Exhibit 10.38

NOTICE OF GRANT OF RESTRICTED STOCK UNIT AWARD

ANNIE’S, INC.

OMNIBUS INCENTIVE PLAN

FOR GOOD AND VALUABLE CONSIDERATION, Annie’s, Inc. (the “Company”) has granted
on the Grant Date (set forth below), pursuant to the provisions of the Company’s
Omnibus Incentive Plan, as may be amended from time to time (the “Plan”), to the
Participant designated in this Notice of Grant of Restricted Stock Unit Award
(the “Notice”) the number of Restricted Stock Units set forth in the Notice
representing the right to receive shares of the common stock of the Company in
the future subject to the terms, conditions and restrictions as outlined below
in this Notice and the additional provisions set forth in the attached Terms and
Conditions of Restricted Stock Unit Award (the Notice and the Terms and
Conditions referred to collectively as the “Agreement”).

Participant:

Grant Date:

# of Restricted Stock Units:

Vesting Schedule: Subject to the provisions contained in Sections 4, 5 and 6 of
the Terms and Conditions, the Restricted Stock Units shall vest, and the
applicable Restrictions set forth in the Terms and Conditions shall lapse, in
the event the Participant does not have a Termination of Service prior to the
applicable vesting date under the following schedule:

 

Date of Vesting

   Cumulative % Vested      Cumulative RSUs Vested      %            %         
  %      

Accelerated Vesting on Certain Terminations or in Connection with a Change in
Control: Notwithstanding the foregoing vesting schedule, the Restricted Stock
Units will be become fully vested and no longer subject to forfeiture (i) in the
event of the Participant’s Termination of Service due to death or disability (as
determined by the Committee in its sole discretion), or (ii) in certain
circumstances in connection with a Change in Control of the Company as set forth
under the provisions of Section 4(c) of the Terms and Conditions.

Dividend Units: Prior to vesting and settlement of the Restricted Stock Units,
the Restricted Stock Units shall accrue Dividend Units in accordance with, and
as defined in, Section 1(c) of the Terms and Conditions.

By signing below, the Participant agrees that this Restricted Stock Unit Award
is granted under and governed by the terms and conditions of the Agreement and
the Plan.

 

[Participant Name]    Annie’s, Inc.

 

      By:             Title:     Date:  

 

      Date:                         ,  20            

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TERMS AND CONDITIONS OF RESTRICTED STOCK UNIT AWARD

These Terms and Conditions of Restricted Stock Unit Award relate to the Notice
of Grant of Restricted Stock Unit Award attached hereto (the “Notice”, and
collectively with these Terms and Conditions, the “Agreement”), by and between
the Annie’s Inc. (the “Company”) and the Participant designated in the Notice.

The Committee has approved an award to the Participant under the Company’s
Omnibus Incentive Plan, as may be amended from time to time (the “Plan”) of the
number of Restricted Stock Units set forth in the Notice representing the right
to receive a corresponding number of shares of the Company’s Common Stock
(“Shares”) in the future subject to the terms, conditions and restrictions set
forth in the Agreement. For purposes of the Agreement, any reference to the
Company shall include a reference to any Subsidiary or Affiliate.

1. Grant of Restricted Stock Units.

(a) As of the Grant Date set forth in the Notice, the Company has granted to the
Participant the number of Restricted Stock Units set forth in the Notice (the
“Units”). The Units are subject to the restrictions set forth in Section 2 of
this Agreement and the applicable provisions of the Plan.

(b) The Units granted under this Agreement shall be reflected in a bookkeeping
account maintained by the Company during the Restricted Period. If and when the
Units become vested and the restrictions set forth in Section 2 expire in
accordance with the terms of this Agreement, and upon the satisfaction of all
other applicable conditions as to the Units, such Units (and any related
Dividend Units described in Section 1(c) below) not forfeited pursuant to
Section 4 hereof shall be settled as provided in Section 1(e) of this Agreement
and otherwise in accordance with the Plan.

