Document:

ExhIbit 10.8

 

NBTY, INC.  ASSOCIATE STOCK OWNERSHIP PLAN

 

(Amended and
Restated Effective December 31, 2006)

 

 

NBTY, Inc. Associate
Stock Ownership Plan

(amended and restated effective December 31, 2006)

 

Table of Contents

 

	
   

  	
  Page

  
	
   

  	
   

  
	
  ARTICLE 1 TITLE, HISTORY AND
  CERTAIN GOVERNING PROVISIONS

  	
  1

  
	
   

  	
   

  
	
  ARTICLE 2 DEFINITIONS

  	
  2

  
	
   

  	
   

  
	
  ARTICLE 3 PARTICIPATION

  	
  8

  
	
   

  	
   

  
	
  Section 3.1.

  	
  Eligibility

  	
  8

  
	
  Section 3.2.

  	
  Transfers to Affiliates

  	
  8

  
	
   

  	
   

  	
   

  
	
  ARTICLE 4 CONTRIBUTIONS

  	
  9

  
	
   

  	
   

  	
   

  
	
  Section 4.1.

  	
  ESOP Contributions

  	
  9

  
	
  Section 4.2.

  	
  Payment

  	
  9

  
	
  Section 4.3.

  	
  Contributions by Participants

  	
  10

  
	
  Section 4.4.

  	
  Maximum Contributions

  	
  10

  
	
  Section 4.5.

  	
  Limitation on Annual Additions

  	
  10

  
	
   

  	
   

  	
   

  
	
  ARTICLE 5 LIMITATIONS ON
  CONTRIBUTIONS

  	
  10

  
	
   

  	
   

  	
   

  
	
  Section 5.1.

  	
  Maximum Annual Additions under
  Section 415 of the Code

  	
  10

  
	
  Section 5.2.

  	
  Other Limitations on Employer
  Contributions

  	
  12

  
	
   

  	
   

  	
   

  
	
  ARTICLE 6 TRUST AND INVESTMENTS

  	
  13

  
	
   

  	
   

  	
   

  
	
  Section 6.1.

  	
  Trust

  	
  13

  
	
  Section 6.2.

  	
  Investment in Qualifying Employer
  Securities

  	
  14

  
	
  Section 6.3.

  	
  Diversification Account Funds

  	
  14

  
	
  Section 6.4.

  	
  Valuation of Funds and Plan
  Accounts

  	
  14

  
	
  Section 6.5.

  	
  Trust Fund to Be Applied
  Exclusively for Participants and their Beneficiaries, Etc.

  	
  15

  
	
   

  	
   

  	
   

  
	
  ARTICLE 7 PARTICIPANT ACCOUNTS,
  INVESTMENT ELECTIONS, ETC.

  	
  15

  
	
   

  	
   

  	
   

  
	
  Section 7.1.

  	
  Participant Accounts

  	
  15

  
	
  Section 7.2.

  	
  ESOP Account

  	
  16

  
	
  Section 7.3.

  	
  Diversification Account

  	
  16

  
	
  Section 7.4.

  	
  Short-Term Investments

  	
  18

  
	
  Section 7.5.

  	
  Allocation of Contributions

  	
  19

  
	
  Section 7.6.

  	
  ESOP Allocations

  	
  19

  
	
  Section 7.7.

  	
  Voting and Exercising Other
  Securities Rights With Respect to NBTY Stock

  	
  20

  
	
  Section 7.8.

  	
  Allocation of Forfeitures

  	
  21

  
	
  Section 7.9.

  	
  Correction of Error

  	
  21

  
	
  Section 7.10.

  	
  Transfers from Other Plans

  	
  22

  
	
   

  	
   

  	
   

  
	
  ARTICLE 8 WITHDRAWALS AND
  DISTRIBUTIONS

  	
  22

  
	
   

  	
   

  
	
  Section 8.1.

  	
  Distribution of Account

  	
  22

  
				

 

 

	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  Section 8.2.

  	
  Payment of Small Account Balances

  	
  25

  
	
  Section 8.3.

  	
  Direct Rollover Option

  	
  25

  
	
  Section 8.4.

  	
  Designation of Beneficiary

  	
  26

  
	
  Section 8.5.

  	
  Missing Persons

  	
  28

  
	
  Section 8.6.

  	
  Distributions to Minor and Disabled
  Distributees

  	
  29

  
	
   

  	
   

  	
   

  
	
  ARTICLE 9 ESOP LOANS

  	
  30

  
	
   

  	
   

  	
   

  
	
  ARTICLE 10 SPECIAL PARTICIPATION
  AND DISTRIBUTION RULES

  	
  31

  
	
   

  	
   

  	
   

  
	
  Section 10.1.

  	
  Reemployment

  	
  31

  
	
  Section 10.2.

  	
  Employment by Affiliates

  	
  33

  
	
  Section 10.3.

  	
  Qualified Military Service

  	
  34

  
	
   

  	
   

  	
   

  
	
  ARTICLE 11 ADMINISTRATION

  	
  34

  
	
   

  	
   

  	
   

  
	
  Section 11.1.

  	
  The Administrator

  	
  34

  
	
  Section 11.2.

  	
  Named Fiduciary

  	
  35

  
	
  Section 11.3.

  	
  Allocation and Delegation of
  Responsibilities

  	
  35

  
	
  Section 11.4.

  	
  Professional and Other Services

  	
  36

  
	
  Section 11.5.

  	
  Claims Procedure

  	
  36

  
	
  Section 11.6.

  	
  Notices to Participants, Etc.

  	
  39

  
	
  Section 11.7.

  	
  Notices to Administrator or
  Employers

  	
  39

  
	
  Section 11.8.

  	
  Records

  	
  39

  
	
  Section 11.9.

  	
  Reports of Trustee and Accounting
  to Participants

  	
  39

  
	
   

  	
   

  	
   

  
	
  ARTICLE 12 PARTICIPATION BY
  EMPLOYERS

  	
  40

  
	
   

  	
   

  	
   

  
	
  Section 12.1.

  	
  Adoption of Plan

  	
  40

  
	
  Section 12.2.

  	
  Withdrawal from Participation

  	
  40

  
	
  Section 12.3.

  	
  Company, Administrator and
  Recordkeeper as Agents for Employers

  	
  40

  
	
  Section 12.4.

  	
  Continuance by a Successor

  	
  41

  
	
   

  	
   

  	
   

  
	
  ARTICLE 13 MISCELLANEOUS

  	
  42

  
	
   

  	
   

  	
   

  
	
  Section 13.1.

  	
  Expenses

  	
  42

  
	
  Section 13.2.

  	
  Legal Fees

  	
  42

  
	
  Section 13.3.

  	
  Statute of Limitations for Actions
  under the Plan

  	
  43

  
	
  Section 13.4.

  	
  Non-Assignability

  	
  43

  
	
  Section 13.5.

  	
  Employment Non-Contractual

  	
  44

  
	
  Section 13.6.

  	
  Merger or Consolidation with
  Another Plan

  	
  44

  
	
  Section 13.7.

  	
  Gender and Plurals

  	
  45

  
	
  Section 13.8.

  	
  Applicable Law

  	
  45

  
	
  Section 13.9.

  	
  Forum for Legal Actions under the
  Plan

  	
  45

  
	
  Section 13.10.

  	
  Severability

  	
  45

  
	
  Section 13.11.

  	
  No Guarantee

  	
  45

  
	
  Section 13.12.

  	
  Plan Voluntary

  	
  46

  
	
   

  	
   

  	
   

  
	
  ARTICLE 14 TOP-HEAVY PLAN
  REQUIREMENTS

  	
  46

  

 

ii

 

	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  Section 14.1.

  	
  General Rule

  	
  46

  
	
  Section 14.2.

  	
  Definitions

  	
  46

  
	
  Section 14.3.

  	
  Minimum Allocation

  	
  48

  
	
  Section 14.4.

  	
  Minimum Vesting for Top-Heavy Years

  	
  48

  
	
   

  	
   

  	
   

  
	
  ARTICLE 15 AMENDMENT, ESTABLISHMENT
  OF SEPARATE PLAN, AND PLAN TERMINATION

  	
  48

  
	
   

  	
   

  	
   

  
	
  Section 15.1.

  	
  Amendment

  	
  48

  
	
  Section 15.2.

  	
  Establishment of Separate Plan

  	
  49

  
	
  Section 15.3.

  	
  Termination

  	
  49

  

 

iii

 

ARTICLE 1

 

TITLE, HISTORY AND
CERTAIN GOVERNING PROVISIONS

 

This document,
entitled the “NBTY, Inc. Associate Stock Ownership Plan” (the “Plan”), is
a successor to a portion of the former NBTY, Inc. Retirement Savings and
Employees’ Stock Ownership Plan (the “Prior Plan”).  The Prior Plan became effective on January 3,
2005 as a result of the merger of the NBTY, Inc. 401(k) Savings Plan
(the “NBTY 401(k) Plan”) and the Rexall Sundown, Inc. 401(k) Employee
Savings Plan (the “Rexall 401(k) Plan” and together with the NBTY 401(k) Plan,
the “Retirement Savings Plans”) into the NBTY, Inc. Employees’ Stock
Ownership Plan (the “Prior ESOP”). 
Effective December 31, 2006, 11:59 p.m., the portions of the
Prior Plan that related to the Prior ESOP were split-off to form the Plan and
the remaining portions of the Prior Plan that related to the Retirement Savings
Plans were amended and restated as the NBTY, Inc. 401(k) Savings
Plan.  The provisions of this amendment
and restatement shall be effective December 31, 2006, 11:59 p.m.,
except that any provision that specifies a different effective date shall be
effective as of the date specified.

 

The rights and
benefits of any Participant (as defined in Article 2) whose employment
with all Employers and Affiliates terminates on or after January 1, 2007,
and the rights and benefits of any Beneficiary of any such Participant, shall
be determined solely by reference to the terms of the Plan as amended and
restated herein, as it may be amended from time to time.  The rights and benefits of any Participant
whose employment with all Employers and Affiliates terminated before January 1,
2007, and who is not reemployed by an Employer or any Affiliate after such
date, and the rights and benefits of any Beneficiary of any such Participant,
shall be determined solely by reference to the terms of the Prior Plan or any
relevant predecessor plan that was in effect on the date of such Participant’s
termination of employment, except as otherwise required by law.

 

 

The Plan is
designed to invest primarily in qualifying employer securities, and is intended
to meet the requirements of a qualified employee stock ownership plan under
sections 401(a), 501(a) and 4975(e)(7) of the Code.

 

ARTICLE 2

 

DEFINITIONS

 

As used herein,
the following words and phrases shall have the following respective meanings
when capitalized:

 

2.1      Account.  A Participant’s subaccounts described in Section 7.1
and such other subaccounts that may be established from time to time on behalf
of such a Participant that are to be credited with contributions made on his or
her behalf, adjusted for earnings and losses, and debited by expenses and
distributions to, and withdrawals of, the Participant.

 

2.2      Administrator.  The Company, as the administrator of the
Plan.

 

2.3      Affiliate.  (a) A corporation that is a member of
the same controlled group of corporations (within the meaning of section 414(b) of
the Code) as an Employer, (b) a trade or business (whether or not
incorporated) under common control (within the meaning of section 414(c) of
the Code) with an Employer, (c) any organization (whether or not
incorporated) that is a member of an affiliated service group (within the
meaning of section 414(m) of the Code) that includes an Employer, a
corporation described in clause (a) of this Section 2.3 or a trade or
business described in clause (b) of this Section 2.3, or (d) any
other entity that is required to be aggregated with an Employer pursuant to
U.S. Treasury regulations promulgated under section 414(o) of the Code.

 

2.4      Allocation Date.  December 31st of each Plan Year.

 

2.5      Associate.  An individual whose relationship with an
Employer is, under common law, that of an employee.

 

2.6      Beneficiary.  A person entitled under Section 8.4 to
receive benefits in the event of the death of a Participant.

 

2.7      Board.  The board of directors of the Company.

 

2.8      Code.  The Internal Revenue Code of 1986, as
amended.

 

2.9      Committee.  The Compensation and Stock Option Committee
of the Board.

 

2.10    Company.  NBTY, Inc., a Delaware corporation, and
any successor thereto.

 

2

 

2.11    Compensation.  Remuneration paid for services performed by a
Participant for an Employer for a Plan Year while the Participant is an
Associate that is wages, tips and other compensation reported on such
Participant’s Form W-2 for such Plan Year in the box that indicates compensation
that is taxable for Federal income tax purposes (but determined without regard
to any rules that limit remuneration included in wages based upon the
nature or location of the employment), and compensation which is not currently
includible in such Participant’s gross income by reason of the application of
sections 125 (cafeteria plan), 132(f)(4) (qualified transportation
fringe), and 402(e)(3) (salary reduction deferrals to a 401(k) plan)
of the Code, reduced by the aggregate of all
amounts included on such Form W-2:

 

(i)        as a result of the grant of stock
awards, stock bonuses, restricted stock, stock appreciation rights, phantom
stock, stock options, stock units, stock equivalences or similar arrangements;

 

(ii)       because such amounts are imputed as income
as a result of, or are paid in the nature of or in relation to, benefits of the
following types:  life insurance,
short-term disability (other than salary continuation payments), long-term
disability, medical and other welfare benefits;

 

(iii)      which are separation, severance or
supplemental unemployment benefits;

 

(iv)     which are reimbursements or expense
allowances (including moving expenses, housing allowances), and

 

(v)      that are payments that are nonreoccurring
in nature (other than payments designated on the Company’s payroll as “associate
of the month”, “associate referral”, “associate suggestion award”, “operator of
the month” and “ticket of the month”).

 

Notwithstanding any provision herein to the contrary,
remuneration in excess of $225,000 (for 2007) (or such other amount provided
pursuant to section 401(a)(17) of the Code) shall be disregarded.  If a determination period consists of fewer
than twelve (12) months, such annual Compensation limit will be multiplied by a
fraction, the numerator of which is the number of months in the determination
period, and the denominator of which is twelve (12)

 

2.12    Disability.  A Participant has a
Disability if he or she has been determined under Title II or XVI of the Social
Security Act to be disabled.

 

2.13    Diversification
Account.   A Participant’s
sub-account described in Section 7.1, adjusted for earnings and losses,
and debited by expenses and distributions to the Participant or his or her
Beneficiary.

 

2.14    Diversification Account Funds.  “Diversification Account Funds” has the
meaning assigned to that term in Section 6.3.

