EXHIBIT 10.1
FORM OF SEVERANCE AGREEMENT
THIS SEVERANCE AGREEMENT ("Agreement") is effective as of July 25, 2005, and is
made by and between United Natural Foods, Inc., a Delaware corporation (the
"Company"), and _______________ ("Employee"). For good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
including without limitation the Employee's willingness to continue his
employment with the Company and the other obligations of the parties hereunder,
the parties hereby agree as follows:
1. The following terms shall have the following definitions:
(a) the term "Act" shall mean the Securities Exchange Act of 1934, as amended to
date.
(b) the term "Affiliate" shall mean any corporation which is a subsidiary of the
Company within the definition of "subsidiary corporation" under Section 424(f)
of the Internal Revenue Code of 1986, as amended.
(c) the term "Cause" shall mean (i) conviction of Employee of a felony or crime
of moral turpitude under applicable law, (ii) unauthorized acts intended to
result in Employee's personal enrichment at the material expense of the Company
or its reputation, or (iii) any violation of Employee's duties or
responsibilities to the Company which constitutes willful misconduct or
dereliction of duty, or breach of Section 6 of this Agreement.
(d) The term "Change in Control" means the happening of any of the following:
(i) any "person", including a "group" (as such terms are used in Sections 13(d)
and 14(d) of the Act, but excluding the Company, any of its Affiliates, or any
employee benefit plan of the Company or any of its Affiliates) is or becomes the
"beneficial owner" (as defined in Rule 13(d)(3) under the Act), directly or
indirectly, of securities of the Company representing the greater of 30% or more
of the combined voting power of the Company's then outstanding securities;
(ii) the stockholders of the Company shall approve a definitive agreement (1)
for the merger or other business combination of the Company with or into another
corporation if (A) a majority of the directors of the surviving corporation were
not directors of the Company immediately prior to the effective date of such
merger or (B) the stockholders of the Company immediately prior to the effective
date of such merger own less than 50% of the combined voting power in the then
outstanding securities in such surviving corporation or (2) for the sale or
other disposition of all or substantially all of the assets of the Company; or
(iii) the purchase of 30% or more of the Stock pursuant to any tender or
exchange offer made by any "person", including a "group" (as such terms are used
in Sections 13(d) and 14(d) of the Act), other than the Company, any of its
Affiliates, or any employee benefit plan of the Company or any of its
Affiliates.
(e) the term "Disability" shall mean the material inability, in the reasonable
opinion of the Board of Directors, of Employee to render his agreed upon
full-time services to the Company due to physical and/or mental infirmity for a
period of one hundred twenty (120) consecutive days, or an aggregate period of
time exceeding one hundred twenty (120) days in any consecutive twelve (12)
month period.
(f) the term "Effective Date" means the date on which a Change in Control
occurs. Anything in this Agreement to the contrary notwithstanding, if a Change
in Control occurs and if the Employee's employment with the Company is
terminated prior to the date on which the Change in Control occurs, and if it is
reasonably demonstrated by the Employee that such termination of employment (i)
was at the request of a third party who has taken steps reasonably calculated to
effect a Change in Control or (ii) otherwise arose in connection with or in
anticipation of a Change in Control, then for all purposes of this Agreement,
the "Effective Date" shall mean the date immediately prior to the date of such
termination of employment.
(g) the term "Equity Plan" shall mean any option to purchase shares of the
Common Stock $.01 par value per share of the Company ("Stock") granted to
Employee pursuant to the Company's 1996 Stock Option Plan or 2002 Stock
Incentive Plan, as amended from time to time ("Options"), any rights the
Employee may have under the Company's Employee Stock Ownership Plan, as amended
from time to time, or any rights the Employee may have under any other current
or future Company plan relating to Options or restricted stock.