(c) With respect to each Unit, whether or not vested, that has not been
forfeited (but only to the extent such award of Units has not been settled), the
Company shall, with respect to any cash dividends paid on the Share underlying
such Unit, accrue and credit to the Participant’s bookkeeping account a number
of Restricted Stock Units having a Fair Market Value as of the date such
dividend is paid equal to the cash dividends that would have been paid with
respect to the Share underlying such Unit if it were an outstanding Share (the
“Dividend Units”). These Dividend Units thereafter shall (i) be treated as Units
for purposes of future dividend accruals pursuant to this Section 1(c); and
(ii) vest in such amounts (rounded to the nearest whole Dividend Unit) at the
same time as the Unit with respect to which such Dividend Units were received.
Any dividends or distributions on a Share underlying a Unit paid other than in
cash shall accrue and be credited in the Participant’s bookkeeping account and
shall vest at the same time as the Unit in respect of which they are made (in
each case in the same form, based on the same record date and at the same time,
as such dividend or other distribution is paid on such Share).

(d) The Company’s obligations under this Agreement (with respect to both the
Units and the Dividend Units, if any) shall be unfunded and unsecured, and no
special or separate fund shall be established and no other segregation of assets
shall be made. The rights of the Participant under this Agreement shall be no
greater than those of a general unsecured creditor of the Company. In addition,
the Units shall be subject to such restrictions as the Company may deem
advisable under the rules, regulations and other requirements of the Securities
and Exchange Commission, any stock exchange upon which Shares are then listed,
any Company policy and any applicable federal or state securities law.

(e) Except as otherwise provided in this Agreement or the Plan, settlement of
the Units in accordance with the provisions of this Section 1(e) shall occur as
soon as practicable after the end

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of the Restricted Period (as defined below), and upon the satisfaction of all
other applicable conditions as to the Units (including the payment by the
Participant of all applicable withholding taxes), but in no event later than
March 15 of the calendar year following the calendar year in which the Unit
vests. Any vested Unit shall be settled solely in one Share, unless the
Committee otherwise determines in its sole discretion that the Unit shall be
settled in another form of consideration permitted under the Plan.

2. Restrictions.

(a) The Participant shall have no rights as a stockholder of the Company by
virtue of any Unit unless and until such Unit vests and resulting Shares are
issued to the Participant:

(b) None of the Units may be sold, transferred, assigned, pledged or otherwise
encumbered or disposed of during the Restricted Period, except as may be
permitted by the Plan or as otherwise permitted by the Committee in its sole
discretion or pursuant to rules adopted by the Committee in accordance with the
Plan.

(c) Any attempt to dispose of the Units or any interest in the Units in a manner
contrary to the restrictions set forth in this Agreement shall be void and of no
effect.

3. Restricted Period and Vesting. The “Restricted Period” is the period
beginning on the Grant Date and ending on the date the Units, or such applicable
portion of the Units, become vested under the schedule set forth in the Notice
or otherwise in accordance with this Agreement. The Units shall become vested
and no longer subject to forfeiture under Section 4(a) upon expiration of the
Restricted Period.

4. Forfeiture.

(a) If during the Restricted Period (i) the Participant incurs a Termination of
Service with the Company for any reason other than as described in Sections 4(b)
or 4(c), (ii) there occurs a material breach of these Terms and Conditions by
the Participant, or (iii) the Participant fails to meet the tax withholding
obligations described in Section 5(a) hereof, all rights of the Participant to
the Units that have not vested in accordance with the schedule set forth in the
Notice or otherwise in accordance with this Agreement as of the date of such
event shall terminate immediately and be forfeited in their entirety.

(b) In the event of the Participant’s Termination of Service during the
Restricted Period due to the Participant’s death or disability (as determined by
the Committee in its sole discretion), all Units outstanding on the date of such
Termination of Service that have not previously vested or been forfeited under
the terms of this Agreement shall be immediately and fully vested and no longer
subject to forfeiture.