 

2.15    Effective Date.  The effective date of this amendment and
restatement of the Plan, with respect to any Employer as of December 31,
2006, shall be December 31, 2006, 11:59 p.m., and, with respect to an
entity that becomes an Employer on or after January 1, 2007,

 

3

 

shall be the date as of which the Plan is adopted by such entity with
the approval of the Company.

 

2.16    Employer.  The Company or any Affiliate that, with the
consent of the Company, elects to participate in the Plan in the manner
described in Section 12.1.  If an
Employer withdraws from participation in the Plan pursuant to Section 12.2
or terminates its participation in the Plan pursuant to Section 15.3, it
shall thereupon cease to be an Employer. 
An entity shall cease being an Employer as of the date it ceases to be
an Affiliate, unless the Company consents to such entity’s continued
participation in the Plan.

 

2.17    ERISA.  The Employee Retirement Income Security Act
of 1974, as amended.

 

2.18    ESOP Account.  A Participant’s sub-account described in Section 7.1,
adjusted for earnings and losses, and debited by expenses and distributions to
the Participant or his or her Beneficiary.

 

2.19    ESOP Suspense
Account.  The account to which
the following are allocated:  (a) shares
of NBTY Stock pledged as collateral for a loan pursuant to Section 7.6(e),
(b) ESOP Contributions, prior to being allocated to Participants’ ESOP
Accounts, and (c) Account balances of each individual whom the
Administrator has determined has provided the Company with a social security
number or other form of identification that has not been legally issued to such
individual by an appropriate government agency and has not thereafter provided
a valid, legally issued form of identification sufficient to permit the Company
to report such individual’s income to all appropriate government agencies.

 

2.20    Fiscal Year.  The twelve-month period ending September 30.

 

2.21    Highly Compensated
Employee.  For any Plan Year,
any Associate who (i) is a 5%-owner (as determined under section 416(i)(1) of
the Code) at any time during such Plan Year or the immediately preceding Plan
Year or (ii) for the immediately preceding Plan Year, was paid
compensation in excess of $100,000 (for 2007) (as adjusted in accordance with
section 414(q)(1)(B) of the Code) from an Employer or Affiliate and was a
member of the “top-paid group” (as defined in section 414(q)(3) of the
Code).

 

2.22    Hour of Service.  (1)  Each hour for which an Associate is
directly or indirectly compensated or entitled to compensation by an Employer
for the performance of duties during the applicable computation period; (2) each
hour for which an Associate is directly or indirectly compensated or entitled
to compensation by an Employer (irrespective of whether the employment
relationship has terminated) for reasons other than performance of duties (such
as vacation, holidays, sickness, incapacity (including disability), jury duty,
lay-off, military duty or leave of absence) during the applicable computation
period (calculated and credited pursuant to Department of Labor regulation §
2530.200b-2(b) and (c) which is incorporated herein by reference); (3) each
hour for which back pay is awarded or agreed to by an Employer without regard
to mitigation of damages (credited to the Associate for the computation period
or periods to which the award or agreement pertains rather than the computation
period in which the award,

 

4

 

agreement or payment is made). 
The same Hours of Service shall not be credited both under (1) or
(2), as the case may be, and under (3).

 

Notwithstanding (2) above, (i) no more than
501 Hours of Service are required to be credited to an Associate on account of
any single continuous period during which the Associate performs no duties
(whether or not such period occurs in a single computation period); (ii) an
hour for which an Associate is directly or indirectly paid, or entitled to
payment, on account of a period during which no duties are performed is not
required to be credited to the Associate if such payment is made or due under a
plan maintained solely for the purpose of complying with applicable workers’ compensation,
or unemployment compensation or disability insurance laws; and (iii) Hours
of Service are not required to be credited for a payment which solely
reimburses an Associate for medical or medically related expenses incurred by
the Associate.

 

Individuals who were employees of Wyeth performing
services solely in its Solgar Vitamin and Herb operating unit at the Wyeth
Effective Time shall be credited with Hours of Service under the Plan for their
hours of service with Wyeth and its affiliates, and individuals who were
employees of Wyeth at such Wyeth Effective Time but who were on an approved
leave of absence from the Solgar Vitamin and Herb operating unit shall be
credited with Hours of Service under the Plan for their hours of service with
Wyeth and its affiliates.  Associates who
(a) were employees of Wyeth performing services in its Solgar Vitamin and
Herb operating unit prior to such Wyeth Effective Time, (b) were hired by
an Employer after such Wyeth Effective Time but on or before December 31,
2006, and (c) the Company determines have exceptional institutional
knowledge of the Solgar Vitamin and Herb operating unit such that their prior
employment with Wyeth will prove valuable to the Company, shall be credited
with Hours of Service under the Plan for their hours of service with Wyeth and
its affiliates.

 

2.23    Ineligible Individual.  Notwithstanding any provision of the Plan to
the contrary, an individual who renders services for an Employer shall not be a
Participant if (i) the terms of his or her employment are subject to a
collective bargaining agreement which does not provide for the participation of
such individual in the Plan; (ii) the individual renders services pursuant
to an agreement or arrangement (written or oral) (a) that such services are
to be rendered as an independent contractor; (b) with an entity, including
a leasing organization within the meaning of section 414(n)(2) of the
Code, that is not an Employer or Affiliate; or (c) that contains a waiver
of participation in the Plan; or (iii) he or she is not treated as an
employee of an Employer on an Employer’s payroll records (notwithstanding any
determination by a court or administrative agency that such individual is an
employee).  Furthermore, if it comes to
the Administrator’s attention that any individual has provided an Employer with
a social security number or other form of identification which has not been
legally issued to such individual by an appropriate government agency, such
individual shall then be considered an Ineligible Individual until such time as
the individual provides the Employer with a valid, legally issued form of
identification sufficient to permit the Company to report such individual’s
income to all appropriate government agencies.

 

2.24    NBTY Stock.  Shares of common capital stock of NBTY, Inc.
which constitute “employer securities” within the meaning of section 4975(e)(8) of
the Code.

 

5

 

2.25    1-Year Break in
Service.  The applicable
computation period during which an Associate or former Associate has not
completed more than 500 Hours of Service. 
Solely for the purpose of determining whether an Associate or former
Associate has incurred a 1-Year Break in Service, Hours of Service shall be
recognized for any “authorized leave of absence” and any “maternity or
paternity leave of absence.”  For this
purpose, Hours of Service shall be credited for the computation period in which
the absence from work begins, only if credit therefore is necessary to prevent
the Associate from incurring a 1-Year Break in Service, and, in any other case,
in the immediately following computation period.  The Hours of Service credited for a “maternity
or paternity leave of absence” shall be those which would normally have been
credited but for such absence, or, in any case in which the Administrator is
unable to determine such hours normally credited, eight (8) Hours of
Service per day.  The total Hours of
Service required to be credited for a “maternity or paternity leave of absence”
shall not exceed the number of Hours of Service needed to prevent the Associate
from incurring a 1-Year Break in Service.

 

“Authorized leave of absence” means an unpaid,
temporary cessation from active employment with the Employer pursuant to an
established nondiscriminatory policy, whether occasioned by illness, Qualified
Military Service, or any other reason.

 

A “maternity or paternity leave of absence” means an
absence from work for any period by reason of the Associate’s pregnancy, birth
of the Associate’s child, placement of a child with the Associate in connection
with the adoption of such child, or any absence for the purpose of caring for
such child for a period immediately following such birth or placement.

 

2.26    Participant.  An Associate who has satisfied the
requirements of Section 3.1.  An
individual shall cease to be a Participant upon the complete distribution of
his or her vested Account.

 

2.27    Plan.  The NBTY, Inc. Associate Stock Ownership
Plan herein set forth, as the same may from time to time be amended.

 

2.28    Plan Year.  The calendar year.

 

2.29    Qualified Military
Service.  An individual’s “service
in the uniformed services” (as defined in 38 U.S.C. § 4303) or any other
service deemed to be “service in the uniformed services” for purposes of Chapter
43 of Title 38 of the United States Code if such individual is entitled to
reemployment rights under or pursuant to USERRA with respect to such service.

 

2.30    Qualified Participant.  A Participant who has attained age fifty-five
(55) and completed ten (10) years of participation as a Participant.

 

2.31    Recordkeeper.  Fidelity Investments Institutional Operations
Company, Inc.

 

2.32    Top-Heavy Plan
Account.  The subaccount
established pursuant to Section 7.1 to which any contributions made for
the benefit of a Participant pursuant to Section 14.3, and earnings and
losses thereon, are credited.

 

6

 

2.33    Trust.  The trust described in Section 6.1 and
established pursuant to an agreement between the Company and the Trustee.

 

2.34    Trust Fund.  All money and property of every kind of the
Trust held by the Trustee pursuant to the terms of the agreement governing the
Trust and attributable to the Plan.

 

2.35    Trustee.  The person or entity appointed by the Company
and serving as trustee of the Trust or, if there is more than one such trustee
acting at a particular time, all of such trustees collectively.

 

2.36    USERRA.  The Uniformed Services Employment and
Reemployment Rights Act of 1994, as amended.

 

2.37    Valuation Date.  Each day on which the New York Stock Exchange
is open for trading.

 

2.38    Wyeth Effective Time.  The “Effective Time” as defined in the
Purchase Agreement by and between Wyeth and NBTY, Inc. dated as of June 6,
2005.

 

2.39    Year of Service.  The computation period of twelve (12)
consecutive months, herein set forth, and during which an Associate has
completed at least 1,000 Hours of Service.

 

For purposes of eligibility for participation in the
Plan, the initial computation period shall begin with the date on which an
Associate first performs an Hour of Service. 
The initial computation period beginning after a 1-Year Break in Service
shall be measured from the date on which an Associate again performs an Hour of
Service.  The computation period after the
initial computation period shall shift to the current Plan Year which includes
the six-month anniversary of the date on which an Associate first performed an
Hour of Service, and subsequent computation periods for vesting purposes shall
be the Plan Year.

 

For vesting purposes, and all other purposes not
specifically addressed in the above paragraph, the computation period shall be
the Plan Year.

 

An Associate shall be credited for service with
Nutrition Headquarters, Inc. and Nutro Laboratories, Inc.

 

For an
Eligible Associate, years of service with Wyeth as reflected on the records of
the Wyeth Savings Plan – United States on the Wyeth Effective Time will
be recognized as Years of Service hereunder for eligibility and vesting
purposes.

 

For
vesting purposes, each Associate who was performing services for Zila
Nutraceuticals, Inc. as of October 2, 2006 will be credited with one
Year of Service for the Plan Year ending December 31, 2006.

 

7

 

ARTICLE 3

 

PARTICIPATION

 

Section 3.1.  Eligibility.   
Each Associate who was an “ESOP Participant” in the NBTY, Inc.
Retirement Savings and Employees’ Stock Ownership Plan (as “ESOP Participant”
was defined therein) immediately before January 1, 2007, shall be a
Participant in the Plan on January 1, 2007.  Each other Associate shall become a
Participant as of the January 1st or July 1st
coincident with or next following the date he or she has completed a Year of
Service, provided that the Associate is not an Ineligible Individual and
provided further (i) that with respect to an Associate hired before January 1,
2007, the Associate has attained age 20 1⁄2 and (ii) that with respect to an
Associate hired after January 1, 2007, the Associated has attained age 21.    An Associate shall be credited for service
with Rexall Sundown, Inc. or any subsidiary thereof, but only for purposes
of determining eligibility to participate in the Plan.

 

Section 3.2.  Transfers to Affiliates.  If the employment of a Participant is
transferred from an Employer to an Affiliate that is not an Employer, the
employment transfer shall not cause such Participant’s participation in the
Plan to terminate, and he or she shall continue to participate in the Plan
until an event occurs which would entitle such Participant to a complete
distribution of his or her Account balance had he or she continued to be
employed by an Employer until the occurrence of such event.  Notwithstanding the foregoing, a Participant
shall not receive ESOP Contributions during any period of employment by an
Affiliate that is not an Employer, and periods of employment by an Affiliate
that is not an Employer shall be taken into account only to the extent set
forth in Section 10.2.

 

8

 

ARTICLE 4

 

CONTRIBUTIONS

 

Section 4.1.  ESOP Contributions.  For each Plan Year, the Company will
contribute (an “ESOP Contribution”) on behalf of the Employers in cash or NBTY
Stock the amounts, if any, that the Committee, in its sole discretion, may
authorize and direct to be contributed. 
ESOP Contributions will be allocated to Participants’ ESOP
Accounts.  ESOP Contributions will be
allocated to Participants who have completed at least 1,000 Hours of Service
during the Plan Year for which such ESOP Contribution is made and who are
employed on the last day of such Plan Year. 
For each ESOP Contribution, an allocation will be made to each
Participant’s ESOP Account in the ratio that the Participant’s Compensation for
such Plan Year bears to the Compensation for such Plan Year of all
Participants.

 

Section 4.2.  Payment. 
The total contributions made pursuant to Article 4 for a Plan Year shall be made in
one or more installments, not later than the due date (including extensions
thereof) for filing the Federal income tax return of the Company for its Fiscal
Year ending immediately after the end of such Plan Year for which the ESOP
Contributions are made.  Any ESOP Contribution made in cash
shall, in the sole discretion of the Company, be (i) used to purchase
available NBTY Stock or (ii) allocated to Participant’s ESOP Account; provided,
however, that to the extent required, any cash contributions shall be
used to repay any portion of a loan incurred as permitted under Article 9.

 

If any portion of
an ESOP Contribution is made in shares of NBTY Stock, such NBTY Stock shall be
valued at the closing price of NBTY Stock on the day of such ESOP
Contribution.  If at any time NBTY Stock
is not readily tradable on an established securities market, then any valuation
required under this Section 4.2 will be conducted by an independent
appraiser (as defined in section 401(a)(28) of the Code).

 

9

 

Section 4.3.  Contributions by Participants.  No Participant is permitted to make any
contributions to his or her Account.

 

Section 4.4.  Maximum
Contributions.  The aggregate amount
of ESOP Contributions for any Plan Year shall not exceed twenty-five percent
(25%) of the aggregate compensation (as defined in section 415(c)(3) of
the Code) of all Participants during such Plan Year, except as provided in this
Section 4.4.  For any Plan Year with
respect to which ESOP Contributions are applied to repay any portion of a loan
incurred pursuant to Article 9, the total amount of ESOP Contributions
used to repay principal on all such loans shall not exceed twenty-five percent
(25%) of such aggregate Participant compensation for such Plan Year.  The Company may contribute any amount in excess
of this maximum amount for the Plan Year, without limitation, for the purpose
of paying interest on such loans. 
Furthermore, the contributions made pursuant to this Article, when
combined with all contributions to tax-qualified plans of the Employers, shall
not exceed the maximum allowable deductions permitted under section 404 of the
Code.

