	20	02/12/06	02/11/07	02/17/08	02/15/09	02/14/10	02/13/11
6	21	02/19/06	02/18/07	02/24/08	02/22/09	02/21/10	02/20/11
	22	02/26/06	02/25/07	03/02/08	03/01/09	02/28/10	02/27/11
	23	03/05/06	03/04/07	03/09/08	03/08/09	03/07/10	03/06/11
	24	03/12/06	03/11/07	03/16/08	03/15/09	03/14/10	03/13/11
7	25	03/19/06	03/18/07	03/23/08	03/22/09	03/21/10	03/20/11
	26	03/26/06	03/25/07	03/30/08	03/29/09	03/28/10	03/27/11
	27	04/02/06	04/01/07	04/06/08	04/05/09	04/04/10	04/03/11
2nd Qtr	28	04/09/06	04/08/07	04/13/08	04/12/09	04/11/10	04/10/11
8	29	04/16/06	04/15/07	04/20/08	04/19/09	04/18/10	04/17/11
	30	04/23/06	04/22/07	04/27/08	04/26/09	04/25/10	04/24/11
	31	04/30/06	04/29/07	05/04/08	05/03/09	05/02/10	05/01/11
	32	05/07/06	05/06/07	05/11/08	05/10/09	05/09/10	05/08/11
9	33	05/14/06	05/13/07	05/18/08	05/17/09	05/16/10	05/15/11
	34	05/21/06	05/20/07	05/25/08	05/24/09	05/23/10	05/22/11
	35	05/28/06	05/27/07	06/01/08	05/31/09	05/30/10	05/29/11
	36	06/04/06	06/03/07	06/08/08	06/07/09	06/06/10	06/05/11
10	37	06/11/06	06/10/07	06/15/08	06/14/09	06/13/10	06/12/11
	38	06/18/06	06/17/07	06/22/08	06/21/09	06/20/10	06/19/11
	39	06/25/06	06/24/07	06/29/08	06/28/09	06/27/10	06/26/11
3rd Qtr	40	07/02/06	07/01/07	07/06/08	07/05/09	07/04/10	07/03/11
11	41	07/09/06	07/08/07	07/13/08	07/12/09	07/11/10	07/10/11
	42	07/16/06	07/15/07	07/20/08	07/19/09	07/18/10	07/17/11
	43	07/23/06	07/22/07	07/27/08	07/26/09	07/25/10	07/24/11
	44	07/30/06	07/29/07	08/03/08	08/02/09	08/01/10	07/31/11
12	45	08/06/06	08/05/07	08/10/08	08/09/09	08/08/10	08/07/11
	46	08/13/06	08/12/07	08/17/08	08/16/09	08/15/10	08/14/11
	47	08/20/06	08/19/07	08/24/08	08/23/09	08/22/10	08/21/11
	48	08/27/06	08/26/07	08/31/08	08/30/09	08/29/10	08/28/11
13	49	09/03/06	09/02/07	09/07/08	09/06/09	09/05/10	09/04/11
	50	09/10/06	09/09/07	09/14/08	09/13/09	09/12/10	09/11/11
	51	09/17/06	09/16/07	09/21/08	09/20/09	09/19/10	09/18/11
4th	52	09/24/06	09/23/07	09/28/08	09/27/09	09/26/10	09/25/11
Qtr	53		09/30/07

Whole Foods Market

Exhibit A Fiscal Period

Period	Week	Fiscal 2012	Fiscal 2013	Fiscal 2014	Fiscal 2015	Fiscal 2016	Fiscal 2017
1	1	10/02/11	10/07/12	10/06/13	10/05/14	10/04/15	10/02/16
	2	10/09/11	10/14/12	10/13/13	10/12/14	10/11/15	10/09/16
	3	10/16/11	10/21/12	10/20/13	10/19/14	10/18/15	10/16/16
	4	10/23/11	10/28/12	10/27/13	10/26/14	10/25/15	10/23/16
2	5	10/30/11	11/04/12	11/03/13	11/02/14	11/01/15	10/30/16
	6	11/06/11	11/11/12	11/10/13	11/09/14	11/08/15	11/06/16
	7	11/13/11	11/18/12	11/17/13	11/16/14	11/15/15	11/13/16
	8	11/20/11	11/25/12	11/24/13	11/23/14	11/22/15	11/20/16
3	9	11/27/11	12/02/12	12/01/13	11/30/14	11/29/15	11/27/16
	10	12/04/11	12/09/12	12/08/13	12/07/14	12/06/15	12/04/16
	11	12/11/11	12/16/12	12/15/13	12/14/14	12/13/15	12/11/16
	12	12/18/11	12/23/12	12/22/13	12/21/14	12/20/15	12/18/16
4	13	12/25/11	12/30/12	12/29/13	12/28/14	12/27/15	12/25/16
	14	01/01/12	01/06/13	01/05/14	01/04/15	01/03/16	01/01/17
	15	01/08/12	01/13/13	01/12/14	01/11/15	01/10/16	01/08/17
1st Qtr	16	01/15/12	01/20/13	01/19/14	01/18/15	01/17/16	01/15/17
5	17	01/22/12	01/27/13	01/26/14	01/25/15	01/24/16	01/22/17
	18	01/29/12	02/03/13	02/02/14	02/01/15	01/31/16	01/29/17
	19	02/05/12	02/10/13	02/09/14	02/08/15	02/07/16	02/05/17
	20	02/12/12	02/17/13	02/16/14	02/15/15	02/14/16	02/12/17
6	21	02/19/12	02/24/13	02/23/14	02/22/15	02/21/16	02/19/17
	22	02/26/12	03/03/13	03/02/14	03/01/15	02/28/16	02/26/17
	23	03/04/12	03/10/13	03/09/14	03/08/15	03/06/16	03/05/17
	24	03/11/12	03/17/13	03/16/14	03/15/15	03/13/16	03/12/17
7	25	03/18/12	03/24/13	03/23/14	03/22/15	03/20/16	03/19/17
	26	03/25/12	03/31/13	03/30/14	03/29/15	03/27/16	03/26/17
	27	04/01/12	04/07/13	04/06/14	04/05/15	04/03/16	04/02/17
2nd Qtr	28	04/08/12	04/14/13	04/13/14	04/12/15	04/10/16	04/09/17
8	29	04/15/12	04/21/13	04/20/14	04/19/15	04/17/16	04/16/17
	30	04/22/12	04/28/13	04/27/14	04/26/15	04/24/16	04/23/17
	31	04/29/12	05/05/13	05/04/14	05/03/15	05/01/16	04/30/17
	32	05/06/12	05/12/13	05/11/14	05/10/15	05/08/16	05/07/17
9	33	05/13/12	05/19/13	05/18/14	05/17/15	05/15/16	05/14/17
	34	05/20/12	05/26/13	05/25/14	05/24/15	05/22/16	05/21/17
	35	05/27/12	06/02/13	06/01/14	05/31/15	05/29/16	05/28/17
	36	06/03/12	06/09/13	06/08/14	06/07/15	06/05/16	06/04/17
10	37	06/10/12	06/16/13	06/15/14	06/14/15	06/12/16	06/11/17
	38	06/17/12	06/23/13	06/22/14	06/21/15	06/19/16	06/18/17
	39	06/24/12	06/30/13	06/29/14	06/28/15	06/26/16	06/25/17
3rd Qtr	40	07/01/12	07/07/13	07/06/14	07/05/15	07/03/16	07/02/17
11	41	07/08/12	07/14/13	07/13/14	07/12/15	07/10/16	07/09/17
	42	07/15/12	07/21/13	07/20/14	07/19/15	07/17/16	07/16/17
	43	07/22/12	07/28/13	07/27/14	07/26/15	07/24/16	07/23/17
	44	07/29/12	08/04/13	08/03/14	08/02/15	07/31/16	07/30/17
12	45	08/05/12	08/11/13	08/10/14	08/09/15	08/07/16	08/06/17
	46	08/12/12	08/18/13	08/17/14	08/16/15	08/14/16	08/13/17
	47	08/19/12	08/25/13	08/24/14	08/23/15	08/21/16	08/20/17
	48	08/26/12	09/01/13	08/31/14	08/30/15	08/28/16	08/27/17
13	49	09/02/12	09/08/13	09/07/14	09/06/15	09/04/16	09/03/17
	50	09/09/12	09/15/13	09/14/14	09/13/15	09/11/16	09/10/17
	51	09/16/12	09/22/13	09/21/14	09/20/15	09/18/16	09/17/17
4th	52	09/23/12	09/29/13	09/28/14	09/27/15	09/25/16	09/24/17
Qtr	53	09/30/12

Whole Foods Market

Exhibit A Fiscal Period

Period	Week	Fiscal 2018	Fiscal 2019	Fiscal 2020	Fiscal 2021
1	1	10/01/17	10/07/18	10/06/19	10/04/20
	2	10/08/17	10/14/18	10/13/19	10/11/20
	3	10/15/17	10/21/18	10/20/19	10/18/20
	4	10/22/17	10/28/18	10/27/19	10/25/20
2	5	10/29/17	11/04/18	11/03/19	11/01/20
	6	11/05/17	11/11/18	11/10/19	11/08/20
	7	11/12/17	11/18/18	11/17/19	11/15/20
	8	11/19/17	11/25/18	11/24/19	11/22/20
3	9	11/26/17	12/02/18	12/01/19	11/29/20
	10	12/03/17	12/09/18	12/08/19	12/06/20
	11	12/10/17	12/16/18	12/15/19	12/13/20
	12	12/17/17	12/23/18	12/22/19	12/20/20
4	13	12/24/17	12/30/18	12/29/19	12/27/20
	14	12/31/17	01/06/19	01/05/20	01/03/21
	15	01/07/18	01/13/19	01/12/20	01/10/21
1st Qtr	16	01/14/18	01/20/19	01/19/20	01/17/21
5	17	01/21/18	01/27/19	01/26/20	01/24/21
	18	01/28/18	02/03/19	02/02/20	01/31/21
	19	02/04/18	02/10/19	02/09/20	02/07/21
	20	02/11/18	02/17/19	02/16/20	02/14/21
6	21	02/18/18	02/24/19	02/23/20	02/21/21
	22	02/25/18	03/03/19	03/01/20	02/28/21
	23	03/04/18	03/10/19	03/08/20	03/07/21
	24	03/11/18	03/17/19	03/15/20	03/14/21
7	25	03/18/18	03/24/19	03/22/20	03/21/21
	26	03/25/18	03/31/19	03/29/20	03/28/21
	27	04/01/18	04/07/19	04/05/20	04/04/21
2nd Qtr	28	04/08/18	04/14/19	04/12/20	04/11/21
8	29	04/15/18	04/21/19	04/19/20	04/18/21
	30	04/22/18	04/28/19	04/26/20	04/25/21
	31	04/29/18	05/05/19	05/03/20	05/02/21
	32	05/06/18	05/12/19	05/10/20	05/09/21
9	33	05/13/18	05/19/19	05/17/20	05/16/21
	34	05/20/18	05/26/19	05/24/20	05/23/21
	35	05/27/18	06/02/19	05/31/20	05/30/21
	36	06/03/18	06/09/19	06/07/20	06/06/21
10	37	06/10/18	06/16/19	06/14/20	06/13/21
	38	06/17/18	06/23/19	06/21/20	06/20/21
	39	06/24/18	06/30/19	06/28/20	06/27/21
3rd Qtr	40	07/01/18	07/07/19	07/05/20	07/04/21
11	41	07/08/18	07/14/19	07/12/20	07/11/21
	42	07/15/18	07/21/19	07/19/20	07/18/21
	43	07/22/18	07/28/19	07/26/20	07/25/21
	44	07/29/18	08/04/19	08/02/20	08/01/21
12	45	08/05/18	08/11/19	08/09/20	08/08/21
	46	08/12/18	08/18/19	08/16/20	08/15/21
	47	08/19/18	08/25/19	08/23/20	08/22/21
	48	08/26/18	09/01/19	08/30/20	08/29/21
13	49	09/02/18	09/08/19	09/06/20	09/05/21
	50	09/09/18	09/15/19	09/13/20	09/12/21
	51	09/16/18	09/22/19	09/20/20	09/19/21
4th	52	09/23/18	09/29/19	09/27/20	09/26/21
Qtr	53	09/30/18

*A request for confidential treatment has been made with respect to portions of the following documents that are marked with [*CONFIDENTIAL*].  The redacted portions have been filed separately with the Securities and Exchange Commission.

Exhibit B

[*CONFIDENTIAL*]

[*CONFIDENTIAL*]	[*CONFIDENTIAL*]	[*CONFIDENTIAL*]
[*CONFIDENTIAL*]	[*CONFIDENTIAL*]	[*CONFIDENTIAL*]
[*CONFIDENTIAL*]	[*CONFIDENTIAL*]	[*CONFIDENTIAL*]
[*CONFIDENTIAL*]	[*CONFIDENTIAL*]	[*CONFIDENTIAL*]
[*CONFIDENTIAL*]	[*CONFIDENTIAL*]	[*CONFIDENTIAL*]
[*CONFIDENTIAL*]	[*CONFIDENTIAL*]	[*CONFIDENTIAL*]
[*CONFIDENTIAL*]	[*CONFIDENTIAL*]	[*CONFIDENTIAL*]
[*CONFIDENTIAL*]	[*CONFIDENTIAL*]	[*CONFIDENTIAL*]

A request for confidential treatment has been made with respect to portions of the following documents that are marked with [*CONFIDENTIAL*].  The redacted portions have been filed separately with the Securities and Exchange Commission.

Exhibit C Addendum

Southern Pacific Region Stores Located in the State of Hawaii

This Exhibit C Addendum to the Agreement for Distribution of Products (the “Agreement”) dated September 25, 2006 between Whole Foods Market Distribution, Inc., a Delaware corporation (“WFM”), and United Natural Foods, Inc., a Delaware corporation (“UNFI”) amends the Agreement to allow the Southern Pacific Region stores located in the State of Hawaii to use UNFI as its Primary Distributor pursuant to the following terms and conditions:

1.Delivery — If WFM chooses to have UNFI deliver product to a Freight Forwarder or other location WFM shall designate, said location must be within a 100 mile radius of a UNFI distribution center.

2.Standard Credit Policy

a.Billed Not Received (BNR) — A freight claim should be filed with the carrier on significant BNR’s such as a missing pallet.  UNFI will review any significant quantities for verification of pallets signed for on the Bill of Lading.

b.[*CONFIDENTIAL*].

c.Damage-freight claim should be filed with the carrier.

d.[*CONFIDENTIAL*].

e.Product Delivery Temperature — UNFI will not issue credit for products delivered at too high or too low temperatures.  A freight claim should be field with the carrier.

f.[*CONFIDENTIAL*].  See Standard Credit Policy, Exhibit E for Consumer Returns.

3.Credit Allowance Credit Policy

a.Billed Not Received — A freight claim should be filed with the carrier.

b.Damaged — A freight claim should be filed with the carrier.

c.[*CONFIDENTIAL*].

d.Product Delivery Temperature —UNFI will not issue credit for products delivered at too high or too low temperatures.  A freight claim should be filed with the carrier.

e.[*CONFIDENTIAL*].

4.Code Date Policy — Same as Exhibit G in the Agreement from invoice date,

a.Frozen —  [*CONFIDENTIAL*].  A freight claim should be filed with the carrier.

All terms not defined herein will have the meeting set forth in the Agreement.  This Exhibit C is dated January 7, 2009.

A request for confidential treatment has been made with respect to portions of the following documents that are marked with [*CONFIDENTIAL*].  The redacted portions have been filed separately with the Securities and Exchange Commission.

Whole Foods Market Distribution, Inc.,

a Delaware corporation

By:

Name Printed: Maren Giuliano

Title: Executive Coordinator of Purchasing

*A request for confidential treatment has been made with respect to portions of the following documents that are marked with [*CONFIDENTIAL*].  The redacted portions have been filed separately with the Securities and Exchange Commission.

Exhibit H

PRIVATE LABEL SKU AND CONTROL LABEL SKU

OVERSTOCK AND SHORT-DATED AGREEMENT

1)Overstock and Short-Dated responsibility chart:

DRY/FROZEN UNFI WFM

[*CONFIDENTIAL*]

REFRIGERATED (with normally 30 days minimum code) UNFI WFM

[*CONFIDENTIAL*]

2)WFM authorizes in advance these autoships:

DRY/FROZEN — Total quantity divided proportionally between the WFM Stores serviced by the UNFI DCc at which the Product is inventoried at 6 weeks from expiration.

DAIRY — Total quantity divided proportionally between the WFM Stores serviced by the UNFI DC at which the Product is inventoried at 3 weeks from expiration.

If the initial notice given is less than 6 weeks on dry/frozen, and less than 3 weeks on refrigerated, UNFI will remove the percentage of stock it is responsible for before performing any autoships.  This way the least possible amount of short-dated product is shipped to WFM Stores.  Any Product removed from inventory will be food banked or otherwise donated by UNFI.

3)UNFI will automatically remove from inventory any products:

DRY/FROZEN — Dated 2 weeks or less from expiration

DAIRY — Dated 1 week or less from expiration

Loss will be assigned as noted in section 1 above, and debits or other reimbursement will be arranged with WFM if appropriate.

4) UNFI and WFM agree that unusual circumstances may justify a different course of action than would otherwise be indicated by this agreement, and that Refrigerated products that normally have less than 30 days minimum code will be handled on a case-by-case basis.

