Document:

Exhibit 10.1

 

EMPLOYMENT AGREEMENT

 

AGREEMENT,
dated as of March 1, 2008, by and between NBTY, Inc., a Delaware
corporation (the “Company”), and SCOTT RUDOLPH (the “Executive”).

 

WHEREAS,
the Company recognizes that the Executive’s talents and abilities are unique,
and have been integral to the success of the Company and thus wishes to secure
the ongoing services of the Executive on the terms and conditions set forth
herein and to prevent any other competitive business from securing his
services, and utilizing his experience, background and know how; and

 

WHEREAS,
the Company and the Executive entered into an Employment Agreement dated as of October 1,
2002 which terminated on September 30, 2007 (the “Old Agreement”), and
desire to continue Executive’s employment on the terms and conditions set forth
in this Agreement; and

 

WHEREAS,
the Board of Directors of the Company (“Board”) recognizes that the possibility
of an unsolicited tender offer or other takeover bid for the Company is
unsettling to senior executives of the Company. Therefore, these arrangements
are being made to help assure a continuing dedication by such senior executives
to their duties to the Company notwithstanding the possibility of a tender
offer or takeover bid. In particular, the Board and the Compensation Committee
of the Board (the “Committee”) believe it important, should the Company receive
proposals from third parties with respect to its future, to enable senior
executives, without being influenced by the uncertainties of their own situation,
to assess and advise the Board whether such proposals would be in the best
interests of the Company and its shareholders and to take such other action
regarding such proposals as the Board might determine to be appropriate. The
Board and the Committee also wish to demonstrate to executives of the Company
that the Company is concerned with the welfare of its executives and intends to
see that loyal executives are treated fairly.

 

NOW,
THEREFORE, in consideration of the premises and the mutual covenants set forth
below, the parties hereby agree as follows:

 

1.                                       Employment. The Company hereby continues to employ the
Executive as Chairman of the Board and Chief Executive Officer of the Company,
and the Executive hereby accepts such employment, on the terms and conditions
set forth below.

 

2.                                       Term. Unless earlier terminated in accordance with Section 6
hereof, the Executive shall be employed by the Company on the terms and
conditions hereof pursuant to this Agreement for a period beginning on the date
hereof (the “Effective Date”) and ending on the third (3rd)
anniversary of the date hereof (the “Employment Period”); provided,  however,
that on the second (2nd) anniversary of the Effective Date and each
anniversary of the Effective Date thereafter the Employment Period shall
automatically be extended, in each case, for an additional one year period
unless the Executive or the Company gives the other prior written notice to the
contrary, so long as

 

 

such
notice is provided at least sixty (60) days prior to the second (2nd)
anniversary of the Effective Date or the anniversary date of the Effective Date
thereafter.

 

3.                                       Position and Duties. During the Employment Period, the Executive
shall serve as Chairman of the Board and Chief Executive Officer of the Company,
with such duties, authority and responsibilities as are normally associated
with and appropriate for such positions. The Executive shall report directly to
the Board or any committees thereof at the request of the Board. The Executive
shall devote substantially all of his working time, attention and energies
during normal business hours (other than absences due to illness or vacation)
to the performance of his duties for the Company. The Executive shall comply
fully and promptly with the various policies, procedures and rules governing
employees promulgated and/or as amended from time to time by the Company.
Notwithstanding the above, the Executive shall be permitted, to the extent such
activities do not substantially interfere with his performance of his duties
and responsibilities hereunder or violate Section 10 of this Agreement, to
(i) manage his personal, financial and legal affairs, (ii) with the
approval of the Board, serve on civic or charitable boards or committees; (iii) with
the approval of the Board, serve on boards of other companies, and the
Executive shall be entitled to receive and retain all remuneration received by
him from the items listed in clauses (i) through (iii) of this
paragraph.

 

4.                                       Place of Performance. During the Employment Period, the Company
shall maintain executive offices for the Executive in Ronkonkoma, New York and
the Executive shall not be required to relocate to any other location beyond a
twenty-five (25) mile radius surrounding Ronkonkoma, New York. During the
Employment Period, the Company shall provide the Executive with an office and
appropriate staff.

 

5.                                       Compensation and Related
Matters.

 

(a)                                  Base Salary. During the Employment Period, the Company
shall pay the Executive an annual base salary at the rate of not less than Nine
Hundred Twenty-Five Thousand Dollars ($925,000) per year retroactive to October 1,
2007 (“Base Salary”). The Executive’s Base Salary shall be paid in
approximately equal installments in accordance with the Company’s customary
payroll practices, less all applicable tax withholdings for state and federal
income taxes, FICA and other deductions as required by law and/or authorized by
the Executive. In the first fiscal quarter of 2008 and each subsequent year
during the Employment Period, pursuant to the Company’s policy for senior
executives, the Company shall effect a performance and salary review of the
Executive and may increase (but not decrease) the Base Salary in such amount as
the Committee, in its sole discretion, determines, but in no event shall the
increase over the prior Base Salary be less than the percentage increase in the
Consumer Price Index published by the Bureau of Labor Statistics of the United
States Department of Labor for each twelve (12) month period beginning on January 1
of such year. January 2008 shall be the “Base Year” and the corresponding
Index number for the month of January on each anniversary of the Effective
Date shall be the current Index number. If the

 

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Executive’s
Base Salary is increased by the Company, such increased Base Salary shall then
constitute the Base Salary for all purposes of this Agreement.

 

(b)                                 Annual Bonus Opportunity. For the fiscal year ending September 30,
2008 and for each full fiscal year of the Company that begins thereafter during
the Employment Period, the Executive shall be eligible to earn an annual bonus
in such amount as shall be determined by the Compensation Committee, in its
sole discretion (the “Annual Bonus”), provided, that the Annual Bonus for any
fiscal year shall not exceed 200% of Executive’s Base Salary in effect on the
first day of such fiscal year (it being understood that the targeted amount of
the Annual Bonus (the “Target Bonus”) shall be 100% of Executive’s Base Salary
in effect on the first day of such fiscal year). The Annual Bonus shall be paid
in cash and may be paid under the Company Executive Bonus Plan in effect on the
Effective Date or other Company bonus plan. Any such cash amount shall be paid
by March 15th of the year following the end of the fiscal year
for which the Annual Bonus was earned.

 

(c)                                  Automobile Allowance;
Driver. The Company shall
lease an automobile for the Executive at a rental cost of up to Two Thousand
Five Hundred Dollars ($2,500) per month. The Company shall also reimburse the
Executive for all costs incurred by the Executive to insure and maintain such
vehicle. Reimbursement of such costs shall be provided to the Executive in
accordance with the Company’s normal business practices but not later than the
end of the calendar year following the calendar year in which the cost was
incurred. During the Employment Period, the Company shall provide the Executive
with access to a driver to drive the Executive, as appropriate to enable the
Executive to comply with his obligations under this Agreement.

 

(d)                                 Business, Travel and
Entertainment Expenses. The
Company shall promptly reimburse the Executive for all business, travel and
entertainment expenses consistent with the Executive’s titles including, without
limitation, first class transportation or travel on a private plane.
Reimbursement of such expenses shall be provided to the Executive in accordance
with the Company’s normal business practices but not later than the end of the
calendar year following the calendar year in which the expense was incurred.

 

(e)                                  Vacation. The Executive shall be entitled to six (6) weeks
of vacation per year. Vacation not taken during the applicable fiscal year (but
not in excess of three weeks) shall be carried over to the next following
fiscal year.

 

(f)                                    Welfare, Pension and
Incentive Benefit Plans. During
the Employment Period and subject to his fulfillment of the applicable
eligibility requirements of the various welfare benefit plans and programs, the
Executive (and his eligible spouse and dependents) shall be entitled to
participate in all the welfare benefit plans and programs maintained by the
Company from time to time for the benefit of its senior executives including,
without limitation, all medical, hospitalization, dental, disability,
accidental death and dismemberment and travel

 

3

 

accident
insurance plans and programs. In addition, during the Employment Period and
subject to his fulfillment of the applicable eligibility requirements of such
employee benefit plans and programs, the Executive shall be eligible to
participate in all pension, retirement, savings and other employee benefit
plans and programs maintained from time to time by the Company for the benefit
of its senior executives, other than any annual cash incentive plan. The
Executive shall pay for the portion of the cost of such benefits as established
by the Company to be paid by its senior executives. Payments and benefits
provided under such plans shall be in the form and at the time each such plan
so provides.

 

(g)                                 Stock-Based Awards. The Executive shall be eligible to receive
such incentive stock options, non-qualified stock options and/or stock
appreciation rights (collectively referred to herein as “Options”) and/or such
other equity awards (collectively with Options referred to as “Stock-Based
Awards”), as may be determined and granted to the Executive from time to time
by the Compensation Committee under the stock option plan in effect at such time
(such stock option plan, or any successor plan is referred to as the “Stock
Option Plan”); provided that the Options shall become 100% vested and
exercisable upon a Change in Control (as defined below) unless otherwise
expressly provided in the applicable award agreement; and the Options shall
expire upon the earlier to occur of (i) ten (10) years from the date
of grant (the “Option Term”) or (ii) except as otherwise provided in Section 8,
one year following the termination of Executive’s employment with the Company.

 

6.                                       Termination. The Executive’s employment hereunder may be
terminated during the Employment Period under the following circumstances (upon
any such termination the Employment Period shall end):

 

(a)                                            Death. The Employment Period shall terminate upon
the Executive’s death.

 

(b)                                           Disability. If, as a result of the Executive’s incapacity
due to physical or mental illness as determined by a physician selected by the
Executive, and reasonably acceptable to the Company, (i) the Executive
shall have been substantially unable, even with reasonable accommodation, to
perform his duties hereunder for six consecutive months, or for an aggregate of
180 days during any period of twelve consecutive months and (ii) within
thirty days after written Notice of Termination (as defined in Section 7
below) is given to the Executive after such six- or twelve-month period, the
Executive shall not have returned to the substantial performance of his duties
on a full-time basis, the Company shall have the right to terminate the
Executive’s employment hereunder for “Disability”.

 

(c)                                            Cause. The Company shall have the right to terminate
the Executive’s employment for “Cause.” For purposes of this Agreement, the
Company shall have “Cause” to terminate the Executive’s employment only upon
the Executive’ s :

 

4

 

(i)                                          conviction of (or entering of a guilty or a
nolo contendere plea to a crime that constitutes) a felony of any type or a
misdemeanor involving moral turpitude; or

 

(ii)                                       illegal or gross misconduct, in either case,
that is willful and that results in material and demonstrable damage to the
business or reputation of the Company; or

 

(iii)                                    willful and continued failure by Executive to
perform his duties hereunder (other than such failure resulting from the
Executive’s incapacity due to physical or mental illness or after the issuance
of a Notice of Termination by the Executive for Good Reason, as defined below)
within ten (10) business days after the Company delivers to him a written
demand for performance that specifically identifies the actions to be
performed; or

 

(iv)                                   engaging in fraud in connection with the
business of the Company or embezzlement or knowing or willful misappropriation
of the Company’s funds or property;

 

(v)                                      habitual abuse of narcotics or alcohol; or

 

(vi)                                   the willful breach by the Executive of any
term of this Agreement.

 

For
purposes of this Section 6(c), no act or failure to act by the Executive
shall be considered “willful” if (x) such act is done by the Executive in
the good faith belief that such act is or was to be beneficial to the Company
or one or more of its businesses, or (y) such failure to take action is
due to the Executive’s good faith belief that such action would be materially
harmful to the Company or one or more of its businesses. “Cause” shall not
exist unless and until the Company has delivered to the Executive a copy of a
resolution duly adopted by a majority of the entire membership of the Board
(excluding the Executive for purposes of determining such majority) at a
meeting of the Board called and held for such purpose after reasonable (but in
no event less than thirty days’) notice to the Executive and an opportunity for
the Executive, together with his counsel, to cure such event or circumstance
(if curable) and to be heard before the Board, finding that in the good faith
opinion of the Board that “Cause” exists, and specifying the particulars
thereof in detail. Notwithstanding the foregoing, if the Board reasonably
believes in good faith that facts exist that may justify a termination for
Cause, the Board retains the right to (i) immediately suspend the
Executive’s employment (without any obligation to pay or provide any benefits
described in Section 6) and (ii) call the Board meeting and comply
with the other requirements described in the preceding sentence within thirty
(30) days thereafter. This Section 6(c) shall not prevent the
Executive from challenging in any court of competent jurisdiction the Board’s
determination that Cause exists or that the Executive has failed to cure any
act (or failure to act) that purportedly formed the basis for the Board’s
determination. However, after giving notice to the Executive and complying with
the procedures set

 

5

 

forth
in this Section 6(c), the Company may relieve the Executive of his duties
on an interim basis.

 

(d)                                 Good Reason. The Executive may terminate his employment
for “Good Reason” after giving the Company detailed written notice thereof, if
the Company shall have failed to cure the event or circumstance constituting “Good
Reason” within thirty (30) business days after receiving such notice, provided,  however, that (i) if
Executive does not notify the Company in writing that a Good Reason event has
occurred within ninety (90) days after Executive has knowledge of such event,
the event will not constitute Good Reason and (ii) if Executive does not
resign within twenty-four (24) months after Executive has knowledge that an
event constituting Good Reason has occurred and has not been cured, any
resignation based thereon shall be deemed not to be for Good Reason. Good
Reason shall mean the occurrence of any of the following without the written
consent of the Executive:

 

(i)                                               the assignment to the Executive of duties
materially inconsistent with this Agreement and his position (including the
office to which he reports, status, offices and title), a change in his titles
or authority or other action by the Company which results in a material diminution
of such position, authority, duties or responsibilities;

 

(ii)                                            any material reduction by the Company of, or
the Company’s failure to pay, the Executive’s Base Salary in breach of Section 5(a) above,
or any material reduction in Executive’s maximum and target bonus opportunity
levels below the 200% and 100% levels set in Section 5(b) above;

 

(iii)                                         any material failure by the Company to
provide benefits required by Section 5;

 

(iv)                                        the requirement of the Executive to relocate
to locations other than that provided in Section 4 hereof;

 

(v)                                           the failure of the Company to comply with and
satisfy Section 13(a) of this Agreement;

 

(vi)                                        as a result of a Change in Control (as
defined below) and a change in circumstances thereafter materially affecting
the Executive’s position, including, without limitation, a material change in
scope of the business or other activities for which he was responsible
immediately prior to the Change in Control, Executive has been rendered
substantially unable to carry out, or has been substantially hindered in the
performance of, any of the authority, duties and responsibilities contemplated
by Section 3 above; or

 

(vii)                                     any material breach of this Agreement by the
Company.

 

The
Executive’s right to terminate his employment hereunder for Good Reason shall
not be affected by his incapacity due to physical or mental illness. The

 

6

 

Executive’s
continued employment shall not constitute consent to, or a waiver of rights
with respect to, any act or failure to act constituting Good Reason hereunder.

 

(e)                                  Without Cause. So long as the Company complies in full with
all of its obligations set forth in Section 8 below, the Company shall
have the right to terminate the Executive’s employment hereunder without Cause
by providing the Executive with a Notice of Termination to that effect.