 

Section 4.5.  Limitation on Annual Additions.  Notwithstanding anything contained herein to
the contrary, allocation of ESOP Contributions for any Plan Year shall be
subject to the limitations set forth in Section 5.1.

 

ARTICLE 5

 

LIMITATIONS ON
CONTRIBUTIONS

 

Section 5.1.  Maximum Annual Additions under Section 415 of the Code.  Notwithstanding any other provision of the
Plan, the amounts allocated to the Account of each Participant for any Plan
Year shall be limited so that the aggregate annual additions for such year to
such a Participant’s Account and to the Participant’s accounts in all other
defined contribution 

 

10

 

plans (including the NBTY, Inc. 401(k) Savings
Plan) maintained by any Employer or Affiliate shall not exceed the lesser of:

 

(a)  $45,000
(for 2007) (as adjusted pursuant to section 415(d) of the Code), and

 

(b)  100% of
his or her compensation for such Plan Year (or such other percentage of
compensation set forth in section 415(c) of the Code).

 

If the annual
additions to a Participant’s Account exceed the limitations set forth above for
any Plan Year (i) as a result of a reasonable error in estimating his or
her annual compensation, (ii) as a result of a reasonable error in
determining the amount of elective deferrals made to the NBTY, Inc. 401(k) Savings
Plan on his or her behalf that may be made by a participant in such plan under
section 415 of the Code or (iii) under other facts and circumstances as
determined by the Commissioner of Internal Revenue, then the amounts to be
allocated to such Participant’s Account for such year shall be reduced pro rata
to the extent of the excess remaining, if any, after the reduction of all “pre-tax
contributions” and “matching contributions” made on the Participant’s behalf to
the NBTY, Inc. 401(k) Savings Plan. 
Any ESOP Contributions so reduced, plus earnings thereon, shall be held
in a segregated suspense account and shall be treated in the next Plan Year as
ESOP Contributions thereby reducing amounts actually contributed by the
Employers for such year.  Upon
termination of the Plan, any balance in such suspense account shall be returned
to each Employer in the amount determined by the Administrator, but only if the
allocation upon Plan termination of such amount to Participants would cause all
Participants to receive annual additions in excess of the limitations of
section 415 of the Code.

 

11

 

The “annual
additions” for a Plan Year to a Participant’s Account and to his or her
accounts in any other defined contribution plan of an Employer or Affiliate is
the sum for such Plan Year of:

 

(a)  the
amount of employer contributions (including elective deferrals) allocated to
his or her accounts, excluding, however, any elective deferrals that are
catch-up contributions or that are made under section 414(v) of the Code,

 

(b)  the
amount of forfeitures allocated to his or her accounts,

 

(c)  the
amount allocated to any individual medical benefit account (as defined in
section 415(l) of the Code) maintained on his or her behalf, and

 

(d)  the
amount of any of his or her contributions, excluding any rollover
contributions, to any such plan.

 

For purposes of
this Section, the term “compensation” shall have the meaning set forth in U.S.
Treasury Regulation § 1.415-2(d)(10) except that in the case of an
Associate whose employment is transferred from an Employer to an Affiliate that
is not an Employer, such term shall exclude any compensation received by such
Associate from such Affiliate, and the term “defined contribution plan” shall
have the meaning set forth in section 415(k)(1) of the Code.

 

Section 5.2.  Other Limitations on Employer Contributions.  The contributions of the Employers for a Plan
Year shall not exceed the maximum amount for which a deduction is allowable to
such Employers for Federal income tax purposes for the fiscal year of such
Employers that ends with such Plan Year.

 

Any contribution
made by an Employer by reason of a good faith mistake of fact, or the portion
of any contribution made by an Employer that exceeds the maximum amount for
which a deduction is allowable to such Employer for Federal income tax purposes
by reason of a 

 

12

 

good faith mistake
in determining the maximum allowable deduction, shall upon the request of such
Employer be returned by the Trustee to an Employer.  An Employer’s request and the return of any
such contribution must be made within one year after such contribution was
mistakenly made or after the deduction of such excess portion of such
contribution was disallowed, as the case may be.  The amount to be returned to an Employer
pursuant to this paragraph shall be the excess of (i) the amount
contributed over (ii) the amount that would have been contributed had
there not been a mistake of fact or a mistake in determining the maximum
allowable deduction.  Earnings
attributable to the mistaken contribution shall not be returned to an Employer,
but losses attributable thereto shall reduce the amount to be so returned.  If the return to an Employer of the amount
attributable to the mistaken contribution would cause the balance of any
Participant’s Account as of the date such amount is to be returned (determined
as if such date coincided with the close of a Plan Year) to be reduced to less
than what would have been the balance of such Account as of such date had the
mistaken amount not been contributed, the amount to be returned to an Employer
shall be limited so as to avoid such reduction.

 

ARTICLE 6

 

TRUST AND INVESTMENTS

 

Section 6.1.  Trust.  A
Trust has been established by the execution of a trust agreement between the
Company (acting on behalf of the Employers) and the Trustee.  All contributions under the Plan shall be
paid to the Trustee.  The Trustee shall
hold all monies and other property received by it and invest and reinvest the
same, together with the income therefrom, on behalf of the Participants
collectively in accordance with (a) the provisions of the trust agreement;
(b) with respect to ESOP Accounts, primarily in qualifying employer
securities; and (c) with respect to Diversification Accounts, the
investment elections of the Participants. 
The Trustee shall make distributions from the Trust Fund at such time or
times to such person or 

 

13

 

persons and in such amounts as the Administrator or
the Recordkeeper directs in accordance with the Plan.

 

Section 6.2.  Investment
in Qualifying Employer Securities.  The Plan will invest primarily in
qualifying employer securities, except as permitted pursuant to Section 6.3
and 7.3.

 

Section 6.3.  Diversification Account Funds.  The Company shall cause the Trustee to
establish, operate and maintain investment funds (“Diversification Account
Funds”) exclusively for the collective investment and reinvestment pursuant to
Participants’ directions described in Section 7.3 of amounts held in
Participants’ Diversification Accounts.  
The Diversification Account Funds shall be identical to the investment
funds available under the NBTY, Inc. 401(k) Savings Plan from time to
time.  The Administrator and the
Recordkeeper will establish procedures setting forth how often changes between
investments may be made and any other limitations and provisions that they may
impose on a Participant’s right to direct investments.

 

Section 6.4.  Valuation of Funds and Plan Accounts.  The Trustee’s determination of market value
pursuant to this Section 6.4 shall be binding and conclusive upon all
parties.

 

(a)  Diversification
Account Funds.  The value of each
Diversification Account Fund as of any Valuation Date shall be the market value
of all assets (including any uninvested cash) held by the fund on such Valuation
Date as determined by the Trustee, reduced by the amount of any accrued
liabilities of the fund on such Valuation Date.

 

(b)  NBTY
Stock.  The value of NBTY Stock as of
any Valuation Date shall be the market value of NBTY Stock held by the fund on such
Valuation Date as determined by the Trustee.

 

14

 

(c)  Participants’
Accounts.  The value of a Participant’s
Account as of any Valuation Date shall be the sum of the values on such
Valuation Date of his or her investment subaccounts in each of the accounts
listed in Section 7.1.

 

Section 6.5.  Trust Fund to Be Applied Exclusively for Participants and
their Beneficiaries, Etc. 
Subject only to the provisions of Article 5 and Sections 13.1 and
13.2(b) and (c), and any other provision of the Plan to the contrary
notwithstanding, no part of the Trust Fund shall be used for or diverted to any
purpose other than for the exclusive benefit of the Participants and their
Beneficiaries.

 

ARTICLE 7

 

PARTICIPANT ACCOUNTS,

INVESTMENT ELECTIONS, ETC.

 

Section 7.1.  Participant Accounts.  The Administrator shall establish and
maintain, or cause to be established and maintained, a separate Account for
each Participant.  Each Account shall
consist of the following subaccounts:

 

(i)            an ESOP Account to which shall be
credited such ESOP Contributions and earnings and losses thereon; and

 

(ii)           if a Participant has elected to
diversify, pursuant to Section 7.3, a portion of his or her ESOP Account
and, if any, his or her Top-Heavy Plan Account, a Diversification Account to
which shall be credited the portion of such Participant’s ESOP Account or
Top-Heavy Plan Account (or both) that he or she elected to diversify and
earnings and losses thereon; and

 

(iii)          if contributions have been made for
the benefit of a Participant when the Plan was a top-heavy plan within the
meaning of Section 14.1, a Top-Heavy Plan Account to which shall be
credited such contributions and earnings and losses thereon.

 

Unless the context
otherwise requires, a Participant’s “Account” or “Account balance” shall mean
the aggregate value of all separate accounts and subaccounts maintained on his
or her behalf pursuant to the Plan and Trust agreement.

 

15

 

 

Section 7.2.  ESOP Account.

 

(a) 
A Participant’s ESOP Account shall be comprised of NBTY Stock and other assets
attributable to ESOP Contributions and forfeitures by other Participants.

 

(b) 
NBTY Stock. 
Each Participant’s ESOP Account shall be credited as of each Allocation
Date with a number of shares of NBTY Stock determined solely by the
Company.  As soon as reasonably
practicable after such crediting to the ESOP Accounts occurs, each Participant
shall be notified of the new balance of his or her ESOP Account.

 

(c) 
Assets other than NBTY Stock.  The Trustee shall determine the market value
of the non-NBTY Stock assets of a Participant’s ESOP Account as of each
Allocation Date, adjusting such value to reflect income, realized and
unrealized profits, and losses and expenses attributable to such accounts.  The adjustments so made shall be allocated to
each ESOP Account based upon its balance as of the beginning of the relevant
Plan Year in relationship to the aggregate balances of all ESOP Accounts as of
the beginning of such Plan Year.

 

Section 7.3.  Diversification Account. (a)    Diversification.  Any election under this Section 7.3(a) made
by a Participant to diversify a portion of his or her ESOP Account or, if any,
his or her Top-Heavy Account shall result in a transfer of the applicable
portion of such accounts to the Participant’s Diversification Account
established pursuant to Section 7.1(ii).

 

(i)            For Plan Years ending on or before December 31,
2002, and for diversification elections effectuated before January 1,
2004, each Participant who has attained age fifty-five (55) and completed ten (10) years
of participation as a Participant shall have the right to make an election to
direct the Trustee regarding the investment of his or her ESOP Account (or
Top-Heavy Account, if any).  In each of
the first five (5) Plan Years following the Plan Year in which a
Participant attained age fifty-five (55) and completed ten (10) years of
participation as a Participant, such a Participant may elect within ninety (90)
days after the close of each such Plan Year in the qualified election period
(as defined in section 401(a)(28) of the Code) to diversify twenty-five percent
(25%) of his or her ESOP Account (or Top-Heavy Account, if any) less any amount
to which a prior election applies.  In
the sixth (6th) year, such a Participant may elect within ninety
(90) days after the close of each Plan Year in the qualified election period
(as 

 

16

 

defined in section
401(a)(28) of the Code) to diversify fifty percent (50%) of his or her ESOP
Account (or Top-Heavy Account, if any) less any amount to which a prior
election applies.

 

(ii)           For Plan years beginning on or after January 1,
2003, and for diversification elections effectuated on or after January 1,
2004 but before January 1, 2005, each Participant who has attained age
fifty-five (55) and has completed ten (10) years of participation as a
Participant shall have the right to make an election to direct the Trustee as
to the investment of his or her ESOP Account (or Top-Heavy Account, if any) as
follows.  In each of the first five (5) Plan
Years following the Plan Year in which a Participant attained age fifty-five
(55) and completed ten (10) years of participation as a Participant, such
a Participant may elect within ninety (90) days after the close of each Plan
Year in the qualified election period (as defined in section 401(a)(28) of the
Code) to diversify twenty-five percent (25%) of his or her ESOP Account (or
Top-Heavy Account, if any) less any amount to which a prior election
applies.  In the sixth (6th)
year, such a Participant may elect within ninety (90) days after the close of
each Plan Year in the qualified election period (as defined in section
401(a)(28) of the Code) to diversify fifty percent (50%) of his or her ESOP
Account (or Top-Heavy Account, if any) less any amount to which a prior
election applies.

 

(iii)          For Plan Years beginning on or after January 1,
2005 with respect to which diversification elections are made, each Qualified
Participant shall have the right to make an election to direct the Plan as to
the investment of his or her ESOP Account (or Top-Heavy Account, if any) as
follows.  In each of the first five (5) Plan
Years following the Plan Year in which a Participant became a Qualified
Participant, such Qualified Participant may elect to direct the investment of
twenty-five percent (25%) of the value of his or her ESOP Account (or Top-Heavy
Account, if any) (any amount transferred to his or her Diversification Account
or diversified pursuant to a predecessor plan shall be taken into account in
determining whether the Participant has directed the investment of twenty-five
percent (25%) of the value of his or her ESOP Account (or Top-Heavy Account, if
any)) within ninety (90) days after the last day of each Plan Year during a
Qualified Participant’s qualified election period (as defined in section
401(a)(28) of the Code).  Within 90 days
after the close of the last Plan Year in a Qualified Participant’s qualified
election period, he or she may direct the investment in fifty percent (50%) of
the value of his or her ESOP Account (or Top-Heavy Account, if any) (any amount
transferred to his or her Diversification Account or diversified pursuant to a
predecessor plan shall be taken into account in determining whether the
Participant has directed the investment of fifty percent (50%) of the value of
his or her ESOP Account(or Top-Heavy Account, if any)).  A Qualified Participant’s direction shall be
provided to the Recordkeeper in a manner determined by the Recordkeeper and
shall become effective within 180 days after the close of the Plan Year to
which the direction applies.

 

(iv)          A Participant who was entitled to
diversify a portion of his or her ESOP Account (or Top-Heavy Account, if any)
during his or her sixth qualified election period and who did not do so because
of administrative reasons, as determined in the Administrator’s sole
discretion, shall be permitted to direct the investment of a maximum of fifty
percent (50%) of the value of his or her ESOP Account (taking into account any 

 

17

 

amount previously
transferred to his or her Diversification Account or diversified pursuant to a
predecessor plan) within the time period determined by the Administrator.

 

(b) 
Investment Election.