*A request for confidential treatment has been made with respect to portions of the following documents that are marked with [*CONFIDENTIAL*].  The redacted portions have been filed separately with the Securities and Exchange Commission.

EXHIBIT I

EDLC Bulk Products Process

1.  Criteria for establishing EDLC Bulk Products.  WFM shall maintain a list of monitored bulk Products.  The initial monitored list is set forth below:

[*CONFIDENTIAL*]

In order to change the price or establish a bulk Product under the EDLC Program the following process shall be utilized:

·Does the cost change email include a monitored item?  If yes, go to next step.

·[*CONFIDENTIAL*]

·[*CONFIDENTIAL*]

·The earliest regional cost-plus price change effective date will be considered the national effective date.

·[*CONFIDENTIAL*]

·[*CONFIDENTIAL*]

·If the item currently has an EDLC, it should be ended the day before the national effective date.

·Email wfmedlc@wholfoods.com with instructions to end any existing EDLC and/or enter the new EDLC.  Ideally, EDLC updates should be data-entered before the 1st day of the pricing month prior to the earliest price change date (so they’ll be picked up by the EDI price file for that month).  Copy the appropriate WFM contact on this email for auditing purposes.

2.Business Analysis.  The appropriate UNFI party shall end and/or enter the EDLC’s and confirm internally when that process is complete.

3.Additional Notes.  WFM price changes will automatically be picked up by the EDI price files, and included in any future bid/cost reports.  Because UNFI pricing may include inbound freight and also because the Delivery Upcharge component is based on UNFI’s regular landed cost, the final prices to WFM may sometimes vary by UNFI DC.

*A request for confidential treatment has been made with respect to portions of the following documents that are marked with [*CONFIDENTIAL*].  The redacted portions have been filed separately with the Securities and Exchange Commission.

Exhibit J

Section A:

[*CONFIDENTIAL*]

Section B:

“Fingerprint” — Defined as an unloading activity type where the order quantities delivered do not meet the “DC minimum pallet height requirements” and therefore require additional handling before being moved to a warehouse storage location.  UNFI and WFM agree to negotiate DC minimum pallet height requirements that reasonably meet the needs of both parties.

*A request for confidential treatment has been made with respect to portions of the following documents that are marked with [*CONFIDENTIAL*].  The redacted portions have been filed separately with the Securities and Exchange Commission.

2010 Policies and Guidelines

Supplier Packet

This 2010 UNFI® Supplier Packet is intended to be used in conjunction with a formal signed contract, and outline the general expectations and requirements for a successful relationship between our companies.

UNFI offers many successful promotional and marketing vehicles to support your products to the trade and to consumers.  Your UNFI Purchasing Category Manager will be able to give you comprehensive information on these programs.

If you have any questions regarding any sections of this document, please contact our New Item Coordinator or your UNFI Purchasing Category Manager.

The policies stated in this packet supersede any policies submitted by suppliers to UNFI unless special exceptions have been made by an authorized member of UNFI management.

TABLE OF CONTENTS

Section			Page
		UNFI WAREHOUSE LOCATIONS	1
		UNFI CONTACTS	2
I.		GENERAL POLICIES AND GUIDELINES	3
	A.	UNFI Code of Conduct	3
	B.	Genetically Modified Organisms (GMOs)	3
	C.	Pesticides	3
	D.	Gift Policy	3
	E.	Miscellaneous Fees	3
	F.	Press Release Policy	3
	G.	Recall Information	4
	H.	Organic and Kosher Certification	4
	I.	Product Loss Claims	4
	J.	Unsaleable Products	4
	K.	Supermarket Division Product Placement	4
	L.	W9 for Taxpayer Identification Number and Certification	5
	M.	Product Correspondence	5
	N.	Supplier Changes	5
	O.	Supplier Freight/Pick Up Allowance	5
	P.	Supplier Discount Programs with Mutual Customers	5
	Q.	Offsets	5
II.		NEW PRODUCT INFORMATION	6
	A.	New Product Introductions	6
	B.	Product Samples Policy	6
	C.	Planograms	6
	D.	[*CONFIDENTIAL*]	6
	E.	New Store Opening/Resets/Expansions	6
III.		PRODUCT PROMOTIONS	8
	A.	Advertising and Marketing	8
	B.	Annual Advertising Contract	8
	C.	Tabletop Shows	8
	D.	[*CONFIDENTIAL*]	8
	E.	[*CONFIDENTIAL*]	8
	F.	Everyday Low Pricing (EDLP)	8
	G.	Turnover Policies	9
IV.		SHIPPING AND RECEIVING PRODUCTS	11
	A.	Back Orders	11
	B.	Bioterrorism Act of 2002	11
	C.	Distribution Center Delivery Receiving	11
	D.	Date Codes	11
	E.	Mis-ships and Shortages	12
	F.	Pallet Exchange Policy	12
	G.	Shipping and Receiving Requirements	12
	H.	Drop Ship Policy for Customers	14
	I.	International Business	14
V.		SUPPLIER INFORMATION	15
	A.	Invoices	15
	B.	Pricing, UPC, and Pack Changes	15
	C.	Discontinued Products	15
EXHIBIT A		UNFI CODE OF CONDUCT	16

UNFI WAREHOUSE LOCATIONS

Eastern Region Warehouses	Western Region Warehouses
Dayville, CT 260 Lake Road Dayville, CT 06241-0999 (860) 779-2800 (800) 877-8898	Seattle, WA 22 30th Street NW, Ste. 102 Auburn, WA 98002 (253) 333-6769 (800) 336-8872
Atlanta, GA 100 Lakeview Court S.W. Atlanta, GA 30336 (404) 346-0960 (800) 676-4667	Portland, OR 7909 S. Union Ridge Parkway Ridgefield, WA 98642 (870) 741-3425
Chesterfield, NH 171 Stow Drive Chesterfield, NH 03443 (603) 256-3000 (800) 451-2525	Denver, CO 15965 E 32nd Avenue Aurora, CO 80011 (303) 360-8459 (800) 522-7633
Greenwood, IN 655 Commerce Pkwy East Drive Greenwood, IN 46143 (317) 865-7140 (800) 814-0819	Rocklin, CA 1101 Sunset Boulevard Rocklin, CA 95765 (916) 625-4100 (800) 679-8735
Iowa City, IA 2340 Heinz Road Iowa City, IA 52240 (319) 337-4471 (800) 323-2131	Moreno Valley, CA 22150 Goldencrest Drive Moreno Valley, CA 92553 (916) 625-4100 (877) 697-0013
Sarasota, FL 6272 McIntosh Road Sarasota, FL 34238 (914) 925-6600 (800) 520-6982
York, PA 225 Cross Farm Lane York, PA 17406 (717) 266-7800 (800) 336-4557
Leicester, MA 88 Huntoon Memorial Highway Leicester, MA  01524 (508) 892-8171 (800) 643-8130
Harrison, AR P.O. Box 790 401 Hwy. 43 East & Cottonwood Road Harrison, AR 72602-0790 (870) 741-3425 (800) 643-8130

Eastern Region Contacts	Western Region Contacts
Advertising Contract Questions
Catherine Bryson, cbryson@unfi.com	Rhonda Hill, rhill@unfi.com
Invoices
Attn: Accounts Payable PO Box 567 Keene, NH 03431	Attn: Accounts Payable 1101 Sunset Blvd Rocklin, CA 95765 AP Hotline 800-679-8735 x53451
Inside Sales / Customer Service Departments
Attn: Director of Customer Service Barbara Laliberte 260 Lake Rd Dayville, CT 06241	Attn: Director of Customer Service Michele Nielsen 1101 Sunset Blvd Rocklin, CA 95765
International Business Questions
InternationalCustServ@unfi.com
Pricing and Price Change
Personal Care and Supplements: tdalterio@unfi.com AND Send to your UNFI Buyer/Category Manager	pricecode@unfi.com AND Send to your UNFI Buyer/Category Manager
Product Recalls
Pat Blouin, pblouin@unfi.com	Robert Bishop, rbishop@unfi.com
Routing/Receiving Questions
Thomas Shaffer, tshaffer@unfi.com 860-779-2800 x32539	Tiffany Vetos, tvetos@unfi.com 860-779-2800 x 54206
Show Orders
Show Orders are requested to be submitted when exiting the Show Floor. If required, can be mailed within 2 days to: Mark Slattery, mslattery@unfi.com 260 Lake Rd, Dayville, CT 06241	Show Orders are requested to be submitted when exiting the Show Floor. If required, can be mailed within 2 days to: Attention Show Orders 1101 Sunset Blvd, Rocklin, CA 95765-3750
Special Orders, Drop Ships and Direct Pallets/Truckloads Policy For authorization for a direct ship/bill-through or direct pallet/truckload
Ruth Slade, rslade@unfi.com	Kathy Gonzalez, kgonzalez@unfi.com 800-679-8735 x5351
Turnovers See page 10 for definition
turnovereast@unfi.com Fax 860-779-9152	turnovers@unfi.com Fax 916-625-4198
EDLP Hotline See Page 9 for definition
EDLPEast@unfi.com	edlpwest@unfi.com 916-625-4100 x53387
Deductions Hotline
deductioncoordinatoreast@unfi.com	deductionswest@unfi.com 916-624100 x53341
Purchasing Department Contact for New Suppliers
newvendor@unfi.com	New_vendors_inquiry@unfi.com

I.GENERAL POLICIES AND GUIDELINES

A.UNFI CODE OF CONDUCT

UNFI’s Code of Conduct for Suppliers is attached as Exhibit A.  We require all of our suppliers to sign off indicating their agreement to comply with the applicable laws and practices listed.  Please return the completed form to your Buyer or Category Manager.

B.GENETICALLY MODIFIED ORGANISMS (GMOs)

UNFI supports sustainable agriculture and organic farming, and we are significantly concerned about the proliferation of genetically modified organisms (GMOs) in foods.  We support a moratorium on the use of GMOs, until more in-depth research on their long-range consequences is completed.  We will persistently work with all of our food suppliers to determine what they can guarantee about GMOs in their products, and to provide the most assurance we can that our products have not been grown, processed or handled with any technology of genetic modification.  Food manufacturers must provide a written statement on company letterhead specifying their position on GMOs.

C.PESTICIDES

1.A pesticide may be defined as any substance intended to control, destroy, repel, or attract a pest.  Any living organism that causes damage or economic loss or transmits or produces disease may be the target pest. Pests can be animals (like insects or mice), unwanted plants (weeds), or microorganisms (like plant diseases or “germs,” that is, viruses and bacteria).  Pesticide products include not only insecticides and herbicides, but many products not typically thought of as pesticides, including algicides (such as pool chlorine), disinfectants and sanitizers (such as toilet bowl cleaner), repellants (such as mosquito repellent), rodenticides (rat poison), and fungicides (like rose dust).

2.Pesticides are required to be registered by the Federal Government and certain states, including California.  California also requires pesticide manufacturers to pay an assessment on sales of pesticides sold in the state.

3.Before selling any product to UNFI, suppliers must complete UNFI’s Pesticide Questionnaire, which can be obtained from your Buyer/Category Manager.

D.GIFT POLICY

UNFI employees cannot accept gifts or travel worth $100 or more without senior management approval.

E.MISCELLANEOUS FEES

[*CONFIDENTIAL*].

F.PRESS RELEASE POLICY

UNFI senior management must pre-approve any reference to UNFI in a press release or print publication prior to publication or distribution.

G.RECALL INFORMATION

In the event of a product recall, please contact:

Eastern Region
Pat Blouin — Purchasing Compliance Manager

603-256-3000 x42254 or pblouin@unfi.com

Western Region
Robert Bishop — Purchasing Compliance Manager

303-360-8459 or rbishop@unfi.com

H.ORGANIC AND KOSHER CERTIFICATION

For an item to be identified as Organic and/or Kosher in UNFI publications, UNFI must have a current Organic and/or Kosher certificate on file.  These certificates are required before items can be set up in UNFI’s systems.  Forward all renewal certificates to your UNFI buyer/Category Manager annually.

K.PRODUCT LOSS CLAIMS

Product Loss Claims (“PLCs”) are generated in 3 ways: defective product reported by retailers, product returned by consumers to our retail customers, and shelf worn product.

1.Defective product — this includes defects in product that may not be apparent until the case is opened by the retailer, such as poorly sealed product, tops/ends not glued shut, dented cans/damaged boxes inside a sealed, undamaged case, and product that spoils before the expiration date on the product.

2.Consumer returns — Customer returns are products returned by the Consumer to the Retailer where they purchased it. UNFI does not require an explanation report for these returns except in the rare case of excessive quantities being returned.

3.Shelf worn product — See Supermarket Program.

PLCs are reported monthly by division, and are deducted at UNFI’s wholesale price.  This covers the costs incurred on top of the invoice price, including stocking, picking and shipping the defective product. Except for some full cases or excessive quantities, PLC products are not picked up by UNFI, but are destroyed at the store level.

J.UNSALEABLE PRODUCTS

Unsaleable products will be disposed of as mutually agreed between the supplier and UNFI.  Depending on the method of disposition, the following fees will apply.  If there is no specific agreement between supplier and UNFI, option D below will apply:

[*CONFIDENTIAL*]

K.SUPERMARKET DIVISION PRODUCT PLACEMENT

Suppliers that wish to have their products considered for the UNFI Supermarket Program must complete the Supermarket Program form, which can be obtained from your Buyer/Category Manager, and support their line by complying with the following requirements.  The Supermarket New Store/New Item Opening Order Program terms are as follows:

[*CONFIDENTIAL*].

4.The program includes physical set-up and cut-in at store level. Please see the Supermarket Opening Order Program form in this packet.

5.The Supermarket Channel expects and receives credit for products that are removed from the shelf for a variety of reasons, including but not limited to discontinuation (by supplier, UNFI, or chain), dating, shelf worn or damage.  [*CONFIDENTIAL*].

L.W9 FOR TAXPAYER IDENTIFICATION NUMBER AND CERTIFICATION

A W9 Tax payer Identification Number and Certificate with live or electronic signature must be on file with UNFI.  Visit http://www.irs.gov/pub/irs-pdf/fw9.pdf to retrieve the form.

M.PRODUCT CORRESPONDENCE

All correspondence regarding products must be directed to the appropriate buyer/category manager and will require a twelve-digit UPC number and UNFI item numbers. Such correspondence may include, but is not limited to:

1.New product announcements

2.Promotions

3.Size, pack, and description changes

4.Price lists and updates

N.SUPPLIER CHANGES

1.Changes to supplier ownership structure, payment terms, or address must be submitted in writing and received  60 days prior to their effective date. This information should be sent to:

East: Pricing and Coding Dept
260 Lake Rd.
Dayville, Ct 06241
AND to your UNFI Buyer West: UNFI Pricing and Coding Dept. 1101 Sunset Blvd Rocklin, CA 95765 AND to your UNFI Buyer

2.Changes to the FOB address may affect freight rates which could in turn affect wholesale price.

O.SUPPLIER FREIGHT/ PICK UP ALLOWANCE

If supplier chooses to offer a pick-up allowance, please fill out the Freight/Pick-up Allowance Form, which can be obtained from your Buyer/Category Manager.

P.SUPPLIER DISCOUNT PROGRAMS WITH MUTUAL CUSTOMERS

If supplier negotiates a discount deal with a mutual retail customer that requires UNFI to undertake certain extra administrative work (such as manual tracking, special reporting, etc.), [*CONFIDENTIAL*].

Q.OFFSETS

UNFI reserves the right to offset payments due from suppliers against payments made to suppliers.

II.NEW PRODUCT INFORMATION

A.NEW PRODUCT INTRODUCTIONS

1.All new product introductions must be supported by [*CONFIDENTIAL*].

2.[*CONFIDENTIAL*].

B.PRODUCT SAMPLES POLICY

1.[*CONFIDENTIAL*].

2.New product samples will be pulled from inventory for Sales, Customer Service, Marketing and Planograms (defined below).

3.Samples of regularly inventoried items (not new products) also may be pulled from inventory for the purpose of introducing your products to selected customers (supermarket, food service, chains) that do not currently stock your products or in order to photograph your products for use in our publications (e.g., Consumer Circular, UNFI website)

C.PLANOGRAMS

1.Planograms are Internet-based product displays that are used in merchandising.

2.Please send front view COLOR image of individual product (no group shots) as sold at retail in jpg format, approximately 150K.  Please title file with the product’s full 12 digit UPC number. Include product dimensions as sold at retail — height, width and depth.

3.Upload file to FTP site FTP//FTP3.UNFI.com/TO-UNFI.  Copy or cut/paste the file.

4.Please send e-mail to Retailimageservices@unfi.com so UNFI can retrieve the images or mail CD to UNFI, Retail Space Management Assistant, 260 Lake Road, Dayville, CT 06241

D.[*CONFIDENTIAL*].

E.NEW STORE OPENING/RESET/EXPANSIONS

1.When a new store opens or when an existing store undergoes a significant expansion or move, UNFI will expect strong support from our suppliers.

2.Most new and/or expanding retailers expect either a free fill or a large discount.

3.Please complete the appropriate discount consent form specifying the discount authorized for New Store Opening orders, and resets, which can be obtained from your Buyer/Category Manager.  Send the completed form to the contacts listed on the form.

4.A hard copy authorization is needed for all discounts and free fills using the appropriate form.

5.When completing the forms, please note the following:

[*CONFIDENTIAL*].

6.Discounts may be updated on an annual basis.  If you elect to change the discounts, the new form must be received no later than December 1st in order to apply those changes for the new calendar year.