(c) Notwithstanding the foregoing, in the event of a Change in Control during
the Restricted Period:

(i) if the Units are assumed or replaced by the successor entity in connection
with such Change in Control, then in the event of the Participant’s Termination
of Service within twenty-four (24) months after such Change in Control (A) due
to the Participant’s death or disability (as determined by the Committee in its
sole discretion), or (B) by the Company without Cause, subject to the
Participant (or the Participant’s estate in the event of the Participant’s
death) delivering a fully effective release of claims in a form provided by the
Committee within 60 days following the date of such Termination of Service, all
Units outstanding on the date of such Termination of Service that have not
previously vested or been forfeited under the terms of this Agreement shall be
immediately and fully vested and no longer subject to forfeiture; and

 

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(ii) if the Units are not assumed or replaced by the successor entity in
connection with such Change in Control, then all Units outstanding on the date
of such Change in Control that have not previously vested or been forfeited
under the terms of this Agreement shall be immediately and fully vested and no
longer subject to forfeiture as of the date of the Change in Control.

(d) The remainder of any Units that have not or do not become vested in
accordance with the terms of this Agreement shall terminate immediately and be
forfeited in their entirety.

5. Withholding.

(a) The Committee shall determine the amount of any withholding or other tax
required by law to be withheld or paid by the Company with respect to any income
recognized by the Participant with respect to the Units. The Participant shall
be required to meet any applicable tax withholding obligation in accordance with
the provisions of the Plan and this Agreement.

(b) Subject to any rules prescribed by the Committee, the Participant shall have
the right to elect to meet any withholding requirement (i) by having withheld
from this Award at the appropriate time that number of whole Shares whose Fair
Market Value is equal to the amount of any taxes required to be withheld with
respect to such Award, (ii) by direct payment to the Company in cash of the
amount of any taxes required to be withheld with respect to such Award or
(iii) by a combination of shares and cash.

6. Committee’s Discretion. Notwithstanding any provision of this Agreement to
the contrary, the Committee shall have discretion to waive any forfeiture of the
Units as set forth in Section 4 hereof, the Restricted Period and any other
conditions set forth in this Agreement.

7. Covenants and Conditions on Awards and Recovery.

(a) Covenants. As a condition for participation in the Plan and the receipt of
any benefits under this Agreement, the Participant agrees and covenants that at
any time during the Participant’s service with the Company and for a period of
twenty-four (24) months following the Participant’s Termination of Service for
any reason, the Participant shall not, directly or indirectly, (1) disclose or
use any confidential information pertaining to the Company, its Affiliates or
its Subsidiaries other than in the proper performance of the Participant’s
duties or responsibilities with respect to the Company; (2) attempt, directly or
indirectly, to induce any employee of the Company, its Affiliates or its
Subsidiaries to be employed or perform services elsewhere; or (3) disparage the
Company, its Affiliates or its Subsidiaries or any of their respective officers
or directors. The determination of whether any conduct, action or failure to act
falls within the scope of activities contemplated by this Section shall be made
by the Committee, in its discretion, and shall be final and binding upon the
Participant. A determination that any particular conduct, action or failure
falls outside the scope of activities contemplated by this Section shall not
imply that, or be determinative of whether, such conduct, action or failure is
otherwise lawful or appropriate.

(b) Recovery of Award Upon Violation of Covenants. In the event that the
Committee determines that the Participant has violated any of the covenants
contained in Section 7(a), then:

(i) all of the Participant’s unvested Units shall be forfeited immediately and
all rights of the Participant with respect to such Units shall terminate; and

 

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(ii) to the extent that the Participant has received Shares or cash in
settlement of any Units upon vesting of such Units, the Participant upon notice
from the Company of the Participant’s obligations under this Section 7(b)(ii),
shall immediately deliver to the Company such number of Shares or amount in cash
equal to the payment previously received by the Participant in settlement of the
vested Units.

The notice described in subsection (ii) above may be given at any time within
twelve months after the expiration of the applicable covenant period under
Section 7(a).

(c) Recovery of Compensation in Connection with Financial Restatement.
Notwithstanding any other provision of this Agreement, if the Board determines
that the Company is required to restate its financial statements due to material
noncompliance with any financial reporting requirement under the law within a
period of three (3) years following the original issuance of such financial
statements (or such longer period as may be required under applicable law),
whether such noncompliance is the result of misconduct or other circumstances,
the Participant shall be required to reimburse the Company for any amounts
earned or payable with respect to this Award to the extent the Board reasonably
determines that the amount earned by or paid to the Participant exceeds the
amount earned or payable based on the restated financial statements, or
otherwise to the extent required by and in accordance with applicable law and
any Company policies.