 

(i)            Initial
Election.  Each Participant
for which a Diversification Account has been established shall make, in the
manner prescribed by the Administrator or Recordkeeper, an investment election
that shall apply to the investment of such Participant’s Diversification
Account and any earnings thereon, subject to such limitations set forth herein
or imposed by the Administrator or Recordkeeper from time to time.  Such election shall specify that such
Diversification Account be invested either (1) wholly in one of the
Diversification Account Funds, or (2) divided among two or more of such
Diversification Account Funds in increments of 1% (or such larger percentage
established by the Administrator or Recordkeeper from time to time).  During any period in which no direction as to
the investment of a Participant’s Diversification Account is on file with the
Recordkeeper, the assets attributable to such Diversification Account shall be
invested in a fund selected by the Administrator from time to time.

 

(ii)           Change of
Election.  A Participant may
change his or her investment election as of any Valuation Date, subject to such
limitations as the Administrator or Recordkeeper from time to time may impose
(including restrictions on investment election changes that apply solely to a
particular Diversification Account Fund). 
A Participant’s investment election change shall be limited to the
Diversification Account Funds then maintained by the Trustee.  A change in investment election made pursuant
to this Section shall apply, as directed by a Participant, to such
Participant’s Diversification Account or to future amounts allocated to his or
her Diversification Account.  Any such
change shall specify that such Diversification Account or future allocations be
invested either (i) wholly in one of Diversification Account Funds or (ii) divided
among two or more of such Diversification Account Funds in increments of 1% (or
such larger percentage established by the Administrator from time to time) or,
solely with respect to a Participant’s existing Diversification Account, in
fixed dollar amounts.  A Participant’s
change of investment election must be made in the manner prescribed by the
Administrator or Recordkeeper.  The
Administrator or Recordkeeper shall prescribe rules regarding the time by
which such an election must be made in order to be effective for a particular
Valuation Date.

 

(c) 
Section 404(c) of ERISA.  The Diversification Account is intended to
meet the requirements of section 404(c) of ERISA and the U.S. Department
of Labor regulations promulgated thereunder, and the applicable provisions of
the Plan shall be construed and interpreted to meet such requirements.

 

Section 7.4.  Short-Term Investments.  Notwithstanding any election of any
Participant, the Trustee shall have the right to hold invested in a short-term
investment fund any 

 

18

 

amounts intended
for investment or reinvestment until such time as investment or reinvestment
may be made in accordance with the Plan and Trust.

 

Section 7.5.  Allocation of Contributions.  Any contribution made when the Plan is a
top-heavy plan within the meaning of Section 14.1 shall be allocated to
the Top-Heavy Account of the Participant for whom such contribution is made as
soon as practicable after the Valuation Date coinciding with or next following
the date on which such contribution is delivered to the Trustee and shall be
credited to such Participant’s Account as of such Valuation Date.

 

Section 7.6.  ESOP Allocations.

 

(a) 
Allocation of Employer Contributions and Forfeitures.  As of each Allocation Date, the total number
of shares and fractional shares of NBTY Stock contributed to the Trust Fund, purchased
by the Trustee with cash contributions made by the Company on behalf of the
Employers, or released from the ESOP Suspense Account during the Plan Year
shall be computed and allocated along with any applicable forfeitures.  The allocation of NBTY Stock shall be made
according to Section 4.1.

 

(b) 
Allocation of Cash Dividends.  Cash dividends on NBTY Stock allocated to a
Participant’s ESOP Account shall be paid to such Participant’s ESOP Account and
reinvested in NBTY Stock.  Cash dividends
on unallocated shares of NBTY Stock shall be allocated in accordance with the
provisions of Section 7.6(c).

 

(c) 
Allocation of Earnings and Losses.  As of each Allocation Date, the Trustee shall
determine the fair market value of the assets relating to ESOP Accounts.  The Trustee shall allocate to the accounts of
the Participants the net earnings and gains or losses related to ESOP Accounts
since the immediately preceding Allocation Date.  Dividends shall be allocated based 

 

19

 

on relative
beginning ESOP Account balances less any distributions actually paid.  Interest and other earnings shall be
allocated based upon the ratio of each Participant’s ESOP Account balance as of
the time immediately preceding the Allocation Date less distributions actually
paid to the aggregate balance of all Participant’s ESOP Accounts.  Other adjustments may be made to ESOP
Accounts as may be necessary and appropriate in order to achieve an equitable
allocation of the net earnings and gains or losses as long as such allocation
is performed in a uniform and non-discriminatory manner.

 

(d)  Allocation of NBTY Stock.  Any provision hereof to the contrary
notwithstanding, at any time that NBTY Stock and assets other than NBTY Stock
are to be allocated to the ESOP Accounts of Participants and former Associates,
then, to the greatest extent possible without resulting in discrimination in
favor of Highly Compensated Employees, NBTY Stock shall be allocated to the
accounts of Participants and assets other than NBTY Stock shall be allocated to
the Accounts of former Associates.

 

(e) 
Interim Allocations.  NBTY Stock acquired by the Trustee with the
proceeds of a loan shall be credited to the ESOP Suspense Account.  As of each Allocation Date, the balance in
the ESOP Suspense Account shall be allocated to the ESOP Accounts in the manner
described in Section 7.6(a).

 

Section 7.7.  Voting and
Exercising Other Securities Rights With Respect to NBTY Stock.

 

(a) 
Each Participant and each former Participant who has an ESOP Account shall be
entitled to direct the Trustee as to the manner in which NBTY Stock credited to
such ESOP Account is to be voted and as to the manner in which other
shareholder rights with respect to such NBTY Stock are to be exercised.  The following guidelines shall apply with
regard to the 

 

20

 

voting rights of
Participants and former Participants with respect to the NBTY Stock credit to
their ESOP Accounts:

 

(i)            The Trustee shall notify
Participants and former Participants of each occasion for the exercise of
voting rights within a reasonable period (not less than thirty (30) days,
unless such period is impossible or impractical) before such rights are to be
exercised.

 

(ii)           The Trustee shall take whatever steps
are reasonably necessary to allow each Participant to exercise rights other
than voting rights of NBTY Stock represented by the Participant’s or former
Participant’s ESOP Account.

 

(iii)          The number of shares to which each
Participant and former Participant is entitled to vote shall have the right to
direct the exercise of the rights thereof shall be determined for any record
date by the number of shares allocated to his or her ESOP Account on the last
Allocation Date.

 

(iv)          The Trustee shall vote fractional
shares by combining directions on voting of such fractional shares to the
extent possible.

 

(v)           The Trustee shall vote any shares in
the ESOP Suspense Account in the same proportion and in the same manner as the
shares in Participants’ and former Participant’s ESOP Accounts are voted by the
Participants.

 

(b) 
The Trustee shall make no recommendation regarding the manner of exercising any
rights under this Section 7.7, including whether such rights should be
exercised

 

Section 7.8.  Allocation of Forfeitures.  With respect to any Participant who
terminates employment and who is not vested in his or her ESOP Account pursuant
to Section 8.1(c), a distribution shall be deemed to have occurred as of
the Participant’s termination of employment.   
The forfeitures of Participants who terminate employment during a
calendar year shall be allocated to the ESOP Accounts of the Participants
employed by an Employer on the last day of such year.  Forfeitures shall be added to the
contribution made pursuant to Article 4 for purposes of allocation to ESOP
Accounts.

 

Section 7.9.  Correction of Error.  If it comes to the attention of the
Administrator that an error has been made in any of the allocations prescribed
by this Article 7, appropriate 

 

21

 

adjustment shall
be made to the accounts of all Participants and Beneficiaries that are affected
by such error, except that no adjustment need be made with respect to any
Participant or Beneficiary whose account has been distributed in full prior to
the discovery of such error.

 

Section 7.10.  Transfers from Other
Plans.  The Trustee of the
Plan shall not permit any amounts to be transferred to the Plan from any other
plan.

 

ARTICLE 8

 

WITHDRAWALS AND DISTRIBUTIONS

 

Section 8.1.  Distribution of Account.   (a)   
No Withdrawals or Loans.  A
Participant shall not be permitted to withdraw any portion of his or her
Account while he or she remains in employment with an Employer or Affiliate or
to take a loan on his or her Account at any time.

 

(b) 
Termination of Employment Under Circumstances Entitling Participant to Full
Distribution of Account.  If a
Participant’s employment with all Employers and Affiliates terminates under any
of the following circumstances, then the Participant or his or her designated
beneficiary, as the case may be, shall be vested in and entitled to receive one
hundred percent (100%) of the entire amount then in the Participant’s Account:

 

(i)            the Participant’s death;

 

(ii)           the Participant’s Disability;

 

(iii)          on or after the date the Participant
attains age 65; or

 

(iv)          on or after the date the Participant
has completed three Years of Service.

 

For purposes of Section 8.1(b)(iv), a Participant
will be deemed to have completed three Years of Service after he or she
completes two Years of Service and then completes 1,000 Hours of Service before
any break in service that would result in the Participant not being credited
for the two Years of Service.

 

22

 

In the event of the sale or disposition of a business or a sale of
substantially all of the assets of a trade or business, a Participant affected
by such sale may be entitled to the entire balance of his or her Account,
irrespective of the Participant’s Years of Service, if expressly provided in
the documents effecting the transaction or otherwise authorized by the Company.

 

(c) 
Other Termination of Employment. 
If a Participant terminates employment with his or her Employer and is
not vested in his or her Account, then such Participant shall be deemed to have
received a distribution of his or her Account and the balance of the Account
shall be forfeited.  If such former
Participant is reemployed prior to incurring five consecutive 1-Year Breaks in
Service, then any forfeiture shall be reinstated.

 

(d) 
Time of Distribution.  The
distribution of an Account shall commence no later than one year after the
close of the Plan Year in which the Participant terminates employment with his
or her Employer due to death, Disability or after the attainment of age 65 and
no later than five years after the close of the Plan Year in which a
Participant terminates employment for any other reason; provided, however,
that:

 

(i)            if a Participant dies before the
commencement of distribution of his or her Account, distributions paid or
commencing after the Participant’s death shall be completed no later than December 31
of the calendar year which contains the fifth anniversary of the Participant’s
death, except that (1) if the Participant’s Beneficiary is the Participant’s
spouse, distribution may be deferred until December 31 of the calendar
year in which the Participant would have attained age 701⁄2 and (2) if the
Participant’s Beneficiary is a person other than the Participant’s spouse and
distributions commence on or before December 31 of the calendar year
immediately following the calendar year in which the Participant died, such
distributions may be made over a period not longer than the life expectancy of
such Beneficiary;

 

(ii)           if at the time of a Participant’s
death, distribution of his or her Account has commenced, the remaining portion
of the Participant’s Account shall be paid at least as rapidly as under the
method of distribution being used prior to the Participant’s death, as
determined pursuant to U.S. Treasury Regulation § 1.401(a)(9)-2;

 

(iii)          unless a Participant files a written
election to defer distribution, distribution shall be made to a Participant by
payment in a single lump sum payment no later than 60 days after the end of the
Plan Year which contains the latest of (i) the date of 

 

23

 

the Participant’s
termination of employment, (ii) the tenth anniversary of the date the
Participant commenced participation in the Plan and (iii) the Participant’s
65th birthday; provided, however, that if the Participant does
not elect a distribution prior to the latest to occur of the events listed
above, the Participant shall be deemed to have elected to defer such distribution
until a date no later than April 1 of the calendar year following the
calendar year in which the Participant attains age 701⁄2; and

 

(v)           with
respect to a Participant who continues in employment after attaining age 701⁄2,
distribution of the Participant’s vested Account shall commence no later than
the Participant’s required beginning date. 
For purposes of this paragraph, the term “required beginning date” shall
mean (A) with respect to a Participant who is a 5%-owner (within the
meaning of section 416(i) of the Code), April 1 of the calendar year
following the calendar year in which the Participant attains age 701⁄2 and (B) with
respect to any other Participant, April 1 of the calendar year following
the calendar year in which the Participant terminates employment with all
Employers and Affiliates.  Distributions
made under this paragraph shall be made in accordance with Section 9.3(c).  A Participant is treated as a 5%-owner for
purposes of this Section if such Participant is a 5%-owner as defined in section
416(i) of the Code (determined in accordance with section 416 of the Code
but without regard to whether the Plan is a top-heavy plan) at any time during
the Plan Year in which such owner attains age 661⁄2 or any subsequent year.  Once distributions have begun to a 5%-owner
under this Section, they must continue to be distributed, even if he or she
ceases to be a 5%-owner.

 

(e) 
Form and Method of Distribution. 
Any distribution from an Account to which a Participant (or in the event
of the Participant’s death, his or her Beneficiary) becomes entitled shall be
made in the form of a lump sum in cash or in shares of NBTY Stock (or, with
respect to assets other than NBTY Stock, in cash) or in the form of cash in
annual installments over a period not to exceed 15 years.  A Participant (or Beneficiary) may change his
or her election with respect to the form of distribution at any time before
benefits commence.  NBTY Stock shall be
valued for distribution purposes at the closing price of NBTY Stock on an
established securities market on the day immediately preceding the day on which
NBTY Stock was last traded.

 

(f) 
Order of Distribution.  Any distribution shall be charged against a
Participant’s subaccounts in the order determined by the Administrator or
Recordkeeper.

 

24

 

(g) 
Put Option.  If, and only if, NBTY
Stock is not readily tradable on an established market, then any Participant
who is otherwise entitled to a distribution of NBTY Stock under the Plan shall
have the right (hereinafter referred to as “Put Option”) to require that his or
her Employer or the Company repurchase any NBTY Stock under a fair valuation
formula established by the independent appraiser appointed.  The Put Option shall only be exercisable
during the sixty (60) day period immediately following the date of distribution
and if the Put Option is not exercised within such sixty (60) days period, then
it can be exercised for an additional period of sixty (60) days in the
following Plan Year.  This Put Option
shall be non-terminable within the meaning of U.S. Treasury Regulation §
54.4975-11(a)(ii).

 

The
amount paid for NBTY Stock under the Put Option shall be paid in substantially
equal period payments (not less frequently than annually) over a period
beginning not later than thirty (30) days after the exercise of the Put Option
and not exceeding five (5) years. 
There shall be adequate security provided and reasonable interest paid
on any unpaid balance.

 

Section 8.2.  Payment of Small Account Balances.  Notwithstanding any provision of Section 8.1
to the contrary and subject to Section 8.3, if the aggregate value of a
Participant’s Account at any time following his or her termination of
employment does not exceed $1,000, then such amount shall be distributed in a
lump sum payment to the Participant or his or her Beneficiary, as the case may
be.  The distributions of such amounts
shall be made at the time determined by the Administrator and the Recordkeeper.