7.Some larger chains run their own customized new store opening/reset programs.  Suppliers may be contacted by UNFI separately about participation in these programs.

IIII.PRODUCT PROMOTIONS

A.ADVERTISING AND MARKETING

UNFI’s Advertising and Marketing Programs have been designed to keep your products visible to our customers.  UNFI is proud of the quality of our publications and the wealth of information provided to our customers.  We offer excellent opportunities for you to tell your own unique story.

B.ANNUAL ADVERTISING CONTRACT

UNFI encourages every supplier to participate in an annual advertising program.  These programs are vitally important for the long-term growth and success of your product line. Suppliers with advertising contracts have priority when products are being considered for additional marketing opportunities

C.TABLETOP SHOWS

UNFI produces six tabletop shows per year.  Suppliers are encouraged to participate in these shows to promote their products.

D.[*CONFIDENTIAL*].

E.[*CONFIDENTIAL*].

F.EVERYDAY LOW PRICING (EDLP)

1.EDLPs (Every Day Low Pricing) are retailer specific deals submitted by a supplier/broker for a minimum of 30 days.  EDLPs submitted for any store that is a member of a chain will be honored for all members of that chain.

2.[*CONFIDENTIAL*].

3.[*CONFIDENTIAL*].

4.It is the supplier/broker’s responsibility to know when their EDLPs end.
[*CONFIDENTIAL*].

5.[*CONFIDENTIAL*].

6.Changes to product pricing or pack size, additions/deletions of SKUs, or introduction of new seasonal or special promotional items, that necessitate a change to the original EDLP are the responsibility of the Supplier/Broker and must be addressed by submitting new EDLP paperwork.  Credits will not be issued for discounts missed due to late paperwork for changes.

7.In the event disputes arise regarding discounts, UNFI may attempt to facilitate discussions between the affected parties to resolve the dispute.

8.[*CONFIDENTIAL*].

G.TURNOVER POLICIES

UNFI defines a turnover order as any one-time deal a store has authorized a supplier or broker to submit. A turnover can be for the purposes of basic stocking, line extension, promotion, store demonstration, store expansion, new store opening, new product placement or product replacement.

1.Turnover Order Requirements and Guidelines

Order quantities on turnover orders should reflect the case pack (unit of issue) of the distributor.  A general guideline is that groceries are sold by case, whereas personal care and supplements are sold by the each. The broker/supplier is responsible for submitting the correct selling unit on all turnovers. Quantities will be entered for the case pack of the product number submitted.  Any resulting errors, over-shipments or increased MCBs are the responsibility of the supplier/broker.

a.[*CONFIDENTIAL*].

b.UNFI item code numbers and store account numbers must be on all turnover orders. The person submitting the order must provide their name, phone number, fax number, and name of company on all orders. The retailer buyer’s name and store address also must be included.

c.Only UNFI will determine the UNFI contribution to deals.

d.For ad items, demo products, or holiday stock we require a [*CONFIDENTIAL*] lead time.  Please specify on the order that it is product for an ad, demo, or holiday or case stack/end-cap display and clearly indicate the date the product is needed at the store.

e.UNFI keeps all hard and electronic copies of turnovers.  Any credits and/or returns will be evaluated and handled in conjunction with UNFI’s credit policy.

f.All promotional items must be delivered within the published dates specified on the front cover of our Monthly Specials book.

g.[*CONFIDENTIAL*].

h.[*CONFIDENTIAL*].

i.[*CONFIDENTIAL*].

j.Please use one ship date and one store per order form page.

k.[*CONFIDENTIAL*].

l.[*CONFIDENTIAL*].

2.Turnover Lead Time and Submission Requirements:

a.Turnover orders require lead time of 48 hours to process to insure accurate discounts are entered. UNFI requires all orders to be prior to the customer’s order deadline.  Please do not expect an order to ship the same day it is submitted.

b.All turnover orders must be emailed or faxed on a turnover form. UNFI East has an automated system that allows turnovers to be submitted via web services or a web portal. UNFI will provide a sample turnover form upon request.  If using your own form, it must be presented on manufacturer or brokerage letterhead.  Please see the contacts page for fax number and email address information.

c.UNFI will provide an e-mail order receipt confirmation.

d.Discount authorization paperwork is required for all orders at the time of data entry; for this reason we are unable to accept verbal turnover orders.

IV.SHIPPING AND RECEIVING PRODUCT

A.BACK ORDERS

UNFI does not accept back orders.

B.BIOTERRORISM ACT OF 2002

The Establishment and Maintenance of Records under the Public Health Security and Bioterrorism Preparedness and Response Act of 2002 (the “Bioterrorism Act”) states, in part:

“Persons who manufacture, process, pack, distribute, receive, hold, or import food in the United States must establish and maintain the following records to identify the immediate previous sources and immediate subsequent recipients for all food they receive:  Name, address, telephone number and, if available, fax number, and e-mail address of the immediate previous source and subsequent recipient; adequate description; date received or released; for persons who manufacturer, process, or pack food, the lot or code number or other identifier; quantity and how the food is packaged; and name, address, telephone number and, if available, fax number, and e-mail address of the transporter who transported the food to and from you”.

Therefore, all deliveries to UNFI of products covered by the Bioterrorism Act (i.e. “food” and beverages for humans and animals and related packaging, all as defined in the Bioterrorism Act) will be subject to the following requirements to assist us in complying with the provisions of the Bioterrorism Act:

C.DISTRIBUTION CENTER DELIVERY RECEIVING

Each driver will be required to supply the following information to the UNFI receiving or shipping office personnel of our distribution center at the time of their scheduled check-in:

1.Driver’s name and photo proof of identity, which will be photocopied.

2.Acceptable photo proof of identity: valid CDL’s, and/or company issued photo badge identification.

3.Transporter/carrier company name and street address, city, state, zip code and main telephone number (Please note: a P.O. Box address is not sufficient.), and, if available, fax number and email address.

Any driver unable to supply this information or refusing this request will not be allowed to load or unload his/her vehicle at our distribution centers.

UNFI reserves the right to refuse products that appear to have been tampered with.

D.DATE CODES

1.UNFI requests that all products from the supplier be identified with an open coded shelf life or use by date.  This date should be on the product as well as printed on the outside of the shipping case.  UNFI requires that all items with closed codes be identified with the actual expiration date on the product and by item on the packing slip and bill of lading.

2.UNFI requires that the supplier provide in writing to the appropriate buyer/category manager updated information regarding production shelf life and guaranteed minimum shelf life at time of receipt.  UNFI requires that the shelf life of all products be at least 75% of the production shelf life at the time of receipt.

3.If products do not have a human readable, calendar expiration date on the outside shipping case, UNFI will bill-back any products that are not sold before the expiration date on the package as this situation prevents UNFI from utilizing our date code tracking system.

E.MIS-SHIPS AND SHORTAGES

1.In the event a mis-ship occurs and UNFI receives product that was not ordered, UNFI will notify supplier of product and inventory count of items.

2.UNFI will charge back freight costs for all returned products.

3.Supplier must make its own arrangements for pick-up.

4.[*CONFIDENTIAL*].

5.Supplier must notify buyer of shortages before delivery or pickup.

F.PALLET EXCHANGE POLICY

1.[*CONFIDENTIAL*].

2.The delivery bill of lading and invoice must indicate the number and type of pallets exchanged (“ins and outs”) for us to authorize payment.

3.UNFI does not participate in any pallet pool programs (e.g. Chep) nor will we accumulate pallets for return.

4.UNFI does not accept iGPS plastic pallets

G.SHIPPING AND RECEIVING REQUIREMENTS

1.The instructions, when followed, will allow UNFI to receive and distribute your product properly.  Adherence to the instructions is necessary for effective distribution, inventory control and processing of Accounts Payable paperwork.

2.The following required procedures maximize the efficiency of our operations, allowing UNFI to deliver your product to our customers in the timeliest manner possible. [*CONFIDENTIAL*].

a.All carriers must make an appointment with the appropriate inbound receiving department 48 hours prior to arrival. Three days is recommended.  Appointments are granted on a first come, first serve basis and not guaranteed. UNFI reserves the right to grant appointment times based on business demands.  Carrier charge backs for appointment fees will not be accepted for prepaid shipments.  Any fees charged will be deducted from supplier invoice.  Appointment fees can be removed through negotiations with your carriers.  [*CONFIDENTIAL*]. Force Majeure* will be considered a consented delay and no charge will apply.

b.Carrier must communicate all release/PO numbers to be delivered.

c.All orders must be palletized, shrink wrapped, and on a good quality “GMA” 4-WAY 40” x 48” pallet.  We do not accept European pallets. Pallets should be built to maximize space within the constraints of packaging. [*CONFIDENTIAL*]. In the event that re-stacking the pallet(s) is not possible, charges for lost space on the truck will apply, plus any other applicable fees described herein.

d.Product must not hang over pallet more than 2”. All products are to be appropriately packaged to limit damage. Glass or canned items should be sealed in corrugated cartons whenever possible. Poorly packaged products may be subject to supplier charge back.

e.All products will be palletized on standard GMA pallets according to the TI/HI specifications when provided by UNFI.  Any time multiple SKUs are shipped on a pallet they must be

separated by a slip sheet or they will be subject to lumper fees. Fees related to the breakdown or re-stacking of products failing to be shipped in proper TI/HI or on substandard pallets will be the carriers’ responsibility for prepaid shipments, plus any applicable fees described elsewhere herein.

f.Prepaid suppliers will provide, or have their selected delivery carrier provide, the manpower to sort and segregate the entire shipment. In the event UNFI is charged for said sort and segregation, the charge plus applicable fees in stated required procedures will be charged back to the supplier.

g.All shipments must have a release/PO number and consignee name clearly marked on the front and back of each pallet. This is very important, as we haul freight for many of our divisions.

h.Each bill of lading must be accompanied by a detailed packing slip for each release/PO being delivered.

i.The transfer or shipping of organic products should be in compliance with the USDA National Organic Program.

j.Products shipped in the same carrier as hazardous materials will be refused by UNFI warehouse receiving.

k.[*CONFIDENTIAL*].

l.Pallets with damaged or leaking products will be re-stacked by the carrier and rejected.

m.Any pallet with signs of pest infestation will be immediately rejected.

n.All temperature sensitive products will be probed upon receipt. Any product not meeting UNFI temperature guidelines will be rejected.  Refrigerated: 34-40 degrees. Frozen: -10 degrees or less.

o.The unloading of all non-palletized loads (deck loaded) will be the responsibility of the supplier and or delivering carrier, and will be stacked to our local requirements.

p.[*CONFIDENTIAL*].

q.Small package shipments such as UPS must adhere to the following:

·Cartons must be clearly marked with box count (i.e. 1 of 2, 2 of 2 etc)

·A purchase order number must be written on each carton.

·A packing slip must accompany each purchase order, if enclosed in carton, please note as such.

·Back Orders will not be accepted.

3.FOB Pickup Requirements

a.UNFI transportation or hired carriers are delayed more than two hours from the time of arrival, fees will be assessed and charged to the supplier.

b.UNFI drivers or hired carriers only can sign for product subject to count or they may sign for a piece count when this can be done without breaking down the load or significant time loss.

c.All shipments must have a purchase order number and consignee name written on both the front and the back of each pallet.

d.Any purchase order quantity shortages not communicated in advance may result in fees assessed to the supplier.

e.Pallets should be built to maximize space within the constraints of packaging.  If our driver must re-stack or re-palletize at the time of pick up or consolidation, the labor cost will charged to the supplier.

f.[*CONFIDENTIAL*].

H.DROP SHIP POLICY FOR CUSTOMERS

Drop ships must be authorized prior to arranging shipment.  Authorization can be obtained by contacting the individual(s) listed on the contacts page herein.  Please reference this authorization number on the invoice.  For details of pricing policies related to drop ships, please contact the appropriate person listed on the contact page.

I.INTERNATIONAL BUSINESS

The UNFI International Division distributes to over 40 countries. Please fill out the International Business Approval Form to have your product approved for this program. For more information and the necessary form,  e-mail InternationalCustServ@unfi.com.

V.SUPPLIER INFORMATION

UNFI reserves the right to conduct third party audits on payments and invoices, which may result in a deduction taken after the original payment is made.

A.INVOICES

Send all invoices to:

Eastern Region UNFI, Accounts Payable, P.O. Box 567, Keene, NH 03431

Western RegionUNFI, Accounts Payable, 1101 Sunset Blvd., Rocklin, CA 95765AP Hotline 800-679-8735 ext. 53451

B.PRICING, UPC AND PACK CHANGES

UNFI will not accept changes that take effect on promotional items until after the promotional period ends.  60 day notice is required using UNFI forms, which can be obtained from your Buyer or Category Manager. Upon notification that an item has had a UPC or pack size change the Distributor Price Pack Size Change Form must be submitted with new specification sheet and price list.

C.DISCONTINUED PRODUCTS

1.UNFI performs ongoing product evaluation, and aggressively manages product mix

2.Upon notification that an item has been discontinued (either by supplier or UNFI) or has a UPC or pack size change, UNFI will:

a.Supply inventory count of items and verify the landed cost of inventory.

b.Remove product from inventory and send a notice to the supplier to arrange for pick up.

c.[*CONFIDENTIAL*].

d.[*CONFIDENTIAL*].

e.[*CONFIDENTIAL*].

3.Refrigerated items which reach pull date will be donated automatically.

Exhibit A

UNITED NATURAL FOODS, INC.

CODE OF CONDUCT FOR SUPPLIERS

UNFI has established a set of six Core Values. These Core Values inspire our approach to business and are fundamental to building successful relationships with all our stakeholders: Customers, Suppliers, Associates and the Environment.

· Integrity and respect in all of our actions

· Trust and accountability in all relationships

· Open and honest communication with our employees

· Profitable growth of the organization

· A safe and healthy work environment

· Social and environmental responsibility for the health of the planet

UNFI believes that our supplier partners play a major role in shaping and maintaining our reputation. As we strive to apply these values to our business practices every day, we now ask that our supplier partners comply with a Code of Conduct that will allow them to support these same values. UNFI sees this as an opportunity to extend good business practices throughout the supply chain and ultimately create a higher standard of business in the world. We intend to use your support of this policy as a way to raise awareness and standards.

Suppliers doing business with UNFI will:

COMPLY WITH APPLICABLE LAWS AND PRACTICES:

Suppliers will comply with all local and national laws and regulations in the jurisdictions in which they do business.

COMPLY WITH THE FOLLOWING CONDITIONS OF EMPLOYMENT:

Compensation: Suppliers will compensate their employees with wages and benefits which are in compliance with the local and national laws and regulations of the jurisdictions in which they do business.

Hours of Labor: Suppliers must ensure that working hours are consistent with local regulations. If regulations do not address standard working hours, suppliers must ensure that work hours are not excessive or unfair.

Forced Labor: Suppliers will not use forced labor.

Child Labor: Suppliers or their subcontractors will not use child labor. Child labor is defined for these purposes as any person employed at an age younger than the legal minimum age for working in any specific jurisdiction.

Discrimination /Rights: Suppliers will not discriminate on the basis of race, color, national origin, gender, religion, disability, sexual orientation, and other similar factors in their employment practices.

PROVIDE A SAFE WORKPLACE ENVIRONMENT:

Health and Safety: Suppliers will insure that adequate accommodations for the health and safety of workers have been implemented and are maintained.

Security: Suppliers will comply with all USDA requirements for product safety and maintain adequate security at all production and warehousing facilities to prevent dangerous exposures to health hazards or perilous cargo.

In addition, UNFI would like to be informed of your companies’ activities in certain areas of interest. Please include information related to your company’s efforts regarding environmental impact and social responsibility along with your signed copy of this code of conduct:

Finally, we are all aware that some parts of the world demonstrate better efforts regarding compliance with the above conditions of employment than others.  If you are doing business with or in any country in areas of the world known for employing labor practices inconsistent with the above, we ask that you remain mindful of the above and use your best efforts to cease associating with any country or entity tolerating or employing these inconsistent labor practices.

The undersigned agrees to the terms outlined in this document and is an authorized representative of the participating company.