 

(f)                                    Without Good Reason. The Executive shall have the right to
terminate his employment hereunder without Good Reason by providing the Company
with a Notice of Termination to that effect.

 

(g)                                 Upon a Change in Control. The Company shall have the right to terminate
the Executive’s employment hereunder as a result of a Change in Control by
providing the Executive with a Notice of Termination to that effect. For purposes
of this Agreement, “Change in Control” shall mean the happening of any of the
following:

 

(i)                                               The members of the Board at the beginning of
any consecutive twenty-four calendar month period, but not including any period
prior to the Effective Date (the “Incumbent Directors”), cease for any reason
other than due to death or such director’s desire to not stand for re-election to the Board to constitute at least a
majority of the members of the Board; provided that any director whose
election, or nomination for election by the Company’s stockholders, was
approved by a vote of at least a majority of the members of the Board then
still in office who were members of the Board at the beginning of such
twenty-four calendar month period shall be deemed an Incumbent Director;

 

(ii)                                            any “person”, including a “group” (as such
terms are used in Sections 13(d) and 14(d) of the Securities Exchange
Act of 1934), but excluding the Executive, the Company, any of its affiliates
or any employee benefit plan of the Company is or becomes after the Effective
Date a “beneficial owner” (as such term is used in Section 13(d) and
14 of the Securities Exchange Act of 1934) directly or indirectly of securities
of the Company (not including in the securities beneficially owned by such
person any securities acquired directly from the Company) representing 25% or
more of the combined voting power of the Company’s then outstanding securities
(the “Company Voting Securities”); provided,  however, such event
shall not be deemed to be a Change in Control if it qualifies as a
Non-Qualifying Transaction as defined in clause (iii) below;

 

(iii)                                         the consummation of a merger, consolidation,
statutory share exchange or similar form of corporate transaction involving the
Company or any of its subsidiaries that requires the approval of the Company’s
stockholders, whether for such transaction or the issuance of securities in the
transaction (a “Business Combination”), unless immediately following such
Business Combination: (A) more than 50% of the total voting power of (x) the
corporation resulting from such Business Combination (the “Surviving
Corporation”), or (y) if

 

7

 

applicable,
the ultimate parent corporation that directly or indirectly has beneficial
ownership of at least 95% of the voting securities eligible to elect directors
of the Surviving Corporation (the “Parent Corporation”), is represented by
Company Voting Securities that were outstanding immediately prior to such
Business Combination (or, if applicable, is represented by shares into which
such Company Voting Securities were converted pursuant to such Business
Combination), and such voting power among the holders thereof is in
substantially the same proportion as the voting power of such Company Voting
Securities among the holders thereof immediately prior to the Business
Combination, (B) no person (other than any employee benefit plan (or
related trust) sponsored or maintained by the Surviving Corporation or the
Parent Corporation), is or becomes the beneficial owner, directly or
indirectly, of 25% or more of the total voting power of the outstanding voting
securities eligible to elect directors of the Parent Corporation (or, if there
is no Parent Corporation, the Surviving Corporation) and (C) at least a
majority of the members of the board of directors of the Parent Corporation
(or, if there is no Parent Corporation, the Surviving Corporation) following
the consummation of the Business Combination were Incumbent Directors at the
time of the Board’s approval of the execution of the initial agreement
providing for such Business Combination (any Business Combination which
satisfies all of the criteria specified in (A), (B) and (C) above
shall be deemed to be a “Non-Qualifying Transaction”); or

 

(iv)                                        the stockholders of the Company approve a
plan of complete liquidation or dissolution of the Company or the consummation
of a sale of all or substantially all of the Company’s assets to a person that
is not controlled by the Company.

 

7.                                       Termination Procedure.

 

(a)                                  Notice of Termination.  Any termination of the Executive’s employment by the Company or by the
Executive during the Employment Period (other than pursuant to Section 6(a))
shall be communicated by written Notice of Termination to the other party. For
purposes of this Agreement, a “Notice of Termination” shall mean a notice
indicating the specific termination provision in this Agreement relied upon and
setting forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Executive’s employment under that
provision.

 

(b)                                 Date of Termination. “Date of Termination” shall mean (i) if the
Executive’s employment is terminated by his death, the date of his death, (ii) if
the Executive’s employment is terminated pursuant to Section 6(b), thirty
(30) days after the date of receipt of the Notice of Termination (provided that
the Executive does not return to the substantial performance of his duties on a
full-time basis during such thirty (30) day period), and (iii) if the
Executive’s employment is terminated for any other reason, the date on which a
Notice of Termination is given or any later date (within thirty (30) days after
the giving of such notice) set forth in such Notice of Termination.
Notwithstanding the foregoing, in the event that the

 

8

 

Executive
has given the Company his Notice of Termination for Good Reason or otherwise,
the Board may elect to have such resignation become effective immediately or at
such other date, not later than the effective date specified in the Notice of
Termination, as the Board may determine.

 

(c)                                  Resignation.  Upon termination of the Executive’s employment, Executive (unless
otherwise requested by the Board) concurrently shall resign any directorships
which he holds with the Company and all affiliates of the Company.

 

8.                                       Compensation Upon
Termination or During Disability.
In the event the Executive’s employment terminates during the Employment
Period, the Company shall provide the Executive with the payments and benefits
set forth below within 10 business days following the Date of Termination
(except for the payment set forth in Section 8 (a)(vi), which shall be
paid as provided in such Section).

 

(a)                                  Termination By Company
without Cause or By Executive for Good Reason. If the Executive’s employment is terminated
by the Company without Cause (other than Disability) or by the Executive for
Good Reason, in each case before a Change in Control has occurred:

 

(i)                                               the Company shall pay to the Executive,
promptly (but in no event more than ten (10) business days) after the Date
of Termination, a lump sum payment equal to the sum of (A) Base Salary and
accrued vacation pay, in each case through the Date of Termination, (B) three
(3) times the Executive’s Base Salary in effect immediately prior to such
termination and (C) three (3) times the average actual Annual Bonus
earned by the Executive in the three (3) fiscal years preceding the fiscal
year in which Executive’s employment is terminated;

 

(ii)                                            the Company shall continue to provide the
Executive and his eligible spouse and dependents for a period equal to three (3) years
following the Date of Termination, the medical, hospitalization, dental and
life insurance program and other benefits provided for in Section 5(f), as
if he had remained employed as follows: (A) during the first eighteen (18)
months following the Date of Termination, medical, hospitalization and dental
benefits shall be continued by the Company as if the Executive was still
actively employed and the Executive shall continue to make the same co-payments
he paid on the date immediately preceding the Date of Termination and (B) for
all other benefits the Company shall promptly (but in no event more than ten (10) days
after incurring such expenses) reimburse the Executive for the insurance
premium cost incurred to purchase the economic equivalent of the benefits they
otherwise would have been entitled to receive under such plans and programs;
and provided,  further, that such benefits shall terminate on the
date or dates the Executive becomes eligible to receive equivalent coverage and
benefits under the plans and programs of a subsequent employer at an equivalent
cost to the Executive (such coverage and

 

9

 

benefits
to be determined on a coverage-by-coverage, or benefit-by-benefit, basis);

 

(iii)                                         unless otherwise expressly provided in the
applicable award agreement, all outstanding equity incentive awards (including,
without limitation, stock options granted under the Stock Option Plan) shall
immediately vest and any then outstanding stock options or similar awards held
by Executive shall remain exercisable for a period of one year from the date of
such termination or, if earlier, until the end of the Option Term;

 

(iv)                                        the Company shall, consistent with past
practice, reimburse the Executive pursuant to Section 5 for business
expenses incurred but not paid prior to such Date of Termination. Reimbursement
of such expenses shall be provided to the Executive in accordance with the
Company’s normal business practices but not later than the end of the calendar
year following the calendar year in which the expense was incurred;

 

(v)                                           the Executive shall be entitled to any other
rights, compensation and/or benefits as may be due to the Executive in
accordance with the terms and provisions of any agreements, plans or programs
of the Company (other than any severance-based plan or program); and

 

(vi)                                        If (x) a Change in Control shall occur
following such Date of Termination and (y) it shall be determined that a
Payment (as defined in Section 9(d) below) would be subject to Excise
Tax (as defined in Section 9(d)), then the Executive shall be entitled to
receive a Gross-Up Payment (as defined in Section 9(d)), as provided in Section 9(d)
and Exhibit A hereto. The Gross-Up Payment shall be paid pursuant to Exhibit A
hereto.

 

The
payments and benefits provided for in Sections 8(a)(i)(A), 8(a)(iv) and
8(a)(v) above are hereinafter referred to as the “Accrued Obligations”.
The receipt of any amounts to be paid under this subsection (a) (other
than any Accrued Obligations) is conditioned upon the Executive or his personal
representative’s execution and delivery (and non-revocation) of a release in
the form shown in Exhibit B hereto within thirty (30) days of the Date of
Termination. Following the Company’s payments and provisions of all of the
foregoing, the Company shall have no further obligations to the Executive
hereunder.

 

(b)                                           Cause or By Executive
Without Good Reason. If the
Executive’s employment is terminated by the Company for Cause or by the
Executive other than for Good Reason, then the Company shall provide the
Executive with his Accrued Obligations and shall have no further obligation to
the Executive hereunder.

 

(c)                                            Disability. During any period that the Executive fails to
perform his duties hereunder as a result of incapacity due to physical or
mental illness (“Disability Period”), the Executive shall continue to receive
his full Base

 

10

 

Salary
set forth in Section 5(a) until his employment is terminated pursuant
to Section 6(b). In the event the Executive’s employment is terminated for
Disability pursuant to Section 6(b):

 

(i)            the Company shall pay to the Executive
promptly (but in no event more than ten (10) business days) after the Date
of Termination a lump sum payment equal to twelve (12) months of Base Salary in
effect immediately prior to such termination;

 

(ii)           unless otherwise expressly provided in the applicable award agreement, all
outstanding equity incentive awards (including without limitation stock options
granted under the Stock Option Plan) shall immediately vest and any then
outstanding stock options or similar awards held by Executive shall remain
exercisable for a period of one year from the date of such termination or, if
earlier, until the end of the Option Term;

 

(iii)          the Company shall, consistent with past practice, reimburse the
Executive pursuant to Section 5 hereof for business expenses incurred but
not paid prior to such Date of Termination. Reimbursement of such expenses
shall be provided to the Executive in accordance with the Company’s normal
business practices but not later than the end of the calendar year following
the calendar year in which the expense was incurred; and

 

(iv)          the Executive shall be entitled to any other rights, compensation
and/or benefits as may be due to Executive in accordance with the terms and
provisions of any agreements, plans or programs of the Company (other than any
severance-based plan or program).

 

The receipt of any amounts to be paid under this
subsection (c) (other than any Accrued Obligations) is conditioned upon
the Executive or his personal representative’s execution and delivery (and
non-revocation) of a release in the form shown in Exhibit B hereto within
thirty (30) days of the Date of Termination. Following the Company’s payments
and provisions of all of the foregoing, the Company shall have no further
obligations to the Executive hereunder.

 

(d)                  Death. If the Executive’s employment is terminated
by his death:

 

(i)            the Company shall pay to the Executive’s
estate promptly (but in no event more than ten (10) business days) after
the Date of Termination a lump sum payment equal to twelve (12) months of Base
Salary in effect immediately prior to death;

 

(ii)           unless otherwise expressly provided in the applicable award agreement,
all outstanding equity incentive awards (including without limitation stock
options granted under the Stock Option Plan) shall immediately vest and any then
outstanding stock options or similar awards held by Executive

 

11

 

shall
remain exercisable for a period of one year from the date of such termination
or, if earlier, until the end of the Option Term;

 

(iii)         the Company shall, consistent with past practice, reimburse the
Executive’s estate pursuant to Section 5 hereof for business expenses
incurred but not paid prior to such Date of Termination. Reimbursement of such
expenses shall be provided to the Executive in accordance with the Company’s
normal business practices but not later than the end of the calendar year
following the calendar year in which the expense was incurred; and

 

(iv)        the Executive’s estate shall be entitled to
any other rights, compensation and/or benefits as may be due to Executive in
accordance with the terms and provisions of any agreements, plans or programs
of the Company (other than any severance-based plan or program).

 

Following
the Company’s payments and provisions of all of the foregoing, the Company
shall have no further obligations to the Executive’s beneficiary, legal
representative or estate hereunder.

 

 

(e)                  Mitigation. The Executive shall not be required to
mitigate damages with respect to the termination of his employment under this
Agreement by seeking other employment or otherwise, and there shall be no
offset against amounts due the Executive under this Agreement on account of
subsequent employment except as specifically provided in this Section 8.
Additionally, amounts owed to the Executive under this Agreement shall not be
offset by any claims the Company may have against the Executive, and the
Company’s obligation to make the payments provided for in this Agreement, and
otherwise to perform its obligations hereunder, shall not be affected by any
other circumstances, including, without limitation, any counterclaim,
recoupment, defense or other right which the Company may have against the
Executive or others.

 

9.           Change in Control Benefits.

 

In
the event the Executive’s employment is terminated by the Company for any
reason other than Cause or Disability, or in the event the Executive resigns
for Good Reason, in each case after a Change in Control has occurred:

 

(a)                The Company shall pay Executive promptly (but
in no event more than ten (10) business days) after the Date of
Termination, as liquidated damages, a lump sum cash payment, equal to the
amount payable under Section 8(a)(i) and shall provide the benefits
and reimbursements provided in Sections 8(a)(ii) and 8(a)(v);

 

(b)                The Company shall, consistent with past
practice, reimburse the Executive pursuant to Section 5 for business
expenses incurred but not paid prior to such Date of Termination. Reimbursement
of such expenses shall be provided to the Executive in accordance with the
Company’s normal business

 

12

 

practices but not later than the end of the calendar year following the
calendar year in which the expense was incurred;

 

(c)                Unless otherwise expressly provided in the
applicable award agreement, all outstanding equity incentive awards (including,
without limitation, stock options granted under the Stock Option Plan) shall
immediately vest and any then outstanding stock options or similar awards held
by the Executive shall remain exercisable for a period of one (1) year
from the date of such termination or, if earlier, until the end of the Option
Term;

 

(d)                Notwithstanding anything in this Agreement to
the contrary, in the event it shall be determined that any payment or
distribution by the Company to or for the benefit of the Executive (whether
paid or payable pursuant to the terms of this Agreement or otherwise) (a “Payment”)
would be subject to the excise tax imposed by Section 4999 (or any
successor provision) of the Internal Revenue Code of 1986, as amended, or any
successor thereto, or any interest or penalties are incurred by the Executive
with respect to such excise tax (such excise tax, together with any such
interest or penalties, are hereinafter collectively referred to as the “Excise
Tax”), then the Executive shall be entitled to receive an additional payment (a
“Gross-Up Payment”) in an amount such that after payment by the Executive of
all taxes (including interest and penalties imposed with respect to such
taxes), including, without limitation, any income taxes (and any interest and
penalties imposed with respect thereto) and Excise Tax imposed upon the
Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal
to the Excise Tax imposed on the Payment, in accordance with the procedures set
forth in Exhibit A hereto;

 

(e)                Mitigation. The Executive shall not be required to
mitigate damages with respect to the termination of his employment under this
Agreement by seeking other employment or otherwise, and there shall be no
offset against amounts due the Executive under this Agreement on account of
subsequent employment except as specifically provided in this Section 9.
Additionally, amounts owed to the Executive under this Agreement shall not be
offset by any claims the Company may have against the Executive, and the
Company’s obligation to make the payments provided for in this Agreement, and
otherwise to perform its obligations hereunder, shall not be affected by any
other circumstances, including, without limitation, any counterclaim,
recoupment, defense or other right which the Company may have against the
Executive or others.