 

Section 8.3.  Direct Rollover Option.  In the case of a distribution that is an “eligible
rollover distribution”, a Participant, a Beneficiary who is a surviving spouse
of a Participant, or a spouse or former spouse of a Participant who is an
alternate payee under a 

 

25

 

qualified domestic
relations order, as defined in section 414(p) of the Code, may elect that
all or any portion of such distribution to which he or she is entitled shall be
directly transferred from the Plan to (i) an individual retirement account
or annuity described in section 408(a) or (b) of the Code, or (ii) if
the terms of which permit the acceptance of eligible rollover distributions, to
another retirement plan qualified under section 401(a) of the Code, to a
qualified annuity plan described in section 403(a) of the Code, to an
annuity contract described in section 403(b) of the Code or to an eligible
plan under section 457(b) of the Code which is maintained by a state,
political subdivision of a state, or any agency or instrumentality of a state
or political subdivision of a state and which agrees to account separately for
amounts transferred into such plan from the Plan.  For purposes of this Section 8.3, the
term “eligible rollover distribution” shall mean any distribution to an
Associate of all or any portion of the balance to the credit of the Associate
in a qualified trust, except that such term shall not include (i) any
distribution which is one of a series of substantially equal periodic payments
(not less frequently than annually) made (a) for the life (or life
expectancy) of the Associate or the joint lives (or joint life expectancies) of
the Associate and the Associate’s designated beneficiary, or (b) for a
specified period of 10 years or more; (ii) any distribution to the extent
such distribution is required under section 401(a)(9) of the Code; and (iii) any
distribution which is made upon hardship of the Associate.

 

Section 8.4.  Designation of Beneficiary.  (a)   
In General.  Each Participant shall have the right to
designate one or more persons (including a legal entity, such as a trust)
(each, a “designated beneficiary”) (which may be designated contingently or
successively) to receive any distribution to be made under this Article upon
the death of the Participant or, in the case of a Participant who dies after
his or her termination of employment but before the distribution of the entire
amount to which he or she is entitled under the Plan, any undistributed balance
to which he 

 

26

 

or she would have
been entitled.  No designation of a
designated beneficiary, other than a Participant’s spouse, shall be effective
if the Participant was married through the one-year period ending on the date
of his or her death unless the designation at the time it was made was
consented to in writing (or by such other method permitted by the Internal
Revenue Service) by the individual who was then the Participant’s spouse,
acknowledging the effect of such consent and witnessed by a notary public or a
Plan representative, or it is established to the satisfaction of the
Administrator or Recordkeeper that such consent could not be obtained because
such spouse could not be located or because of the existence of other
circumstances as the Secretary of the Treasury may prescribe as excusing the
requirement of such consent.  Subject to
the immediately preceding sentence, a Participant may from time to time,
without the consent of any designated beneficiary, change or cancel any such
designation.  Such designation and each
change thereof shall be made in the manner prescribed by the Administrator and
shall be filed with the Administrator or Recordkeeper.  If (i) no person has been designated by
a Participant as a designated beneficiary under this Plan or (ii) a
designation is not effective for the reason described in the second sentence of
this Section 8.4(a), then the Participant’s Beneficiary shall be (1) the
deceased’s surviving spouse, if any, (2) if there is no surviving spouse,
the person designated by the Participant to receive a benefit upon his or her
death under the NBTY, Inc. 401(k) Savings Plan, or if no person is so
designated under the NBTY, Inc. 401(k) Savings Plan, the person
most-recently designated to receive a benefit upon his or her death under any
predecessor plan as reflected in the records of an Employer or the
Recordkeeper, (3) if there is no surviving spouse and no persons are so
designated, then living descendants, if any, of the deceased, per stirpes, or (4) if
there is no surviving spouse, if no persons are so designated and there are no
living descendants, the executor or administrator of the estate of the
deceased.  

 

27

 

Unless otherwise
set forth in the applicable beneficiary designation form or the instructions
thereto, if a designated beneficiary predeceases the Participant, then any
undistributed Account of the deceased shall be distributed by the Trustee in
the order prescribed by the immediately preceding sentence.

 

(b) 
Successor Beneficiaries.  A Beneficiary may, in the manner prescribed
by the Administrator or Recordkeeper, designate a person (a “successor
beneficiary”) to receive any undistributed balance upon the death of the
Beneficiary to which such Beneficiary would have been entitle to receive.  Unless otherwise set forth in the applicable
form pursuant to which a Participant designates a Beneficiary or the
instructions thereto, if the Beneficiary dies after the Participant and before
distribution of the entire amount of the benefit under the Plan in which the
Beneficiary has an interest, then any remaining amount shall be distributed, as
soon as practicable after the death of such Beneficiary, in the form of a lump
sum payment to the successor beneficiary, or, if there is no such successor
beneficiary, to the executor or administrator of the estate of such deceased
Beneficiary.

 

Section 8.5.  Missing Persons. 
If following the date on which a Participant’s Account may be
distributed without the Participant’s consent pursuant to Section 8.1(c) or
8.2, the Administrator or Recordkeeper in the exercise of reasonable diligence
has been unable to locate the person or persons entitled to the Participant’s
Account (after sending a registered letter, return receipt requested, to the
last know and address, and after utilizing certified mail, checking records of
related employee benefit plans maintained by the Company, contacting such
designated beneficiaries, and using a letter forwarding service (of the
Internal Revenue Service or Social Security Administration) and any further
effort deemed prudent by the Administrator  or
Recordkeeper  to ascertain the whereabouts of
such Participant or Beneficiary), then the 

 

28

 

Participant’s
Account may be forfeited; provided, however, that to the extent
required by law the Plan shall reinstate and pay to such person or persons the
amount so forfeited upon a claim for such amount made by such person or
persons.  The amount to be so reinstated
shall be obtained from the total amount that shall have been forfeited pursuant
to this Section and Section 8.1(c) during the Plan Year in which
the claim for such forfeited benefit is made, and shall not include any
earnings or losses from the date of the forfeiture under this Section.  If the amount to be reinstated exceeds the
amount of such forfeitures, an Employer shall make a contribution in an amount
equal to such Employer’s pro-rata share of such excess.  An Employer’s pro rata share shall be
determined by multiplying the amount of such forfeitures by a fraction, the
numerator of which is equal to the number of Associates employed by such
Employer who made a claim for such forfeited benefits and the denominator of
which is the number of all Associates who made a claim for such forfeited
benefits.  To the extent the forfeitures
under this Section exceed any claims for forfeited benefits made pursuant
to this Section, such excess shall be applied in accordance with Section 7.8.

 

Section 8.6.  Distributions to Minor and Disabled Distributees.  Any distribution that is payable to a
distributee who is a minor or to a distributee who has been legally determined
to be unable to manage his or her affairs by reason of illness or mental
incompetency may be made to, or for the benefit of, any such distributee at
such time consistent with the provisions of this Plan and in such of the
following ways as the legal representative of such distributee shall
direct:  (a) directly to any such
minor distributee if, in the opinion of such legal representative, such minor
is able to manage his or her affairs, (b) to such legal representative, (c) to
a custodian under a Uniform Gifts to Minors Act for any such minor distributee,
or (d) as otherwise directed by such legal representative.  Neither the Administrator nor the Trustee
shall be required to 

 

29

 

oversee the
application by any third party other than the legal representative of a
distributee of any distribution made to or for the benefit of such distributee
pursuant to this Section.

 

ARTICLE 9

 

ESOP LOANS

 

The Administrator may direct the Trustee to incur a loan on behalf of
the Trust in a manner and under conditions which will cause the loan to be an “exempt
loan” within the meaning of section 4975(d)(2) of the Code and Treasury
regulations promulgated thereunder.  A
loan shall be used primarily for the benefit of Participants and their
Beneficiaries.  The proceeds of such loan
shall be used, within a reasonable time after the loan is obtained, only to
purchase NBTY Stock, to repay the loan or to repay any prior loan.  Any such loan shall provide for a reasonable
rate of interest, an ascertainable period of maturity and shall be without
recourse against the Plan.  Any such loan
shall be secured solely by shares of NBTY Stock acquired with the proceeds of
the loan and shares of such stock that were used as collateral on a prior loan
which was repaid with the proceeds of the current loan.  Such stock pledged as collateral shall be
placed in an ESOP Suspense Account and released pursuant to the next paragraph
as the loan is repaid.  NBTY Stock
released from the ESOP Suspense Account shall be allocated in the manner
described in Section 7.6.  No person
entitled to payment under a loan made pursuant to this Section shall have
recourse against any Trust fund assets other than the stock used as collateral
for the loan, Company contributions of cash that are available to meet
obligations under the loan and earnings attributable to such collateral and the
investment of such contributions. 
Contributions made under Article 4 with respect to any Plan Year
during which the loan remains unpaid, and earnings on such contributions, shall
be deemed available to meet obligations under the loan, unless otherwise
provided by the Company at the time such contribution is made.

 

30

 

Any pledge of NBTY
Stock as collateral under this Section shall provide for the release of
shares so pledged upon the payment of any portion of the loan.  Shares so pledged shall be released in the
proportion that the principal and interest paid on the loan for the Plan Year
bears to the aggregate principal and interest paid for the current Plan Year
and each Plan Year thereafter, as provided in U.S. Treasury Regulation §
54.4975-7(b)(8).

 

Payments of
principal and interest on any loan under this Section shall be made by the
Trustee at the direction of the Administrator solely from:  (i) contributions under Article 4
available to meet obligations under the loan, (ii) earnings form the
investment of such contributions, (iii) earning attributable to stock pledged
as collateral for the loan, (iv) the proceeds of a subsequent loan made to
repay the loan, and (v) the proceeds of the sale of any stock pledged as
collateral for the loan.  The
contributions and earnings available to pay the loan must be accounted for
separately by the Administrator until the loan is repaid.

 

Subject to the
limitations of Section 5.1 on annual additions to a Participant’s Account,
assets released from an ESOP Suspense Account by reason of payment made on a
loan shall be allocated immediately upon such payment to the accounts of all
Participants who then would be entitled to an allocation of contributions if
such payment had been made on the last day of the Plan Year.

 

ARTICLE 10

 

SPECIAL
PARTICIPATION AND DISTRIBUTION RULES

 

Section 10.1.  Reemployment.  (a)   
Participation.  If an Associate whose employment with all
Employers terminated before the Associate satisfied the service requirement set
forth in Section 3.1 is reemployed by an Employer, the Associate’s prior
service shall be disregarded.  If an
individual who satisfied the service requirement set forth in Section 3.1
but who terminated employment before the January 1 or July 1 next
following the moment at 

 

31

 

which such service
requirement was satisfied is reemployed as an Associate before a 1-Year Break
in Service has occurred, then such individual shall become a Participant
pursuant to Section 3.1, as of the date he or she would otherwise have
been eligible to participate in the Plan pursuant to Section 3.1, had he
or she not terminated employment.  If an
individual who was a Participant terminated employment with his or her Employer
and is reemployed by an Employer, then the individual shall again become a
Participant as of the January 1st or
July 1st coincident with or next following  his or her reemployment date.  If a Participant whose employment with the
Employers is terminated is receiving installment payments pursuant to Section 8.1(e),
such payments shall be suspended upon such Participant’s reemployment unless he
or she has attained age 591⁄2 on or before the date of such reemployment.

 

(b)  Restoration of Forfeitures.  If a Participant whose employment with the
Employers is terminated is reemployed prior to incurring five consecutive
1-Year Breaks in Service, and, at or after his or her termination of
employment, his or her Account was forfeited pursuant to Section 8.1(c),
then an amount equal to the forfeited amount shall be credited to his or her
Account as soon as administratively practicable after he or she is
reemployed.  Any amount to be restored
pursuant to this subsection shall be obtained from the total amounts that have
been forfeited pursuant to Sections 8.1(c) and 8.5, as applicable, during
the Plan Year in which such Participant is reemployed from the Accounts of
Participants employed by the same Employer as the reemployed Participant, as
the case may be.  If the aggregate amount
to be so restored to the Accounts of Participants who are Associates of a
particular Employer exceeds the amount of such applicable forfeitures, such
Employer shall make a contribution in an amount equal to the excess.  Any such contribution shall be made
regardless of whether the limitations set forth in Article 5 will be
exceeded by such contribution.

 

32

 

(c)  Service.  In the case of a Participant who was vested
when his or her employment with the Employers and Affiliates terminated, any
service attributable to his or her prior period of employment shall be
reinstated as of the date of his or her reparticipation. In the case of an
Associate who was not a Participant during his or her prior period of
employment or in the case of a Participant who was not vested when his or her
prior period of employment terminated, any service attributable to his or her
prior period of employment with the Employers and Affiliates shall not be
cancelled unless one of the following is applicable:  (A) the number of his or her consecutive
years of 1-Year Breaks in Service was less than the aggregate number of Years
of Service earned before his or her first 1-Year Break in Service (determined
without regard to whether participation in the Plan had commenced); (B) the
Associate’s 1-Year Break(s) in Service commenced on or after May 1,
1986 and the number of his or her consecutive years of 1-Year Breaks in Service
was less than five (5); (C) the Associate’s 1-Year Breaks in Services
commenced on or after May 1, l986 due to a “maternity or paternity leave
of absence” and the number of his or her consecutive years of 1-Year Breaks in
Service was less than the aggregate number of years in his or her pre-break
Service plus one year (considering Service determined without regard to whether
participation in the Plan had commenced); or (D) the Associate’s 1-Year
Breaks in Service commenced on or after May 1, l986 due to a “maternity or
a paternity leave of absence” and the number of his or her consecutive years of
1-Year Breaks in Service was less than six (6).

 

Section 10.2.  Employment by
Affiliates.  If an individual
is employed by an Affiliate that is not an Employer, then any period of
employment with such Affiliate shall be taken into account under the Plan
solely for the purposes of (i) measuring such individual’s Hours of
Service and Years of Service and (ii) determining when such individual has
terminated 

 

33

 

his or her employment for
purposes of the Plan, to the same extent it would have been had such period of
employment been as an Associate.

 

Section 10.3.  Qualified Military
Service.  Notwithstanding any
provision of this Plan to the contrary, contributions, benefits and service
credit with respect to Qualified Military Service will be provided in
accordance with section 414(u) of the Code.

 

ARTICLE 11

 

ADMINISTRATION

 

Section 11.1.  The Administrator.  (a)   
The Administrator shall be the “administrator” of the Plan within the
meaning of such term as used in ERISA and shall be responsible for the
administration of the Plan.

 

(b)  No
individual employed by the Administrator who is a Participant shall take part
in any action of the Administrator or any matter involving solely his or her
rights under the Plan.