Company Name:

Authorized Representative:

Title:

Date:

EX-10.2

Exhibit 10.2

WHOLE FOODS

EXECUTIVE RETENTION PLAN

AND NON-COMPETE ARRANGEMENT

Effective May 20, 2010

TABLE OF CONTENTS

WHOLE FOODS EXECUTIVE RETENTION PLAN AND NON-COMPETE ARRANGEMENT

ARTICLE I PREAMBLE AND PURPOSE		1
1.1	Preamble	1
1.2	Purpose	1
ARTICLE II DEFINITIONS AND CONSTRUCTION		2
2.1	Definitions	2
2.2	Construction	8
ARTICLE III NON-COMPETE BENEFITS		9
3.1	Non-Compete Benefits	9
3.2	Remedies for Violation of Restrictive Covenants	10
3.3	Death or Disability of Covered Executive	11
ARTICLE IV EMPLOYMENT AND BENEFITS AFTER A CHANGE IN CONTROL		12
4.1	COC Employment Period	12
4.2	Terms of Employment	12
4.3	Termination	15
4.4	Obligations of the Employer in Connection with a Change of Control	15
4.5	Death	16
4.6	Disability	17
4.7	Termination for Cause; Termination Other Than for Good Reason	17
4.8	Rabbi Trust	17
4.9	Legal Fees	18
4.10	Non-Exclusivity of Rights	18
ARTICLE V ADMINISTRATION		20
5.1	The Plan Administrator	20
5.2	Powers of Plan Administrator	20
5.3	Appointment of Daily Administrator	20
5.4	Duties of Daily Administrator	20
5.5	Indemnification of Plan Administrator and Daily Administrator	22
5.6	Claims for Benefits	22
5.7	Arbitration	23
5.8	Receipt and Release of Necessary Information	24
5.9	Overpayment and Underpayment of Benefits	25
5.10	No Mitigation	25
ARTICLE VI AMENDMENT AND TERMINATION OF THE PLAN		26
6.1	Continuation	26
6.2	Amendment of Plan	26
6.3	Termination of Plan	26
6.4	Termination of Affiliated Company’s Participation	26
6.5	409A Compliance	26
ARTICLE VII MISCELLANEOUS		28
7.1	No Reduction of Employer Rights	28

I

7.2	Successor to the Company	28
7.3	Provisions Binding	28
7.4	Governing Law	28
7.5	Notice	28
7.6	Severability	29
7.7	Counterparts and Electronic Signatures	29
7.8	Withholding	29
7.9	No Waiver	29

II

WHOLE FOODS EXECUTIVE RETENTION PLAN AND NON-COMPETE ARRANGEMENT

ARTICLE I
PREAMBLE AND PURPOSE

1.1Preamble.  Whole Foods Market, Inc., a Texas Corporation (the “Company”) adopted the Whole Foods Executive Retention Plan (the “Plan”) effective as of May 20, 2010, in order to induce its executives’, and those of its Affiliated Companies, as defined in Article II, to enter into certain non-competition arrangements, compliance with the confidentiality provisions and restrictive covenants set forth in the Plan Agreements (as defined below), and to provide protection to such executives in the event of a Change of Control as defined in Article II.  By this instrument, the Company desires to amend and restate the Plan effective May 20, 2010 to change the name of the Plan to the “Whole Foods Executive Retention Plan and Non-Compete Arrangement” and to clarify the conditions under which the Non-Compete Payment, as defined in Article II, will be made.

The Company may adopt one or more domestic trusts to serve as a possible source of funds for the payment of benefits under the Plan.

1.2Purpose.  Through the Plan, the Company intends to permit the deferral of compensation and to provide additional benefits to a select group of management or highly compensated employees of the Company and its Affiliated Companies.  Accordingly, it is intended that the Plan will not constitute a “qualified plan” subject to the limitations of section 401(a) of the Internal Revenue Code of 1986, as amended, nor will it constitute a “funded plan,” for purposes of such requirements.  It also is intended that the Plan will qualify as a “pension plan” within the meaning of section 3(2) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) that is exempt from the participation and vesting requirements of Part 2 of Title I of ERISA, the funding requirements of Part 3 of Title I of ERISA, and the fiduciary requirements of Part 4 of Title I of ERISA by reason of the exclusions afforded plans that are unfunded and maintained by an employer primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees.

End of Article I

1

ARTICLE II

DEFINITIONS AND CONSTRUCTION

2.1Definitions.  When a word or phrase appears in this Plan with the initial letter capitalized, and the word or phrase does not commence a sentence, the word or phrase will generally be a term defined in this Section 2.1.  The following words and phrases with the initial letter capitalized will have the meaning set forth in this Section 2.1, unless a different meaning is required by the context in which the word or phrase is used.

(a)“Accrued Obligations” has the meaning set forth in Section 4.4(a)(i)(A).

(b)“Affiliated Company” means a corporation that is a member of a controlled group of corporations (as defined in section 414(b) of the Code) that includes the Company, any trade or business (whether or not incorporated) that is in common control (as defined in section 414(c) of the Code) with the Company, or any entity that is a member of the same affiliated service group (as defined in section 414(m) of the Code) as the Company.

(c)“Annual Base Salary” has the meaning in Section 4.2(b)(i).

(d)“Annual Bonus” has the meaning in Section 4.2(b)(ii).

(e)“Board” means the Board of Directors of the Company.

(f)“Cause” means:

(i)the willful and continued failure of the Covered Executive to perform substantially his or her duties with the Company or any Affiliated Company (other than any such failure resulting from incapacity due to physical or mental illness or following the Covered Executive’s delivery of a Notice of Termination for Good Reason), after a written demand for substantial performance is delivered to the Covered Executive by the Board or the Chief Executive Officer of the Company that specifically identifies the manner in which the Board or the Chief Executive Officer of the Company believes that the Covered Executive has not substantially performed the Covered Executive’s duties, or

(ii)the willful engaging by Covered Executive in illegal conduct or gross misconduct that is materially and demonstrably injurious to the Company.

Provided however, for purposes of defining “Cause”, no act, or failure to act, on the part of the Covered Executive will be considered “willful” unless it is done, or omitted to be done, by the Covered Executive in bad faith or without reasonable belief that the Covered Executive’s action or omission was in the best interests of the Company.  Furthermore, any act, or failure to act, based upon (A) authority given pursuant to a resolution duly adopted by the Board, or if the Company is not the ultimate parent corporation of the Affiliated Companies and is not publicly-traded, the board of directors of the ultimate parent of the Company (the “Applicable Board”), (B) the instructions of the Chief Executive Officer of the Company or a senior officer of the Company, or (C) the advice of counsel for the

2

Company will be conclusively presumed to be done, or omitted to be done, by the Covered Executive in good faith and in the best interests of the Company.

Any termination by the Employer for Cause will be communicated by the Employer through a Notice of Termination to the Covered Executive given in accordance with Section 7.5.  The failure by the Employer to set forth in the Notice of Termination any fact or circumstance that contributes to a showing of Cause will not waive any right of the Employer hereunder or preclude the Employer from asserting such fact or circumstance in enforcing the Employer’s rights hereunder

The cessation of employment of the Covered Executive will be deemed to be not for Cause unless and until there has been delivered to the Covered Executive a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters of the entire membership of the Applicable Board (excluding the Covered Executive, if the Covered Executive is a member of the Applicable Board) at a meeting of the Applicable Board called and held for such purpose (after reasonable notice is provided to the Covered Executive and the Covered Executive is given an opportunity, together with counsel for the Covered Executive, to be heard before the Applicable Board), finding that, in the good faith opinion of the Applicable Board, the Covered Executive is guilty of the conduct described in Section 2.1(f)(i) or (ii) of this definition of “Cause”, and specifying the particulars thereof in detail.

(g)“Change of Control” means the occurrence of any of the following:

(i)Any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (a “Person”) becomes the beneficial owner (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of twenty percent (20%) or more of either (A) the then-outstanding shares of common stock of the Company (the “Outstanding Company Common Stock”), or (B) the combined voting power of the then-outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that, for purposes of this definition of Change of Control, the following acquisitions will not constitute a Change of Control:  (1) any acquisition directly from the Company, (2) any acquisition by the Company, (3) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any Affiliated Company, or (4) any acquisition pursuant to a transaction that complies with paragraphs (1) (2) or (3) of this definition;

(ii)Individuals who, as of the date hereof, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board will be considered as though such individual was a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial

3

assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board;

(iii)Consummation of a reorganization, merger, statutory share exchange or consolidation or similar transaction involving the Company or any of its subsidiaries, a sale or other disposition of all or substantially all of the assets of the Company, or the acquisition of assets or stock of another entity by the Company or any of its subsidiaries (each, a “Business Combination”), in each case unless, following such Business Combination, (A) all or substantially all of the individuals and entities that were the beneficial owners of the Outstanding Company Common Stock and the Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than fifty percent (50%) of the then-outstanding shares of common stock (or, for a non-corporate entity, equivalent securities) and the combined voting power of the then-outstanding voting securities entitled to vote generally in the election of directors (or, for a non-corporate entity, equivalent governing body, as the case may be), of the entity resulting from such Business Combination (including, without limitation, an entity that, as a result of such transaction, owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership immediately prior to such Business Combination of the Outstanding Company Common Stock and the Outstanding Company Voting Securities, as the case may be, (B) no Person (excluding any corporation resulting from such Business Combination or any employee benefit plan (or related trust) of the Company or such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, twenty percent (20%) or more of, respectively, the then-outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then-outstanding voting securities of such corporation, except to the extent that such ownership existed prior to the Business Combination, and (C) at least a majority of the members of the board of directors (or, for a non-corporate entity, equivalent governing body) of the entity resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement or of the action of the Board providing for such Business Combination; or

(iv)Approval by the shareholders of the Company of a complete liquidation or dissolution of the Company.

(h)“Change of Control Period” means the period commencing on the Effective Date and ending on the third anniversary of the date of a Change of Control.

(i)“COBRA” means the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended.

4

(j)“COC Effective Date” means the first date during the Change of Control Period on which a Change of Control occurs.  Notwithstanding anything in the Plan to the contrary, if a Change of Control occurs and if the Covered Executive’s employment with the Employer is terminated prior to the date on which the Change of Control occurs, and if it is reasonably demonstrated by the Covered Executive that such termination of employment (i) was at the request of a third party that has taken steps reasonably calculated to effect a Change of Control, or (ii) otherwise arose in connection with or anticipation of a Change of Control, then “COC Effective Date” means the date immediately prior to the date of such termination of employment.

(k)“COC Employment Period” means the period commencing on the COC Effective Date and ending on the second anniversary of the COC Effective Date.

(l)“Code” means the Internal Revenue Code of 1986, as amended from time to time.

(m)“Company” means Whole Foods Market, Inc., a Texas Corporation.

(n)“Compensation Committee” means the Compensation Committee of the Board.

(o)“Covered Executive” means any Executive of the Employer who is designated as a Covered Executive by the Compensation Committee.  A Covered Executive will not cease to be a Covered Executive by reason of his or her transfer to comparable positions with the Affiliated Companies and the Covered Executive will continue to participate in the Plan pursuant to the terms hereof.

(p)“Daily Administrator” means the individual or entity appointed by the Plan Administrator to handle the day-to-day administration of the Plan.  If the Plan Administrator does not appoint an individual or entity to serve as the Daily Administrator, the Plan Administrator will be the Daily Administrator.

(q)“Date of Termination” means:

(i)if the Covered Executive’s employment is terminated by the Employer for Cause, or by the Covered Executive for Good Reason, the date of receipt of the Notice of Termination or such later date specified in the Notice of Termination, as the case may be,

(ii)if the Covered Executive’s employment is terminated by the Employer other than for Cause, the date on which the Employer notifies the Covered Executive of such termination,

(iii)if the Covered Executive resigns without Good Reason, the date on which the Covered Executive notifies the Employer of such termination, and

(iv)if the Covered Executive’s employment is deemed to be terminated by reason of death, the date of death of Executive.

Notwithstanding the foregoing, in no event will the Date of Termination with respect to clauses (i), (ii) or (iii) occur until Executive experiences a “separation

5

from service” within the meaning of Section 409A of the Code, and notwithstanding anything contained herein to the contrary, the date on which such separation from service takes place will be the “Date of Termination.”

An Executive who transfers employment among the Affiliated Companies will not incur a “separation from service” within the meaning of Section 409A of the Code.

(r)“Delayed Payment Date” means the first business day after the date that is six (6) months following Executive’s “separation from service” within the meaning of Section 409A of the Code.

(s)“Disability” means the inability of the Covered Executive to engage in any substantial gainful activity similar to his or her current position by reason of a mental or physical impairment expected to result in death or last for at least twelve (12) months, or the Covered Executive, because of such a condition, is receiving income replacement benefits for at least three months under an accident or health plan covering the Employer’s employees.

(t)“Effective Date” means May 20, 2010.

(u)“Employer” means the Company and each Affiliated Company that has adopted the Plan as a participating employer.  Unless provided otherwise by the Compensation Committee or the Board, all Affiliated Companies will be participating employers in the Plan.  Each such Affiliated Company may evidence its adoption of the Plan either by a formal action of its governing body or taking administrative actions with respect to the Plan on behalf of its Covered Executives (e.g., communicating the terms of the Plan, etc.).  An entity will cease to be a participating employer as of the date such entity ceases to be an Affiliated Company.

(v)“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time.

(w)“Executive” means each select member of management or highly compensated employee receiving remuneration, or who is entitled to remuneration, for services rendered to the Employer, in the legal relationship of employer and employee.  The term “Executive” does not include a consultant, independent contractor or leased employee even if such consultant, leased employee or independent contractor is subsequently determined by the Employer, the Internal Revenue Service, the Department of Labor or a court of competent jurisdiction to be a common law employee of the Employer.

(x)“Good Reason” means:

(i)the assignment to the Covered Executive of any duties inconsistent in any respect with the Covered Executive’s position (including status, offices, titles and reporting requirements), authority, duties or responsibilities, or any action by the Employer that results in a diminution in such position, authority, duties or responsibilities (whether or not occurring solely as a result of the Company’s ceasing to be a publicly traded entity), excluding

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for this purpose an isolated, insubstantial and inadvertent action not taken in bad faith and that is remedied by the Employer promptly after receipt of notice thereof given by the Covered Executive;

(ii)after a COC Effective Date, any failure by the Employer to comply with any of the provisions of Section 4.2(b), other than an isolated, insubstantial and inadvertent failure not occurring in bad faith and that is remedied by the Employer promptly after receipt of notice thereof given by the Covered Executive;

(iii)after a COC Effective Date the Employer’s requiring Executive (A) to be based at any office or location other than as provided in Section 4.2(a)(i)(B), or (B) to be based at a location other than the principal executive offices of the Employer if the Covered Executive was employed at such location immediately preceding the COC Effective Date;

(iv)after a COC Effective Date any purported termination by the Employer of the Covered Executive’s employment otherwise than as expressly permitted by this Plan; or

(v)any other action or inaction that constitutes a material breach by the Employer or a successor of this Plan, including any failure by the Employer to comply with and satisfy Section 7.2.

For purposes of this definition, after a COC Effective Date any good faith determination of Good Reason made by the Covered Executive will be conclusive; furthermore, the Covered Executive’s mental or physical incapacity following the occurrence of an event described above in clauses (i) through (v) will not affect the Covered Executive’s ability to terminate employment for Good Reason and the Covered Executive’s death following delivery of a Notice of Termination for Good Reason will not affect the Covered Executive’s estate’s entitlement to severance payments benefits provided hereunder upon a termination of employment for Good Reason.

Any termination by the Covered Executive for Good Reason, will be communicated by the Covered Executive through a Notice of Termination to the Employer given in accordance with Section 7.5.  The failure by the Covered Executive to set forth in the Notice of Termination any fact or circumstance that contributes to a showing of Good Reason will not waive any right of the Covered Executive hereunder or preclude the Covered Executive from asserting such fact or circumstance in enforcing the Covered Executive’s rights hereunder.

(y)“Interest” means the applicable federal rate provided for in Section 7872(f)(2)(A) of the Code determined as of the Date of Termination.

(z)“Non-Compete Benefits” means the benefits described in Article III of the Plan including, but not limited to, the Non-Compete Payments described therein.

(aa)“Non-Compete Payment” and “Non-Compete Payments” has the meaning assigned to each in Section 3.1(a) of the Plan.

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(bb)“Notice of Termination” means a written notice that (i) indicates the specific termination provision in this Plan relied upon, (ii) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Covered Executive’s employment under the provision so indicated, and (iii) if the Date of Termination (as defined herein) is other than the date of receipt of such notice, specifies the Date of Termination (which Date of Termination will be not more than thirty (30) days after the giving of such notice).

(cc)“Plan Administrator” means the individual or committee appointed by the Company to administer the Plan.  If the Company does not appoint an individual or committee to serve as the Plan Administrator, the Company will be the Plan Administrator.

(dd)“Plan” means the Whole Foods Executive Retention Plan and Non-Compete Arrangement as set forth herein and as the same may be amended from time to time.

(ee)“Plan Agreement” means the written agreement between a Covered Executive and the Plan Administrator, on behalf of the Employer substantially in the form attached hereto in Appendix A.  This form Plan Agreement may differ with respect to a Covered Executive as determined by the Compensation Committee in its sole and absolute discretion.  Each Plan Agreement will form a part of the Plan with respect to the affected Covered Executive.

(ff)“Plan Year” means the fiscal year of the Plan, which will commence on January 1 each year and end on December 31 of such year.  The initial Plan Year will be a short plan year beginning on May 20, 2010 and ending on December 31, 2010.

(gg)“Pro Rata Bonus” has the meaning assigned in Section 4.4(a)(iii).

(hh)“Specified Employee” means a “specified employee” within the meaning of section 409A of the Code (as determined in accordance with the methodology established by the Employer as in effect on the Date of Termination).

(ii)“Trustee” means a nationally recognized financial institution appointed by the Company to serve as trustee of the Trust.

(jj)“Trust” means the “rabbi trust” to be established by the Company pursuant to Section 4.8.

2.2Construction.  Headings and subheadings are for the purpose of reference only and are not to be considered in the construction of the Plan.  The pronouns “he,” “him” and “his” used in the Plan will also refer to similar pronouns of the female gender unless otherwise qualified by the context.