 

10.         Confidential Information;
Non-Competition; Non-Solicitation.

 

(a)                Executive acknowledges that in his employment
hereunder he will occupy a position of trust and confidence.

 

(b)                Except as may be required or appropriate in
connection with his carrying out his duties under this Agreement, the Executive
shall not, without the prior written consent of the Company or as may otherwise
be required

 

13

 

by law or any legal process, or as is necessary in connection with any
adversarial proceeding against the Company (in which case the Executive shall
cooperate with the Company, at the Company’s expense, in obtaining a protective
order against disclosure by a court of competent jurisdiction), communicate, to
anyone other than the Company and those designated by the Company or on behalf
of the Company in the furtherance of its business or to perform his duties
hereunder, any of the following, in each case without limitation in time: any
trade secrets, confidential information, knowledge or data relating to the
Company and its businesses, operations, inventions, products, strategies, and
investments, obtained by the Executive during the Executive’s employment by the
Company that is not publicly available (other than by acts by the Executive in
violation of this Agreement). Executive acknowledges that such confidential
information is specialized, unique in nature and of great value to the Company,
and that such confidential information gives the Company a competitive
advantage. The Executive agrees to deliver or return to the Company, at the
Company’s request at any time or upon termination or expiration of his
employment or as soon thereafter as possible, all documents, computer tapes and
disks, records, lists, data, drawings, prints, notes and written information
(and all copies thereof) furnished by or on behalf of the Company or prepared
by the Executive in the course of his employment by the Company.

 

(c)                During the Employment Period and for a period
of one (1) year beyond the expiration of the Employment Period, Executive shall
not, directly or indirectly, without the prior written consent of the Company,
provide services to (whether as an employee or a consultant, with or without
pay), own, manage, operate, join, control, participate in, or be connected with
(as a stockholder, partner, or otherwise), any business, individual, partner,
firm, corporation, or other entity that is then a direct competitor of the
Company or its subsidiaries (each such competitor a “Competitor of the Company”);
provided, however, that the “beneficial ownership” by
Executive, either individually or as a member of a “group,” as such terms are
used in Rule 13d of the General Rules and Regulations under the
Securities Exchange Act of 1934, as amended, of not more than five percent (5%)
of the voting stock of any publicly held corporation shall not alone constitute
a violation of this Agreement and provided  further that, with the consent of the Company (which
consent shall not be unreasonably withheld or delayed), the foregoing shall not
prohibit Executive from rendering services to an entity that conducts a
business that is a “Competitor of the Company” if such business does not
contribute a material portion of such entity’s revenues. It is further
expressly agreed that the Company will or would suffer irreparable injury if
Executive were to compete with the Company or any subsidiary thereof in
violation of this Agreement, and that the Company would by reason of such
competition be entitled to injunctive relief in a court of appropriate
jurisdiction, and Executive further consents and stipulates to the entry of
such injunctive relief in such a court prohibiting Executive from competing
with the Company or any subsidiary of the Company in violation of this
Agreement. Executive and the Company acknowledge and agree that the business of
the Company is international in nature, and that the terms of the
non-competition agreement set forth herein shall apply on a worldwide basis,
but only in

 

14

 

those countries
where the Company has significant global operations on the date of termination
of Executive’s employment.

 

(d)                During the Employment Period and for a period
of one (1) year beyond the expiration of the Employment Period, Executive
shall not, directly or indirectly, without the prior written consent of the Company,
solicit, induce, encourage or in any way cause any of the Company’s or its
affiliates’ customers, or any person, firm, corporation, company, partnership,
association or entity which was contacted or whose business was solicited,
serviced or maintained by the Company or its affiliates during the term of
Executive’s employment with the Company to reduce or terminate its business
relationship with the Company or its affiliates.

 

(e)                During the Employment Period and for a period
of two (2) years beyond the expiration of the Employment Period, Executive
shall not, directly or indirectly, without the prior written consent of the
Company, solicit, recruit, induce, encourage or in any way cause any employee
of the Company (or such affiliate) to terminate his employment with the Company
(or such affiliate).

 

(f)                 The obligations contained in this Section 10
shall survive the termination or expiration of Executive’s employment with the
Company and shall be fully enforceable thereafter in accordance with its terms.

 

(g)                If any portion of the covenants or agreements
contained in this Section 10, or the application hereof, is construed to
be invalid or unenforceable, the other portions of such covenant(s) or
agreement(s) or the application thereof shall not be affected and shall be
given full force and effect without regard to the invalid or unenforceable
portions to the fullest extent possible. If any covenant or agreement in this Section 10
is held to be unenforceable because of the duration thereof or the scope thereof,
then the court making such determination shall have the power to reduce the
duration and/or limit the scope thereof to the minimum extent necessary to make
the covenant or agreement enforceable in its reduced
form.

 

11.         Indemnification.

 

(a)                General. The Company agrees that if the Executive is made
a party or is threatened to be made a party to any action, suit or proceeding,
whether civil, criminal, administrative or investigative (a “Proceeding”), in
whole or in part, by reason of the fact that the Executive is or was a trustee,
director, officer or employee of the Company, or any
predecessor to the Company or any of their affiliates or is or was serving at
the request of the Company, or any of their affiliates as a trustee, director,
officer, member, employee or agent of another corporation or a partnership,
joint venture, limited liability company, trust or other enterprise, including,
without limitation, service with respect to employee benefit plans, whether or
not the basis of such Proceeding is alleged action in an official capacity as a
trustee, director, officer, member, employee or agent while serving as a
trustee, director, officer, member, employee or agent, the Executive shall be
indemnified

 

15

 

and held harmless by the Company to the fullest extent authorized by
Delaware law and by the Company’s certificate of incorporation and/or by-laws,
as the same exists or may hereafter be amended, against all Expenses (as
defined below) incurred or suffered by the Executive in connection therewith,
and such indemnification shall continue as to the Executive even if the
Executive has ceased to be an officer, director, trustee or agent, or is no longer employed by the Company and shall inure to
the benefit of his heirs, executors and administrators.

 

(b)                Expenses. As  used in this Agreement, the term “Expenses”
shall include, without limitation, damages, losses, judgments, liabilities,
fines, penalties, excise taxes, settlements, and costs, attorneys’ fees, accountants’
fees, and disbursements and costs of attachment or similar bonds, investigations, and any expenses of establishing a right to indemnification under
this Agreement.

 

(c)                Enforcement. If a claim or request under this Section 11
is not paid by the Company or on its behalf, within thirty (30) days after a
written claim or request has been received by the Company, the Executive may at
any time thereafter bring suit against the Company to recover the unpaid amount
of the claim or request and if successful in whole or in part, the Executive
shall be entitled to be paid also the expenses, including attorneys’ fees, of
prosecuting such suit. All obligations for indemnification hereunder shall be
subject to, and paid in accordance with, applicable Delaware law, as the same
exists or may hereafter be amended.

 

(d)                Partial Indemnification. If the Executive is entitled under any
provision of this Agreement to indemnification by the Company for some or a
portion of any Expenses, but not, however, for the total amount thereof, the
Company shall nevertheless indemnify the Executive for the
portion of such Expenses to which the Executive is entitled.

 

(e)                Advances of Expenses. Expenses incurred by the Executive in
connection with any Proceeding shall be paid by the Company in advance upon
request of the Executive that the Company pay such Expenses, but only in the
event that the Executive shall have delivered in writing to the Company (i) an
undertaking to reimburse the Company for Expenses with respect to which the
Executive is not entitled to indemnification and (ii) a statement of his good faith
belief that the standard of conduct necessary for indemnification by the
Company has been met.

 

(f)                 Notice of Claim. The Executive shall give to the Company
notice of any claim made against him for which indemnification will or could be
sought under this Agreement. In addition, the Executive shall give the Company
such information and cooperation as it may reasonably require and as shall be
within the Executive’s power and at such times and places as are convenient for
the Executive.

 

(g)                Defense of Claim. With respect to any Proceeding as to which
the Executive notifies the Company of the commencement thereof:

 

16

 

(i)              The Company will be entitled to participate
therein at its own expense;

 

(ii)             Except as otherwise provided below, to the
extent that it may wish, the Company will be entitled to assume the defense
thereof, with counsel reasonably satisfactory to the Executive, which in the
Company’s sole discretion may be regular counsel to the Company and may be
counsel to other officers and directors of the Company or any subsidiary. The
Executive also shall have the right to employ his own counsel in such action,
suit or proceeding if he reasonably concludes that failure to do so could
involve a conflict of interest between the Company and the Executive, and under
such circumstances the fees and expenses of such counsel shall be at the
expense of the Company; and

 

(iii)            The Company shall not be liable to indemnify
the Executive under this Agreement for any amounts paid in settlement of any
action or claim affected without its written consent. The Company shall not
settle any action or claim in any manner which would (x) impose any
penalty that would not be paid directly or indirectly by the Company, (y) impose
any limitation on the Executive, or (z) admit any liability on the part of
the Executive, in each case without the Executive’s written consent. Neither
the Company nor the Executive will unreasonably withhold or delay their consent
to any proposed settlement.

 

(h)                Non-exclusivity. The right to indemnification and the payment
of Expenses incurred in defending a Proceeding in advance of its final
disposition conferred in this Section 11 shall not be exclusive of any
other right which the Executive may have or hereafter may acquire under any
statute or certificate of incorporation or by-laws of the Company or any
subsidiary, agreement, vote of shareholders or disinterested directors or
trustees or otherwise.

 

(i)                 D&O Insurance. The Company shall provide the Executive with
directors’ and officers’ liability insurance at least as favorable as the
insurance coverage provided to other senior executive officers and directors of
the Company respecting liabilities, costs, charges and expenses of any type
whatsoever incurred or sustained by the Executive (or Executive’s legal
representative or other successors), in his capacity as an officer or director
of the Company, in connection with a Proceeding.

 

12.         Legal Fees and Expenses.

 

(a)                After a Change in Control. If any contest or dispute shall arise between
the Company and the Executive regarding any provision of this Agreement after a
Change in Control, the Company shall reimburse the Executive for all legal fees
and expenses reasonably incurred by the Executive in connection with such
contest or dispute. Such reimbursement shall be made as soon as practicable
following the resolution of such contest or dispute (whether or not appealed) to
the extent the Company receives reasonable written evidence of such fees and
expenses.

 

17

 

(b)                Before a Change in Control. If any contest or dispute shall arise between
the Company and the Executive regarding any provision of this Agreement prior
to a Change in Control, the Company shall reimburse the Executive for all
legal. fees and expenses reasonably incurred by the Executive in connection
with such contest or dispute only if the Executive substantially prevails in
his claim. Such reimbursement shall be made as soon as practicable following
the resolution of such contest or dispute (whether or not appealed) to the
extent the Company receives reasonable written evidence of such fees and
expenses.

 

13.         Successors; Binding
Agreement.

 

(a)                Company’s Successors. No  rights or obligations of the Company under this Agreement may be
assigned or transferred, except that the Company shall require any successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise)
to all or substantially all of the business and/or assets of the Company to
expressly assume and agree to perform this Agreement in the same manner and to
the same extent that the Company would be required to perform it if no such succession
had taken place. As used in this Agreement, “Company” shall include any
successor to its business and/or assets (by merger, purchase or otherwise)
which executes and delivers the agreement provided for in this Section 13
or which otherwise becomes bound by all the terms and provisions of this
Agreement by operation of law.

 

(b)                Vesting of Rights. Since Executive has rendered and continues to
render valuable services to the Company in reliance upon this Agreement, the
rights and obligations created hereunder are hereby vested, and may not be
revoked, rescinded, modified or amended by any subsequent action of the Board.

 

(c)                Executive’s Successors. No rights or obligations of the Executive
under this Agreement may be assigned or transferred by the Executive other than
his rights to payments or benefits hereunder, which may be transferred only by
will or the laws of descent and distribution. Upon the Executive’s death, this
Agreement and all rights of the Executive hereunder shall inure to the benefit
of and be enforceable by the Executive’s beneficiary or beneficiaries, personal
or legal representatives, or estate, to the extent any such person succeeds to
the Executive’s interests under this Agreement. If the Executive should die
following his Date of Termination while any amounts would still be payable to
him hereunder if he had continued to live, all such amounts unless otherwise
provided herein shall be paid in accordance with the terms of this Agreement to
such person or persons so appointed in writing by the Executive, or otherwise
to his legal representatives or estate.

 

14.         Notice. For the purposes of this Agreement, notices,
demands and all other communications provided for in this Agreement shall be in
writing and shall be deemed to have been duly given when delivered either
personally or by United States certified or registered mail, return receipt
requested, postage prepaid, addressed as follows:

 

18

 

 

If
to the Executive:

 

At
his residence address most recently filed with the Company.

 

With
a copy to:

 

Pillsbury
Winthrop Shaw Pittman LLP

1540
Broadway

New York, New York 10036 

Attn: Susan P. Serota, Esq.

Kenneth
W. Taber, Esq.

If
to the Company:

 

NBTY, Inc.

2100
Smithtown Avenue

Ronkonkoma,
New York 11779

Attn:
Harvey Kamil, President and Chief Financial Officer

 

With
a copy to:

 

NBTY, Inc.

2100
Smithtown Avenue

Ronkonkoma,
New York 11779

Attn:
Irene B. Fisher, Esq., General Counsel

 

or
to such other address as any party may have furnished to the others in writing
in accordance herewith, except that notices of change of address shall be
effective only upon receipt.

 

15.         Miscellaneous.  No
provisions of this Agreement may be amended, modified, supplemented or waived
unless such amendment, modification or supplement is agreed to in
writing signed by the Executive and by a duly authorized officer of the
Company, and such waiver is set forth in writing and signed by the party to be
charged. No waiver by either party hereto at any time of any breach by the other
party hereto of any condition or provision of this Agreement to be performed by
such other party shall be deemed a waiver of similar or dissimilar provisions
or conditions at the same or at any prior or subsequent time. No agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not set forth
expressly in this Agreement. The respective rights and obligations of the
parties hereunder of this Agreement shall survive the Executive’s termination
of employment and the termination of this Agreement to the extent necessary for
the intended preservation of such rights and obligations.

 

16.         Validity.  The
invalidity or unenforceability of any provision or provisions of this Agreement
shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect.

 

19

 

17.         Counterparts.  This
Agreement may be executed in one or more counterparts, each of which shall be
deemed to be an original but all of which together will constitute one and the
same instrument.