 

(c)  The
Administrator shall have the duty and authority to interpret and construe, in
its sole discretion, the terms of the Plan in all respects, including, but not
limited to, all questions of eligibility, the status and rights of
Participants, distributees and other persons under the Plan, and the manner, time
and amount of payment of any distribution under the Plan. All determinations
and actions of the Administrator shall be conclusive and binding upon all
affected parties, except that the Administrator may revoke or modify a
determination or action that it determines to have been in error.  Benefits will be paid under the Plan only if
the Administrator decides in its sole discretion that the applicant is entitled
to the benefits.

 

(d)  The
Administrator shall direct the Trustee to make payments of amounts to be
distributed from the Trust under Article 8.

 

34

 

(e)  The
Administrator may adopt such rules, regulations, and procedures as it deems
necessary for the conduct of its affairs and the administration of the Plan,
provided that any such rules, regulations, and procedures shall be consistent
with the provisions of the Plan and ERISA, and such rules, regulations, and
procedures shall be binding upon all Participants and Beneficiaries.

 

(f)  The
Administrator shall discharge its duties as administrator with respect to the
Plan (i) solely in the interest of the Participants and Beneficiaries, (ii) for
the exclusive purpose of providing benefits to the Participants and
Beneficiaries and of defraying reasonable expenses of administering the Plan
and (iii) with the care, skill, prudence, and diligence under the
circumstances then prevailing that a prudent person acting in a like capacity
and familiar with such matters would use in the conduct of an enterprise of a like
character and with like aims.  The
Employers hereby jointly and severally indemnifies and holds harmless the
Trustee from the effects and consequences of its acts, omissions and conduct in
its official capacity, except to the extent that such effects and consequences
result from its own gross negligence, willful misconduct or criminal acts.

 

Section 11.2.  Named Fiduciary.  The Company shall be a “named fiduciary” of
the Plan within the meaning of such term as used in ERISA solely with respect
to its powers specifically set forth herein.

 

Section 11.3.  Allocation and
Delegation of Responsibilities. 
The Administrator, the Company, and any Employer may allocate their
responsibilities and may delegate to any person, partnership, corporation or a
committee to carry out any of their responsibilities with respect to the
Plan.  Any such allocation or designation
shall be in writing and shall be kept with the records of the Plan.

 

35

 

Section 11.4.  Professional and
Other Services.  Each of the
Administrator, the Company, and the Employers may employ counsel (who may be
counsel for an Employer), specialists, advisers, and agents (including
non-fiduciaries) to advise it and its agents or delegates and may arrange for
clerical and other services as the Administrator, the Company or the Employer
and its agents may require in carrying out its duties hereunder.  The Trustee may compensate such agents or
advisers from the assets of the Plan as fiduciary expenses (but not including
any business (settlor) expenses of an Employer) to the extent not paid by any
Employer.

 

Section 11.5.  Claims Procedure.  Any Participant or distributee (or his or her
duly authorized representative) who believes he or she is entitled to benefits
in an amount greater than those which he or she has been notified he or she is
entitled to receive, is receiving or has received may file a claim with the
Administrator.  Such a claim shall be in
writing and state the nature of the claim, the facts supporting the claim, the
amount claimed and the address of the claimant. 
No claim may be filed by any Participant or distributee more than two
years after the person filing the claim knew, or had reason to know, of the circumstances
giving rise to the claim.  The
Administrator shall review the claim and, within 90 days after receipt of the
claim, give written notice to the claimant of its decision with respect to the
claim.  If special circumstances require
an extension of time, the claimant shall be so advised in writing or by
electronic means within the initial 90-day period and in no event shall such an
extension exceed 90 days.  The notice of
the decision of the Administrator with respect to the claim shall be written in
a manner calculated to be understood by the claimant and, if the claim is
wholly or partially denied, shall set forth the specific reasons for the
denial, specific references to the pertinent Plan provisions on which the
denial is based, a description of any additional material or 

 

36

 

information necessary for
the claimant to perfect the claim and an explanation of why such material or
information is necessary, and an explanation of the claim review procedure
under the Plan and the time limits applicable to such procedure (including a
statement of the claimant’s right to bring a civil action under section 502(a) of
ERISA following the final denial of a claim). 
Such notice shall also include (a) a statement that, as required by
Section 13.3 of the Plan, no legal or equitable action may be commenced
under Section 502 of ERISA later than one year after the claimant receives
a final decision from the Administrator in response to the claimant’s request
for review of the adverse benefit determination and (b) a statement that,
as required by Section 13.9 of the Plan, any legal or equitable action
brought under Section 502 of ERISA or any other action involving the Plan
brought under any other state law shall be litigated in the Federal courts
located in the Eastern  District of
New York and no other Federal or state court.

 

The claimant (or
his or her duly authorized representative) may request a hearing of the denial
by filing with the Administrator a written request for such hearing within 60
days after notice of the denial has been received by the claimant.  Within the same 60-day period, the claimant
may submit to the Administrator written comments, documents, records and other
information relating to the claim.  Upon
request and free of charge, the claimant also may have reasonable access to,
and copies of, documents, records and other information relevant to the
claim.  If a request for review is so
filed, then the Administrator shall then conduct a hearing within the same
60-day period, at which the claimant may be represented by an attorney or any
other representative of such claimant’s choosing and expense and at which the
claimant shall have an opportunity to submit written and oral evidence and
arguments in support of the claim.  At
the hearing (or prior thereto upon five (5) business days’ written notice
to the Administrator) the claimant or the claimant’s representative shall have
an opportunity to review all documents in 

 

37

 

the possession of the Administrator which are
pertinent to the claim at issue and its disallowance.  Either the claimant or the Administrator may
cause a court reporter to attend the hearing and record the proceedings.  In such event, a complete written transcript
of the proceedings shall be furnished to both parties by the court
reporter.  The full expense of any such
court reporter and such transcripts shall be borne by the party who requests or
requested the court reporter to attend the hearing.  A final, written decision as to the allowance
of the claim shall be made by the Administrator within sixty (60) days of
receipt of the appeal request unless special circumstances require an extension
of time provided that the delay and the special circumstances are communicated
in writing to the claimant within the 60-day period.  If the appeal of the claim is wholly or
partially denied, the notice of the Administrator’s final decision shall
include specific reasons for the denial, specific references to the pertinent
Plan provisions on which the denial is based and a statement that the claimant
is entitled, upon request and free of charge, to reasonable access to, and
copies of, all relevant documents, records and information.  The notice shall be written in a manner
calculated to be understood by the claimant and shall notify the claimant of
his or her right to bring a civil action under section 502(a) of
ERISA.  The claimant must file a civil
action with respect to the denied claim not later than one hundred eighty (180)
days following the date of the Administrator’s final determination.

 

In making
determinations regarding claims for benefits, the Administrator shall consider
all of the relevant facts and circumstances, including, without limitation,
governing plan documents, consistent application of Plan provisions with
respect to similarly situated claimants and any comments, documents, records
and other information with respect to the claim submitted by the claimant (the “Claimant’s
Submissions”).  The Claimant’s
Submissions shall be 

 

38

 

considered by the Administrator without regard to
whether the Claimant’s Submissions were submitted or considered by the
Administrator in the initial benefit determination.

 

Section 11.6.  Notices to
Participants, Etc.  All
notices, reports and statements given, made, delivered or transmitted to a
Participant or distributee or any other person entitled to or claiming benefits
under the Plan shall be deemed to have been duly given, made, delivered or transmitted
when provided via such written or other means as may be permitted by applicable
regulations promulgated by the U.S. Treasury Department.  A Participant, distributee or other person
may record any change of his or her address by written notice filed with his or
her Employer.

 

Section 11.7.  Notices to
Administrator or Employers. 
Written directions and notices and other written or electronic
communications from Participants, distributees or other persons entitled to or
claiming benefits under the Plan to the Administrator or the Employers shall be
deemed to have been duly given, made, delivered or transmitted when given,
made, delivered or transmitted in the manner and to the location prescribed by
the Administrator or the Employers for the giving of such directions, notices
and other communications.

 

Section 11.8.  Records.  The Administrator shall keep a record of all
of its proceedings with respect to the Plan and shall keep or cause to be kept
all books of account, records and other data as may be necessary or advisable
in its judgment for the administration of the Plan.

 

Section 11.9.  Reports of Trustee
and Accounting to Participants. 
The Administrator shall keep on file, in such form as it shall deem
convenient and proper, all reports concerning the Trust Fund received by it
from the Trustee, and, as soon as practicable after the close of each Plan
Year, each Participant and Beneficiary shall be provided a written benefit 

 

39

 

statement indicating the
balance credited to any Account for such individual as of the close of such
Plan Year.  Any Participant or
Beneficiary claiming that an error has been made with respect to such balance
shall notify the Administrator in writing within ninety (90) days following the
delivery of such benefit statement.  If
no notice of error timely is provided, the benefit statement shall be presumed
to be correct.

 

ARTICLE 12

 

PARTICIPATION BY
EMPLOYERS

 

Section 12.1.  Adoption of Plan.  With the consent of the Company, any entity
may become an Employer under the Plan by (a) taking such action as shall
be necessary to adopt the Plan and (b) executing and delivering such
instruments and taking such other action as may be necessary or desirable to
put the Plan and Trust into effect with respect to such entity, as prescribed
by the Administrator.  The powers and
control of the Company, as provided in the Plan and the trust agreement, shall
not be diminished by reason of participation of any such adopting entity in the
Plan.

 

Section 12.2.  Withdrawal from
Participation.  An Employer
may withdraw from participation in the Plan at any time by filing with the
Company a duly certified copy of a written instrument duly adopted by an
Employer to that effect and giving notice of its intended withdrawal to the
Company, the Employers and the Trustee prior to the effective date of
withdrawal.

 

Section 12.3.  Company,
Administrator and Recordkeeper as Agents for Employers.  Each entity which becomes an Employer
pursuant to Section 12.1 or Section 12.4 by so doing shall be deemed
to have appointed the Company, the Administrator and the Recordkeeper as its
agents to exercise on its behalf all of the powers and authorities conferred
upon the Company, the Administrator and the Recordkeeper by the terms of the
Plan.  The 

 

40

 

authority of the Company,
the Administrator and the Recordkeeper to act as such agent shall continue
unless and until the portion of the Trust Fund held for the benefit of
Associates of the particular Employer and their Beneficiaries is set aside in a
separate Trust Fund as provided in Section 15.2.

 

Section 12.4.  Continuance by a
Successor.  In the event that
an Employer other than the Company is reorganized by way of merger,
consolidation, transfer of assets or otherwise, so that another entity other
than an Employer succeeds to all or substantially all of such Employer’s
business, such successor entity may, with the consent of the Company, be
substituted for such Employer under the Plan by adopting the Plan.  Contributions by such Employer automatically
shall be suspended from the effective date of any such reorganization until the
date upon which the substitution of such successor entity for an Employer under
the Plan becomes effective.  If, within
90 days following the effective date of any such reorganization, such successor
entity shall not have elected to adopt the Plan, the Company fails to consent
to such adoption, or an Employer adopts a plan of complete liquidation other
than in connection with a reorganization, the Plan automatically shall be
terminated with respect to employees of such Employer as of the close of
business on the 90th day following the effective date of such reorganization or
as of the close of business on the date of adoption of such plan of complete
liquidation, as the case may be, and the Administrator shall direct the Trustee
to distribute the portion of the Trust Fund applicable to such Employer in the
manner provided in Section 15.3.

 

If such successor
entity is substituted for an Employer as described above, then, for all
purposes of the Plan, employment of each Associate with such Employer,
including 

 

41

 

service with and compensation paid by such Employer,
shall be considered to be employment with such successor entity.

 

ARTICLE 13

 

MISCELLANEOUS

 

Section 13.1.  Expenses.  All costs and expenses of administering the
Plan and the Trust, including the expenses of Employer and the Administrator, the
fees of counsel and of any agents for an Employer, investment advisory and
record keeping fees, the fees and expenses of the Trustee, the fees of counsel
for the Trustee and other administrative expenses, shall be paid out of the
Trust Fund unless paid by an Employer. 
The Administrator, in its sole discretion, having regard to the nature
of a particular expense, shall determine the portion of such expense that is to
be borne by each Employer.  An Employer
may seek reimbursement of any expense paid by such Employer that the
Administrator determines is properly payable from the Trust Fund.  Until paid, expenses shall constitute a
liability of the Plan.

 

Section 13.2.  Legal Fees.  Any award of legal fees in connection with an
action involving the Plan shall be calculated pursuant to a method that results
in the lowest amount of fees being paid, which amount shall be no more than the
amount that is reasonable.  In no event
shall legal fees be awarded for work related to (a) administrative
proceedings under the Plan, (b) unsuccessful claims brought by a
Participant, Beneficiary or any other person, or (c) actions that are not
brought under ERISA.  In calculating any
award of legal fees, there shall be no enhancement for the risk of contingency,
nonpayment or any other risk nor shall there be applied a contingency
multiplier or any other multiplier.  In
any action brought by a Participant, Beneficiary or any other person against
the Plan, the Administrator, any Plan fiduciary, any Plan administrator, the
Company, its affiliates or their respective officers, directors, employees, or
agents (the “Plan Parties”), legal fees of the Plan Parties in connection with
such action shall be 

 

42

 

paid by the Participant,
Beneficiary or other person bringing the action, unless the court specifically
finds that there was a reasonable basis for the action.

 

Section 13.3.  Statute of Limitations for Actions under
the Plan.  Except for actions to
which the statute of limitations prescribed by Section 413 of ERISA
applies, (a) no legal or equitable action relating to a claim for benefits
under Section 502 of ERISA may be commenced later than one year after the
claimant receives a final decision from the Administrator in response to the
claimant’s request for review of the adverse benefit determination (or, if
later, one year after the effective date of this provision) and (b) no
other legal or equitable action involving the Plan may be commenced later than
two years from the time the person bringing an action knew, or had reason to
know, of the circumstances giving rise to the action (or, if later, two years
after the effective date of this provision). 
This provision shall not bar the Plan or its fiduciaries from recovering
overpayments of benefits or other amounts incorrectly paid to any person under
the Plan at any time or bringing any legal or equitable action against any
party.

 

Section 13.4.  Non-Assignability.

 

(a)  In General. 
No right or interest of any Participant or Beneficiary in the Plan shall
be assignable or transferable in whole or in part, either directly or by
operation of law or otherwise, including, but not by way of limitation,
execution, levy, garnishment, attachment, pledge or bankruptcy, but excluding
devolution by death or mental incompetency, and any attempt to do so shall be
void, and no right or interest of any Participant or Beneficiary in the Plan
shall be liable for, or subject to, any obligation or liability of such
Participant or Beneficiary, including claims for alimony or the support of any
spouse, except as provided below.

