Document:

exhibit10_3.htm

    
 

    
      

      

    

    
      Exhibit
        10.3 

      
        

 

    

     

    AMENDED
      AND
      RESTATED AGREEMENT

     

    THIS
      AMENDED AND
      RESTATED AGREEMENT (this “Agreement”) is entered into effective as of
      September 21, 2007 (the “Effective Date”) by and between ______________, an
      individual residing at _________________________ (“Executive”), and Schiff
      Nutrition Group, Inc., a Utah corporation with offices located at
      2002 South 5070 West, Salt Lake City, Utah 84104 (the “Company”).

     

    This
      Agreement
      amends and restates that certain Agreement, dated as of October 1, 2005, by
      and
      between Executive and the Company (the “Prior Agreement”).

     

    RECITALS

     

    WHEREAS,
      the
      Company and Executive desire to amend and restate the Prior Agreement to extend
      the term of the Agreement, to clarify the intent of certain provisions, and
      to
      make certain other changes.

     

    TERMS
      OF
      AGREEMENT

    

    NOW,
      THEREFORE, in
      exchange for good and valuable consideration, the receipt and sufficiency of
      which is hereby acknowledged, the Company and Executive agree as
      follows:

     

    1.  Certain
      Defined
      Terms.  In addition to terms defined elsewhere herein, the
      following terms have the following meanings when used in this Agreement with
      initial capital letters:

     

    (a)  “Affiliate”
      shall mean a domestic or foreign business entity controlled by, controlling,
      under common control with, or in a joint venture with, the applicable person
      or
      entity.

     

    (b)  “Board”
      shall mean the Board of Directors of the Company.

     

    (c)  “Cause”
      shall mean Executive’s:

     

    (i)  Gross,
      fraudulent
      or willful misconduct of Executive at any time during Executive’s employment by
      the Company, or any such misconduct during any prior period of employment in
      an
      executive capacity with any person or entity if not disclosed to the Company
      in
      writing prior to the execution hereof;

     

    (ii)  Substantial
      and
      willful failure to perform specific and lawful directives of the Board or a
      superior employee of the Company;

     

    (iii)  Willful
      and knowing
      violation of any rules or regulations of any governmental or regulatory body,
      which is materially injurious to the financial condition of the
      Company;

     

    (iv)  Conviction
      of or
      plea of guilty or nolo contendere to a felony or fraud during
      Executive’s employment with the Company;

     

    (v)  Drug,
      alcohol or
      substance abuse (to the extent not inconsistent with the Americans with
      Disability Act or similar state law); or

     

    (vi)  Material
      breach of
      the terms of this Agreement which is not corrected after written notice and
      a
      reasonable cure period not to exceed 15 days

     

    (d)  “Change
      in
      Control” means and includes each of the following:

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    (i)  A
      transaction or
      series of transactions (other than an offering of SNI Class A common stock
      to
      the general public through a registration statement filed with the Securities
      and Exchange Commission) whereby any “person” or related “group” of “persons”
(as such terms are used in Sections 13(d) and 14(d)(2) of the
      Securities Exchange Act of 1934, as amended) (other than SNI, any of its
      subsidiaries, an employee benefit plan maintained by SNI or any of its
      subsidiaries or a “person” that, prior to such transaction, directly or
      indirectly controls, is controlled by, or is under common control with, SNI)
      directly or indirectly acquires beneficial ownership (within the meaning of
      Rule 13d-3 under the Exchange Act) of securities of SNI possessing more
      than 50% of the total combined voting power of SNI’s securities outstanding
      immediately after such acquisition, excluding any transaction involving a
      distribution of SNI’s Class A common stock (or any substituted security) held by
      Weider Health and Fitness (“WHF”) to individual stockholders of WHF or
      their family trusts if and to the extent the Board finds such distribution
      to
      not be within the intent of this Section 1(d)(i);

     

