EX-10.4 5 ex10-4.txt Exhibit 10.4 UNITED NATURAL FOODS, INC. FORM OF NON-STATUTORY STOCK OPTION AGREEMENT 1. Grant of Option. United Natural Foods, Inc., a Delaware corporation (the "Company"), hereby grants to _________ (the "Grantee") an option, pursuant to the Company's 2002 Stock Incentive Plan (the "Plan"), to purchase an aggregate of _______ shares of Common Stock, par value $0.01 per share ("Common Stock"), of the Company at a price of $________ per share, purchasable as set forth in and subject to the terms and conditions of this option and the Plan. Except in the preceding sentence and where the context otherwise requires, the term "Company" shall include the parent and all present and future subsidiaries of the Company as defined in Sections 424(e) and 424(f) of the Internal Revenue Code of 1986, as amended or replaced from time to time (the "Code"). 2. Non-Statutory Stock Option. This option is not intended to qualify as an incentive stock option within the meaning of Section 422 of the Code. 3. Exercise of Option and Provisions for Termination. (a) Vesting Schedule. Except as otherwise provided in this Agreement, this option may be exercised prior to the tenth anniversary of the date of grant (hereinafter the "Expiration Date") in installments as to not more than the number of shares set forth in the table below during the respective installment periods set forth in the table below. Number of Shares as to which Exercise Period Option is Exercisable --------------- --------------------- The right of exercise shall be cumulative so that if the option is not exercised to the maximum extent permissible during any exercise period, it shall be exercisable, in whole or in part, with respect to all shares not so purchased at any time prior to the Expiration Date or the earlier termination of this option. This option may not be exercised at any time on or after the Expiration Date, except as otherwise provided in Sections 3(d) and (e) below. (b) Exercise Procedure. Subject to the conditions set forth in this Agreement, this option shall be exercised by the Grantee's delivery of written notice of exercise to the Treasurer of the Company, specifying the number of shares to be purchased and the purchase price to be paid therefor and accompanied by payment in full in accordance with Section 4. Such exercise shall be effective upon receipt by the Treasurer of the Company of such written notice together with the required payment. The Grantee may purchase less than the number of shares covered hereby, provided that no partial exercise of this option may be for any fractional share or for fewer than ten whole shares. (c) Continuous Employment Required. Except as otherwise provided in this Section 3, this option may not be exercised unless the Grantee, at the time he or she exercises this option, is, and has been at all times since the date of grant of this option, an employee of the Company. For all purposes of this option, (i) "employment" shall be defined in accordance with the provisions of Section 1.421-7(h) of the Income Tax Regulations or any successor regulations, and (ii) if this option shall be assumed or a new option substituted therefor in a transaction to which Section 424(a) of the Code applies, employment by such assuming or substituting corporation (hereinafter called the "Successor Corporation") shall be considered for all purposes of this option to be employment by the Company. (d) Exercise Period Upon Termination of Employment. If the Grantee ceases to be employed by the Company for any reason, then, except as provided in paragraphs (e) and (f) below, the right to exercise this option shall terminate 90 days after such cessation (but in no event after the Expiration Date); provided that this option shall be exercisable only to the extent that the Grantee was entitled to exercise this option on the date of such cessation. Notwithstanding the foregoing, if the Grantee, prior to the Expiration Date, materially violates the non-competition or confidentiality provisions of any employment contract, confidentiality and nondisclosure agreement or other agreement between the Grantee and the Company, the right to exercise this option shall terminate immediately upon written notice to the Grantee from the Company describing such violation. (e) Exercise Period Upon Death or Disability. If the Grantee dies or becomes disabled (within the meaning of Section 22(e)(3) of the Code) prior to the Expiration Date while he or she is an employee of the Company, or if the Grantee dies within 90 days after the Grantee ceases to be an employee of the Company (other than as the result of a discharge for "cause" as specified in paragraph (f) below), this option shall be exercisable, within the period of one year following the date of death or disability of the Grantee (but in no event after the Expiration Date), by the Grantee or by the person to whom this option is transferred by will or the laws of descent and distribution, provided that this option shall be exercisable only to the extent that this option was exercisable by the Grantee on the date of his or her death or disability. Except as otherwise indicated by the context, the term "Grantee", as used in this option, shall be deemed to include the estate of the Grantee or any person who acquires the right to exercise this option by bequest or inheritance or otherwise by reason of the death of the Grantee. (f) Discharge for Cause. If the Grantee, prior to the Expiration Date, is discharged by the Company for "cause" (as defined below), the right to exercise this option shall terminate immediately upon such cessation of employment. "Cause" shall mean willful misconduct in connection with the Grantee's employment or willful failure to perform his or her employment responsibilities in the best interests of the Company (including, without limitation, breach by the Grantee of any provision of any employment, nondisclosure, non-competition or other similar agreement between the Grantee and the Company), as determined by the Company, which determination shall be conclusive. The Grantee shall be considered to have been discharged "for cause" if the Company determines, within 30 days after the Grantee's resignation, that discharge for cause was warranted. (g) Termination of Employment After a Change in Control. Notwithstanding the provisions of paragraphs (d), (e) and (f) above, if, within three months after the Company obtains actual knowledge that a Change in Control (as defined in the Plan) has occurred, the Grantee's employment with the Company ceases for any reason, the Grantee may exercise this option in full, notwithstanding any limitation on the exercise of this option, at any time within three months after such cessation of employment. 