(h) the term the "Good Reason" shall mean, without the Employee's express
written consent, the occurrence of any one or more of the following: (i) the
assignment of Employee to duties materially adversely inconsistent with the
Employee's current duties, and failure to rescind such assignment within thirty
(30) days of receipt of notice from the Employee; (ii) a relocation more than
fifty miles from the Company's Dayville, Connecticut offices; (iii) a reduction
by the Company in the Employee's base salary, or the failure of the Company to
pay or cause to be paid any compensation or benefits hereunder when due or under
the terms of any plan established by the Company, and failure to restore such
base salary or make such payments within five (5) days of receipt of notice from
the Employee; (iv) failure to include the Employee in any new employee benefit
plans proposed by the Company or a material reduction in the Employee's level of
participation in any existing plans of any type; provided that a Company-wide
reduction or elimination of such plans shall not be a violation of this Section
(iv); or (v) the failure of the Company to obtain a satisfactory agreement from
any successor to the Company with respect to the ownership of substantially all
the stock or assets of the Company to assume and agree to perform this
Agreement.
2. In the event (a) the Employee is terminated for reasons other than Cause,
death or Disability or (b) the Employee resigns for Good Reason, in addition to
the payment of any unpaid base salary and accrued and unpaid vacation as of the
date of such termination or resignation, the Company shall continue Employee's
base salary and medical benefits in effect as of the date of such termination or
resignation for a period of one (1) year, subject to applicable withholding and
deductions. Notwithstanding the preceding sentence, if any payment that would
otherwise be made pursuant to the preceding sentence would not comply with the
American Jobs Creation Act of 2004 (Section 409A of the Internal Revenue Code)
because the payment is made to a "key employee" (as determined under that Act)
before the date that is six months after the date of the Employee's separation
from service, such payment will be made in accordance with the Act.
3. In the event of termination for Cause, death or Disability, or resignation
for other than Good Reason, the Company shall be under no obligation to other
than to provide payment of any unpaid base salary and accrued and unpaid
vacation as of the date of such termination or resignation; provided, however,
that with respect to a termination for Cause, the Company may withhold any
compensation due to Employee as a partial offset against any damages suffered by
the Company as a result of Employee's actions.
4. In the event (a) the Employee is terminated for reasons other than Cause,
death or Disability or (b) the Employee resigns for Good Reason, and such
termination or resignation takes place on or within one (1) year after the
Effective Date of a Change in Control, in addition to the compensation set forth
in Section 2 and subject to any limitations imposed under applicable law: (i)
any and all Options awarded to the Employee not previously exercisable and
vested shall become fully vested and exercisable, (ii) Employee shall become
fully vested in Employee's account under the Employee Stock Ownership Plan and
(iii) Employee shall become fully vested in all rights to restricted stock
granted to Employee under any other Equity Plan.
5. The availability, if any, of any other benefits shall be governed by the
terms and conditions of the plans and/or agreements under which such benefits
are granted. The benefits granted under this Agreement are in addition to, and
not in limitation of, any other benefits granted to Employee under any policy,
plan and/or agreement.
6. Employee covenants with the Company as follows (as used in this Section 6,
"Company" shall include the Company and its subsidiaries and affiliates):
(a) Employee shall not knowingly use for Employee's own benefit or disclose or
reveal to any unauthorized person, any trade secret or other confidential
information relating to the Company, or to any of the businesses operated by it,
including, without limitation, any customer lists, customer needs, price and
performance information, processes, specifications, hardware, software, devices,
supply sources and characteristics, business opportunities, potential business
interests, marketing, promotional pricing and financing techniques, or other
information relating to the business of the Company, and Employee confirms that
such information constitutes the exclusive property of the Company. Such
restrictions shall not apply to information which is generally (i) available in
the industry or (ii) disclosed through no fault of Employee. Employee agrees
that Employee will return to the Company upon request, but in any event upon
termination of employment, any physical embodiment of any confidential
information and/or any summaries containing any confidential information, in
whole in part, in any media.