 

18.         Entire Agreement.  This
Agreement (and any existing stock option award agreements between the Company
and the Executive with respect to stock options still held by Executive as of
the Effective Date) sets forth the entire agreement of the parties hereto in
respect of the subject matter contained herein and supersedes all prior
agreements, promises, covenants, arrangements, communications, representations
or warranties, whether oral or written, by any officer, employee or
representative of any party hereto in respect of such subject matter. .

 

19.         Governing Law.  Except
as otherwise provided in Section 11 hereof, the validity, interpretation,
construction and performance of this Agreement shall be governed by the laws of
the State of New York without regard to its conflicts of law principles.

 

20.         Section Headings.  The
section headings in this Employment Agreement are for convenience of reference
only, and they form no part of this Agreement and shall not affect its
interpretation.

 

21.         Withholding.  The
Company shall make such deductions and withhold such amounts from each payment
made to the Executive hereunder as may be required from time to time by law,
governmental regulation or order.

 

22.         Section 409A.

 

(a)                To the fullest extent applicable, amounts and
other benefits payable under this Agreement are intended to be exempt from the
definition of “nonqualified deferred compensation” under Section 409A of
the Internal Revenue Code of 1986, as amended (the “Code”) in accordance with
one or more of the exemptions available under the final Treasury regulations
promulgated under Section 409A. In this regard, each payment under this
Agreement, including without limitation, each payment other than a life annuity
(within the meaning of Treasury Regulation Section 1.409A-2(b)(2)(ii)) in
a series of scheduled installments (within the meaning of Treasury Regulation Section 1.409A-2(b)(2)(iii)),
shall be deemed a separate payment for purposes of Code section 409A. To the
extent that any such amount or benefit is or becomes subject to Section 409A
due to a failure to qualify for an exemption from the definition of nonqualified
deferred compensation in accordance with such final Treasury regulations, this
Employment Agreement is intended to comply with the applicable requirements of Section 409A
with respect to such amounts or benefits. This Employment Agreement shall be
interpreted and administered to the extent possible in a manner consistent with
the foregoing statement of intent.

 

(b)                Notwithstanding anything in this Employment
Agreement or elsewhere to the contrary, if the Executive is a Specified
Employee (as defined

 

20

 

below
in subparagraph (c) below) on the Date of Termination and the Company
reasonably determines that any amount or other benefit payable under this
Agreement on account of the Executive’s termination of employment constitutes
nonqualified deferred compensation that will subject the Executive to “additional
tax” under Section 409A(a)(1)(B) of the Code (together with any
interest or penalties imposed with respect to, or in connection with, such tax,
a “409A Tax”) with respect to the payment of such amount or the provision of
such benefit if paid or provided at the time specified in the Agreement, then
the payment or provision thereof shall be postponed to the first business day
of the seventh month following the Date of Termination or, if earlier, the date
of the Executive’s death (the “Delayed Payment Date”). The Company and the
Executive may agree to take other actions to avoid the imposition of a 409A Tax
at such time and in such manner as permitted under Section 409A. In the
event that this Section 22 requires a delay of any payment, such payment
shall be accumulated and paid in a single lump sum on the Delayed Payment Date
together with interest for the period of delay, compounded monthly, equal to
the prime or base lending rate then used by Citibank, N.A., in New York City
and in effect as of the date the payment would otherwise have been provided.

 

(c)                         For purposes of
this Employment Agreement, the (i) term “Specified Employee” shall mean a “specified
employee” within the meaning of Section 409A(a)(2)(B)(i) of the Code,
as determined by the Compensation Committee and (ii) the Executive’s Date
of Termination shall in no event be earlier than the date the Executive has
incurred a “separation from service” within the meaning of Section 409A(a)(2)(A)(i) of
the Code.

 

(d)                        The Company and
the Executive may agree to take other actions to avoid the imposition of a 409A
Tax at such time and in such manner as permitted under Section 409A.

 

21

 

 

IN
WITNESS WHEREOF, the parties hereto have executed this Agreement the day and
year above first written.

 

	
  EXECUTIVE 

  	
   

  	
  NBTY, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/
  SCOTT RUDOLPH

  	
   

  	
   

  	
  By:

  	
  /s/
  Harvey Kamil

  	
   

  
	
  SCOTT
  RUDOLPH

  	
   

  	
  Name:
  Harvey Kamil

  
	
   

  	
   

  	
  Title:
  President and CFO

  
						

 

22

 

EXHIBIT A

 

GROSS-UP PAYMENT

 

In
the event that any payment received by Executive or paid by the Company on
behalf of Executive under this Agreement or under any other plan, arrangement
or agreement with the Company or any person whose actions result in a change in
control of the Company (provided that the Company approves of the arrangement
pursuant to which the payment by such person is made to Executive) or any
person affiliated with the Company or such person (collectively, the “Total
Payments”) will be subject to the excise tax (the “Excise Tax”) imposed by
section 4999 (or any successor provision) of the Code, the Company shall
promptly pay to Executive an additional amount (the “Gross-Up Payment”) such
that the net amount retained or to be retained by Executive, after deduction of
any Excise Tax on the Total Payments and on any federal, state and local
income, excise and/or other taxes upon the Gross-up Payment provided for
hereunder, shall be equal to the Total Payments.

 

For
purposes of determining whether any of the Total Payments will be subject to
the Excise Tax and the amount of such Excise Tax, (i) the Total Payments
shall be treated as “parachute payments” within the meaning of section 280G(b)(2) of
the Code, and all “excess parachute payments” within the meaning of section
280G(b)(1) of the Code shall be treated as subject to the Excise Tax,
unless in the opinion of tax counsel selected by the Company’s independent
auditors and reasonably acceptable to Executive the Total Payments (in whole or
in part) do not constitute parachute payments, including by reason of Section 280G(b)(4)(A) of
the Code, or such excess parachute payments (in whole or in part) represent
reasonable compensation for services actually rendered, within the meaning of
section 280G(b)(4)(B) of the Code, in excess of the base amount allocable
to such reasonable compensation, or are otherwise not subject to the Excise
Tax, and (ii) the value of any non-cash benefits or any deferred payment
or benefit shall be determined by the Company’s independent auditors in
accordance with the principles of sections 280G(d)(3) and (4) of the
Code.

 

For
purposes of determining the amount of the Gross-Up Payment, Executive shall be
deemed to pay federal income and other taxes at the highest applicable marginal
rate of taxation in the calendar year in which the Gross-Up Payment is to be
made and state and local income and other taxes at the highest applicable
marginal rate of taxation in the state and locality of Executive’s residence on
the date the Gross-Up Payment is to be made, net of the maximum reduction in
federal income taxes which could be obtained from deduction of such state and
local taxes and any other taxes. In the event that the Excise Tax is
subsequently determined to be less than the amount originally taken into
account hereunder, Executive shall promptly repay to the Company, at the time
that the amount of such reduction in Excise Tax is finally determined, the
portion of the Gross-Up Payment attributable to such reduction (plus that
portion of the Gross-Up Payment attributable to the Excise Tax and federal,
state and local income and other taxes imposed on the Gross-Up Payment being
repaid by Executive to the extent that such repayment results in an actual reduction
in Excise Tax and/or a federal, state or local income tax deduction) plus
interest on the amount of such repayment at the rate

 

23

 

provided
in section 1274(b)(2)(B) of the Code (provided,  however,
that if all or any portion of the amount of any repayment made to Executive by
any governmental entity shall be made at a higher rate of interest than that
provided under section 1274(b)(2)(B) of the Code (the “Higher Interest
Rate Amount”), Executive shall also repay to the Company interest on the Higher
Interest Rate Amount at a rate equal to the excess of such higher rate of
interest over the rate provided under section 1274(b)(2)(B) of the Code).
In the event that the Excise Tax is determined to exceed the amount originally
taken into account hereunder (including by reason of any payment the existence
or amount of which cannot be determined at the time of the Gross-Up Payment),
the Company shall promptly make an additional Gross-Up Payment in respect of
such excess (plus any interest, penalties or additions to tax payable by
Executive with respect to such excess) at the time that the amount of such
excess is finally determined. The parties agree that such excess will be
considered to have been finally determined at the conclusion of Internal
Revenue Service administrative appellate proceedings, unless the parties
mutually agree to pay or settle such amount earlier, or agree to pursue an
appeal further. Executive and the Company shall each reasonably cooperate with
the other in connection with any administrative or judicial proceedings
concerning the existence or amount of liability for Excise Tax with respect to
the Total Payments. In the event of an audit or other administrative or
judicial proceeding relating to or arising from the issue of potential
liability for the Excise Tax, the Company shall pay all attorneys’ and
accountants’ fees and other costs reasonably incurred by Executive in
connection with the audit or other proceeding to the extent such fees and costs
relate to such liability, provided, that in the case of judicial or
administrative proceedings, the Company consents to the pursuit of such
proceedings.

 

The
Gross-Up Payment payable pursuant hereto shall be payable (or, as applicable
withheld), in whole or in part as applicable, on the earlier of (i) the
date the Company is required to withhold the Excise Tax pursuant to section
4999 of the Code or (ii) the date Executive is required to pay the Excise
Tax. In the case where the amount of such Gross-Up Payment is subject to audit
or litigation, payment shall be made no later than the end of the Executive’s
taxable year following his taxable year in which the taxes that are subject to
the audit or litigation are remitted to the taxing authority, or where as a
result of such audit or litigation no taxes are remitted, the end of the
Executive’s taxable year following his taxable year in which the audit is
completed or there is a final and nonappealable settlement or other resolution
of the litigation.

 

Executive
shall notify the Company of any audit or review by the Internal Revenue Service
of Executive’s federal income tax return for the year in which a payment under
this Agreement is made within ten (10) days of Executive’s receipt of such
audit or review. In addition, Executive shall also notify the Company of the final
resolution of such audit or review within ten (10) days of such
resolution.

 

24

 

EXHIBIT B

 

GENERAL RELEASE OF CLAIMS

 

This
General Release of Claims (this “Release”), dated as of
                 20   ,
confirms the following understandings and agreements between NBTY, Inc., a
Delaware corporation (the “Company”) and                (hereinafter
referred to as “you” or “your”).

 

In
consideration of the promises set forth in that certain employment agreement
between you and the Company dated February        ,
2008 (the “Employment Agreement”), as well as any promises set forth in this
Release, you agree as follows:

 

1.                                       Opportunity for
Review and Revocation. You have twenty-one (21)
days to review and consider this Release. Notwithstanding anything contained
herein to the contrary, this Release will not become effective or enforceable
for a period of seven (7) calendar days following the date of its
execution, during which time you may revoke your acceptance of this Release by
notifying the General Counsel of the Company, in writing. To be effective, such
revocation must be received by the Company no later than 5:00 p.m. on the
seventh (7th) calendar day following its execution. Provided that
the Release is executed and you do not revoke it, the eighth (8th)
day following the date on which this Release is executed shall be its effective
date (the “Effective Date”). In the event of your revocation of this Release
pursuant to this Section 1, this Release will be null and void and of no
effect, and the Company will have no obligations hereunder.

 

2.                                  Employee
Release and Waiver of Claims.

 

(a)                                                As used in this
Release, the term “claims” will include all claims, covenants, warranties,
promises, undertakings, actions, suits, causes of action, obligations, debts,
accounts, attorneys’ fees, judgments, losses and liabilities, of whatsoever
kind or nature, in law, equity or otherwise.

 

(b)                                               For and in
consideration of the payments and benefits described in Section 8(a) or
Section 8(c) of the Employment Agreement (the “Consideration”), you,
for and on behalf of yourself and your heirs, administrators, executors and
assigns, effective the date hereof, do fully and forever release, remise and
discharge the Company, its direct and indirect parents, subsidiaries and
affiliates, together with their respective past, present and/or future
officers, directors, partners, shareholders, employees, trustees, counsel,
representatives, insurers, successors and assigns, whether in official or
individuals capacities (collectively, and with the Company, the “Group”) from
any and all claims whatsoever up to the date hereof which you had, may have
had, or now have against the Group, for or by reason of any matter, cause or
thing whatsoever, including any claim arising out of or attributable to your
employment or the termination of your employment with the Company, whether for
tort, breach of express or implied employment contract, intentional infliction
of emotional distress, wrongful termination, unjust dismissal, defamation,
libel or slander, or under any federal, state or local law dealing with

 

25

 

discrimination
based on age, race, sex, national origin, handicap, religion, disability or
sexual orientation. This release of claims includes, but is not limited to, all
claims arising under the Age Discrimination in Employment Act (“ADEA”), Title
VII of the Civil Rights Act, the Americans with Disabilities Act, the Civil
Rights Act of 1991, the Family Medical Leave Act, and the Equal Pay Act, each
as may be amended from time to time, and all other federal, state and local
laws, the common law and any other purported restriction on an employer’s right
to terminate the employment of employees.

 

(c)                                                You
specifically release all claims relating to your employment and its termination
under ADEA, a United States federal statute that, among other things, prohibits
discrimination on the basis of age in employment and employee benefit plans.

 

(d)                                               Notwithstanding
any provision of this Release to the contrary, by executing this Release, you
are not releasing any claims relating to: (i) your rights with respect to
the Consideration or any other benefits expressly provided under the Employment
Agreement, and (ii) any indemnification or similar rights you may have as
a current or former officer or director of the Company, including, without
limitation, any and all rights thereto referenced in the Employment Agreement,
the Company’s bylaws, plan of reorganization or liquidation, other governance
documents, or any rights with respect to the Company’s directors’ and officers’
insurance policies.

 

3.                                       Knowing and
Voluntary Waiver. You expressly acknowledge and agree that you:

 

(a)                                                Are able to
read the language, and understand the meaning and effect, of this Release;

 

(b)                                               Have no
physical or mental impairment of any kind that has interfered with your ability
to read and understand the meaning of this Release or its terms, and that you
are not acting under the influence of any medication, drug or chemical of any
type in entering into this Release;

 

(c)                                                Are
specifically agreeing to the terms of the release contained in this Release in
consideration of the Company’s commitments under the Employment Agreement. The
Company has agreed to provide the compensation and benefits in the Employment
Agreement in consideration of your services provided pursuant to the Employment
Agreement and because of your execution of this Release;

 

(d)                                               Understand
that, by entering into this Release, you do not waive rights or claims under
ADEA that may arise after the Effective Date;

 

(e)                                                Had or could
have had twenty-one (21) calendar days in which to review and consider this Release;

 

 

26

 

(f)                                                  Were advised to
consult with your attorney regarding the terms and effect of this Release; and

 

(g)                                               Have signed
this Release knowingly and voluntarily.

 

4.                                       No Suit. You represent
that you have not filed or permitted to be filed against the Group,
individually or collectively, any complaints or lawsuits arising out of your
employment, or any other matter arising on or prior to the Effective Date.

 

5.                                       Successors and
Assigns. The provisions hereof shall enure to the benefit of your heirs,
executors, administrators, legal personal representatives and assigns and shall
be binding upon your heirs, executors, administrators, legal personal
representatives and assigns.

 

6.                                  Severability. If any provision
of this Release shall be held by any court of competent jurisdiction to be
illegal, void or unenforceable, such provision shall be of no force and effect.
The illegality or unenforceability of such provision, however, shall have no
effect upon and shall not impair the enforceability of any other provision of
this Release.