4. Payment of Purchase Price. The payment of the purchase price for shares of Common Stock purchased upon exercise of this option shall be made in accordance with Section 10 of the Plan. 5. Delivery of Shares; Compliance With Securities Laws, Etc. (a) General. The Company shall, upon payment of the option price for the number of shares purchased and paid for, make prompt delivery of such shares to the Grantee, provided that if any law or regulation requires the Company to take any action with respect to such shares before the issuance thereof, then the date of delivery of such shares shall be extended for the period necessary to complete such action. (b) Listing, Qualification, Etc. This option shall be subject to the requirement that if, at any time, counsel to the Company shall determine that the listing, registration or qualification of the shares subject hereto upon any securities exchange or under any state or federal law, or the consent or approval of any governmental or regulatory body, or that the disclosure of non-public information or the satisfaction of any other condition is necessary as a condition of, or in connection with, the issuance or purchase of shares hereunder, this option may not be exercised, in whole or in part, unless such listing, registration, qualification, consent or approval, disclosure or satisfaction of such other condition shall have been effected or obtained on terms acceptable to the Board of Directors. Nothing herein shall be deemed to require the Company to apply for, effect or obtain such listing, registration, qualification or disclosure, or to satisfy such other condition. 6. Nontransferability of Option. This option is personal and no rights granted hereunder may be transferred, assigned, pledged or hypothecated in any way (whether by operation of law or otherwise) nor shall any such rights be subject to execution, attachment or similar process, other than in accordance with the terms of the Plan. Upon any attempt to transfer, assign, pledge, hypothecate or otherwise dispose of this option or of such rights contrary to the provisions of the Plan, or upon the levy of any attachment or similar process upon this option or such rights, this option and such rights shall, at the election of the Company, become null and void. 7. No Special Employment Rights. Nothing contained in the Plan or this option shall be construed or deemed by any person under any circumstances to bind the Company to continue the employment of the Grantee for the period within which this option may be exercised. 8. Rights as a Stockholder. The Grantee shall have no rights as a stockholder with respect to any shares which may be purchased by exercise of this option (including, without limitation, any rights to receive dividends or non-cash distributions with respect to such shares) unless and until a certificate representing such shares is duly issued and delivered to the Grantee. No adjustment shall be made for dividends or other rights for which the record date is prior to the date such stock certificate is issued. 9. Withholding Taxes. The Company's obligation to deliver shares upon the exercise of this option shall be subject to the Grantee's satisfaction of all applicable federal, state and local income and employment tax withholding requirements. 10. Limitations on Disposition of Incentive Stock Option Shares. It is understood and intended that this option shall qualify as an "incentive stock option" as defined in Section 422 of the Code. Accordingly, the Grantee understands that in order to obtain the benefits of an incentive stock option under Section 421 of the Code, no sale or other disposition may be made of any shares acquired upon exercise of the option within one year after the day of the transfer of such shares to him, nor within two years after the grant of the option. If the Grantee intends to dispose, or does dispose (whether by sale, exchange, gift, transfer or otherwise), of any such shares within said periods, he or she will notify the Company in writing within ten days after such disposition. 11. Miscellaneous. (a) Except as provided herein, this option may not be amended or otherwise modified unless evidenced in writing and signed by the Company and the Grantee. (b) All notices under this option shall be mailed or delivered by hand to the parties at their respective addresses set forth beneath their names below or at such other address as may be designated in writing by either of the parties to one another. (c) This option shall be governed by and construed in accordance with the laws of the State of Connecticut. [Signature Page Follows] Date of Grant: ___________ UNITED NATURAL FOODS, INC. By: ___________________________ Steven H. Townsend Chair of the Board and Chief Executive Officer 260 Lake Road Dayville, Connecticut 06241 Grantee's Acceptance: The undersigned hereby accepts the foregoing option and agrees to the terms and conditions thereof. The undersigned hereby acknowledges receipt of a copy of the Company's 2002 Stock Incentive Plan. GRANTEE: ___________________________ Address: ___________________________ ___________________________