(b) During the term of employment, and for a period of one year following
termination of such employment for any reason or payment of any compensation,
whichever occurs last, Employee shall not engage, directly or indirectly (which
includes, without limitation, owning, managing, operating, controlling, being
employed by, giving financial assistance to, participating in or being connected
in any material way with any person or entity), anywhere in the United States in
any activities with the following companies, that include Tree of Life or any of
its subsidiaries, Millbrook Distributors, Nature's Best, C&S Distributors or any
other company which is a direct competitor of the Company with respect to (i)
the Company's activities on the date hereof and/or (ii) any activities which the
Company becomes involved in during the Employee's term of employment; provided,
however, that Employee's ownership as a passive investor of less than two
percent (2%) of the issued and outstanding stock of a publicly held corporation
so engaged, shall not by itself be deemed to constitute such competition.
Further, during such one-year period Employee shall not act to induce any of the
Company's vendors, customers or employees to take action might be
disadvantageous to the Company or otherwise disturb such party's relationship
with the Company.
(c) Employee hereby acknowledges that Employee will treat as for the Company's
sole benefit, and fully and promptly disclose and assign to the Company without
additional compensation, all ideas, information, discoveries, inventions and
improvements which are based upon or related to any confidential information
protected under Section (a) herein, and which are made, conceived or reduced to
practice by Employee during Employee's employment by the Company and within one
year after termination thereof. The provisions of this subsection (c) shall
apply whether such ideas, discoveries, inventions, improvements or knowledge are
conceived, made or gained by Employee alone or with others, whether during or
after usual working hours, either on or off the job, directly or indirectly
related to the Company's business interests (including potential business
interests), and whether or not within the realm of Employee's duties.
(d) Employee shall, upon request of the Company, but at no expense to Employee,
at any time during or after employment by the Company, sign all instruments and
documents and cooperate in such other acts reasonably required to protect rights
to the ideas, discoveries, inventions, improvements and knowledge referred to
above, including applying for, obtaining and enforcing patents and copyrights
thereon in any and all countries.
(e) Employee recognizes that the possible restrictions on Employee's activities
which may occur as a result of Employee's performance of Employee's obligations
under this Agreement are required for the reasonable protection of the Company
and its investments, and Employee expressly acknowledges that such restrictions
are fair and reasonable for that purpose. Employee further expressly
acknowledges that damages alone will be an inadequate remedy for any breach or
violation of any of the provisions of this Agreement, and that the Company, in
addition to all other remedies hereunder, shall be entitled, as a matter of
right, to injunctive relief, including specific performance, with respect to any
such breach or violation or threatened breach or violation, in any court of
competent jurisdiction. If any of the provisions of this Agreement are held to
be in any respect an unreasonable restriction upon Employee then they shall be
deemed to extend only over the maximum period of time, geographic area, and/or
range of activities as to which they may be enforceable. Employee expressly
agrees that all payments and benefits due Employee under this Agreement shall be
subject to Employee's compliance with the provisions set forth in this Section
6.
(f) Except with respect to any shorter term as expressly provided herein, this
Section 6 shall survive the expiration or earlier termination of Employee's
relationship with the Company for a period of ten (10) years.
7. This Agreement may not be modified or amended except by an instrument in
writing signed by the parties hereto. If, for any reason, any provision of this
Agreement is held invalid, such invalidity shall not affect any other provision
of this Agreement not held so invalid, and each such other provision shall to
the full extent consistent with law continue in force and effect. This Agreement
has been executed and delivered in the State of Connecticut, and its validity,
interpretation, performance, and enforcement shall be governed by the laws of
said State. This Agreement contains the entire understanding between the parties
hereto and supersedes any and all prior agreements, oral or written, on the
subject matter hereof between the Company and Employee, but it is not intended
to, and does not, limit any prior, present or future obligations of the Employee
with respect to confidentiality, ownership of intellectual property and/or
non-competition which are greater than those set forth herein.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement, intending
the Agreement to become binding and effective as of the date and year first
written above.
United Natural Foods, Inc. Employee
By______________________ By_________________________