 

7.                                       Governing Law. This
Agreement shall be governed by and construed in accordance with Federal law and
the laws of the State of New York, applicable to releases made and to be performed
in that State.

 

IN
WITNESS WHEREOF, the undersigned has executed this Release as of the date first
written above.

 

	
   

  	
  By:

  	
   

  
	
   

  	
        Name:

  

 

27Exhibit 10.2

 

EMPLOYMENT AGREEMENT

 

AGREEMENT,
dated as of March 1, 2008, by and between NBTY, Inc., a Delaware
corporation (the “Company”), and HARVEY KAMIL (the “Executive”).

 

WHEREAS,
the Company recognizes that the Executive’s talents and abilities are unique,
and have been integral to the success of the Company and thus wishes to secure
the ongoing services of the Executive on the terms and conditions set forth
herein and to prevent any other competitive business from securing his
services, and utilizing his experience, background and know how; and

 

WHEREAS,
the Company and the Executive entered into an Employment Agreement dated as of October 1,
2002 which terminated on September 30, 2007 (the “Old Agreement”), and
desire to continue Executive’s employment on the terms and conditions set forth
in this Agreement; and

 

WHEREAS,
the Board of Directors of the Company (“Board”) recognizes that the possibility
of an unsolicited tender offer or other takeover bid for the Company is
unsettling to senior executives of the Company. Therefore, these arrangements
are being made to help assure a continuing dedication by such senior executives
to their duties to the Company notwithstanding the possibility of a tender
offer or takeover bid. In particular, the Board and the Compensation Committee
of the Board (the “Committee”) believe it important, should the Company receive
proposals from third parties with respect to its future, to enable senior
executives, without being influenced by the uncertainties of their own situation,
to assess and advise the Board whether such proposals would be in the best
interests of the Company and its shareholders and to take such other action
regarding such proposals as the Board might determine to be appropriate. The
Board and the Committee also wish to demonstrate to executives of the Company
that the Company is concerned with the welfare of its executives and intends to
see that loyal executives are treated fairly.

 

NOW,
THEREFORE, in consideration of the premises and the mutual covenants set forth
below, the parties hereby agree as follows:

 

1.                                            Employment. The Company hereby continues to employ the Executive as President and
Chief Financial Officer of the Company, and the Executive hereby accepts such
employment, on the terms and conditions set forth below.

 

2.                                            Term. Unless earlier terminated in accordance with Section 6 hereof, the
Executive shall be employed by the Company on the terms and conditions hereof
pursuant to this Agreement for a period beginning on the date hereof (the “Effective
Date”) and ending on the third (3rd) anniversary of the date hereof
(the “Employment Period”); provided,  however, that on the second (2nd)
anniversary of the Effective Date and each anniversary of the Effective Date
thereafter the Employment Period shall automatically be extended, in each case,
for an additional one year period unless the Executive or the Company gives the
other prior written notice to the contrary, so long as 

 

 

such notice is provided at
least sixty (60) days prior to the second (2nd) anniversary of the
Effective Date or the anniversary date of the Effective Date thereafter.

 

3.                                            Position and Duties. During the
Employment Period, the Executive shall serve as President and Chief Financial
Officer of the Company, with such duties, authority and responsibilities as are
normally associated with and appropriate for such positions. The Executive
shall report directly to the Board or any committees thereof at the request of
the Board. The Executive shall devote substantially all of his working time,
attention and energies during normal business hours (other than absences due to
illness or vacation) to the performance of his duties for the Company. The
Executive shall comply fully and promptly with the various policies, procedures
and rules governing employees promulgated and/or as amended from time to
time by the Company. Notwithstanding the above, the Executive shall be
permitted, to the extent such activities do not substantially interfere with
his performance of his duties and responsibilities hereunder or violate Section 10
of this Agreement, to (i) manage his personal, financial and legal
affairs, (ii) with the approval of the Board, serve on civic or charitable
boards or committees; (iii) with the approval of the Board, serve on
boards of other companies, and the Executive shall be entitled to receive and
retain all remuneration received by him from the items listed in clauses (i) through
(iii) of this paragraph.

 

4.                                            Place of Performance. During the
Employment Period, the Company shall maintain executive offices for the
Executive in Ronkonkoma, New York and the Executive shall not be required to
relocate to any other location beyond a twenty-five (25) mile radius
surrounding Ronkonkoma, New York. During the Employment Period, the Company shall
provide the Executive with an office and appropriate staff.

 

5.                                            Compensation and Related Matters.

 

(a)                                  Base Salary. During the Employment Period,
the Company shall pay the Executive an annual base salary at the rate of not
less than Six Hundred Thousand Dollars ($600,000) per year retroactive to October 1,
2007 (“Base Salary”). The Executive’s Base Salary shall be paid in
approximately equal installments in accordance with the Company’s customary
payroll practices, less all applicable tax withholdings for state and federal
income taxes, FICA and other deductions as required by law and/or authorized by
the Executive. In the first fiscal quarter of 2008 and each subsequent year
during the Employment Period, pursuant to the Company’s policy for senior executives,
the Company shall effect a performance and salary review of the Executive and
may increase (but not decrease) the Base Salary in such amount as the
Committee, in its sole discretion, determines, but in no event shall the
increase over the prior Base Salary be less than the percentage increase in the
Consumer Price Index published by the Bureau of Labor Statistics of the United
States Department of Labor for each twelve (12) month period beginning on January 1
of such year. January 2008 shall be the “Base Year” and the corresponding
Index number for the month of January on each anniversary of the Effective
Date shall be the current Index number. If the Executive’s Base Salary is

 

2

 

increased by the Company, such increased Base Salary shall then
constitute the Base Salary for all purposes of this Agreement.

 

(b)                                 Annual Bonus Opportunity. For the fiscal
year ending September 30, 2008 and for each full fiscal year of the
Company that begins thereafter during the Employment Period, the Executive
shall be eligible to earn an annual bonus in such amount as shall be determined
by the Compensation Committee, in its sole discretion (the “Annual Bonus”),
provided, that the Annual Bonus for any fiscal year shall not exceed 200% of
Executive’s Base Salary in effect on the first day of such fiscal year (it
being understood that the targeted amount of the Annual Bonus (the “Target
Bonus”) shall be 100% of Executive’s Base Salary in effect on the first day of
such fiscal year). The Annual Bonus shall be paid in cash and may be paid under
the Company Executive Bonus Plan in effect on the Effective Date or other
Company bonus plan. Any such cash amount shall be paid by March 15th
of the year following the end of the fiscal year for which the Annual Bonus was
earned.

 

(c)                                  Automobile Allowance. The Company shall
lease an automobile for the Executive at a rental cost of up to Two Thousand
Dollars ($2,000) per month. The Company shall also reimburse the Executive for
all costs incurred by the Executive to insure and maintain such vehicle.
Reimbursement of such costs shall be provided to the Executive in accordance
with the Company’s normal business practices but not later than the end of the
calendar year following the calendar year in which the cost was incurred.

 

(d)                                 Business, Travel and Entertainment Expenses. The
Company shall promptly reimburse the Executive for all business, travel and
entertainment expenses consistent with the Executive’s titles including,
without limitation, first class transportation or travel on a private plane.
Reimbursement of such expenses shall be provided to the Executive in accordance
with the Company’s normal business practices but not later than the end of the
calendar year following the calendar year in which the expense was incurred.

 

(e)                                  Vacation. The Executive shall be entitled
to six (6) weeks of vacation per year. Vacation not taken during the
applicable fiscal year (but not in excess of three weeks) shall be carried over
to the next following fiscal year.

 

(f)                                    Welfare, Pension and Incentive Benefit Plans. During
the Employment Period and subject to his fulfillment of the applicable
eligibility requirements of the various welfare benefit plans and programs, the
Executive (and his eligible spouse and dependents) shall be entitled to
participate in all the welfare benefit plans and programs maintained by the
Company from time to time for the benefit of its senior executives including,
without limitation, all medical, hospitalization, dental, disability,
accidental death and dismemberment and travel accident insurance plans and
programs. In addition, during the Employment Period and subject to his
fulfillment of the applicable eligibility requirements of such employee benefit
plans and programs, the

 

3

 

Executive shall be eligible to participate in all pension, retirement,
savings and other employee benefit plans and programs maintained from time to
time by the Company for the benefit of its senior executives, other than any
annual cash incentive plan. The Executive shall pay for the portion of the cost
of such benefits as established by the Company to be paid by its senior
executives. Payments and benefits provided under such plans shall be in the
form and at the time each such plan so provides.

 

(g)                                 Stock-Based
Awards. The Executive shall be eligible to receive such incentive
stock options, non-qualified stock options and/or stock appreciation rights
(collectively referred to herein as “Options”) and/or such other equity awards
(collectively with Options referred to as “Stock-Based Awards”), as may be
determined and granted to the Executive from time to time by the Compensation
Committee under the stock option plan in effect at such time (such stock option
plan, or any successor plan is referred to as the “Stock Option Plan”);
provided that the Options shall ‘become 100% vested and exercisable upon a
Change in Control (as defined below) unless otherwise expressly provided in the
applicable award agreement; and the Options shall expire upon the earlier to
occur of (i) ten (10) years from the date of grant (the “Option Term”)
or (ii) except as otherwise provided in Section 8, one year following
the termination of Executive’s employment with the Company.

 

6.                                       Termination. The Executive’s
employment hereunder may be terminated during the Employment Period under the
following circumstances (upon any such termination the Employment Period shall
end):

 

(a)                                  Death. The Employment Period shall
terminate upon the Executive’s death.

 

(b)                                 Disability. If, as a result of the
Executive’s incapacity due to physical or mental illness as determined by a
physician selected by the Executive, and reasonably acceptable to the Company, (i) the
Executive shall have been substantially unable, even with reasonable
accommodation, to perform his duties hereunder for six consecutive months, or
for an aggregate of 180 days during any period of twelve consecutive months and
(ii) within thirty days after written Notice of Termination (as defined in
Section 7 below) is given to the Executive after such six- or twelve-month
period, the Executive shall not have returned to the substantial performance of
his duties on a full-time basis, the Company shall have the right to terminate
the Executive’s employment hereunder for “Disability”.

 

(c)                                  Cause. The Company shall have the right to
terminate the Executive’s employment for “Cause.” For purposes of this
Agreement, the Company shall have “Cause” to terminate the Executive’s
employment only upon the Executive’s:

 

(i)                                     conviction
of (or entering of a guilty or a nolo contendere plea to a crime that
constitutes) a felony of any type or a misdemeanor involving moral turpitude;
or

 

4

 

(ii)                                  illegal
or gross misconduct, in either case, that is willful and that results in
material and demonstrable damage to the business or reputation of the Company;
or

 

(iii)                               willful
and continued failure by Executive to perform his duties hereunder (other than
such failure resulting from the Executive’s incapacity due to physical or
mental illness or after the issuance of a Notice of Termination by the
Executive for Good Reason, as defined below) within ten (10) business days
after the Company delivers to him a written demand for performance that
specifically identifies the actions to be performed; or

 

(iv)                              engaging
in fraud in connection with the business of the Company or embezzlement or
knowing or willful misappropriation of the Company’s funds or property;

 

(v)                                 habitual
abuse of narcotics or alcohol; or

 

(vi)                              the
willful breach by the Executive of any term of this Agreement.

 

For purposes of this Section 6(c), no act or failure to act by the
Executive shall be considered “willful” if (x) such act is done by the
Executive in the good faith belief that such act is or was to be beneficial to
the Company or one or more of its businesses, or (y) such failure to take
action is due to the Executive’s good faith belief that such action would be
materially harmful to the Company or one or more of its businesses. “Cause”
shall not exist unless and until the Company has delivered to the Executive a
copy of a resolution duly adopted by a majority of the entire membership of the
Board at a meeting of the Board called and held for such purpose after
reasonable (but in no event less than thirty days’) notice to the Executive and
an opportunity for the Executive, together with his counsel, to cure such event
or circumstance (if curable) and to be heard before the Board, finding that in
the good faith opinion of the Board that “Cause” exists, and specifying the
particulars thereof in detail. Notwithstanding the foregoing, if the Board
reasonably believes in good faith that facts exist that may justify a
termination for Cause, the Board retains the right to (i) immediately
suspend the Executive’s employment (without any obligation to pay or provide
any benefits described in Section 6) and (ii) call the Board meeting
and comply with the other requirements described in the preceding sentence within
thirty (30) days thereafter. This Section 6(c) shall not prevent the
Executive from challenging in any court of competent jurisdiction the Board’s
determination that Cause exists or that the Executive has failed to cure any
act (or failure to act) that purportedly formed the basis for the Board’s
determination. However, after giving notice to the Executive and complying with
the procedures set forth in this Section 6(c), the Company may relieve the
Executive of his duties on an interim basis.

 

(d)                                 Good Reason.
The Executive may terminate his employment for “Good Reason” after giving the
Company detailed written notice thereof, if the Company

 

5

 

shall have failed to cure the event or circumstance constituting “Good
Reason” within thirty (30) business days after receiving such notice, provided,
however, that (i) if Executive does not notify the Company in
writing that a Good Reason event has occurred within ninety (90) days after
Executive has knowledge of such event, the event will not constitute Good
Reason and (ii) if Executive does not resign within twenty-four (24)
months after Executive has knowledge that an event constituting Good Reason has
occurred and has not been cured, any resignation based thereon shall be deemed
not to be for Good Reason. Good Reason shall mean the occurrence of any of the
following without the written consent of the Executive:

 

(i)                                     the
assignment to the Executive of duties materially inconsistent with this
Agreement and his position (including the office to which he reports, status,
offices and title), a change in his titles or authority or other action by the
Company which results in a material diminution of such position, authority,
duties or responsibilities;

 

(ii)                                  any
material reduction by the Company of, or the Company’s failure to pay, the
Executive’s Base Salary in breach of Section 5(a) above, or any
material reduction in Executive’s maximum and target bonus opportunity levels
below the 200% and 100% levels set in Section 5(b) above;

 

(iii)                               any
material failure by the Company to provide benefits required by Section 5;

 

(iv)                              the
requirement of the Executive to relocate to locations other than that provided
in Section 4 hereof;

 

(v)                                 the
failure of the Company to comply with and satisfy Section 13(a) of
this Agreement;

 

(vi)                              as a
result of a Change in Control (as defined below) and a change in circumstances
thereafter materially affecting the Executive’s position, including, without
limitation, a material change in scope of the business or other activities for
which he was responsible immediately prior to the Change in Control, Executive
has been rendered substantially unable to carry out, or has been substantially
hindered in the performance of, any of the authority, duties and
responsibilities contemplated by Section 3 above; or

 

(vii)                           any
material breach of this Agreement by the Company.

 

The Executive’s right to terminate his employment hereunder for Good
Reason shall not be affected by his incapacity due to physical or mental
illness. The Executive’s continued employment shall not constitute consent to,
or a waiver of rights with respect to, any act or failure to act constituting
Good Reason hereunder.

 

6

 

(e)                                  Without Cause.  So
long as the Company complies in full with all of its obligations set forth in Section 8
below, the Company shall have the right to terminate the Executive’s employment
hereunder without Cause by providing the Executive with a Notice of Termination
to that effect.