 

43

 

(b)  Exception for Qualified Domestic Relations Orders.  Notwithstanding any provision of the Plan to
the contrary, if a Participant’s Account under the Plan, or any portion
thereof, is the subject of one or more qualified domestic relations orders (as
defined in section 414(p) of the Code), such Account or portion of either
shall be paid to the individual, at the time and in the manner specified in any
such order.  The Administrator shall
adopt rules and procedures, in accordance with section 414(p) of the
Code, relating to its (i) review of any domestic relations order for
purposes of determining whether the order is a qualified domestic relations
order and (ii) administration of a qualified domestic relations
order.  A domestic relations order shall
not fail to constitute a qualified domestic relations order solely because such
order provides for distribution to an alternate payee of the benefit assigned
to the alternate payee under the Plan prior to the applicable Participant’s
earliest retirement age (as defined in section 414(p) of the Code) under
the Plan.

 

(c)  Other Exception. 
Notwithstanding any provision of the Plan to the contrary, if a
Participant is ordered or required to pay an amount to the Plan pursuant to (i) a
judgment in a criminal action, (ii) a civil judgment in connection with a
violation (or alleged violation) of Part 4 of Subtitle B of Title I of
ERISA or (iii) a settlement agreement between the Secretary of Labor and
the Participant or the Pension Benefit Guaranty Corporation and the Participant
in connection with a violation (or alleged violation) of Part 4 of
Subtitle B of Title I of ERISA, the Participant’s Account may, to the extent
permitted by law, be offset by such amount.

 

Section 13.5.  Employment Non-Contractual.  The Plan confers no right upon an Associate
to continue in employment.

 

Section 13.6.  Merger or Consolidation with Another Plan.  A merger or consolidation with, or transfer
of assets or liabilities to, any other plan shall not be effected 

 

44

 

unless the terms of such
merger, consolidation or transfer are such that each Participant, distributee,
Beneficiary or other person entitled to receive benefits from the Plan would,
if the Plan were to terminate immediately after the merger, consolidation or
transfer, receive a benefit equal to or greater than the benefit such person
would be entitled to receive if the Plan were to terminate immediately before
the merger, consolidation, or transfer.

 

Section 13.7.  Gender and Plurals.  Wherever used in the Plan, words in the
masculine gender shall include the masculine or feminine gender, and, unless
the context otherwise requires, words in the singular shall include the plural,
and words in the plural shall include the singular.

 

Section 13.8.  Applicable Law.  The Plan and all rights hereunder shall be
governed by and construed in accordance with the laws of New York to the extent
such laws have not been preempted by applicable Federal law.

 

Section 13.9.  Forum for Legal Actions under the Plan.  Any legal action involving the Plan that is
brought by any Participant, any Beneficiary or any other person shall be
litigated in the Federal courts located in the Eastern District of New York and
no other Federal or state court.

 

Section 13.10.  Severability. 
If any provision of the Plan is held illegal or invalid, the illegality
or invalidity shall not affect the remaining provisions of the Plan and the
Plan shall be construed and enforced as if the illegal or invalid provision had
not been included in the Plan.

 

Section 13.11.  No Guarantee. 
None of the Company, the Employers, the Administrator or the Trustee in
any way guarantees the Trust from loss or depreciation nor the payment of any
benefit that may be or become due to any person from the Trust Fund.  Nothing in the Plan shall be deemed to give
any Participant, distributee or Beneficiary an interest in any 

 

45

 

specific part of the
Trust Fund or any other interest except the right to receive benefits from the
Trust Fund in accordance with the provisions of the Plan and the trust
agreement.

 

Section 13.12.  Plan Voluntary. 
Although it is intended that the Plan shall be continued and that
contributions shall be made as herein provided, the Plan is entirely voluntary
on the part of the Employers and the continuance of the Plan and the
contributions hereunder are not and shall not be regarded as contractual
obligations of the Employers.

 

ARTICLE 14

 

TOP-HEAVY PLAN
REQUIREMENTS

 

Section 14.1.  General
Rule.  If the Plan is or becomes
top-heavy in any Plan Year, the provisions of this Article 14 will
supersede any conflicting provision in the Plan.

 

Section 14.2.  Definitions.

 

(a)  Key
Employee. Key Employee shall mean any Associate or former Associate (or any
Beneficiary of such Associate) who at any time during the Plan Year that
includes the Determination Date was (i) an officer of an Employer having
annual compensation greater than $145,000 (for 2007) (as adjusted under section
416(i)(1) of the Code for Plan Years beginning after December 31,
2002), (ii) a five percent (5%) owner of an Employer, or (iii) a one
percent (1%) owner of an Employer having annual compensation of more than
$150,000.

 

(b)  Top-Heavy
Plan:  For any Plan Year, the Plan is
top-heavy if any of the following conditions exist:

 

(i)            If, as of the Determination Date,
the Top-Heavy Ratio for the Plan exceeds 60 percent and the Plan is not part of
any Required Aggregation Group or Permissive Aggregation Group.

 

(ii)           If the Plan is a part of a Required
Aggregation Group but not part of a Permissive Aggregation Group and the
Top-Heavy Ratio for the Required Aggregation Group exceeds 60 percent.

 

46

 

(iii)          If the Plan is a part of a Permissive
Aggregation Group and the Top-Heavy Ratio for the Permissive Aggregation Group
exceeds 60 percent.

 

(c)  Top-Heavy
Ratio:  The aggregate of the account
balances of Key Employees under the Plan compared to the aggregate of the
account balances of all Associates who are Participants.  Effective January 1, 2002, the aggregate
of the account balances of all Associates shall be increased by the
distributions made with respect to the Associate under the Plan and any plan
aggregated with the Plan under section 416(g)(2) of the Code during the
1-year period ending on the Determination Date. 
The preceding sentence shall also apply to distributions under a
terminated plan which, had it not been terminated, would have been aggregated with
the Plan under section 416(g)(2)(A) of the Code.  In the case of a distribution made for a
reason other than severance from employment, death, or disability, this
provision shall be applied by substituting “5-year period” for “1-year period.”  Effective January 1, 2002, the accrued
benefits and accounts of any individual who has not performed services for an
Employer during the 1-year period ending on the Determination Date shall not be
taken into account.

 

(d)  Permissive
Aggregation Group:  The Required
Aggregation Group, plus any other plan or plans of the Employer which, when
considered as a group with the Required Aggregation Group, would continue to
satisfy the requirements of sections 401(a)(4) and 410 of the Code.

 

(e)  Required
Aggregation Group:  (i) Each qualified
plan of the Employer in which at least one (1) Key Employee participates
and (ii) any other qualified plan of the Employer that enables a plan
described in Section 14.2(d) to meet the requirements of section
401(a)(4) or 410 of the Code.

 

(f)  Determination
Date:  For any Plan Year after the
first Plan Year, the last day of the preceding Plan Year.  For the first Plan Year of the Plan, the last
day of such Plan Year.

 

47

 

(g)  Compensation:  Compensation shall have the meaning set forth
in U.S. Treasury Regulation § 1.415-2(d).

 

Section 14.3.  Minimum Allocation.  The sum of
contributions and forfeitures (as referred to in U.S. Treasury Regulation §
1.416-1, M-10) allocated under Section 7.8 on behalf of any Participant
who is not a Key Employee shall not be less than three percent (3%) of such
Participant’s compensation.  The minimum
allocation (to be known as the “Employer Top-Heavy Contribution”) is determined
without regard to any Social Security contribution.  The Employer Top-Heavy Contribution shall be
made even though, under other Plan provisions, the Participant would not
otherwise be entitled to receive an allocation, or would have received a lesser
allocation for the year because of (i) the Participant’s failure to
complete 1,000 Hours of Service or (ii) the Participant’s compensation for
such year is less than a stated amount.

 

The provisions of
this Section shall not apply to any Participant who was not employed by an
Employer on the last day of the Plan Year.

 

Section 14.4.  Minimum Vesting for Top-Heavy Years.  Any portion of an Account that a Participant
is not entitled to receive pursuant to this Section shall be charged to
the relevant account and forfeited as of the earlier of (i) the date the
Participant receives a distribution of his or her vested account and (ii) the
date the Participant incurs five consecutive 1-Year Breaks in Service.

 

ARTICLE 15

 

AMENDMENT, ESTABLISHMENT OF

SEPARATE PLAN, AND PLAN TERMINATION

 

Section 15.1.  Amendment.  The Committee may, at any time and from time
to time, amend or modify the Plan.  Any
such amendment or modification shall become effective as of such date provided
therein upon its execution, including retroactively to the extent permitted 

 

48

 

by law, and may apply to
Participants in the Plan at the time thereof as well as to future Participants.

 

Section 15.2.  Establishment of Separate Plan.  If an Employer terminates its participation
in the Plan pursuant to Section 15.3, then the Administrator shall
determine the portion of each of the funds of the Trust Fund that is applicable
to the Participants employed by such Employer and their Beneficiaries and
direct the Trustee to segregate such portion in a separate trust.  Such separate trust thereafter shall be held
and administered as a part of the separate plan of such Employer.

 

Section 15.3.  Termination. 
The Company at any time may terminate the Plan or any portion of the
Plan by delivery to the Administrator of written notice of such
termination.  An Employer at any time may
terminate its participation in the Plan by resolution of its board of
directors.  In the event of any such
termination, or in the event of the partial termination of the Plan with
respect to a group of Participants (or any combination thereof), the Accounts
of the group with respect to whom the Plan is terminated shall become fully
vested and thereafter shall not be subject to forfeiture.  Unallocated amounts, including Forfeitures,
shall be allocated to the applicable Accounts. 
The Administrator shall direct the Trustee to distribute the vested
Accounts to such group.

 

A complete
discontinuance of contributions by an Employer to the Plan shall be deemed a
termination of such Employer’s participation in the Plan for purposes of this Section 15.3.

 

49

 

IN
WITNESS WHEREOF, the NBTY, Inc. Compensation and Stock
Option Committee has caused this amendment to be adopted the Company this 1st
day of August, 2007.

 

 

	
   

  	
  By: 

  	
  /s/ Peter White

  
	
   

  	
   

  
	
   

  	
  Peter White

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Glenn Cohen

  
	
   

  	
   

  
	
   

  	
  Glenn Cohen

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Neil Koenig

  
	
   

  	
   

  
	
   

  	
  Neil Koenig

  

 

50QuickLinks
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Exhibit 10.16    
    

 
 

CONFIDENTIAL    
    

May 9,
2008 

Mr. Joseph
J. Troy

4211 W. Boy Scout Blvd

Tampa, FL 33607

        RE:
Employment Agreement 

Dear
Joe: 

        Confirming
our recent discussions, we are pleased that you have accepted the position of Executive Vice President Structured Finance of JWH Holding Company, LLC ("the Company").
With the acceptance of your new role, you left your former position, Executive Vice President and Chief Financial Officer for Walter Industries, Inc., effective February 13, 2008. This
document, including Exhibit A, supersedes all previous agreements and other rights you had with Walter Industries, Inc., or any of its affiliates ("Walter"), including your
Change-in-Control Agreement dated February, 2004. This Agreement sets forth the terms and conditions of your employment and will be final and binding on the date you execute
this letter. 

	1.
	You
will serve as Executive Vice President Structured Finance of JWH Holding Company, LLC reporting to the Chief Executive Officer of the Company. Your responsibilities and
primary objective will be to provide a solution for the separation of JWH Holding Company, LLC from Walter, to the satisfaction of the Board of Directors of Walter ("the Project"). It is our
goal that this Project will be completed no later than September 1, 2008 or such later date as the parties mutually agree ("Termination Date").

	2.
	Your
compensation package will be as follows:

	(a)
	Your
annualized base salary will be $352,240 per year.

	(b)
	For
2008 you will be eligible for a bonus with a target of 60% of your base salary, which will be pro-rated from January 1, 2008 to Termination Date and payable on
the achievement of Project results by the Termination Date. The 2008 bonus will not be paid or payable in the event that the Project is not completed by the Termination Date, or you leave the Company
prior to the satisfactory completion of the Project.

	(c)
	The
Company agrees that 25,901 non-qualified stock options from your August 4, 2006 equity grant will vest as scheduled on August 4, 2008, irrespective of
the status of your employment at that time. You will have 90 days after the Termination Date to exercise any vested options you hold at that time. Except as provided in Paragraph 15 all
other unvested equity grants awarded under the 1995 or 2002 Walter Long-Term Incentive Plans will terminate as of the date hereof. 

On
February 27, 2008 you received a performance-based equity grant with a value of $125,000 under the 2002 Walter Long-Term Incentive Plan in the form of restricted stock units.
This grant will vest in its entirety on the Termination Date if the Project has been completed. If the Project is not completed by the Termination Date, this equity grant will lapse. 

	(d)
	Your
vehicle allowance will continue until your employment ceases pursuant to paragraph 3 below, at the rate of $1,500 per month, subject to usual withholding taxes.

	(e)
	You
will receive the following additional benefits:

	•
	Reimbursement
for all reasonable and customary business-related travel and entertainment expenses in accordance with the terms of the Company policy generally applicable to
the executives in the location in which you are primarily based, as it may change from time to time. 

 

	•
	Participation
in the group life and health insurance benefit programs, the Walter Retirement Savings Plan, the Employee Stock Purchase Plan, use of the corporate country
club membership and an annual executive physical generally applicable to executives employed in the location in which you are primarily based, in accordance with their terms as they may change from
time to time until the Termination Date.

	•
	Eligibility
for 30 days of annual vacation to be used in accordance with policy generally applicable to executives employed in the location in which you are primarily
based, as it may change from time to time. Vacation pay that is earned as of the Termination Date that has not been used will be paid to you following your termination on such date.

	3.
	In
the event of your involuntary termination (other than for "Cause" as defined below), in the event of your Constructive Termination (as defined below), or on the Termination Date
(whichever comes first), your employment will cease and you will be entitled to (i) payment of base salary for 18 months, (ii) payment of the target amount of your cash bonus for
18 months, paid on a pro rata basis for 18 months following the Termination Date, (iii) continued participation in health and life insurance benefits until the earlier of the
18-month anniversary of the Termination Date or the date as you are enrolled as a participant in a group health insurance plan from subsequent employment. Your COBRA election period will
not commence until the expiration of such period. Your current auto allowance, use of the corporate country club membership and the executive annual physical will cease on the Termination Date. All
payments must be in accordance with all government regulations (e.g. IRC Section 409A) and may result in a delay in payments of up to six months to comply with these regulations.