End of Article II

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ARTICLE III
NON-COMPETE BENEFITS

3.1Non-Compete Benefits.  If at any time after the earlier to occur of a Change of Control or March 1, 2012, the Covered Executive’s employment is terminated either (i) by the Employer other than for Cause, or (ii) except to the extent limited by the applicable Plan Agreement, by the Covered Executive, then, subject to the Covered Executive’s compliance with the confidentiality provisions and restrictive covenants in the Plan Agreement and execution, within forty-five (45) days following the Date of Termination, of the Waiver and Release, in the form substantially similar to the form attached hereto as Exhibit A, in addition to the other rights set forth herein the Covered Executive will be entitled to the following Non-Compete Benefits:

(a)Non-Compete Payment.  To the extent not limited below and to the extent the Covered Executive continues to comply with the terms of the Plan and the applicable Plan Agreement, the Employer will make up to ten (10) semi annual payments to the Covered Executive each in an amount equal to the amount set forth in Section 1 of the Covered Executive’s Plan Agreement divided by ten (10) (each a “Non-Compete Payment,” and together, the “Non-Compete Payments”).  The first such Non-Compete Payment will be made on a date which is six (6) months and one (1) day after the Date of Termination.  Each of the additional Non-Compete Payments will be made six (6) months after the date of the last such payment.  The Employer will withhold from any amounts or benefits due to Executive under this Article III such United States federal, state or local or foreign taxes as are required to be withheld pursuant to any applicable law or regulation.

Notwithstanding the above, in the event the Covered Executive voluntarily leaves the Employer’s employment before the Total Benefit Date (as defined in the Covered Executive’s Plan Agreement) set forth in Section 1 of the Covered Executive’s Plan Agreement, the amount, if any, paid to the Covered Executive for each of the Non-Compete Payments will be adjusted as set forth below; provided however, if Executive leaves the Employer’s employment with Good Reason, no adjustment shall be made to reduce any such payment that becomes due; otherwise, depending on the length of time preceding the Date of Termination the Covered Executive has held his or her current position or one or more of several other designated positions as set forth in Section 1 of the Covered Executive’s Plan Agreement, the Non-Compete Payments will be adjusted as follows:

YEARS IN POSITION	ADJUSTMENT TO NON-COMPETE PAYMENT
Fewer than 11	reduced to zero
11 or greater but fewer than 12	20% of original amount will be paid
12 or greater but fewer than 13	40% of original amount will be paid
13 or greater but fewer than 14	60% of original amount will be paid

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14 or greater but fewer than 15	80% of original amount will be paid
15 or greater	No adjustment will be made

(b)Equity Compensation.  Unless otherwise specified in an applicable award agreement, all stock options that have been granted to the Covered Executive by the Employer will become vested and immediately exercisable, and will remain exercisable until the earlier of (i) the fifth (5th) anniversary of the Date of Termination, or (ii) the original expiration date of the applicable stock option (other than by reason of termination of employment). Unless otherwise specified in an applicable award agreement, all restricted stock, restricted stock units and other similar awards will also immediately vest.

(c)COBRA Coverage.  The Employer will reimburse the Covered Executive on a monthly basis for COBRA premiums paid by the Covered Executive for continuation of medical, dental and vision benefits under the Company’s group health plans to the Covered Executive and his or her eligible family members for a period commencing on the date the Covered Executive’s group health coverage would otherwise terminate by reason of his or her termination of employment and terminating on the earlier of (i) the eighteenth (18th) month anniversary of the Date of Termination, or (ii) the Covered Executive’s obtaining similar health benefit coverage, with no pre-existing condition exclusions applicable to the Covered Executive after taking into account the rules regarding creditable health coverage, via employment with a new employer; provided, that the Covered Executive and/or his eligible family members timely elect COBRA and provide evidence of the payment of the monthly COBRA premium.  The Covered Executive will be obligated to notify the Daily Administrator within thirty (30) days of the date he or she secures similar health coverage, in which case the Employer’s obligation to reimburse the Covered Executive for such COBRA premium payments will cease, but the Covered Executive and/or his or her family members may, at their option, elect to continue to receive continued medical, dental and vision benefits under the Company’s group health plan pursuant to COBRA for the remainder of the applicable COBRA continuation period at their own expense in accordance with the eligibility requirements of COBRA.

3.2Remedies for Violation of Restrictive Covenants.  The Employer’s only remedies for the Covered Executive’s failure to comply with the restrictive covenants set forth in Section 2(b)(i) of the Plan Agreement (relating to the covenant not to compete) will be termination for Cause, if applicable, and to cease to provide any and all Non-Compete Benefits described in this Article III (including, without limitation, the Employer’s ceasing to provide any and all Non-Compete Payments otherwise payable under Section 3.1(a)). The Employer’s only remedies for the Covered Executive’s failure to comply with the confidentiality provisions and the other restrictive covenants in the Plan Agreement (i.e., the covenants other than the covenant not to compete described in the preceding sentence) will be termination for Cause, if applicable, the injunctive relief described in Section 5 of the Plan Agreement, if applicable, and to cease to provide any and all Non-Compete Benefits described in this Article III (including, without limitation, the Employer’s ceasing to provide any and all Non-Compete Payments otherwise payable under Section 3.1(a)).

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3.3Death or Disability of Covered Executive.  Notwithstanding anything else in this Article III, in the event of Covered Executive’s death or Disability, this Article III will be effective as of the Effective Date (without giving effect to the March 1, 2012 delayed date), the Waiver and Release will be deemed to have been signed by the Covered Executive after a termination without Cause, the Covered Executive will be deemed to have complied with the confidentiality provisions and restrictive covenants set forth in the Plan Agreement and the Employer will make the associated payments provided for in this Article III to the Covered Executive or his or her estate.

End of Article III

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ARTICLE IV
EMPLOYMENT AND BENEFITS AFTER A CHANGE IN CONTROL

4.1COC Employment Period.  The Employer agrees to continue to employ the Covered Executive, subject to the terms and conditions of the Plan, for the COC Employment Period.  The COC Employment Period will terminate upon Executive’s termination of employment for any reason; subject to the terms of this Article IV.

4.2Terms of Employment.

(a)Position and Duties.

(i)Scope and Location. During the COC Employment Period, (A) the Covered Executive’s position (including status, offices, titles and reporting requirements), authority, duties and responsibilities will be at least commensurate in all respects with the most significant of those held, exercised and assigned to the Covered Executive at any time during the one hundred and twenty (120)-day period immediately preceding the COC Effective Date, (B) the Covered Executive’s services will be performed at the office where the Covered Executive was employed immediately preceding the COC Effective Date or at any other location less than thirty-five (35) miles from such office, and (C) the Covered Executive will not be required to travel on Employer business to a substantially greater extent than required during the one hundred and twenty (120)-day period immediately prior to the COC Effective Date.

(ii)Additional Positions.  During the COC Employment Period, and excluding any periods of paid time off or sabbatical to which the Covered Executive is entitled, the Covered Executive agrees to devote reasonable attention and time during normal business hours to the business and affairs of the Employer and, to the extent necessary to discharge the responsibilities assigned to the Covered Executive hereunder, to use the Covered Executive’s reasonable best efforts to perform faithfully and efficiently such responsibilities.  During the COC Employment Period, it will not be a violation of this Article IV for the Covered Executive to (A) serve on corporate, civic or charitable boards or committees, (B) deliver lectures, fulfill speaking engagements or teach at educational institutions and (C) manage personal investments, so long as such activities do not significantly interfere with the performance of the Covered Executive’s responsibilities as an Executive in accordance with this Article IV.  It is expressly understood and agreed that, to the extent that any such activities have been conducted by the Covered Executive prior to the COC Effective Date, the continued conduct of such activities (or the conduct of activities similar in nature and scope thereto) subsequent to the COC Effective Date will not thereafter be deemed to interfere with the performance of the Covered Executive’s responsibilities to the Employer.

(b)Compensation.

(i)Base Salary.  During the COC Employment Period, the Covered Executive will receive an annual base salary (the “Annual Base Salary”)

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at an annual rate at least equal to twenty-six (26) times the highest bi-weekly base salary rate applicable to the Covered Executive by the Company and the Affiliated Companies in respect of the one (1)-year period immediately preceding the month in which the COC Effective Date occurs.  The Annual Base Salary will be paid pursuant to the Employer’s normal payroll practices at such intervals as the Employer pays Executive salaries generally.  During the COC Employment Period, the Annual Base Salary will be reviewed at least annually, beginning no more than 12 months after the last salary increase awarded to Executive prior to the COC Effective Date.  Any increase in the Annual Base Salary will not serve to limit or reduce any other obligation to the Covered Executive under this Article IV.  The Annual Base Salary will not be reduced after any such increase and the term “Annual Base Salary” will refer to the Annual Base Salary as so increased.

(ii)Annual Bonus.  In addition to the Annual Base Salary, the Covered Executive will be awarded, for each fiscal year ending during the COC Employment Period, an annual bonus (the “Annual Bonus”) in cash according to the same formula used to calculate the Covered Executive’s last bonus paid prior to the COC Effective Date.  Notwithstanding the prior sentence, if any comparable bonus under the Employer’s successor bonus plan or arrangement would result in a higher payment to the Covered Executive, the Covered Executive will instead receive such bonus amount as her/his “Annual Bonus”.  Each such Annual Bonus will be paid no later than two and a half months after the end of the fiscal year for which the Annual Bonus is awarded and determined to be payable, unless Executive elects to defer the receipt of such Annual Bonus pursuant to an arrangement that meets the requirements of section 409A of the Code.

(iii)Long-Term Cash and Equity Incentives, Savings and Retirement Plans.  During the COC Employment Period, the Covered Executive will be entitled to participate in all long-term cash incentive, equity incentive, savings and retirement plans, practices, policies, and programs applicable generally to other peer Executives, but in no event will such plans, practices, policies and programs provide the Covered Executive with incentive opportunities (measured with respect to both regular and special incentive opportunities, to the extent, if any, that such distinction is applicable), savings opportunities and retirement benefit opportunities, in each case, less favorable, in the aggregate, than the most favorable of those provided by the Employer to the Covered Executive under such plans, practices (including without limitation, the Company’s annual stock option grant), policies and programs as in effect at any time during the one hundred and twenty (120)-day period immediately preceding the COC Effective Date or, if more favorable to the Covered Executive, those provided generally at any time after the COC Effective Date to other peer Executives.

(iv)Welfare Benefit Plans.  During the COC Employment Period, the Covered Executive and/or the Covered Executive’s family, as the case may be, will be eligible for participation in and will receive all benefits under welfare

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benefit plans, practices, policies and programs provided by the Employer (including, without limitation, medical, dental, vision, disability, employee life, group life, accidental death and travel accident insurance plans and programs) to the extent applicable generally to other peer Executives, but in no event will such plans, practices, policies and programs provide the Covered Executive with benefits that are less favorable, in the aggregate, than the most favorable of such plans, practices, policies and programs in effect for the Covered Executive at any time during the one hundred and twenty (120)-day period immediately preceding the COC Effective Date or, if more favorable to Executive, those provided generally at any time after the COC Effective Date to other peer Executives.

(v)Expenses.  During the COC Employment Period, the Covered Executive will be entitled to receive prompt reimbursement for all reasonable expenses incurred by the Covered Executive in accordance with the most favorable policies, practices and procedures of the Employer in effect for Executive at any time during the one hundred and twenty (120)-day period immediately preceding the COC Effective Date or, if more favorable to the Covered Executive, as in effect generally at any time thereafter with respect to other peer Executives.

(vi)Fringe Benefits.  During the COC Employment Period, the Covered Executive will be entitled to fringe benefits in accordance with the most favorable plans, practices, programs and policies of the Employer in effect for the Covered Executive at any time during the one hundred and twenty (120)-day period immediately preceding the COC Effective Date or, if more favorable to the Covered Executive, as in effect generally at any time thereafter with respect to other peer Executives.

(vii)Office and Support Staff.  During the COC Employment Period, the Covered Executive will be entitled to an office or offices of a size and with furnishings and other appointments, and to an exclusive personal administrative assistant and other assistance, at least equal to the most favorable of the foregoing provided to the Covered Executive by the Employer at any time during the one hundred and twenty (120)-day period immediately preceding the COC Effective Date or, if more favorable to the Covered Executive, as provided generally at any time thereafter with respect to other peer Executives. The Covered Executive will be entitled to pick his or her own administrative assistant.

(viii)Paid Time Off.  During the COC Employment Period, the Covered Executive will be entitled to paid vacation in accordance with the most favorable plans, policies, programs and practices of the Employer as in effect for the Covered Executive at any time during the one hundred and twenty (120)-day period immediately preceding the COC Effective Date or, if more favorable to the Covered Executive, as in effect generally at any time thereafter with respect to other peer Executives.

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4.3Termination.

(a)Death.  The Covered Executive’s employment will terminate automatically if the Covered Executive dies during the COC Employment Period.

(b)Termination With or without Cause or by Reason of Disability.  Subject to the other terms of the Plan (including, without limitation, payment of certain amounts to the Covered Executive), the Employer may terminate the Covered Executive’s employment during the COC Employment Period with or without Cause.

4.4Obligations of the Employer in Connection with a Change of Control.

(a)Termination Payments.  If, during the COC Employment Period the Employer terminates the Covered Executive’s employment other than for Cause or Death, or the Covered Executive terminates employment for Good Reason then the Covered Executive will be entitled to the following:

(i)Cash Payments:  The Employer will pay to the Covered Executive, in a lump sum in cash within thirty (30) days after the Date of Termination, the aggregate of the following amounts:

(A)the sum of (1) the Covered Executive’s Annual Base Salary through the Date of Termination to the extent not previously paid, (2) the Covered Executive’s business expenses that are reimbursable pursuant to Section 4.2(b) but have not been reimbursed by the Employer as of the Date of Termination; (3) the Covered Executive’s Annual Bonus for the fiscal year immediately preceding the fiscal year in which the Date of Termination occurs, if such bonus has not been paid as of the Date of Termination; (4) any accrued paid time off to the extent not theretofore paid (the sum of the amounts described in subclauses (1), (2), (3) and (4), the “Accrued Obligations”) provided, that notwithstanding the foregoing, if the Covered Executive has made an irrevocable election under any deferred compensation arrangement subject to section 409A of the Code to defer any portion of the annual bonus described in clause (3) above, then for all purposes of this Article IV (including, without limitation, Sections 4.5 through 4.7)), such deferral election, and the terms of the applicable arrangement will apply to the same portion of the amount described in such clause (3), and such portion will not be considered as part of the “Accrued Obligations” but will instead be an “Other Benefit” (as defined in Section 4.10 below;

(B)the amount equal to the product of (1) three, and (2) the sum of (x) the Covered Executive’s Annual Base Salary and (y) the average of the last three annual bonuses paid to the Covered Executive; and

(ii)Non-Compete Benefits:  Subject to the other terms of the Plan, including the requirement that Executive comply with the restrictive covenants in

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the Plan Agreement and execute a Waiver and Release, the Employer will provide the payments and benefits set forth in Article III.

Notwithstanding the foregoing provisions of Section 4.4(a)(i), in the event that the Covered Executive is a Specified Employee, amounts that would otherwise be payable and benefits that would otherwise be provided under Section 4.4(a)(i) during the six (6)-month period immediately following the Date of Termination (other than the Accrued Obligations) will instead be paid, with Interest, on any delayed payment on the Delayed Payment Date; provided, however, that if the Covered Executive dies following the Date of Termination but prior to the Delayed Payment Date, such amounts will be paid to the personal representative of the Covered Executive’s estate within thirty (30) days following the Covered Executive’s death.

(iii)Pro Rata Bonus.  “Pro Rata Bonus” means an amount equal to the product of (i) the Covered Executive’s annual bonus during year in which the COC Effective Date occurs, if any, and (ii) a fraction, the numerator of which is the number of days in such year through the Date of Termination and the denominator of which is three hundred and sixty five (365).  The Pro Rata Bonus will be paid at the same time and form specified in the applicable annual incentive plan.  Notwithstanding the foregoing, in the event that the successor to the Company by reason of the Change of Control fails to assume the Company’s annual incentive plan in effect on the COC Effective Date, and irrespective of whether Executive incurs a termination of employment, dies or becomes Disabled, Executive will be entitled to receive a lump sum cash payment in an amount equal to the target bonus specified in the Company’s annual incentive plan, or if the plan does not specify a target, the amount which would be payable based on the Company’s forecasted results for such period established prior to the Change of Control (the “Target Bonus”), subject to applicable withholding for income and employment taxes.  Such Target Bonus will be paid within five (5) business days following the date of the Change of Control provided that amounts payable under the annual incentive plan are exempt from Section 409A of the Code by reason of the short-term deferral rule; otherwise, the Target Bonus will be paid at the time such amount would have otherwise been paid had the annual incentive plan remained in effect for the remainder of the year in which occurs the COC Effective Date.

(iv)Other Benefits:  except as otherwise set forth in the last sentence of Section 4.10, to the extent not theretofore paid or provided, the Employer will timely pay or provide to Executive any Other Benefits in accordance with the terms of the underlying plans or agreements.

4.5Death.  If the Covered Executive dies during the COC Employment Period, the Employer will provide Executive’s estate or beneficiaries with all payments due to the Covered Executive as though Executive had left the employment of the Employer with Good Reason on the date of the Covered Executive’s death (other than with respect to the application of the Delayed Payment).  All such payments will be paid by the Employer to the Covered Executive’s estate or beneficiary, as applicable, in a lump sum

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in cash within thirty (30) days of the date of the Covered Executive’s death (the “deemed Date of Termination”).  With respect to the provision of the Other Benefits, the term “Other Benefits” for the purposes of this Section 4.5 will include, without limitation, and the Covered Executive’s estate and/or beneficiaries will be entitled to receive, benefits at least equal to the most favorable benefits provided by the Employer to the estates and beneficiaries of peer Executives under such plans, programs, practices and policies relating to death benefits, if any, as in effect with respect to other peer Executives and their beneficiaries at any time during the one hundred and twenty (120)-day period immediately preceding the COC Effective Date or, if more favorable to the Covered Executive’s estate and/or beneficiaries, as in effect on the date of the Covered Executive’s death with respect to other peer Executives of the and their beneficiaries.