 

(f)                                    Without Good Reason. 
The Executive shall have the right to terminate his
employment hereunder without Good Reason by providing the Company with a Notice
of Termination to that effect.

 

(g)                                 Upon a Change in Control.  The Company shall have the right
to terminate the Executive’s employment hereunder as a result of a Change in
Control by providing the Executive with a Notice of Termination to that effect.
For purposes of this Agreement, “Change in Control” shall mean the happening of
any of the following:

 

(i)                                     The
members of the Board at the beginning of any consecutive twenty-four calendar
month period, but not including any period prior to the Effective Date (the “Incumbent
Directors”), cease for any reason other than due to death or such director’s
desire to not stand for re-election to the Board to constitute at least a
majority of the members of the Board; provided that any director whose
election, or nomination for election by the Company’s stockholders, was
approved by a vote of at least a majority of the members of the Board then
still in office who were members of the Board at the beginning of such
twenty-four calendar month period shall be deemed an Incumbent Director;

 

(ii)                                       any
“person”, including a “group” (as such terms are used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934), but excluding the
Executive, the Company, any of its affiliates or any employee benefit plan of
the Company is or becomes after the Effective Date a “beneficial owner” (as
such term is used in Section 13(d) and 14 of the Securities Exchange
Act of 1934) directly or indirectly of securities of the Company (not including
in the securities beneficially owned by such person any securities acquired
directly from the Company) representing 25% or more of the combined voting
power of the Company’s then outstanding securities (the “Company Voting
Securities”); provided, however, such event shall not be deemed to be a
Change in Control if it qualifies as a Non-Qualifying Transaction as defined in
clause (iii) below;

 

(iii)                                    the
consummation of a merger, consolidation, statutory share exchange or similar
form of corporate transaction involving the Company or any of its subsidiaries
that requires the approval of the Company’s stockholders, whether for such
transaction or the issuance of securities in the transaction (a “Business
Combination”), unless immediately following such Business Combination: (A) more
than 50% of the total voting power of (x) the corporation resulting from
such Business Combination (the “Surviving Corporation”), or (y) if
applicable, the ultimate parent corporation that directly or indirectly has
beneficial ownership of at least 95% of the voting securities eligible to elect
directors of the

 

7

 

Surviving Corporation (the “Parent Corporation”), is represented by
Company Voting Securities that were outstanding immediately prior to such
Business Combination (or, if applicable, is represented by shares into which
such Company Voting Securities were converted pursuant to such Business
Combination), and such voting power among the holders thereof is in
substantially the same proportion as the voting power of such Company Voting
Securities among the holders thereof immediately prior to the Business
Combination, (B) no person (other than any employee benefit plan (or
related trust) sponsored or maintained by the Surviving Corporation or the
Parent Corporation), is or becomes the beneficial owner, directly or
indirectly, of 25% or more of the total voting power of the outstanding voting
securities eligible to elect directors of the Parent Corporation (or, if there
is no Parent Corporation, the Surviving Corporation) and (C) at least a
majority of the members of the board of directors of the Parent Corporation
(or, if there is no Parent Corporation, the Surviving Corporation) following
the consummation of the Business Combination were Incumbent Directors at the
time of the Board’s approval of the execution of the initial agreement
providing for such Business Combination (any Business Combination which
satisfies all of the criteria specified in (A), (B) and (C) above
shall be deemed to be a “Non-Qualifying Transaction”); or

 

(iv)                              the stockholders of the
Company approve a plan of complete liquidation or dissolution of the Company or
the consummation of a sale of all or substantially all of the Company’s assets
to a person that is not controlled by the Company.

 

7.                                       Termination Procedure.

 

(a)                                  Notice of Termination. 
Any termination of the Executive’s employment by the Company
or by the Executive during the Employment Period (other than pursuant to Section 6(a))
shall be communicated by written Notice of Termination to the other party. For
purposes of this Agreement, a “Notice of Termination” shall mean a notice
indicating the specific termination provision in this Agreement relied upon and
setting forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Executive’s employment under that
provision.

 

(b)                                 Date of Termination. 
“Date of Termination” shall mean (i) if the Executive’s
employment is terminated by his death, the date of his death, (ii) if the
Executive’s employment is terminated pursuant to Section 6(b), thirty (30)
days after the date of receipt of the Notice of Termination (provided that the
Executive does not return to the substantial performance of his duties on a
full-time basis during such thirty (30) day period), and (iii) if the
Executive’s employment is terminated for any other reason, the date on which a
Notice of Termination is given or any later date (within thirty (30) days after
the giving of such notice) set forth in such Notice of Termination.
Notwithstanding the foregoing, in the event that the Executive has given the
Company his Notice of Termination for Good Reason or otherwise, the Board may
elect to have such

 

8

 

resignation become effective immediately or at such other date, not
later than the effective date specified in the Notice of Termination, as the
Board may determine.

 

(c)                                  Resignation.  Upon
termination of the Executive’s employment, Executive (unless otherwise
requested by the Board) concurrently shall resign any directorships which he
holds with the Company and all affiliates of the Company.

 

8.                                       Compensation Upon Termination or During Disability.  In the event the Executive’s employment
terminates during the Employment Period, the Company shall provide the
Executive with the payments and benefits set forth below within 10 business
days following the Date of Termination (except for the payment set forth in Section 8
(a)(vi), which shall be paid as provided in such Section).

 

(a)                                  Termination By Company without Cause or By Executive
for Good Reason.  If the
Executive’s employment is terminated by the Company without Cause (other than
Disability) or by the Executive for Good Reason, in each case before a Change
in Control has occurred:

 

(i)                                     the
Company shall pay to the Executive, promptly (but in no event more than ten (10) business
days) after the Date of Termination, a lump sum payment equal to the sum of (A) Base
Salary and accrued vacation pay, in each case through the Date of Termination, (B) three
(3) times the Executive’s Base Salary in effect immediately prior to such
termination and (C) three (3) times the average actual Annual Bonus
earned by the Executive in the three (3) fiscal years preceding the fiscal
year in which Executive’s employment is terminated;

 

(ii)                                  the
Company shall continue to provide the Executive and his eligible spouse and
dependents for a period equal to three (3) years following the Date of
Termination, the medical, hospitalization, dental and life insurance program
and other benefits provided for in Section 5(f), as if he had remained
employed as follows: (A) during the first eighteen (18) months following
the Date of Termination, medical, hospitalization and dental benefits shall be
continued by the Company as if the Executive was still actively employed and
the Executive shall continue to make the same co-payments he paid on the date
immediately preceding the Date of Termination and (B) for all other
benefits the Company shall promptly (but in no event more than ten (10) days
after incurring such expenses) reimburse the Executive for the insurance premium
cost incurred to purchase the economic equivalent of the benefits they
otherwise would have been entitled to receive under such plans and programs;
and provided,  further, that such benefits shall terminate on the
date or dates the Executive becomes eligible to receive equivalent coverage and
benefits under the plans and programs of a subsequent employer at an equivalent
cost to the Executive (such coverage and benefits to be determined on a
coverage-by-coverage, or benefit-by-benefit, basis);

 

9

 

(iii)                               unless
otherwise expressly provided in the applicable award agreement, all outstanding
equity incentive awards (including, without limitation, stock options granted
under the Stock Option Plan) shall immediately vest and any then outstanding
stock options or similar awards held by Executive shall remain exercisable for
a period of one year from the date of such termination or, if earlier, until
the end of the Option Term;

 

(iv)                              the
Company shall, consistent with past practice, reimburse the Executive pursuant
to Section 5 for business expenses incurred but not paid prior to such
Date of Termination. Reimbursement of such expenses shall be provided to the
Executive in accordance with the Company’s normal business practices but not
later than the end of the calendar year following the calendar year in which
the expense was incurred;

 

(v)                                 the
Executive shall be entitled to any other rights, compensation and/or benefits
as may be due to the Executive in accordance with the terms and provisions of
any agreements, plans or programs of the Company (other than any
severance-based plan or program); and

 

(vi)                              If (x) a
Change in Control shall occur following such Date of Termination and (y) it
shall be determined that a Payment (as defined in Section 9(d) below)
would be subject to Excise Tax (as defined in Section 9(d)), then the
Executive shall be entitled to receive a Gross-Up Payment (as defined in Section 9(d)),
as provided in Section 9(d) and Exhibit A hereto. The Gross-Up
Payment shall be paid pursuant to Exhibit A hereto.

 

The payments and benefits provided for in Sections 8(a)(i)(A), 8(a)(iv) and
8(a)(v) above are hereinafter referred to as the “Accrued Obligations”.
The receipt of any amounts to be paid under this subsection (a) (other
than any Accrued Obligations) is conditioned upon the Executive or his personal
representative’s execution and delivery (and non-revocation) of a release in
the form shown in Exhibit B hereto within thirty (30) days of the Date of
Termination. Following the Company’s payments and provisions of all of the
foregoing, the Company shall have no further obligations to the Executive
hereunder.

 

(b)                                 Cause or By Executive Without Good Reason.  If the Executive’s employment is
terminated by the Company for Cause or by the Executive other than for Good
Reason, then the Company shall provide the Executive with his Accrued
Obligations and shall have no further obligation to the Executive hereunder.

 

(c)                                  Disability.  During
any period that the Executive fails to perform his duties hereunder as a result
of incapacity due to physical or mental illness (“Disability Period”), the
Executive shall continue to receive his full Base Salary set forth in Section 5(a) until
his employment is terminated pursuant to Section 6(b). In the event the
Executive’s employment is terminated for Disability pursuant to Section 6(b):

 

10

 

(i)                                     the
Company shall pay to the Executive promptly (but in no event more than ten (10) business
days) after the Date of Termination a lump sum payment equal to twelve (12)
months of Base Salary in effect immediately prior to such termination;

 

(ii)                                  unless
otherwise expressly provided in the applicable award agreement, all outstanding
equity incentive awards (including without limitation stock options granted
under the Stock Option Plan) shall immediately vest and any then outstanding
stock options or similar awards held by Executive shall remain exercisable for
a period of one year from the date of such termination or, if earlier, until
the end of the Option Term;

 

(iii)                               the
Company shall, consistent with past practice, reimburse the Executive pursuant
to Section 5 hereof for business expenses incurred but not paid prior to
such Date of Termination. Reimbursement of such expenses shall be provided to
the Executive in accordance with the Company’s normal business practices but
not later than the end of the calendar year following the calendar year in
which the expense was incurred; and

 

(iv)                              the
Executive shall be entitled to any other rights, compensation and/or benefits
as may be due to Executive in accordance with the terms and provisions of any
agreements, plans or programs of the Company (other than any severance-based
plan or program).

 

The receipt of any amounts to be paid under this subsection (c) (other
than any Accrued Obligations) is conditioned upon the Executive or his personal
representative’s execution and delivery (and non-revocation) of a release in
the form shown in Exhibit B hereto within thirty (30) days of the Date of
Termination. Following the Company’s payments and provisions of all of the
foregoing, the Company shall have no further obligations to the Executive
hereunder.

 

(d)                                 Death.  If the Executive’s employment is terminated
by his death:

 

(i)                                     the
Company shall pay to the Executive’s estate promptly (but in no event more than
ten (10) business days) after the Date of Termination a lump sum payment
equal to twelve (12) months of Base Salary in effect immediately prior to
death;

 

(ii)                                  unless
otherwise expressly provided in the applicable award agreement, all outstanding
equity incentive awards (including without limitation stock options granted
under the Stock Option Plan) shall immediately vest and any then outstanding
stock options or similar awards held by Executive shall remain exercisable for
a period of one year from the date of such termination or, if earlier, until
the end of the Option Term;

 

11

 

(iii)           the
Company shall, consistent with past practice, reimburse the Executive’s estate
pursuant to Section 5 hereof for business expenses incurred but not paid
prior to such Date of Termination. Reimbursement of such expenses shall be
provided to the Executive in accordance with the Company’s normal business
practices but not later than the end of the calendar year following the
calendar year in which the expense was incurred; and

 

(iv)          the Executive’s estate shall be
entitled to any other rights, compensation and/or benefits as may be due to
Executive in accordance with the terms and provisions of any agreements, plans
or programs of the Company (other than any severance-based plan or program).

 

Following the Company’s payments and provisions of all of the
foregoing, the Company shall have no further obligations to the Executive’s
beneficiary, legal representative or estate hereunder.

 

(e)                                     Mitigation.  The Executive shall not be required
to mitigate damages with respect to the termination of his employment under
this Agreement by seeking other employment or otherwise, and there shall be no
offset against amounts due the Executive under this Agreement on account of
subsequent employment except as specifically provided in this Section 8.
Additionally, amounts owed to the Executive under this Agreement shall not be
offset by any claims the Company may have against the Executive, and the
Company’s obligation to make the payments provided for in this Agreement, and
otherwise to perform its obligations hereunder, shall not be affected by any
other circumstances, including, without limitation, any counterclaim,
recoupment, defense or other right which the Company may have against the
Executive or others.

 

9.                                       Change in Control Benefits.

 

In the event the Executive’s employment is terminated by the Company
for any reason other than Cause or Disability, or in the event the Executive
resigns for Good Reason, in each case after a Change in Control has occurred:

 

(a)                                     The
Company shall pay Executive promptly (but in no event more than ten (10) business
days) after the Date of Termination, as liquidated damages, a lump sum cash
payment, equal to the amount payable under Section 8(a)(i) and shall
provide the benefits and reimbursements provided in Sections 8(a)(ii) and
8(a)(v);

 

(b)                                    The
Company shall, consistent with past practice, reimburse the Executive pursuant
to Section 5 for business expenses incurred but not paid prior to such
Date of Termination. Reimbursement of such expenses shall be provided to the
Executive in accordance with the Company’s normal business practices but not
later than the end of the calendar year following the calendar year in which
the expense was incurred;

 

12

 

(c)                                     Unless
otherwise expressly provided in the applicable award agreement, all outstanding
equity incentive awards (including, without limitation, stock options granted
under the Stock Option Plan) shall immediately vest and any then outstanding
stock options or similar awards held by the Executive shall remain exercisable
for a period of one (1) year from the date of such termination or, if
earlier, until the end of the Option Term;

 

(d)                                    Notwithstanding
anything in this Agreement to the contrary, in the event it shall be determined
that any payment or distribution by the Company to or for the benefit of the
Executive (whether paid or payable pursuant to the terms of this Agreement or
otherwise) (a “Payment”) would be subject to the excise tax imposed by Section 4999
(or any successor provision) of the Internal Revenue Code of 1986, as amended,
or any successor thereto, or any interest or penalties are incurred by the
Executive with respect to such excise tax (such excise tax, together with any
such interest or penalties, are hereinafter collectively referred to as the “Excise
Tax”), then the Executive shall be entitled to receive an additional payment (a
“Gross-Up Payment”) in an amount such that after payment by the Executive of
all taxes (including interest and penalties imposed with respect to such
taxes), including, without limitation, any income taxes (and any interest and
penalties imposed with respect thereto) and Excise Tax imposed upon the
Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal
to the Excise Tax imposed on the Payment, in accordance with the procedures set
forth in Exhibit A hereto;

 

(e)                                     Mitigation.  The Executive shall not be required to
mitigate damages with respect to the termination of his employment under this
Agreement by seeking other employment or otherwise, and there shall be no
offset against amounts due the Executive under this Agreement on account of
subsequent employment except as specifically provided in this Section 9.
Additionally, amounts owed to the Executive under this Agreement shall not be
offset by any claims the Company may have against the Executive, and the
Company’s obligation to make the payments provided for in this Agreement, and
otherwise to perform its obligations hereunder, shall not be affected by any
other circumstances, including, without limitation, any counterclaim,
recoupment, defense or other right which the Company may have against the
Executive or others.