    (ii)  During
      any period
      of two consecutive years, individuals who, at the beginning of such period,
      constitute the Board of Directors of SNI together with any new director(s)
      (other than a director designated by a person who shall have entered into an
      agreement with SNI to effect a transaction described in Section 1(d)(i) or
      Section 1(d)(iii)) whose election by the Board of Directors of SNI or
      nomination for election by SNI’s stockholders was approved by a vote of at least
      two-thirds of the directors then still in office who either were directors
      at
      the beginning of the two year period or whose election or nomination for
      election was previously so approved, cease for any reason to constitute a
      majority thereof;

     

    (iii)  The
      consummation by
      SNI (whether directly involving SNI or indirectly involving SNI through one
      or
      more intermediaries) of (x) a merger, consolidation, reorganization, or
      business combination or (y) a sale or other disposition of all or
      substantially all of SNI’s assets or (z) the acquisition of assets or stock
      of another entity, in each case other than a transaction:

     

    (A)  Which
      results in
      SNI’s voting securities outstanding immediately before the transaction
      continuing to represent (either by remaining outstanding or by being converted
      into voting securities of SNI or the person that, as a result of the
      transaction, controls, directly or indirectly, SNI or owns, directly or
      indirectly, all or substantially all of SNI’s assets or otherwise succeeds to
      the business of SNI (SNI or such person, the “Successor Entity”))
      directly or indirectly, at least a majority of the combined voting power of
      the
      Successor Entity’s outstanding voting securities immediately after the
      transaction, and

     

    (B)  After
      which no
      person or group beneficially owns voting securities representing 50% or more
      of
      the combined voting power of the Successor Entity; provided, however,
      that no person or group shall be treated for purposes of this
      Section 1(d)(iii)(B) as beneficially owning 50% or more of combined
      voting power of the Successor Entity solely as a result of the voting power
      held
      in SNI prior to the consummation of the transaction; or

     

    (iv)  SNI’s
      stockholders
      approve a liquidation or dissolution of SNI.

    

    (e)  “Code”
shall
      mean Internal Revenue Code of 1986, as amended.

     

     

    
      
        
        

      

      
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    (f)  “Good
      Reason” shall mean any one of the following conduct or events which is not
      cured by the Company within 30 days after Executive’s notice in writing to the
      Company within 90 days of the first happening of the conduct or
      event:

     

    (i)  the
      Company’s
      material diminution of Executive’s authority, responsibilities, duties,
      or compensation; or

     

    (ii)  any
      involuntary
      relocation of Executive’s principal place of business to a location that
      represents a material change in geographic location (including, without
      limitation, any involuntary relocation that is more than 50 miles from
      Executive’s current principal place of business with the Company).

     

    (g)  “Separation
      from
      Service” shall mean Executive’s separation of service with the Company
      and/or its Affiliates within the meaning of Section 409A(a)(2(A)(i) of the
      Code
      and the regulations thereunder.

     

    (h)  “Termination
      Date” shall mean the effective date of the termination of Executive’s
      employment with the Company for any reason.

     

    (i)  “SNI”
shall
      mean Schiff Nutrition International, Inc., a Delaware corporation and the parent
      of the Company.

     

    2.  Term
      of
      Agreement. The term of this Agreement shall commence on the Effective Date
      and shall continue through the full payment of all severance and other benefits
      to Executive in accordance with the terms and conditions of this
      Agreement.  Subject to Section 3(b), this Agreement shall be effective
      with respect to (a) the termination of Executive’s employment with the Company
      other than for Cause only if such termination occurs during the period
      commencing on the Effective Date and ending on September 30, 2010 or (b) the
      termination of Executive’s employment with the Company for Good Reason only if
      the event or conduct giving rise to Good Reason occurs during the period
      commencing on the Effective Date and ending on September 30,
      2010.  Notwithstanding the foregoing sentence, this Agreement shall be
      effective with respect to any “termination in connection with a Change in
      Control” (as defined in Section 3(b) below) if the Change in Control is (i)
      subject to a definitive written purchase, sale, merger or similar agreement
      entered into on or before September 30, 2010 and (ii) consummated on or prior
      to
      the expiration of six months following September 30, 2010. During the term
      of
      this Agreement, Executive shall be employed as an at-will employee of the
      Company.