4.6Disability.  If the Covered Executive’s employment is terminated by the Employer during the COC Employment Period by reason of the Covered Executive’s Disability, the Covered Executive will be treated as though the Covered Executive had left the employment of the Employer with Good Reason as of the Date of Termination.  Except as otherwise provided herein, all payments will be paid by the Employer to the Covered Executive in accordance with Section 4.4(a).  With respect to the provision of the Other Benefits, the term “Other Benefits” for the purposes of this Section 4.6 will include, and the Covered Executive will be entitled to receive (after the Employer’s termination of the Covered Executive’s employment), disability and other benefits at least equal to the most favorable of those generally provided by the Employer to disabled Executives and/or their families in accordance with such plans, programs, practices and policies relating to disability, if any, as in effect generally with respect to other peer Executives and their families at any time during the one hundred and twenty (120)-day period immediately preceding the COC Effective Date or, if more favorable to the Covered Executive and/or the Covered Executive’s family, as in effect at any time thereafter generally with respect to other peer Executives and their families.

4.7Termination for Cause; Termination Other Than for Good Reason.  If the Covered Executive’s employment is terminated for Cause during the COC Employment Period, the Employer will provide the Covered Executive with the Covered Executive’s Annual Base Salary through the Date of Termination, payment for accrued but unused paid time off, and the timely payment or delivery of the Other Benefits (disregarding the proviso set forth in Section 4.4(a)(i)(A) regarding the deferral of the Annual Bonus), but no Pro Rata Bonus will be paid to the Covered Executive and the Employer will have no other severance obligations under Article IV of the Plan; provided however, the Covered Executive may still receive any payment to which he or she is entitled under another Article of the Plan.  If the Covered Executive voluntarily terminates employment during the COC Employment Period, excluding a termination for Good Reason, the Employer will provide to Executive the Accrued Obligations and the Pro Rata Bonus and the timely payment or delivery of the Other Benefits, subject to the proviso set forth in Section 4.4(a)(i)(A) to the extent applicable, and will have no other severance obligations under Article IV of the Plan; provided however, that Covered Executive may still receive any payment to which he or she is entitled under another Article of the Plan.  In such case, all the Accrued Obligations will be paid to the Covered Executive in a lump sum in cash within thirty (30) days of the Date of Termination and the Pro Rata Bonus will be paid pursuant to the terms of Section 4.4(a)(iii).

4.8Rabbi Trust.  After any COC Effective Date, to the extent the payments to be provided to Executive under Section 4.4(a)(i) are not to be paid until the Delayed Payment Date

17

and/or there are payments due under Section 3.1(a) then within five (5) business days of Executive’s Date of Termination, the Company will deliver cash, in an amount equal to the aggregate of the cash amounts due under Article III, which is not immediately payable, and Article IV, which is payable on a Delayed Payment Date (plus the estimated Interest), to a Trust to be held by the Trustee pursuant to the terms of the Trust agreement entered into between the Company and the Trustee prior to the COC Effective Date; provided, however, that the Trust will not be funded if the funding thereof would result in taxable income to Executive by reason of section 409A(b) of the Code; and provided, further, in no event will any Trust assets at any time be located or transferred outside of the United States, within the meaning of section 409A(b) of the Code.  Any fees and expenses of the Trustee will be paid by the Company.  The Trustee may not be removed by the Company during the five (5)-year period following the Change of Control.

4.9Legal Fees.  At anytime after a COC Effective date through the Covered Executive’s remaining lifetime (or, if longer, through the 20th anniversary of the COC Effective Date), and regardless of whether or not the Plan has been terminated, the Employer agrees to pay as incurred (within ten (10) days following the Employer’s receipt of an invoice from the Covered Executive) to the full extent permitted by law, all legal fees and expenses that the Covered Executive may reasonably incur as a result of any contest (regardless of the outcome thereof) by the Employer, the Covered Executive or others of the validity or enforceability of, or liability under, any provision of the Plan, the Plan Agreement or the Waiver and Release, or any guarantee of performance thereof (including, without limitation, as a result of any contest by the Covered Executive about the amount of any payment pursuant to the Plan), plus, in each case, Interest determined as of the date such legal fees and expenses were incurred.  In order to comply with section 409A of the Code, in no event will the payments by the Employer under this Section 4.9 be made later than the end of the calendar year next following the calendar year in which such fees and expenses were incurred, provided, that the Covered Executive submits an invoice for such fees and expenses at least ten (10) days before the end of the calendar year next following the calendar year in which such fees and expenses were incurred.  The amount of such legal fees and expenses that the Employer is obligated to pay in any given calendar year will not affect the legal fees and expenses that the Employer is obligated to pay in any other calendar year, and the Covered Executive’s right to have the Employer pay such legal fees and expenses may not be liquidated or exchanged for any other benefit.

4.10Non-Exclusivity of Rights.  Nothing in the Plan will prevent or limit the Covered Executive’s continuing or future participation in any plan, program, policy or practice provided by the Employer and for which the Covered Executive may qualify, nor will anything herein limit or otherwise affect such rights as the Covered Executive may have under any other contract or agreement with the Employer.  Amounts that are vested benefits or that the Covered Executive is otherwise entitled to receive under any plan, policy, practice or program of or any other contract or agreement with the Employer at or subsequent to the Date of Termination (“Other Benefits”) will be payable in accordance with such plan, policy, practice or program or contract or agreement, except as explicitly modified by the Plan.  Without limiting the generality of the foregoing, the Covered Executive’s resignation under the Plan, with or without Good Reason, will in no way affect Executive’s ability to terminate employment by reason of Executive’s “retirement” under any compensation and benefits plans, programs or arrangements of the Employer, including without limitation any retirement or pension plans or arrangements

18

or to be eligible to receive benefits under any compensation or benefit plans, programs or arrangements of the Employer, including without limitation any retirement or pension plan or arrangement of the Employer or substitute plans adopted by the Company or its successors, and any termination which otherwise qualifies as Good Reason will be treated as such even if it is also a “retirement” for purposes of any such plan.  Notwithstanding the foregoing, if Executive receives payments and benefits pursuant to Article IV, Executive will not be entitled to any severance pay or benefits under any severance plan, program or policy of the Employer, unless otherwise specifically provided therein in a specific reference to the Plan; provided however, that the Covered Executive will be entitled to receive Non-Compete Payments and the benefits set forth in Article III, subject to applicable requirements.

End of Article IV

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ARTICLE V
ADMINISTRATION

5.1The Plan Administrator.  The overall administration of the Plan will be the responsibility of the Plan Administrator.

5.2Powers of Plan Administrator.  The Plan Administrator will have sole and absolute discretion regarding the exercise of its powers and duties under the Plan.  In order to effectuate the purposes of the Plan, the Plan Administrator will have the following powers and duties:

(a)To appoint the Daily Administrator;

(b)To review and render decisions respecting a denial of a claim for benefits under the Plan;

(c)To construe the Plan and to make equitable adjustments for any mistakes or errors made in the administration of the Plan; and

(d)To determine and resolve, in its sole and absolute discretion, all questions relating to the administration of the Plan and any trust established to secure the assets of the Plan:

(i)when differences of opinion arise between the Company, an Affiliate, the Daily Administrator, the trustee, a Covered Executive, or any of them, and

(ii)whenever it is deemed advisable to determine such questions in order to promote the uniform and nondiscriminatory administration of the Plan for the greatest benefit of all parties concerned.

The foregoing list of express powers is not intended to be either complete or conclusive, and the Plan Administrator will, in addition, have such powers as it may reasonably determine to be necessary or appropriate in the performance of its powers and duties under the Plan.

5.3Appointment of Daily Administrator.  The Plan Administrator will appoint the Daily Administrator, who will have the responsibility and duty to administer the Plan on a daily basis.  The Plan Administrator may remove the Daily Administrator with or without cause at any time.  The Daily Administrator may resign upon written notice to the Plan Administrator.

5.4Duties of Daily Administrator.  The Daily Administrator will have sole and absolute discretion regarding the exercise of its powers and duties under the Plan.  The Daily Administrator will have the following powers and duties:

(a)To enter into, on behalf of the Employer, a Plan Agreement with an Executive who is deemed a Covered Executive;

(b)To direct the administration of the Plan in accordance with the provisions herein set forth;

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(c)To adopt rules of procedure and regulations necessary for the administration of the Plan, provided such rules are not in consistent with the terms of the Plan;

(d)To determine all questions with regard to rights of Covered Executives and beneficiaries under the Plan including, but not limited to, questions involving eligibility of an Executive to participate in the Plan and the amount of a Covered Executive’s benefits;

(e)To make all final determinations and computations concerning the benefits to which the Covered Executive or his estate is entitled under the Plan;

(f)To enforce the terms of the Plan and any rules and regulations adopted by the Plan Administrator;

(g)To review and render decisions respecting a claim for a benefit under the Plan;

(h)To furnish the Employer with information that the Employer may require for tax or other purposes;

(i)To engage the service of counsel (who may, if appropriate, be counsel for the Employer), actuaries, and agents whom it may deem advisable to assist it with the performance of its duties;

(j)To prescribe procedures to be followed by Covered Executives in obtaining benefits;

(k)To receive from the Employer and from Covered Executives such information as is necessary for the proper administration of the Plan;

(l)To create and maintain such records and forms as are required for the efficient administration of the Plan;

(m)To make all initial determinations and computations concerning the benefits to which any Covered Executive is entitled under the Plan;

(n)To give the trustee of any trust established to serve as a source of funds under the Plan specific directions in writing with respect to:

(i)making distribution payments, giving the names of the payees, specifying the amounts to be paid and the time or times when payments will be made; and

(ii)making any other payments which the trustee is not by the terms of the trust agreement authorized to make without a direction in writing by the Daily Administrator;

(o)To comply with all applicable lawful reporting and disclosure requirements of ERISA;

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(p)To comply (or transfer responsibility for compliance to the trustee) with all applicable federal income tax withholding requirements for benefit distributions; and

(q)To construe the Plan, in its sole and absolute discretion, and make equitable adjustments for any errors made in the administration of the Plan.

The foregoing list of express duties is not intended to be either complete or conclusive, and the Daily Administrator will, in addition, exercise such other powers and perform such other duties as it may deem necessary, desirable, advisable or proper for the supervision and administration of the Plan.

5.5Indemnification of Plan Administrator and Daily Administrator.  To the extent not covered by insurance, or if there is a failure to provide full insurance coverage for any reason, and to the extent permissible under corporate by-laws and other applicable laws and regulations, the Employer agrees to hold harmless and indemnify the Plan Administrator and Daily Administrator against any and all claims and causes of action by or on behalf of any and all parties whomsoever, and all losses therefrom, including, without limitation, costs of defense and reasonable attorneys’ fees, based upon or arising out of any act or omission relating to or in connection with the Plan other than losses resulting from the Plan Administrator’s or any such person’s commission of fraud or willful misconduct.

5.6Claims for Benefits.

(a)Initial Claim.  In the event that a Covered Executive or his estate (a “claimant”) claims to be eligible for benefits, or claims any rights under the Plan or seeks to challenge the validity or terms of the Waiver and Release described in Section 3.1, such claimant must complete and submit such claim forms and supporting documentation as will be required by the Daily Administrator, in its sole and absolute discretion.  Likewise, any claimant who feels unfairly treated as a result of the administration of the Plan, must file a written claim, setting forth the basis of the claim, with the Daily Administrator.  In connection with the determination of a claim, or in connection with review of a denied claim, the claimant may examine the Plan, and any other pertinent documents generally available to Covered Executives that are specifically related to the claim.

A written notice of the disposition of any such claim will be furnished to the claimant within ninety (90) days after the claim is filed with the Daily Administrator.  Such notice will refer, if appropriate, to pertinent provisions of the Plan, will set forth in writing the reasons for denial of the claim if a claim is denied (including references to any pertinent provisions of the Plan) and, where appropriate, will describe any additional material or information necessary for the claimant to perfect the claim and an explanation of why such material or information is necessary.  If the claim is denied, in whole or in part, the claimant will also be notified of the Plan’s claim review procedure and the time limits applicable to such procedure, including the claimant’s right to arbitration following an adverse benefit determination on review as provided below.  All benefits provided in the Plan as a result of the disposition of a claim will be paid as soon as practicable following receipt of proof of entitlement, if requested.

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(b)Request for Review.  Within ninety (90) days after receiving written notice of the Daily Administrator’s disposition of the claim, the claimant may file with the Plan Administrator a written request for review of his claim.  In connection with the request for review, the claimant will be entitled to be represented by counsel and will be given, upon request and free of charge, reasonable access to all pertinent documents for the preparation of his claim.  If the claimant does not file a written request for review within ninety (90) days after receiving written notice of the Daily Administrator’s disposition of the claim, the claimant will be deemed to have accepted the Daily Administrator’s written disposition, unless the claimant was physically or mentally incapacitated so as to be unable to request review within the ninety (90) day period.

(c)Decision on Review.  After receipt by the Plan Administrator of a written application for review of his claim, the Plan Administrator will review the claim taking into account all comments, documents, records and other information submitted by the claimant regarding the claim without regard to whether such information was considered in the initial benefit determination.  The Plan Administrator will notify the claimant of its decision by delivery or by certified or registered mail to his last known address.

A decision on review of the claim will be made by the Plan Administrator at its next meeting following receipt of the written request for review.  If no meeting of the Plan Administrator is scheduled within forty-five (45) days of receipt of the written request for review, then the Plan Administrator will hold a special meeting to review such written request for review within such forty-five (45) day period.  If special circumstances require an extension of the forty-five (45) day period, the Plan Administrator will so notify the claimant and a decision will be rendered within ninety (90) days of receipt of the request for review.  In any event, if a claim is not determined by the Plan Administrator within ninety (90) days of receipt of written submission for review, it will be deemed to be denied.

The decision of the Plan Administrator will be provided to the claimant as soon as possible but no later than five (5) days after the benefit determination is made.  The decision will be in writing and will include the specific reasons for the decision presented in a manner calculated to be understood by the claimant and will contain references to all relevant Plan provisions on which the decision was based.  Such decision will also advise the claimant that he may receive upon request, and free of charge, reasonable access to and copies of all documents, records and other information relevant to his claim and will inform the claimant of his right to arbitration in the case of an adverse decision regarding his appeal.  The decision of the Plan Administrator will be final and conclusive.

5.7Arbitration.  In the event the claims review procedure described in Section 5.6 of the Plan does not result in an outcome thought by the claimant to be in accordance with the Plan document, he may appeal such decision prior to a Change of Control to a third party neutral arbitrator.  These arbitration provisions as a final dispute resolution mechanism will be elective on the part of the Covered Executive on and after a Change of Control (i.e, the Covered Executive may pursue legal action in a court of law in lieu of an appeal to any arbitrator).  The claimant must appeal to an arbitrator (or pursue legal action in a court of law) within sixty (60) days after receiving the Plan Administrator’s denial or deemed denial of his request for review and before bringing suit in court.  The

23

arbitration will be conducted pursuant to the American Arbitration Association (“AAA”) Rules on Employee Benefit Claims.

The arbitrator will be mutually selected by the claimant and the Plan Administrator from a list of arbitrators who are experienced in nonqualified deferred compensation plan benefit matters that is provided by the AAA.  If the parties are unable to agree on the selection of an arbitrator within ten days of receiving the list from the AAA, the AAA will appoint an arbitrator.  The arbitrator’s review will be limited to interpretation of the Plan document in the context of the particular facts involved.  The claimant, the Plan Administrator and the Employer agree to accept the award of the arbitrator as binding, and all exercises of power by the arbitrator hereunder will be final, conclusive and binding on all interested parties, unless found by a court of competent jurisdiction, in a final judgment that is no longer subject to review or appeal, to be arbitrary and capricious.  The claimant, Plan Administrator and the Employer agree that the venue for the arbitration will be in Austin, Texas.  The costs of arbitration will be paid by the Employer and all legal fees and expenses reasonably incurred by the claimant will be reimbursed pursuant to Section 4.9 (or if inapplicable, such fees and expenses will be incurred by the claimant except to the extent the arbitrator may require the Employer to reimburse the claimant for all or a portion of such amounts).

The following discovery may be conducted by the parties: interrogatories, demands to produce documents, requests for admissions and oral depositions.  The arbitrator will resolve any discovery disputes by such pre-hearing conferences as may be needed.  The Employer, Plan Administrator and claimant agree that the arbitrator will have the power of subpoena process as provided by law.  Disagreements concerning the scope of depositions or document production, its reasonableness and enforcement of discovery requests will be subject to agreement by the Employer and the claimant or will be resolved by the arbitrator.  All discovery requests will be subject to the proprietary rights and rights of privilege and other protections granted by applicable law to the Employer and the claimant and the arbitrator will adopt procedures to protect such rights.  With respect to any dispute, the Employer, Plan Administrator and the claimant agree that all discovery activities will be expressly limited to matters directly relevant to the dispute and the arbitrator will be required to fully enforce this requirement.

The arbitrator will have no power to add to, subtract from, or modify any of the terms of the Plan, or to change or add to any benefits provided by the Plan, or to waive or fail to apply any requirements of eligibility for a benefit under the Plan.  Nonetheless, the arbitrator will have absolute discretion in the exercise of its powers in the Plan.  Arbitration decisions will not establish binding precedent with respect to the administration or operation of the Plan.