 

10.                                 Confidential Information;
Non-Competition; Non-Solicitation.

 

(a)                                     Executive
acknowledges that in his employment hereunder he will occupy a position of
trust and confidence.

 

(b)                                    Except
as may be required or appropriate in connection with his carrying out his
duties under this Agreement, the Executive shall not, without the prior written
consent of the Company or as may otherwise be required by law or any legal
process, or as is necessary in connection with any adversarial proceeding
against the Company (in which case the Executive shall cooperate with the
Company, at the Company’s expense, in obtaining a protective order against
disclosure by a court of

 

13

 

competent jurisdiction), communicate, to anyone other than the Company
and those designated by the Company or on behalf of the Company in the
furtherance of its business or to perform his duties hereunder, any of the
following, in each case without limitation in time: any trade secrets,
confidential information, knowledge or data relating to the Company and its
businesses, operations, inventions, products, strategies, and investments,
obtained by the Executive during the Executive’s employment by the Company that
is not publicly available (other than by acts by the Executive in violation of
this Agreement). Executive acknowledges that such confidential information is
specialized, unique in nature and of great value to the Company, and that such
confidential information gives the Company a competitive advantage. The
Executive agrees to deliver or return to the Company, at the Company’s request
at any time or upon termination or expiration of his employment or as soon
thereafter as possible, all documents, computer tapes and disks, records,
lists, data, drawings, prints, notes and written information (and all copies
thereof) furnished by or on behalf of the Company or prepared by the Executive
in the course of his employment by the Company.

 

(c)                                     During
the Employment Period and for a period of one (1) year beyond the
expiration of the Employment Period, Executive shall not, directly or
indirectly, without the prior written consent of the Company, provide services
to (whether as an employee or a consultant, with or without pay), own, manage,
operate, join, control, participate in, or be connected with (as a stockholder,
partner, or otherwise), any business, individual, partner, firm, corporation,
or other entity that is then a direct competitor of the Company or its
subsidiaries (each such competitor a “Competitor of the Company”); provided, however, that the “beneficial ownership” by Executive,
either individually or as a member of a “group,” as such terms are used in Rule 13d
of the General Rules and Regulations under the Securities Exchange Act of
1934, as amended, of not more than five percent (5%) of the voting stock of any
publicly held corporation shall not alone constitute a violation of this
Agreement and provided  further that, with the consent
of the Company (which consent shall not be unreasonably withheld or delayed),
the foregoing shall not prohibit Executive from rendering services to an entity
that conducts a business that is a “Competitor of the Company” if such business
does not contribute a material portion of such entity’s revenues. It is further
expressly agreed that the Company will or would suffer irreparable injury if
Executive were to compete with the Company or any subsidiary thereof in
violation of this Agreement, and that the Company would by reason of such
competition be entitled to injunctive relief in a court of appropriate
jurisdiction, and Executive further consents and stipulates to the entry of
such injunctive relief in such a court prohibiting Executive from competing
with the Company or any subsidiary of the Company in violation of this
Agreement. Executive and the Company acknowledge and agree that the business of
the Company is international in nature, and that the terms of the
non-competition agreement set forth herein shall apply on a worldwide basis,
but only in those countries where the Company has significant global operations
on the date of termination of Executive’s employment.

 

(d)                                    During
the Employment Period and for a period of one (1) year beyond the
expiration of the Employment Period, Executive shall not, directly or

 

14

 

indirectly, without the prior written consent of the Company, solicit,
induce, encourage or in any way cause any of the Company’s or its affiliates’
customers, or any person, firm, corporation, company, partnership, association
or entity which was contacted or whose business was solicited, serviced or
maintained by the Company or its affiliates during the term of Executive’s
employment with the Company to reduce or terminate its business relationship
with the Company or its affiliates.

 

(e)                                     During
the Employment Period and for a period of two (2) years beyond the
expiration of the Employment Period, Executive shall not, directly or
indirectly, without the prior written consent of the Company, solicit, recruit,
induce, encourage or in any way cause any employee of the Company (or such
affiliate) to terminate his employment with the Company (or such affiliate).

 

(f)                                       The
obligations contained in this Section 10 shall survive the termination or
expiration of Executive’s employment with the Company and shall be fully
enforceable thereafter in accordance with its terms.

 

(g)                                    If
any portion of the covenants or agreements contained in this Section 10,
or the application hereof, is construed to be invalid or unenforceable, the
other portions of such covenant(s) or agreement(s) or the application
thereof shall not be affected and shall be given full force and effect without
regard to the invalid or unenforceable portions to the fullest extent possible.
If any covenant or agreement in this Section 10 is held to be
unenforceable because of the duration thereof or the scope thereof, then the
court making such determination shall have the power to reduce the duration
and/or limit the scope thereof to the minimum extent necessary to make the
covenant or agreement enforceable in its reduced form.

 

11.                                 Indemnification.

 

(a)                                     General.  The Company agrees that if the
Executive is made a party or is threatened to be made a party to any action,
suit or proceeding, whether civil, criminal, administrative or investigative (a
“Proceeding”), in whole or in part, by reason of the fact that the Executive is
or was a trustee, director, officer or employee of the Company, or any
predecessor to the Company or any of their affiliates or is or was serving at
the request of the Company, or any of their affiliates as a trustee, director,
officer, member, employee or agent of another corporation or a partnership,
joint venture, limited liability company, trust or other enterprise, including,
without limitation, service with respect to employee benefit plans, whether or
not the basis of such Proceeding is alleged action in an official capacity as a
trustee, director, officer, member, employee or agent while serving as a
trustee, director, officer, member, employee or agent, the Executive shall be
indemnified and held harmless by the Company to the fullest extent authorized
by Delaware law and by the Company’s certificate of incorporation and/or
bylaws, as the same exists or may hereafter be amended, against all Expenses
(as defined below) incurred or suffered by the Executive in connection
therewith, and such indemnification shall continue as to the Executive even if
the Executive has ceased to be

 

15

 

an officer, director, trustee or agent, or is no longer employed by the
Company and shall inure to the benefit of his heirs, executors and
administrators.

 

(b)                                    Expenses. As  used
in this Agreement, the term “Expenses” shall include, without limitation,
damages, losses, judgments, liabilities, fines, penalties, excise taxes,
settlements, and costs, attorneys’ fees, accountants’ fees, and disbursements
and costs of attachment or similar bonds, investigations, and any expenses of
establishing a right to indemnification under this Agreement.

 

(c)                                     Enforcement. If
a claim or request under this Section 11 is not paid by the Company or on
its behalf, within thirty (30) days after a written claim or request has been
received by the Company, the Executive may at any time thereafter bring suit
against the Company to recover the unpaid amount of the claim or request and if
successful in whole or in part, the Executive shall be entitled to be paid also
the expenses, including attorneys’ fees, of prosecuting such suit. All
obligations for indemnification hereunder shall be subject to, and paid in
accordance with, applicable Delaware law, as the same exists or may hereafter
be amended.

 

(d)                                    Partial
Indemnification. If the Executive is entitled under any provision of this
Agreement to indemnification by the Company for some or a portion of any
Expenses, but not, however, for the total amount thereof, the Company shall
nevertheless indemnify the Executive for the portion of such Expenses to which
the Executive is entitled.

 

(e)                                     Advances of
Expenses. Expenses incurred by the Executive in connection with any
Proceeding shall be paid by the Company in advance upon request of the
Executive that the Company pay such Expenses, but only in the event that the
Executive shall have delivered in writing to the Company (i) an
undertaking to reimburse the Company for Expenses with respect to which the
Executive is not entitled to indemnification and (ii) a statement of his
good faith belief that the standard of conduct necessary for indemnification by
the Company has been met.

 

(f)                                       Notice of Claim.
The Executive shall give to the Company notice of any claim made against
him for which indemnification will or could be sought under this Agreement. In
addition, the Executive shall give the Company such information and cooperation
as it may reasonably require and as shall be within the Executive’s power and
at such times and places as are convenient for the Executive.

 

(g)                                    Defense of Claim. With respect to any
Proceeding as to which the Executive notifies the Company of the commencement
thereof:

 

(i)                                     The
Company will be entitled to participate therein at its own expense;

 

(ii)                                  Except
as otherwise provided below, to the extent that it may wish, the Company will
be entitled to assume the defense thereof, with

 

16

 

counsel reasonably satisfactory to the Executive, which in the Company’s
sole discretion may be regular counsel to the Company and may be counsel to
other officers and directors of the Company or any subsidiary. The Executive
also shall have the right to employ his own counsel in such action, suit or proceeding
if he reasonably concludes that failure to do so could involve a conflict of
interest between the Company and the Executive, and under such circumstances
the fees and expenses of such counsel shall be at the expense of the Company;
and

 

(iii)                               The
Company shall not be liable to indemnify the Executive under this Agreement for
any amounts paid in settlement of any action or claim affected without its
written consent. The Company shall not settle any action or claim in any manner
which would (x) impose any penalty that would not be paid directly or
indirectly by the Company, (y) impose any limitation on the Executive, or (z) admit
any liability on the part of the Executive, in each case without the Executive’s
written consent. Neither the Company nor the Executive will unreasonably
withhold or delay their consent to any proposed settlement.

 

(h)            Non-exclusivity. The right to indemnification and the
payment of Expenses incurred in defending a Proceeding in advance of its final
disposition conferred in this Section 11 shall not be exclusive of any
other right which the Executive may have or hereafter may acquire under any
statute or certificate of incorporation or by-laws of the Company or any
subsidiary, agreement, vote of shareholders or disinterested directors or
trustees or otherwise.

 

(i)                                        D&O
Insurance. The Company shall provide the Executive with directors’ and
officers’ liability insurance at least as favorable as the insurance coverage
provided to other senior executive officers and directors of the Company
respecting liabilities, costs, charges and expenses of any type whatsoever
incurred or sustained by the Executive (or Executive’s legal representative or
other successors), in his capacity as an officer or director of the Company, in
connection with a Proceeding.

 

12.                                 Legal Fees and Expenses.

 

(a)                                     After
a Change in Control. If any contest or dispute shall arise between the Company
and the Executive regarding any provision of this Agreement after a Change in
Control, the Company shall reimburse the Executive for all legal fees and
expenses reasonably incurred by the Executive in connection with such contest
or dispute. Such reimbursement shall be made as soon as practicable following
the resolution of such contest or dispute (whether or not appealed) to the
extent the Company receives reasonable written evidence of such fees and
expenses.

 

(b)                                    Before
a Change in Control. If any contest or dispute shall arise between the Company
and the Executive regarding any provision of this Agreement prior to a Change
in Control, the Company shall reimburse the Executive for all legal fees and
expenses reasonably incurred by the Executive in connection with such contest
or dispute only if the Executive substantially prevails in his claim. Such
reimbursement shall be

 

17

 

made as soon as practicable following the resolution of such contest or
dispute (whether or not appealed) to the extent the Company receives reasonable
written evidence of such fees and expenses.

 

13.           Successors; Binding Agreement.

 

(a)                                     Company’s
Successors. No rights or obligations of the Company under this Agreement
may be assigned or transferred, except that the Company shall require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Company to expressly assume and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to perform it
if no such succession had taken place. As used in this Agreement, “Company”
shall include any successor to its business and/or assets (by merger, purchase
or otherwise) which executes and delivers the agreement provided for in this Section 13
or which otherwise becomes bound by all the terms and provisions of this
Agreement by operation of law.

 

(b)                                    Vesting of Rights. Since
Executive has rendered and continues to render valuable services to the Company
in reliance upon this Agreement, the rights and obligations created hereunder
are hereby vested, and may not be revoked, rescinded, modified or amended by
any subsequent action of the Board.

 

(c)                                     Executive’s
Successors. No rights or obligations of the Executive under this Agreement
may be assigned or transferred by the Executive other than his rights to
payments or benefits hereunder, which may be transferred only by will or the
laws of descent and distribution. Upon the Executive’s death, this Agreement
and all rights of the Executive hereunder shall inure to the benefit of and be
enforceable by the Executive’s beneficiary or beneficiaries, personal or legal
representatives, or estate, to the extent any such person succeeds to the
Executive’s interests under this Agreement. If the Executive should die
following his Date of Termination while any amounts would still be payable to
him hereunder if he had continued to live, all such amounts unless otherwise
provided herein shall be paid in accordance with the terms of this Agreement to
such person or persons so appointed in writing by the Executive, or otherwise
to his legal representatives or estate.

 

14.                                 Notice. For
the purposes of this Agreement, notices, demands and all other communications
provided for in this Agreement shall be in writing and shall be deemed to have
been duly given when delivered either personally or by United States certified
or registered mail, return receipt requested, postage prepaid, addressed as
follows:

 

If to the Executive:

 

At his residence address most recently filed with the Company.

18

 

With a copy to:

 

Pillsbury Winthrop Shaw Pittman

LLP 1540 Broadway

New York, New York 10036

Attn:                    Susan P.
Serota, Esq.

Kenneth W. Taber, Esq.

 

If to the Company:

 

NBTY, Inc.

2100 Smithtown Avenue

Ronkonkoma, New York 11779

Attn: Scott Rudolph, Chief Executive Officer

 

With a copy to:

 

NBTY, Inc.

2100 Smithtown Avenue

Ronkonkoma, New York 11779

Attn: Irene B. Fisher, Esq., General Counsel

 

or to such other address as any party may have furnished to the others
in writing in accordance herewith, except that notices of change of address
shall be effective only upon receipt.

 

15.                                 Miscellaneous. No provisions
of this Agreement may be amended, modified, supplemented or waived unless such
amendment, modification or supplement is agreed to in writing signed by the
Executive and by a duly authorized officer of the Company, and such waiver is
set forth in writing and signed by the party to be charged. No waiver by either
party hereto at any time of any breach by the other party hereto of any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time. No agreements or representations,
oral or otherwise, express or implied, with respect to the subject matter
hereof have been made by either party which are not set forth expressly in this
Agreement. The respective rights and obligations of the parties hereunder of
this Agreement shall survive the Executive’s termination of employment and the
termination of this Agreement to the extent necessary for the intended
preservation of such rights and obligations.

 

16.                               Validity. The invalidity
or unenforceability of any provision or provisions of this Agreement shall not
affect the validity or enforceability of any other provision of this Agreement,
which shall remain in full force and effect.

 

17.                                 Counterparts. This Agreement
may be executed in one or more counterparts, each of which shall be deemed to
be an original but all of which together will constitute one and the same
instrument.