	4.
	As
an Executive of the Company, you will have access to confidential information and other trade secrets of the Company, Walter, and its subsidiaries, affiliates and related entities
("Affiliates"). Each Affiliate is a third party beneficiary to this Agreement.

	5.
	You
agree that all inventions, improvements, trade secrets, reports, manuals, computer programs, systems, tapes and other ideas and materials developed or invented by you during the
period of your employment with Walter, either solely or in collaboration with others, which relate to the actual or anticipated business or research of Walter, which result from or are suggested by
any work you may do, or which result from use of Walter's premises or Walter's or its customers' property (collectively, the "Developments") shall be the sole and exclusive property of Walter. You
hereby assign to Walter your entire right and interest in any Developments and will hereafter execute any documents in connection therewith that Walter may reasonably request. This section does not
apply to any inventions that you made prior to your employment by Walter, or to any inventions that you develop entirely on your own time without using any of Walter's equipment, supplies, facilities
or Walter's or its customers' confidential information and which do not relate to the Walter businesses, anticipated research and developments or the work you have performed for the Walter.

	6.
	Non-Compete/Non-Solicit.
It is understood and agreed that the nature and methods employed in Walter's business are such that you will have substantial
relationships with specific businesses and personnel, prospective and existing, vendors, contractors, customers, and employees of Walter that result in the creation of customer goodwill. It is also
understood that as a result of your employment with the Company, you will have access to Company confidential information that is worthy of protection. Therefore, in consideration of your employment
with the Company and for other good and valuable consideration, beginning immediately and continuing for the Restricted Period, for any reason, for cause or without cause, so long as Walter or any
affiliate, successor or assign thereof carries on the same or like business, you shall not, without the express written consent of Walter, which consent shall not be unreasonably withheld or delayed,
directly or 

 

indirectly,
for yourself or on behalf of, or in conjunction with, any other person, persons, company, partnership, corporation, business entity or otherwise: 

	(a)
	Call
upon, solicit, write, direct, divert, influence, or accept business (either directly or indirectly) with respect to any account or customer or prospective customer of Walter or
any corporation controlling, controlled by, under common control with, or otherwise related to Walter, including but not limited to any other affiliated companies;

	(b)
	Hire
away any personnel of Walter and/or entice any such persons to leave the employ of Walter or its affiliated entities; or

	(c)
	Engage
in or prepare to engage in or have a financial or other interest in any business or any activity which you know (or reasonably should have known) to be directly competitive
with the business of Walter or its affiliated entities as then being carried on or to have a strategic interest in Walter or its affiliated entities; or serve as an employee, agent, partner,
shareholder, director or consultant for, or in any other capacity participate, engage, or have a financial or other interest in any business or any activity which you know (or reasonably should have
known) to be directly competitive with the business of the Company or its affiliated entities as then being carried on or to have a strategic interest in Walter or its affiliated entities (provided,
however, that notwithstanding anything to the contrary contained in this Agreement, you may own up to two percent (2%) of the outstanding shares of the capital stock of a company whose securities are
registered under Section 12 of the Securities Exchange Act of 1934). 

        The
restrictive covenants contained in this Paragraph shall apply to all states that Walter or any of its Affiliates is currently conducting the specific business in which it seeks to
preclude competition by you ("Restricted Geographic Area"). The "Restrictive Period" shall be, (a) in the case of the Company's Financing business, a period of twelve (12) months from
the date of your Termination from the Company, and (b) in the case of Walter's natural resources businesses, a period of eighteen (18) months from the date of your Termination from the
Company. In the case of the Company's homebuilding business, the restrictive covenants contained in subparagraphs (a) and (b) shall be twelve (12) months and the restrictive
covenants contained in subparagraph (c) shall not apply. 

	7.
	Divisibility
of Covenants. If any covenant, restriction or other provision of this Agreement is found invalid or incapable of being enforced by reason of any law, rule or public
policy, all other covenants, restrictions and provisions shall nonetheless remain in full force and effect, and no provision of this Agreement shall be dependent upon any other provision. The parties
agree that the Restricted Geographical Area is divisible and that the restrictions upon your business activities in subparagraph 6 (c) above shall apply separately and distinctly to each
state in the Restricted Geographical Area with the same force and effect as though such restrictions were separately expressed with respect to each and every State, and if such restrictions are held
by any court to be unenforceable as to any particular state, such restrictions nevertheless shall be fully operative and enforceable with respect to each of the other state referred to in
subparagraph 6(c) above. Notwithstanding anything to the contrary in this Agreement, if any of the covenants and restrictions set forth above is found to be invalid or incapable of being
enforced for the reason that the duration or geographic area thereof is deemed by a court to be unreasonable, then the parties hereto authorize any court so declaring the covenant or restriction
unreasonable to rewrite the same so as to change the duration or geographic area (or both) to the maximum time and area that the court may deem to be reasonable under the circumstances.

	8.
	Third-Party
Beneficiaries; Enforcement and Remedies. The restrictive covenants and other provisions of this Agreement are intended for the benefit of the Company and Walter and each
Affiliate and are enforceable by Walter and by each Affiliate to the same extent as if you were an employee of Walter or the Affiliate. You agree and acknowledge that a violation of any of the 

 

provisions
of paragraphs 5, 6, and 9, by you shall cause the Company and each affected Affiliate to suffer irreparable and continuing harm and damage for which there will be no adequate remedy
at law. In the event of a violation of any of the provisions of paragraphs 5, 6, and 9 by you, you agree that the Company and each affected Affiliate shall be entitled to injunctions, both
preliminary and final, prohibitory and mandatory, without bond or security, enjoining and restraining such violation, and that such injunction relief shall be in addition to all other remedies
available to the Company and each affected Affiliate either at law or in equity. You waive the right to claim, and agree that you are estopped from claiming, in any action to enforce the provisions of
those paragraphs that the Company or any Affiliate has an adequate remedy at law and therefore is not entitled to injunctive relief. 

	9.
	You
acknowledge and agree that you will respect and safeguard Walter's property, trade secrets and confidential information. The term "confidential information" means any information
not generally known which concerns Walter's business, or proposed future business and which gives or is intended to give Walter an advantage over its competitors who do not have the information. You
acknowledge that Walter's electronic communication systems (such as email and voicemail) are maintained to assist in the conduct of Walter's business and that such systems and data exchanged or stored
thereon are property of Walter. After your termination from Walter, you will not disclose any trade secrets or confidential information you acquired while an employee, including any corporation
controlling, controlled by, under common control with, or otherwise related to Walter, including but not limited to any other affiliated companies, successor to any other person or entity, including
without limitation, a subsequent employer, or use such information in any manner. Notwithstanding the foregoing, the term "confidential information" shall not include any information which:
(i) which was known to you prior to your employment with Walter as evidenced by written records; (ii) is disclosed to you in good faith by a party who is in lawful possession thereof and
who has the right to make such disclosure; and (iii) is or shall become public knowledge, by publication or otherwise, through no fault of you.

	10.
	As
an inducement to the Company to make this agreement with you, you represent and warrant that you are not a party to any agreement or obligation for personal services and that there
exists no impediment or restraint, contractual or otherwise on your power, right or ability to accept this offer and to perform the duties and obligations specified herein.

	11.
	Non-Disparagement.
Beginning immediately and continuing following your termination of employment for any reason and continuing for so long as Walter or any corporation
controlling, controlled by, under common control with, or otherwise related Walter, including but not limited to any other affiliated companies, successor or assigns thereof carries on the same or
like business, Walter and you mutually agree not to, directly or indirectly, for itself/yourself or on behalf of, or in conjunction with, any other person, persons, company, partnership, corporation,
business entity or otherwise make any statements that are inflammatory, detrimental, slanderous, or negative in any way to the interests of Walter or its affiliated entities or you.

	12.
	Cooperation.
You agree to provide your reasonable cooperation to Walter or any of its Affiliates, or any of their respective shareholders, officers, employees, representatives or
agents, upon reasonable advance notice to you that such cooperation is required, in connection with any action, proceeding or investigation (or any appeal from any action, proceeding or investigation)
that relates to events occurring during your employment with Walter. Walter shall reimburse you for all travel, lodging and other related costs incurred by you in connection with provision of such
cooperation, in accordance with Walter's business expense reimbursement policy maintained for its executives from time to time. 

 
	13.
	Definitions:

        "Cause"
shall mean: (a) material failure to act in accordance with the reasonable instructions of the Chief Executive Officer of the Company, (b) conviction of a felony
arising from any act of fraud, embezzlement or willful dishonesty in relation to the business or affairs of the Company or any other felonious conduct on your part that is demonstrably detrimental to
the best interests of the Company or any subsidiary or affiliate, (c) being repeatedly under the influence of illegal drugs or alcohol while performing your duties, or (d) commission of
any other willful act that is demonstrably injurious to the financial condition or business reputation of the Company or any subsidiary or affiliate. 

        "Constructive
Termination" shall mean, without your written consent: (a) a material failure of the Company to comply with the provisions of this Agreement, (b) any
purported termination of your employment other than for Cause, or (c) the failure of a successor corporation to assume the Company's obligations under this Agreement. 

	14.
	In
the event that any portion of any payment under this Agreement, or under any other agreement with, or plan of the Company (in the aggregate, Total Payments) would constitute an
"excess parachute payment," such that a golden parachute excise tax is due, the Company shall provide to you, in cash, an additional payment in an amount sufficient to cover the full cost of any
excise tax and all of your additional federal, state, and local income, excise, and employment taxes that arise on this additional payment (cumulatively, the Full Gross-Up Payment), such
that you are in the same after-tax position as if you had not been subject to the excise tax. For this purpose, you shall be deemed to be in the highest marginal rate of federal, state,
and local income taxes in the state and locality of your residence on the date of your termination. This payment shall be made as soon as possible following the date of your termination and in
accordance with government regulations including IRC Section 409A. For purposes of this Agreement, the term "excess parachute payment" shall have the meaning assigned to such term in
Section 280G of the Internal Revenue Code, as amended (the Code), and the term "excise tax" shall mean the tax imposed on such excess parachute payment pursuant to Sections 280G and 4999
of the Code.

	15.
	Additional
Post Termination Date Benefits in Exchange for General Release. In consideration of your signing a general release in a form reasonably satisfactory to the Company; on your
Termination Date, the equity grants listed on Schedule 1 hereto will become vested on their normal vesting dates irrespective of the status of your employment at that time and you will have
90 days after February 28, 2009 to exercise stock options that become vested thereunder. In the event Walter Industries, Inc. common stock (WLT) is no longer publicly traded prior
to February 28, 2009, the equity grants listed on Schedule l hereto will be converted into the right to receive the cash value equivalent as soon as practicable after the last day of WLT
trading, without interest.

	16.
	Expenses
Relating to Enforcement. If it becomes necessary for the Company, any Affiliate or you to enforce this Agreement, the prevailing party shall be entitled to recover its costs
of such judicial action, including reasonable attorneys' fees both at the trial court and appellate court levels, from the non-prevailing party.

	17.
	Independent
Obligations. The covenants, restrictions, agreements and obligations made or binding hereunder are independent of any other obligation arising under this Agreement or any
other agreement or law. The existence of any claim or cause of action, whether based on this Agreement or otherwise, shall not constitute a defense to the enforcement by the Company or any Affiliate
of this Agreement against you or to the enforcement by you of this Agreement against the Company.

	18.
	Waiver.
The waiver by either party of a breach of any provision of this Agreement by the other party shall not operate or be construed as a waiver of any subsequent or other breach.

	19.
	Governing
Law; Venue. The validity, interpretation, construction and enforcement of this Agreement are governed by the laws of the State of Florida. Each party consents and agrees
that 

 

the
proper, exclusive and convenient venue for any legal proceeding relating to this Agreement is Hillsborough County, Florida; and each party waives any defense, whether asserted by motion or
pleading, that Hillsborough County, Florida, is an improper or inconvenient venue. 

	20.
	Severability.
If any provision of this Agreement should be found to be unenforceable, by reason of any law, rule or public policy, only that provision shall be affected, and the
balance of this Agreement shall remain in full force and effect and enforceable according to its terms.

	21.
	It
is agreed and understood that this Employment Agreement, if and when accepted, constitutes our entire understanding regarding the subject matter herein and shall supersede all
prior agreements, discussions, understandings and proposals (written or oral) relating to your prior employment with Walter Industries, Inc. and your employment with JWH Holding
Company, LLC.

	22.
	Miscellaneous
Agreements. The covenants, restrictions, agreements and obligations made or binding on you hereunder are personal to you and shall not be assigned or delegated. The
rights and obligations of the Company under this Agreement shall inure to the benefit of and shall be binding upon the successors and assigns of the Company, and the rights of each Affiliate under
this Agreement shall inure to the benefit of the successors and assigns of such Affiliate. This Agreement may be executed in counterparts, and the signature pages of the counterparts may be assembled
to form a single, integrated document. You acknowledge that you have read this Agreement in its entirety, have had the opportunity to consult with an attorney about it and has entered into this
Agreement freely and voluntarily. As used in this Agreement, the singular or plural shall be deemed to include the other whenever the context so indicates or requires. Both parties have participated
in a material way in negotiating and finalizing this Agreement, and the language of all parts of this Agreement shall in all cases be construed as a whole, according to its fair meaning, and not
strictly for or against any of the parties or third-party beneficiaries. The paragraph headings in this Agreement are for reference only and shall not affect, limit or control the meaning of any
provision of this Agreement. 

        Joe,
your signature below confirms your acceptance of this Employment Agreement. Please sign one of the enclosed copies and return it to me in the envelope provided. 

	 	 	Very truly yours,

JWH HOLDING COMPANY, LLC
	

 	
 	

/s/  Mark J. O'Brien      

	 	 	By:	Mark J. O'Brien

Chairman and Chief Executive Officer
	

 	
 	

WALTER INDUSTRIES, INC.
	

 	
 	

/s/  Larry Williams      

	 	 	By:	Larry Williams

Senior Vice President-Human Resources

Agreed
and Accepted 

	/s/  Joseph J. Troy      
 Joseph J. Troy	 	May 9, 2008
 Date

 
 
 

SCHEDULE 1    
    

	Future Vesting Detail
	 	Grant Type
	 	Original Grant Date

	

3,206 on 2/25/2009	
 	

Restricted Stock Units	
 	

2/25/2005
	

2,546 on 2/22/2009	
 	

Non-qualified stock options	
 	

2/22/2006
	

5,589 on 2/22/2009	
 	

Restricted Stock Units	
 	

2/22/2006
	

4,902 on 1/31/2009	
 	

Non-qualified stock options	
 	

1/31/2007

QuickLinks

Exhibit 10.16

CONFIDENTIAL

SCHEDULE 1

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