5.8Receipt and Release of Necessary Information.  In implementing the terms of the Plan, the Plan Administrator and Daily Administrator, as applicable, may, without the consent of or notice to any person, release to or obtain from any other insuring entity or other organization or person any information, with respect to any person, which the Plan Administrator or Daily Administrator deems to be necessary for such purposes.  Any Covered Executive or estate claiming benefits under the Plan will furnish to the Plan Administrator or Daily Administrator, as applicable, such information as may be necessary to determine eligibility for and amount of benefit, as a condition of claiming and receiving such benefit.

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5.9Overpayment and Underpayment of Benefits.  The Daily Administrator may adopt, in its sole and absolute discretion, whatever rules, procedures and accounting practices are appropriate in providing for the collection of any overpayment of benefits.  If a Covered Executive or his estate receives an underpayment of benefits, the Daily Administrator will direct that payment be made as soon as practicable to make up for the underpayment.  If an overpayment is made to a Covered Executive or his estate, for whatever reason, the Daily Administrator may, in its sole and absolute discretion, withhold payment of any further benefits under the Plan until the overpayment has been collected or may require repayment of benefits paid under the Plan without regard to further benefits to which the Covered Executive or his estate may be entitled.

5.10No Mitigation.  The Employer’s obligation to make the payments provided for under the Plan and otherwise to perform its obligations hereunder will not be affected by any set-off, counterclaim, recoupment, defense, or other claim, right or action that the Employer may have against the Covered Executive or others.  In no event will the Covered Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to Executive under any of the provisions of the Plan, and except as specifically provided in Section 3.1(c) regarding COBRA coverage, such amounts will not be reduced whether or not the Covered Executive obtains other employment.

End of Article V

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ARTICLE VI
AMENDMENT AND TERMINATION OF THE PLAN

6.1Continuation.  The Company currently intends to continue the Plan indefinitely. However, if the Plan is discontinued, the Company assumes no contractual obligation beyond the obligations due to each Executive under the Plan and their respective Plan Agreements which were executed prior to such discontinuance.

6.2Amendment of Plan.  The Company, through an action of the Board reserves the right in its sole and absolute discretion to amend the Plan in any respect at any time; provided, however, that except as required to comply with section 409A of the Code or other applicable law, no amendment to the Plan will be made that reduces or diminishes the rights of any Covered Executive as set forth in the Covered Executive’s Plan Agreement without the Covered Executive’s written consent.  In the event of a Change of Control, no amendment may be made to the Plan within twenty four (24) months following a Change of Control without the consent of the affected Covered Executives.

6.3Termination of Plan.  The Company, through an action of the Board, may terminate or suspend the Plan in whole or in part at any time subject to the same rules regarding the amendment of the Plan in Section 6.2 (i.e., no Covered Executive’s Plan Agreement may be terminated without the Covered Executive’s written consent and the Plan may not be terminated within twenty four (24) months following a Change of Control without the consent of the affected Covered Executives).

6.4Termination of Affiliated Company’s Participation.  The Company may terminate an Affiliated Company’s participation in the Plan at any time by an action of the Compensation Committee and providing written notice to the Affiliated Company; provided, however, no such termination shall be allowed to negatively impact a Covered Executive’s rights to the benefits described in the Plan and the Covered Executive’s Plan Agreement that is in effect at the time of such termination.  The effective date of any such termination will be the later of the date specified in the notice of the termination of participation or the date on which the Daily Administrator can administratively implement such termination.

6.5409A Compliance.  The Plan is intended to comply with the requirements of section 409A of the Code or an exemption or exclusion therefrom and will in all respects be administered in accordance with section 409A of the Code.  In the event that the Company determines that a provision of the Plan does not comply with section 409A of the Code, the Company may modify the Plan, in the least restrictive manner necessary and without any diminution in the value of the payments to the Covered Executive, in order to cause the provisions of the Plan to comply with the requirements of section 409A of the Code, so as to avoid the imposition of taxes and penalties on the Covered Executive pursuant to section 409A of the Code. Based on existing guidance under section 409A of the Code, the Company believes and intends that the Non-Compete Payment under Section 3.1(a) and the Change of Control payment under Section 4.4(a)(i)(B) constitute separate amounts of deferred compensation under Section 409A of the Code and, as such, they may each have a separate time and form of payment under Treasury Regulation §1.409A-3(c).  However, in the event that subsequent guidance issued under section 409A indicates that this is not the case and the Non-Compete Payment and the Change of Control payment under Section 4.4(a)(i)(B) must

26

be treated as a single payment, the Change of Control payment will be paid at the same time and in the same form as the Non-Compete Payment.

End of Article VI

27

ARTICLE VII
MISCELLANEOUS

7.1No Reduction of Employer Rights.  Except as provided in Article IV, nothing contained in the Plan will be construed as a contract of employment between the Employer and a Covered Executive, or as a right of any Covered Executive to continue in the employment of the Employer, or as a limitation of the right of the Employer to discharge any of its Covered Executives, with or without cause.

7.2Successor to the Company.  The Company will require any successor or assign (whether direct or indirect, by purchase, exchange, lease, merger, consolidation, or otherwise) to all or substantially all of the property and assets of the Company and its Affiliated Companies taken as a whole, to expressly assume the Plan and to agree to perform under the Plan in the same manner and to the same extent that the Company and its Affiliated Companies would be required to perform it if no such succession had taken place.

7.3Provisions Binding.  All of the provisions of the Plan will be binding upon the Company and its Affiliated Companies and any successor to the Company or any such Affiliated Company.  Likewise, the provisions of the Plan will be binding upon all persons who will be entitled to any benefit hereunder, their heirs and personal representatives.

7.4Governing Law.  Except to the extent pre-empted by ERISA or other applicable federal law, the Plan will be governed by and construed in accordance with the laws of the State of Texas, without reference to principles of conflict of laws.

7.5Notice.  All notices and other communications under the Plan must be in writing and given by hand delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, addressed as follows:

(a)Covered Executive.  For notice to the Covered Executive:

At the most recent address on file at the Employer.

(b)For the Company and Administrators:  For notice to the Company, Plan Administrator or Daily Administrator:

Whole Foods Market, Inc.

550 Bowie St.

Austin, TX 78703

Notice to the Company should be directed to the attention of the General Counsel.

(c)Alternate Address.  If either party provides written notice to the other in accordance with this Section 7.5, of an alternate address, such address will be used instead of the addresses specified in clauses (a) or (b).

(d)Effective Date.  Notice and communications will be effective when actually received by the addressee.

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7.6Severability.  The invalidity or unenforceability of any provision of the Plan will not affect the validity or enforceability of any other provision of the Plan.

7.7Counterparts and Electronic Signatures.  Each Plan Agreement may be executed in several counterparts, all of which taken together shall constitute one single agreement.  Signatures may be made and delivered electronically.

7.8Withholding.  The Company may withhold from any amounts payable under the Plan such United States federal, state or local or foreign taxes as will be required to be withheld pursuant to any applicable law or regulation.

7.9No Waiver.  The Covered Executive’s or the Employer’s failure to insist upon strict compliance with any provision of the Plan or the failure to assert any right the Covered Executive or the Employer have hereunder, including, without limitation, the right of the Covered Executive to terminate employment for Good Reason, will not be deemed to be a waiver of such provision or right or any other provision or right of the Plan.

End of Article VII

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IN WITNESS WHEREOF, this Whole Foods Executive Retention Plan and Non-Compete Arrangement has been executed on this       day of                         , 2010, effective as of May 20, 2010, except as specifically provided otherwise herein.

WHOLE FOODS MARKET, INC.
By:
	John P. Mackey
	Co-Chief Executive Officer

30

APPENDIX A

PLAN AGREEMENTS

Section 2.1(ee) of the Whole Foods Executive Retention Plan and Non-Compete Arrangement (the “Plan”) provides that each Covered Executive will enter into an Plan Agreement which sets forth the terms and conditions of his benefits under the Plan and a form copy of such agreement will be attached to the Plan as Appendix A.

A-1

WHOLE FOODS EXECUTIVE RETENTION PLAN

AND NON-COMPETE ARRANGEMENT AGREEMENT

THIS EXECUTIVE RETENTION PLAN AND NON-COMPETE ARRANGEMENT AGREEMENT (“Plan Agreement”) is made as of           20    by and between the Plan Administrator of the Whole Foods Executive Retention Plan and Non-Compete Arrangement (the “Plan”) on behalf of Whole Foods Market Services, Inc. (the “Employer”), and                                   (the “Covered Executive”).  This Plan Agreement supersedes and replaces any existing agreement entered into between the Employer and the Covered Executive under the Plan and any existing severance, change in control or similar agreement in effect between the Employer and the Covered Executive and represents the entire agreement of the parties concerning the subject matter herein.  Capitalized terms used in this Plan Agreement that are not defined herein will have the meaning set forth in the Plan.

1.Non-Compete Benefits.

(a)Non-Compete Payment.  The amount of the total of all Non-Compete Payments payable to the Covered Executive under Section 3.1(a) of the Plan will equal up to                                          ($            )(so long as the Covered Executive complies with the terms of this Plan Agreement); provided, this amount will be adjusted to reflect the increase, if any, in the Consumer Price Index (as defined below) that has occurred during the period beginning on the date of this Plan Agreement and ending as of the close of the month immediately preceding the month in which the Covered Executive’s employment is terminated in accordance with Section 3.1(a) of the Plan; [and further provided, that the amount of the Non-Compete Payment payable upon a voluntary termination of employment for a reason other than Good Reason, Disability or death will be subject to Section 1(d) of this Plan Agreement]*.

For the avoidance of doubt, on the date of this Plan Agreement, the Company and the Covered Executive agree that the Covered Executive has continuously served in one or more of the positions referenced in Section 3.1(a) of the Plan from             ; therefore, for any Date of Termination occurring on or after [15 Years following start date] (the “Total Benefit Date”), no adjustments to any Non-Compete Payment otherwise due shall be made pursuant to the terms of the table in Section 3.1(a) of the Plan.

For purposes of Section 1 of this Plan Agreement, the term “Consumer Price Index” means the Consumer Price Index for all Urban Consumers published by the United States Bureau of Labor Statistics, or the supplement or successor thereto if publication of such index should be discontinued.

(b)Equity Compensation.  [Subject to the provisions of Section 1(d) of this Plan Agreement,]* applicable equity compensation granted to the Covered Executive shall be vested and be exercisable pursuant to the provisions of Section 3.1(b) of

[*These provisions apply only to the Company’s Co-Chief Executive Officers (other than John Mackey), Chief Financial Officer and the two other most highly compensated executive officers of the Company for fiscal 2009.

A-2

the Plan (so long as the Covered Executive complies with the terms of this Plan Agreement).

(c)COBRA Coverage.  [Subject to the provisions of Section 1(d) of this Plan Agreement,]* the Covered Executive shall be entitled to reimbursement of COBRA premiums pursuant to the provisions of Section 3.1(c) of the Plan (so long as the Covered Executive complies with the terms of this Plan Agreement).

(d)[Voluntary Termination of Employment.  In the event that the Covered Executive voluntarily terminates employment with the Company for a reason other than Good Reason, Disability or death, the Non-Compete Benefits otherwise due and payable shall not be due and payable in connection with such termination, and instead the benefits payable, if any, will consist of those benefits described in Sections 1(a), 1(b) and 1(c) of this Plan Agreement but in such amounts as are negotiated between either one of the two Co-Chief Executive Officers of the Company and the Covered Executive and documented in a signed writing (the “Negotiated Benefits” which benefits will be deemed to be Non-Compete Benefits described herein); provided, however that for purposes of such negotiation the benefits cannot exceed the maximum provided for in the case of a termination for “Good Reason” under Sections 1(a), 1(b) and 1(c) of this Plan Agreement.  Notwithstanding the foregoing, if either of the two Co-Chief Executive Officers of the Company as of the date of this Agreement are involuntarily terminated or if both of the Co-Chief Executive Officers die and/or otherwise terminate employment with the Company within forty-five (45) days of each other (including the situations in which: both die; each person’s employment is terminated, and one person dies and the other person’s employment is terminated) and the Covered Executive terminates employment with the Company after the occurrence of the applicable event(s), the Negotiated Benefits will not be payable and the amount of Non-Compete Benefits determined under Section 1(a), (b) and (c) of this Plan Agreement, without regard to this Section 1(d), shall be payable to the Covered Executive.]* [In the event that the Covered Executive voluntarily terminates employment with the Company for a reason other than Good Reason, Disability or death, the Non-Compete Benefits otherwise due and payable shall not be due and payable in connection with such termination, and instead the benefits payable, if any, will consist of those benefits described in Sections 1(a), 1(b) and 1(c) of this Plan Agreement but in such amounts as are negotiated between the other Co-Chief Executive Officer of the Company and the Covered Executive (the “Negotiated Benefits” which benefits will be deemed to be Non-Compete Benefits described herein); provided, however, that for purposes of such negotiation the benefits cannot exceed the maximum provided for in the case of a termination for “Good Reason” under Sections 1(a), 1(b) and 1(c) of this Plan Agreement.  Notwithstanding the foregoing, if the other of the two Co-Chief Executive Officers of the Company as of the date of this Agreement dies or terminates employment with the Company for any reason and the Covered Executive terminates his employment with the Company after the occurrence of such event, Negotiated Benefits will not be

[*These provisions apply only to the Company’s Co-Chief Executive Officers (other than John Mackey), Chief Financial Officer and the two other most highly compensated executive officers of the Company for fiscal 2009.

A-3

payable and the amount of Non-Compete Benefits determined under Section 1(a), (b) and (c) of this Plan Agreement, without regard to this Section 1(d), shall be payable to the Covered Executive.]#

2.Confidentiality and Restrictive Covenants.  As a condition of receiving the Non-Compete Benefits under Article III of the Plan, as set forth in Section 1 of this Plan Agreement [including the Negotiated Benefits that may be payable in the event of the Covered Executive’s voluntary termination of employment]*, the Covered Executive agrees to comply with the following confidentiality provisions and restrictive covenants:

(a)Confidentiality Provisions.

(i)Definition of Confidential Information. “Confidential Information” means the existence this Plan Agreement, including all its material terms.  “Confidential Information” also means any information or material (A) generated or collected by, or utilized in the operations of, the Employer that relates to the actual or anticipated business or research and development conducted by or on behalf of the Employer, or (B) suggested by or resulting from any task assigned to the Covered Executive or work performed by the Covered Executive for or on behalf of the Employer, including, for example and without limitation, information and materials relating or pertaining to the Employer’s financial performance, financial statements and reports, financial projections, accounting methods and information, business plans, strategic plans, plans regarding the Employer’s future growth, development and projects, marketing plans and strategies, sales methods and strategies, products, pricing strategies, price lists, vendor lists, vendor information (including, without limitation, their history of dealings with the Employer), employee files, employee compensation, skills, performance and qualifications of the Employer’s personnel, trade secrets, inventions (whether patented or unpatented), copyrights, service marks, know-how, computer programs, computer code and related documentation, processes, methods, formulas, research, development, licenses, permits, and compilations of any of the foregoing information relating to the actual or anticipated business of the Employer.  Confidential Information does not include information that properly and lawfully has become generally known to the public other than as a result of any act or omission by any Covered Executive.

Confidential Information also includes information that belongs to the Employer’s vendors and customers and is not generally known to the public.  This includes information that could be used by clients’ competitors to gain an advantage in the market; client’s marketing plans, business plans, customer lists/data, organizational structure, pricing, financial data, budgeting and reporting.

[*These provisions apply only to the Company’s Co-Chief Executive Officers (other than John Mackey), Chief Financial Officer and the two other most highly compensated executive officers of the Company for fiscal 2009.

#These provisions apply only to the Company’s Co-Chief Executive Officers (other than John Mackey).]

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(ii)Promise to Provide Confidential Information.  The Employer promises that it will, throughout the course of the Covered Executive’s employment with the Employer, provide the Covered Executive with Confidential Information.  The Covered Executive acknowledges that the Employer has invested substantial time, money and effort in developing its Confidential Information, that this Confidential Information is a valuable, special and unique asset of the Employer, that the Employer would sustain great loss if such information were improperly used or disclosed, and that the protection and maintenance of the Employer’s Confidential Information constitute legitimate interests to be protected by the Company by the covenants set forth in this Section 2.2.

(iii)Nondisclosure of Confidential Information.  During the Covered Executive’s employment with the Employer and at any time thereafter, the Covered Executive will preserve in strictest confidence, and will not disclose, copy or take away, either directly or indirectly, or use for the Covered Executive’s own benefit or the benefit of any third party, any Confidential Information of the Employer or any confidential or proprietary information or material received by the Employer from third parties, except as required in the ordinary course of the Covered Executive’s employment for the benefit of the Employer.  With respect to other employees of any Employer or its affiliates (including all parent companies and all wholly or partially owned subsidiaries), unless approved by a member of the Employer’s Executive Team, the Covered Executive agrees that he/she will only discuss this Plan Agreement with the following persons: any Executive Team Member, the Senior Global Vice President and/or the General Counsel or another attorney for the Employer.  Notwithstanding the above, the Covered Executive has the right to discuss the terms of this Plan Agreement with outside legal counsel, accountants and other persons who are not employed with an Employer entity and who have a need to know in order to assist the Covered Executive with the enforcement and/or protection of any legal right.