 

19

 

18.                                 Entire
Agreement. This Agreement (and any existing stock option award
agreements between the Company and the Executive with respect to stock options
still held by Executive as of the Effective Date) sets forth the entire
agreement of the parties hereto in respect of the subject matter contained
herein and supersedes all prior agreements, promises, covenants, arrangements,
communications, representations or warranties, whether oral or written, by any
officer, employee or representative of any party hereto in respect of such
subject matter.

 

19.                               Governing
Law. Except as otherwise provided in Section 11 hereof, the
validity, interpretation, construction and performance of this Agreement shall
be governed by the laws of the State of New York without regard to its
conflicts of law principles.

 

20.                               Section Headings.
The section headings in this Employment Agreement are for convenience of
reference only, and they form no part of this Agreement and shall not affect
its interpretation.

 

21.                               Withholding. The Company
shall make such deductions and withhold such amounts from each payment made to
the Executive hereunder as may be required from time to time by law,
governmental regulation or order.

 

22.                               Section 409A.

 

(a)                                     To
the fullest extent applicable, amounts and other benefits payable under this
Agreement are intended to be exempt from the definition of “nonqualified
deferred compensation” under Section 409A of the Internal Revenue Code of
1986, as amended (the “Code”) in accordance with one or more of the exemptions
available under the final Treasury regulations promulgated under Section 409A.
In this regard, each payment under this Agreement, including without
limitation, each payment other than a life annuity (within the meaning of
Treasury Regulation Section 1.409A-2(b)(2)(ii)) in a series of scheduled
installments (within the meaning of Treasury Regulation Section 1.409A-2(b)(2)(iii)),
shall be deemed a separate payment for purposes of Code section 409A. To the
extent that any such amount or benefit is or becomes subject to Section 409A
due to a failure to qualify for an exemption from the definition of
nonqualified deferred compensation in accordance with such final Treasury
regulations, this Employment Agreement is intended to comply with the
applicable requirements of Section 409A with respect to such amounts or
benefits. This Employment Agreement shall be interpreted and administered to
the extent possible in a manner consistent with the foregoing statement of
intent.

 

(b)                                    Notwithstanding
anything in this Employment Agreement or elsewhere to the contrary, if the
Executive is a Specified Employee (as defined below in subparagraph (c) below)
on the Date of Termination and the Company reasonably determines that any
amount or other benefit payable under this Agreement on account of the
Executive’s termination of employment constitutes nonqualified deferred
compensation that will subject the Executive to “additional tax” under Section

 

20

 

409A(a)(1)(B) of
the Code (together with any interest or penalties imposed with respect to, or
in connection with, such tax, a “409A Tax”) with respect to the payment of such
amount or the provision of such benefit if paid or provided at the time
specified in the Agreement, then the payment or provision thereof shall be
postponed to the first business day of the seventh month following the Date of
Termination or, if earlier, the date of the Executive’s death (the “Delayed
Payment Date”). The Company and the Executive may agree to take other actions
to avoid the imposition of a 409A Tax at such time and in such manner as
permitted under Section 409A. In the event that this Section 22
requires a delay of any payment, such payment shall be accumulated and paid in
a single lump sum on the Delayed Payment Date together with interest for the
period of delay, compounded monthly, equal to the prime or base lending rate
then used by Citibank, NA., in New York City and in effect as of the date the
payment would otherwise have been provided.

 

(c)                                     For purposes of this Employment Agreement,
the (i) term “Specified Employee” shall mean a “specified employee” within
the meaning of Section 409A(a)(2)(B)(i) of the Code, as determined by
the Compensation Committee and (ii) the Executive’s Date of Termination
shall in no event be earlier than the date the Executive has incurred a “separation
from service” within the meaning of Section 409A(a)(2)(A)(i) of the
Code.

 

(d)                                 The Company and the Executive may agree to
take other actions to avoid the imposition of a 409A Tax at such time and in
such manner as permitted under Section 409A.

 

IN
WITNESS WHEREOF, the parties hereto have executed this Agreement the day and
year above first written.

 

 

	
  EXECUTIVE

  	
   

  	
  NBTY, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Scott Rudolph

  
	
  /s/ HARVEY
  KAMIL

  	
   

  	
   

  	
  Name: Scott Rudolph

  
	
  HARVEY KAMIL

  	
   

  	
   

  	
  Title:   Chief Executive Officer

  

 

21

 

EXHIBIT A

 

GROSS-UP PAYMENT

 

In the event that any payment received by Executive or paid by the
Company on behalf of Executive under this Agreement or under any other plan,
arrangement or agreement with the Company or any person whose actions result in
a change in control of the Company (provided that the Company approves of the
arrangement pursuant to which the payment by such person is made to Executive)
or any person affiliated with the Company or such person (collectively, the “Total
Payments”) will be subject to the excise tax (the “Excise Tax”) imposed by
section 4999 (or any successor provision) of the Code, the Company shall
promptly pay to Executive an additional amount (the “Gross-Up Payment”) such
that the net amount retained or to be retained by Executive, after deduction of
any Excise Tax on the Total Payments and on any federal, state and local
income, excise and/or other taxes upon the Gross-up Payment provided for
hereunder, shall be equal to the Total Payments.

 

For purposes of determining whether any of the Total Payments will be
subject to the Excise Tax and the amount of such Excise Tax, (i) the Total
Payments shall be treated as “parachute payments” within the meaning of section
280G(b)(2) of the Code, and all “excess parachute payments” within the
meaning of section 280G(b)(1) of the Code shall be treated as subject to
the Excise Tax, unless in the opinion of tax counsel selected by the Company’s
independent auditors and reasonably acceptable to Executive the Total Payments
(in whole or in part) do not constitute parachute payments, including by reason
of Section 280G(b)(4)(A) of the Code, or such excess parachute
payments (in whole or in part) represent reasonable compensation for services
actually rendered, within the meaning of section 280G(b)(4)(B) of the
Code, in excess of the base amount allocable to such reasonable compensation,
or are otherwise not subject to the Excise Tax, and (ii) the value of any
non-cash benefits or any deferred payment or benefit shall be determined by the
Company’s independent auditors in accordance with the principles of sections
280G(d)(3) and (4) of the Code.

 

For purposes of determining the amount of the Gross-Up Payment,
Executive shall be deemed to pay federal income and other taxes at the highest
applicable marginal rate of taxation in the calendar year in which the Gross-Up
Payment is to be made and state and local income and other taxes at the highest
applicable marginal rate of taxation in the state and locality of Executive’s
residence on the date the Gross-Up Payment is to be made, net of the maximum
reduction in federal income taxes which could be obtained from deduction of
such state and local taxes and any other taxes. In the event that the Excise
Tax is subsequently determined to be less than the amount originally taken into
account hereunder, Executive shall promptly repay to the Company, at the time
that the amount of such reduction in Excise Tax is finally determined, the
portion of the Gross-Up Payment attributable to such reduction (plus that
portion of the Gross-Up Payment attributable to the Excise Tax and federal,
state and local income and other taxes imposed on the Gross-Up Payment being
repaid by Executive to the extent that such repayment

 

 

results in an actual reduction in Excise Tax and/or a federal, state or
local income tax deduction) plus interest on the amount of such repayment at
the rate provided in section 1274(b)(2)(B) of the Code (provided,  however,
that if all or any portion of the amount of any repayment made to Executive by
any governmental entity shall be made at a higher rate of interest than that
provided under section 1274(b)(2)(B) of the Code (the “Higher Interest
Rate Amount”), Executive shall also repay to the Company interest on the Higher
Interest Rate Amount at a rate equal to the excess of such higher rate of
interest over the rate provided under section 1274(b)(2)(B) of the Code).
In the event that the Excise Tax is determined to exceed the amount originally
taken into account hereunder (including by reason of any payment the existence
or amount of which cannot be determined at the time of the Gross-Up Payment),
the Company shall promptly make an additional Gross-Up Payment in respect of
such excess (plus any interest, penalties or additions to tax payable by Executive
with respect to such excess) at the time that the amount of such excess is
finally determined. The parties agree that such excess will be considered to
have been finally determined at the conclusion of Internal Revenue Service
administrative appellate proceedings, unless the parties mutually agree to pay
or settle such amount earlier, or agree to pursue an appeal further. Executive
and the Company shall each reasonably cooperate with the other in connection
with any administrative or judicial proceedings concerning the existence or
amount of liability for Excise Tax with respect to the Total Payments. In the
event of an audit or other administrative or judicial proceeding relating to or
arising from the issue of potential liability for the Excise Tax, the Company
shall pay all attorneys’ and accountants’ fees and other costs reasonably
incurred by Executive in connection with the audit or other proceeding to the
extent such fees and costs relate to such liability, provided, that in the case
of judicial or administrative proceedings, the Company consents to the pursuit
of such proceedings.

 

The Gross-Up Payment payable pursuant hereto shall be payable (or, as
applicable withheld), in whole or in part as applicable, on the earlier of (i) the
date the Company is required to withhold the Excise Tax pursuant to section
4999 of the Code or (ii) the date Executive is required to pay the Excise
Tax. In the case where the amount of such Gross-Up Payment is subject to audit
or litigation, payment shall be made no later than the end of the Executive’s
taxable year following his taxable year in which the taxes that are subject to
the audit or litigation are remitted to the taxing authority, or where as a
result of such audit or litigation no taxes are remitted, the end of the
Executive’s taxable year following his taxable year in which the audit is
completed or there is a final and nonappealable settlement or other resolution
of the litigation.

 

Executive shall notify the Company of any audit or review by the
Internal Revenue Service of Executive’s federal income tax return for the year
in which a payment under this Agreement is made within ten (10) days of
Executive’s receipt of such audit or review. In addition, Executive shall also
notify the Company of the final resolution of such audit or review within ten (10) days
of such resolution.

 

 

EXHIBIT B

 

GENERAL RELEASE OF CLAIMS

 

This General Release of Claims (this “Release”), dated as of
             ,
20   , confirms the following understandings and agreements between
NBTY, Inc., a Delaware corporation (the “Company”) and
               (hereinafter
referred to as “you” or “your”).

 

In consideration of the promises set forth in that certain employment
agreement between you and the Company dated February   , 2008
(the “Employment Agreement”), as well as any promises set forth in this
Release, you agree as follows:

 

1.             Opportunity for Review and Revocation.
 You have twenty-one (21) days to review
and consider this Release. Notwithstanding anything contained herein to the
contrary, this Release will not become effective or enforceable for a period of
seven (7) calendar days following the date of its execution, during which
time you may revoke your acceptance of this Release by notifying the General
Counsel of the Company, in writing. To be effective, such revocation must be
received by the Company no later than 5:00 p.m. on the seventh (7th)
calendar day following its execution. Provided that the Release is executed and
you do not revoke it, the eighth (8th) day following the date on
which this Release is executed shall be its effective date (the “Effective Date”).
In the event of your revocation of this Release pursuant to this Section 1,
this Release will be null and void and of no effect, and the Company will have
no obligations hereunder.

 

2.             Employee Release and Waiver of Claims.

 

(a)           As used in this Release, the term “claims”
will include all claims, covenants, warranties, promises, undertakings,
actions, suits, causes of action, obligations, debts, accounts, attorneys’
fees, judgments, losses and liabilities, of whatsoever kind or nature, in law,
equity or otherwise.

 

(b)           For and in consideration of the payments and
benefits described in Section 8(a) or Section 8(c) of the
Employment Agreement (the “Consideration”), you, for and on behalf of yourself
and your heirs, administrators, executors and assigns, effective the date
hereof, do fully and forever release, remise and discharge the Company, its
direct and indirect parents, subsidiaries and affiliates, together with their
respective past, present and/or future officers, directors, partners,
shareholders, employees, trustees, counsel, representatives, insurers,
successors and assigns, whether in official or individuals capacities
(collectively, and with the Company, the “Group”) from any and all claims
whatsoever up to the date hereof which you had, may have had, or now have
against the Group, for or by reason of any matter, cause or thing whatsoever,
including any claim arising out of or attributable to your employment or the
termination of your employment with the Company, whether for tort, breach of
express or implied employment contract, intentional infliction of emotional
distress, wrongful termination,

 

 

unjust dismissal, defamation, libel or slander, or under any federal,
state or local law dealing with discrimination based on age, race, sex,
national origin, handicap, religion, disability or sexual orientation. This
release of claims includes, but is not limited to, all claims arising under the
Age Discrimination in Employment Act (“ADEA”), Title VII of the Civil Rights
Act, the Americans with Disabilities Act, the Civil Rights Act of 1991, the
Family Medical Leave Act, and the Equal Pay Act, each as may be amended from
time to time, and all other federal, state and local laws, the common law and
any other purported restriction on an employer’s right to terminate the
employment of employees.

 

(c)           You specifically release all claims relating
to your employment and its termination under ADEA, a United States federal
statute that, among other things, prohibits discrimination on the basis of age
in employment and employee benefit plans.

 

(d)           Notwithstanding any provision of this
Release to the contrary, by executing this Release, you are not releasing any
claims relating to: (i) your rights with respect to the Consideration or
any other benefits expressly provided under the Employment Agreement, and (ii) any
indemnification or similar rights you may have as a current or former officer
or director of the Company, including, without limitation, any and all rights
thereto referenced in the Employment Agreement, the Company’s bylaws, plan of
reorganization or liquidation, other governance documents, or any rights with
respect to the Company’s directors’ and officers’ insurance policies.

 

3.             Knowing and Voluntary Waiver. You
expressly acknowledge and agree that you:

 

(a)           Are able to read the language, and
understand the meaning and effect, of this Release;

 

(b)           Have no physical or mental impairment of any
kind that has interfered with your ability to read and understand the meaning
of this Release or its terms, and that you are not acting under the influence
of any medication, drug or chemical of any type in entering into this Release;

 

(c)           Are specifically agreeing to the terms of
the release contained in this Release in consideration of the Company’s
commitments under the Employment Agreement. The Company has agreed to provide
the compensation and benefits in the Employment Agreement in consideration of
your services provided pursuant to the Employment Agreement and because of your
execution of this Release;

 

(d)           Understand that, by entering into this
Release, you do not waive rights or claims under ADEA that may arise after the
Effective Date;

 

(e)           Had or could have had twenty-one (21)
calendar days in which to review and consider this Release;

 

 

(f)            Were advised to consult with your attorney
regarding the terms and effect of this Release; and

 

(g)           Have signed this Release knowingly and
voluntarily.

 

4.             No Suit. You represent that you
have not filed or permitted to be filed against the Group, individually or
collectively, any complaints or lawsuits arising out of your employment, or any
other matter arising on or prior to the Effective Date.

 

5.             Successors and Assigns. The provisions
hereof shall enure to the benefit of your heirs, executors, administrators,
legal personal representatives and assigns and shall be binding upon your
heirs, executors, administrators, legal personal representatives and assigns.

 

6.             Severability. If any provision of
this Release shall be held by any court of competent jurisdiction to be
illegal, void or unenforceable, such provision shall be of no force and effect.
The illegality or unenforceability of such provision, however, shall have no
effect upon and shall not impair the enforceability of any other provision of
this Release.

 

7.             Governing Law. This Agreement shall
be governed by and construed in accordance with Federal law and the laws of the
State of New York, applicable to releases made and to be performed in that
State.

 

IN WITNESS WHEREOF, the undersigned has executed this Release as of the
date first written above.

 

	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

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