(d) Retention of Settled Shares in Compliance with Company Share Ownership and
Retention Policies. The Units and any Shares acquired upon settlement of any
vested Units shall be subject to compliance with any applicable share ownership
or retention policies adopted from time to time by the Company.

8. Defined Terms. Capitalized terms used but not defined in this Agreement shall
have the meanings set forth in the Plan.

9. Nonassignability. The Units may not be sold, assigned, transferred (other
than by will or the laws of descent and distribution, or to an inter vivos trust
with respect to which the Participant is treated as the owner under Sections 671
through 677 of the Code), pledged, hypothecated, or otherwise encumbered or
disposed of until the restrictions on such Units, as set forth in this
Agreement, have lapsed or been removed.

10. Participant Representations. The Participant hereby represents to the
Company that the Participant has read and fully understands the provisions of
the Notice, these Terms and Conditions and the Plan and the Participant’s
decision to participate in the Plan is completely voluntary. Further, the
Participant acknowledges that the Participant is relying solely on his or her
own advisors with respect to the tax consequences of this award.

11. Regulatory Restrictions on the Units. Notwithstanding any other provision of
the Plan, the obligation of the Company to issue Shares in connection with this
Award under the Plan shall be subject to all applicable laws, rules and
regulations and such approval by any regulatory body as may be required. The
Company reserves the right to restrict, in whole or in part, the delivery of
Shares pursuant to this Agreement prior to the satisfaction of all legal
requirements relating to the issuance of such shares, to their registration,
qualification or listing or to an exemption from registration, qualification or
listing.

 

12. Miscellaneous.

 

  12.1

Notices. All notices, requests, deliveries, payments, demands and other
communications which are required or permitted to be given under these Terms and
Conditions shall be in

 

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  writing and shall be either delivered personally or sent by registered or
certified mail, or by private courier, return receipt requested, postage prepaid
to the parties at their respective addresses set forth herein, or to such other
address as either shall have specified by notice in writing to the other. Notice
shall be deemed duly given hereunder when delivered or mailed as provided
herein.

 

  12.2 Waiver. The waiver by any party hereto of a breach of any provision of
this Agreement shall not operate or be construed as a waiver of any other or
subsequent breach.

 

  12.3 Entire Agreement. These Terms and Conditions, the Notice and the Plan
constitute the entire agreement between the parties with respect to the subject
matter hereof.

 

  12.4 Binding Effect; Successors. This Agreement shall inure to the benefit of
and be binding upon the parties hereto and to the extent not prohibited herein,
their respective heirs, successors, assigns and representatives. Nothing in this
Agreement, express or implied, is intended to confer on any person other than
the parties hereto and as provided above, their respective heirs, successors,
assigns and representatives any rights, remedies, obligations or liabilities.

 

  12.5 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California.

 

  12.6 Headings. The headings contained herein are for the sole purpose of
convenience of reference, and shall not in any way limit or affect the meaning
or interpretation of any of the terms or provisions of these Terms and
Conditions.

 

  12.7 Conflicts; Amendment. The provisions of the Plan are incorporated in this
Agreement in their entirety. In the event of any conflict between the provisions
of this Agreement and the Plan, the provisions of the Plan shall control. The
Agreement may be amended at any time by written agreement of the parties hereto.

 

  12.8 No Right to Continued Employment. Nothing in this Agreement shall confer
upon the Participant any right to continue in the employ or service of the
Company or affect the right of the Company to terminate the Participant’s
employment or service at any time.

 

  12.9 Further Assurances. The Participant agrees, upon demand of the Company or
the Committee, to do all acts and execute, deliver and perform all additional
documents, instruments and agreements which may be reasonably required by the
Company or the Committee, as the case may be, to implement the provisions and
purposes of the Notice and these Terms and Conditions and the Plan.

 

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