(iv)Return of Confidential Information.  At the end of the Covered Executive’s employment with the Employer, the Covered Executive agrees to search for and return to the Employer all property belonging to the Employer including any documents, records, electronic data, and tangible items and materials containing or embodying any Employer information or Employer Confidential Information—whether such information was prepared by the Covered Executive or by others, and whether such information exists as hard copy or in electronic form on a Employer-issued computer device, a personal computer device or any other electronic device.  All documents, records, computer programs, electronic data, and tangible items and materials containing or embodying any Confidential Information, including all copies thereof, whether prepared by the Covered Executive or by others, will immediately be returned to the Employer upon termination of the Covered Executive’s employment with the Employer (voluntary or otherwise), or at any time upon the Employer’s request.  The Covered Executive understands and agrees that the Covered Executive’s obligation to maintain the

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confidentiality of Confidential Information remains even after the Covered Executive’s employment with the Employer ends and continues for so long as such Confidential Information remains not generally known to the public through no fault or breach of this Plan Agreement by the Covered Executive.  Notwithstanding the above, the Covered Executive has the right to keep a copy of the Plan Agreement.

(b)Restricted Covenants.  In consideration of the Employer’s promise to provide Confidential Information and other good and valuable consideration, the receipt and sufficiency thereof is hereby acknowledged, the Covered Executive agrees as follows:

(i)Covenant Not to Compete.  During the Covered Executive’s employment with the Employer or its affiliates, including all parent companies and all wholly or partially owned subsidiaries (collectively, the “Employer Entities” for purposes of this Section 2(b)(i)), other than with respect to the Employer Entities, the Covered Executive will refrain from participating in, providing services to, planning or organizing any business that is in the business of retail food service, retail grocery sales or retail grocery distribution.  During the Covered Executive’s employment and, in the event the Covered Executive is eligible for and elects to receive the Non-Compete Benefits payable pursuant to Article III, for a period of five (5) years following the termination of the Covered Executive’s employment (such additional period, the “Restricted Period”), the Covered Executive will not, in any geographic region in which any of the Employer Entities then does business, directly or indirectly, perform management level services for, consult with or sit on the board of directors (or similar body)  of any business competitive with the Employer Entities including any company in the business of retail food service, retail grocery sales or retail grocery distribution.

(ii)Nonsolicitation of Team Members.  During the Covered Executive’s employment and, in the event the Covered Executive is eligible for and elects to receive the Non-Compete Benefits payable pursuant to Article III, the Restricted Period, the Covered Executive will not, on the Covered Executive’s own behalf or on behalf of any other person, have any contact with a person who is, during such time frame, an employee of a Employer entity, for the purpose of discussing that person’s leaving such employment.  The Covered Executive will not, during the Restricted Period, in any other manner attempt, directly or indirectly, attempt to hire any employee of an Employer entity or to influence, induce or encourage any employee of an Employer entity to leave the employment of the Employer.

(iii)Nondisparagement. The Covered Executive agrees that the Covered Executive will not disparage the Employer or one or more of its affiliates (including any parent companies and any wholly or partially owned subsidiaries), the Board, the Employer’s executives, the Employer’s employees and the Employer’s products or services during the term of this Plan Agreement and thereafter.  For purposes of this Plan Agreement, disparagement does not include (A) compliance with legal

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process or subpoenas to the extent only truthful statements are rendered in such compliance attempt, (B) statements in response to an inquiry from a court or regulatory body, or (C) statements or comments in rebuttal of media stories or alleged media stories.

(iv)Termination and Forfeiture.  If during the Covered Executive’s employment with the Employer, the Covered Executive materially violates any of the covenants and restrictions contained in this Plan Agreement, such action may be grounds for the termination of the Covered Executive’s employment for Cause.  If the Covered Executive is eligible for and elects to receive the Non-Compete Benefits payable pursuant to Article III of the Plan and during the Restricted Period the Covered Executive violates any of the covenants and restrictions contained in this Plan Agreement, the Covered Executive will forfeit the right to any and all future Non-Compete Benefits.  The provisions of this Plan Agreement are in addition to any forfeiture provisions of other Employer plans, programs or agreements applicable to the Covered Executive. The Covered Executive specifically recognizes and affirms that the restrictive covenants set forth in this Plan Agreement are a material part of this Plan Agreement without which the Employer would not have entered into this Plan Agreement.

(v)Representations. The Covered Executive has carefully read and considered the provisions of Paragraphs 2(b)(i) through (iv) of this Plan Agreement and agrees that the restrictions set forth therein, including, but not limited to, the time period and geographic area of the restrictions and the scope of activities restricted are fair and reasonable and are supported by sufficient and valid consideration, and that these restrictions do not impose any greater restraint than is necessary to protect the goodwill and other legitimate business interests of the Employer, its officers, directors, shareholders and other employees. The Covered Executive acknowledge that the covenants and agreements in Paragraphs 2(b)(i) through (iv) of this Plan Agreement are ancillary to and a part of an otherwise enforceable agreement entered into at the time these covenants are made, namely, the agreement concerning provision and confidentiality of Confidential Information. The Covered Executive acknowledges that the Covered Executive’s agreement to be bound by the restrictive covenants set forth in Paragraphs 2(b)(i) through (iv) of this Plan Agreement is a concurrent and material inducement for the Employer (A) to enter into the ancillary terms of this Plan Agreement, (B) to continue the Covered Executive’s employment, and (C) to provide the Covered Executive with the promises and consideration set forth in this Plan Agreement.  The Covered Executive agrees that each ancillary agreement set forth in this Plan Agreement, is otherwise enforceable and independently sufficient to support all of the protective covenants in Paragraphs 2(b)(i) through (iv) of this Plan Agreement. The Covered Executive acknowledges that these restrictions will not prevent the Covered Executive from obtaining gainful employment in the Covered Executive’s occupation or field of expertise or cause the Covered Executive undue hardship and that there are numerous other employment

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and business opportunities available to the Covered Executive that are not affected by these restrictions.

(vi)Reformation.  Should an arbitrator or court determine that the scope of any of the covenants contained in Paragraphs 2(b)(i) through (iv) of this Plan Agreement exceed the maximum restrictiveness such arbitrator or court deems reasonable and enforceable, the parties intend that the arbitrator or court should reform, modify and enforce the provision to such narrower scope as it determines to be reasonable and enforceable.  Any reduction in the Restricted Period will concomitantly reduce the obligation to provide the Non-Compete Benefits to the duration of the revised Restricted Period.

(vii)Election.  If at any time the Covered Executive elects not to receive the Non-Compete Benefits, then the Employer agrees it will not enforce this Paragraph 2(b) during the portion of the Restriction Period occurring after such election in exchange for the Covered Executive’s commitment to not seek any or addition, as applicable, Non-Compete Benefits, including, without limitation, any additional Non-Compete Payment.

3.Change in Control Benefits.  In the event of a Change of Control, the Covered Executive will also be entitled to the rights and benefits set forth in Article IV of the Plan, as in effect on the date of this Plan Agreement, including the termination payment described in Section 4.4(a) and subject to the Covered Executive’s satisfaction of the terms and conditions that are required to receive such benefits.

4.Dispute Resolution.  Any dispute or claim for benefits under the Plan must be resolved through the claims procedure set forth in Article V of the Plan which procedure, prior to a Change of Control culminates in binding arbitration, if elected by the Covered Executive.  By accepting the benefits provided under the Plan, the Covered Executive hereby agrees to binding arbitration as the final means of dispute resolution (if the Covered Executive elects to pursue binding obligation) with respect to the Plan prior to a Change of Control.

5.Injunctive Relief.  Notwithstanding anything contained in the Plan or Section 4 to the contrary, if the Covered Executive breaches, or threatens to commit a breach of, any of the restrictive covenants of Section 2(b) of this Plan Agreement (other than the restrictive covenants set forth in Section 2(b)(i)), the Company will also have the right and remedy to seek from any court of competent jurisdiction specific performance of such provisions or injunctive relief against any act which would violate any of Section 2(b) of this Plan Agreement, it being acknowledged and agreed that any such breach or threatened breach will cause irreparable injury to the Company.  The Company and the Covered Executive (a) agree that any suit, action or legal proceeding permitted by this Section 5 may be brought in the courts of record of the State of Texas in Travis County or the court of the United States, Western District of Texas; (b) consent to the jurisdiction of each such court in any suit, action or proceeding permitted by this Section; and (c) waive any objection that they may have to the laying of venue of any such suit, action or proceeding permitted by this Section 5 in any of such courts.

6.Plan Incorporated by Reference. The Plan is hereby incorporated into and made a part of this Plan Agreement as though set forth in full herein.  The parties will be bound by

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and have the benefit of each and every provision of the Plan, as amended from time to time.

7.Amendment.  This Plan Agreement may be amended at any time by the mutual agreement of the parties; provided, that no such amendment will be effective unless evidenced by a written instrument executed by both the Employer and the Covered Executive.

IN WITNESS WHEREOF, the parties hereto have entered into this Plan Agreement on            , 20   .

COVERED EXECUTIVE	PLAN ADMINISTRATOR
	WHOLE FOODS MARKET, INC.
By:	By:
Name:		John P. Mackey
Title:		Co-Chief Executive Officer

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EXHIBIT A

WAIVER AND RELEASE

In exchange for the payment to me of the Non-Compete Benefits described in Article III of the Whole Foods Executive Retention Plan and Non-Compete Arrangement (the “Plan”), the terms of which I understand are incorporated herein by reference, which Non-Compete Benefits are in addition to any remuneration or benefits to which I am already entitled, I agree to the following restrictive covenants and to waive all of my claims against and release (a) Whole Foods Market, Inc. and its predecessors, successors and assigns (collectively referred to as “WFMI”), (b) all of the affiliates (including all parent companies and all wholly or partially owned subsidiaries) of WFMI and their directors, officers, employees, agents, insurers, predecessors, successors and assigns (collectively referred to as the “Affiliates”), and (c) WFMI and its Affiliates’ (collectively referred to as the “Company”) employee benefit plans and the fiduciaries and agents of said plans (collectively referred to as the “Benefit Plans”) from any and all claims, demands, actions, liabilities and damages arising out of or relating in any way to my employment with or separation from employment with the Company other than amounts due pursuant to Section 4.4 of the Plan and rights and benefits I am entitled to under the Benefit Plans.  (WFMI, its Affiliates and the Benefit Plans are sometimes hereinafter collectively referred to as the “Released Parties”).

I understand that signing this Waiver and Release is an important legal act.  I acknowledge that I am hereby advised in writing to consult an attorney before signing this Waiver and Release.  I understand that, in order to be eligible for the Non-Compete Payment, I must sign (and return to the Company) this Waiver and Release.  I acknowledge that I have been given at least [21] days to consider whether to accept the Non-Compete Payment and therefore execute this Waiver and Release.

In exchange for the payment to me of the Non-Compete Benefits, (i) I agree not to pursue a legal claim in any local, state and/or federal court regarding or relating in any way to my employment with or separation from employment with the Company, and (ii) I knowingly and voluntarily waive all claims and release the Released Parties from any and all claims, demands, actions, liabilities, and damages, whether known or unknown, arising out of or relating in any way to my employment with or separation from employment with the Company, except to the extent that my rights are vested under the terms of any employee benefit plans sponsored by the Company (including, without limitation, the Plan and any related agreements thereunder) and except with respect to such rights or claims as may arise after the date this Waiver and Release is executed.

This Waiver and Release includes, but is not limited to, claims and causes of action under:  Title VII of the Civil Rights Act of 1964, as amended; the Age Discrimination in Employment Act of 1967, as amended, including the Older Workers Benefit Protection Act of 1990; the Civil Rights Act of 1866, as amended; the Civil Rights Act of 1991; the Americans with Disabilities Act of 1990; the Workers Adjustment and Retraining Notification Act of 1988; the Pregnancy Discrimination Act of 1978; the Employee Retirement Income Security Act of 1974, as amended; the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended; the Family and Medical Leave Act of 1993; the Fair Labor Standards Act; the Occupational Safety and Health Act; the Texas Labor Code §21.001 et. seq.; the Texas Labor Code; claims in connection with workers’ compensation, retaliation or “whistle blower” statutes; and/or contract, tort, defamation, slander, wrongful termination or any other state or federal regulatory, statutory

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or common law.  Notwithstanding the above, I further acknowledge that I am not waiving and am not being required to waive any right that cannot be waived under law (including, without limitation, the right to file an administrative charge or participate in an administrative investigation or proceeding); provided that I disclaim and waive any right to share or participate in any monetary award resulting from the prosecution of such charge or investigation or proceeding.

Further, I expressly represent that no promise or agreement which is not expressed in this Waiver and Release has been made to me in executing this Waiver and Release, and that I am relying on my own judgment in executing this Waiver and Release, and that I am not relying on any statement or representation of the Company or any of its agents.  I agree that this Waiver and Release is valid, fair, adequate and reasonable, is with my full knowledge and consent, was not procured through fraud, duress or mistake and has not had the effect of misleading, misinforming or failing to inform me.  I acknowledge and agree that the Company will withhold minimum amount of any taxes required by federal or state law from the Non-Compete Benefits otherwise payable to me.

Notwithstanding the foregoing, I do not release and expressly retain (A) all rights to indemnity, contribution, and a defense, and directors and officers and other liability coverage and third party insurance coverage that I may have under any statute, the bylaws of the Company or by other agreement; and (B) the right to any, unpaid reasonable business expenses and any accrued benefits payable under any Company welfare plan or tax-qualified plan.

I acknowledge that payment of the Non-Compete Benefits is not an admission by any one or more of the Released Parties that they engaged in any wrongful or unlawful act or that they violated any federal or state law or regulation.  I acknowledge that the Company has not promised me continued employment or represented to me that I will be rehired in the future.  I acknowledge that my employer and I contemplate an unequivocal, complete and final dissolution of my employment relationship.  I acknowledge that this Waiver and Release does not create any right on my part to be rehired by the Company, and I hereby waive any right to future employment by the Company.

I understand that for a period of seven (7) calendar days following the date that I sign this Waiver and Release, I may revoke my acceptance of this Waiver and Release, provided that my written statement of revocation is received on or before that seventh day by [Name and/or Title], [address], facsimile number:                     , in which case the Waiver and Release will not become effective.  If I timely revoke my acceptance of this Waiver and Release, the Company will have no obligation to provide the Non-Compete Benefits to me.  I understand that failure to revoke my acceptance of the offer within seven (7) calendar days from the date I sign this Waiver and Release will result in this Waiver and Release being permanent and irrevocable.

Should any of the provisions set forth in this Waiver and Release be determined to be invalid by a court, agency or other tribunal of competent jurisdiction, it is agreed that such determination will not affect the enforceability of other provisions of this Waiver and Release.  I acknowledge that this Waiver and Release sets forth the entire understanding and agreement between me and the Company concerning the subject matter of this Waiver and Release and supersede any prior or contemporaneous oral and/or written agreements or representations, if any, between me and the Company.

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I acknowledge that I have read this Waiver and Release have had an opportunity to ask questions and have it explained to me, I am signing this Waiver and Release knowingly and voluntarily and with the advice of any attorney I have retained to advise me with respect to it, and that I understand that this Waiver and Release will have the effect of knowingly and voluntarily waiving any action I might pursue, including breach of contract, personal injury, retaliation, discrimination on the basis of race, age, sex, national origin, or disability and any other claims arising prior to the date of this Waiver and Release.

I represent that I am not aware of any claim by me other than the claims that are released in this Waiver and Release.  By execution of this document, I do not waive or release or otherwise relinquish any legal rights I may have which are attributable to or arise out of acts, omissions, or events of the Company which occur after the date of the execution of this Waiver and Release.

Covered Executive’s Signature

Covered Executive’s Printed Name

Covered Executive’s Signature Date

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EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, John Mackey, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Whole Foods Market, Inc.;

2.Based on my knowledge, this report does 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 this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 13, 2010

/s/John Mackey

John Mackey

Co-Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, Walter Robb, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Whole Foods Market, Inc.;

2.Based on my knowledge, this report does 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 this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 13, 2010

/s/Walter Robb

Walter Robb

Co-Chief Executive Officer

EX-31.3

Exhibit 31.3

CERTIFICATIONS

I, Glenda Chamberlain, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Whole Foods Market, Inc.;

2.Based on my knowledge, this report does 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 this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 13, 2010

/s/Glenda Chamberlain

Glenda Chamberlain

Chief Financial Officer

EX-32.1

Exhibit 32.1

Certification by Co-Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes - Oxley Act of 2002

In connection with the Quarterly Report of Whole Foods Market, Inc. (the “Company”) on Form 10-Q for the period ending July 4, 2010 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, John Mackey, Co-Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1)The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o (d)); and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/John Mackey

John Mackey

Co-Chief Executive Officer

August 13, 2010

EX-32.2

Exhibit 32.2

Certification by Co-Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes - Oxley Act of 2002

In connection with the Quarterly Report of Whole Foods Market, Inc. (the “Company”) on Form 10-Q for the period ending July 4, 2010 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Walter Robb, Co-Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1)The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o (d)); and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/Walter Robb

Walter Robb

Co-Chief Executive Officer

August 13, 2010

EX-32.3

Exhibit 32.3

Certification by Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes - Oxley Act of 2002

In connection with the Quarterly Report of Whole Foods Market, Inc. (the “Company”) on Form 10-Q for the period ending July 4, 2010 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Glenda Chamberlain, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1)The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o (d)); and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/Glenda Chamberlain

Glenda Chamberlain

Chief Financial Officer

August 13, 2010