     

    3.  Severance
      Payment/Benefits.

     

    (a)  If
      Executive’s
      employment as an at-will employee of the Company shall be terminated either
      by
      the Company other than for Cause or by Executive for Good Reason, then in
      consideration of and subject to the delivery by Executive to the Company of
      a
      release that becomes irrevocable within 30 days of Executive’s Separation
      from Service, in form and substance reasonably satisfactory to the Company,
      of
      any claims that Executive might have against the Company, the Company shall
      pay
      Executive a severance benefit in an amount equal to the sum of (a) his then
      annual rate of base salary (but without regard to any reduction in Executive’s
      base salary that would serve as a basis for a termination of employment by
      Executive for Good Reason) and (b) the greater of (i) his annual bonus paid
      or
      payable relating to the Company’s most recently completed fiscal year, (ii) the
      average of his annual bonuses paid or payable relating to the Company’s three
      most recently completed fiscal years, or (iii) 30% of his then annual rate
      of
      base salary.  Subject to Section 4 of this Agreement, such amount
      shall be paid, without interest, in 24 equal semi-monthly installments payable
      beginning on the first business day of the first month that is at least 30
      days
      following Executive’s Separation from Service.

     

     

    
      
        
        

      

      
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    (b)  If
      Executive’s
      employment as an at-will employee of the Company shall be terminated “in
      connection with a Change in Control” either by the Company other than for Cause
      or by Executive for Good Reason, then in consideration of and subject to the
      delivery by Executive to the Company of a release that becomes irrevocable
      within 30 days of Executive’s Separation from Service, in form and
      substance reasonably satisfactory to the Company, of any claims that Executive
      might have against the Company, and in lieu of the provisions of Section 3(a)
      above, the Company shall pay Executive a severance benefit in an amount equal
      to
      150% of the sum of (a) his then annual rate of base salary  (but
      without regard to any reduction in Executive’s base salary that would serve as a
      basis for a termination of employment by Executive for Good Reason) and (b)
      the
      greater of (i) his annual bonus paid or payable relating to the Company’s most
      recently completed fiscal year, (ii) the average of his annual bonuses paid
      or
      payable relating to the Company’s three most recently completed fiscal years, or
      (iii) 50% of his then annual rate of base salary.  Subject to Section
      4 of this Agreement, such amount shall be paid, without interest, in 36 equal
      semi-monthly installments beginning on the first business day of the first
      month
      that is at least 30 days after Executive’s Separation from
      Service.  For purposes of this Agreement, any termination “in
      connection with a Change in Control” shall mean any termination either by the
      Company other than for Cause or by Executive for Good Reason during the period
      beginning 90 days prior to and concluding 12 months following the consummation
      of a Change in Control.

     

    (c)  Upon
      the occurrence
      of a Change in Control, unless otherwise provided in the applicable equity
      award
      agreement, all restricted stock, options to purchase shares of Class A Common
      Stock of SNI or other equity awards granted to Executive under SNI’s 1997 Equity
      Participation Plan or 2004 Incentive Plan, as either may be amended from time
      to
      time, shall become vested and exercisable as of the effective date of the Change
      in Control.

     

    (d)  In
      the event
      Executive’s employment as an at-will employee of the Company shall be terminated
      pursuant to Section 3(a), subject to Section 4 of this Agreement, Executive
      and
      Executive’s covered dependents shall be entitled to continue to receive, at the
      expense of the Company (other than Executive’s continued payments of the current
      portion of such costs for Executive and his covered dependents), and participate
      in, for a period of 12 months from the Termination Date, any life insurance,
      dental insurance, disability insurance, health insurance or hospital plans
      of
      the Company in effect at the time of termination (as such plans may be amended
      from time to time thereafter); provided, that, in the event of Executive’s
      termination of employment “in connection with a Change in Control” (as defined
      in Section 3), such benefits shall be substantially similar in the aggregate
      to
      (or greater than) the benefits provided to Executive and his covered dependents
      immediately prior to the Change in Control (or, if greater, the benefits
      provided to Executive and his covered dependents immediately prior to
      Executive’s termination of employment).  In the event Executive’s
      employment as an at-will employee of the Company shall be terminated pursuant
      to
      Section 3(b), subject to Section 4 of this Agreement, Executive shall be
      entitled to continue to receive, at the expense of the Company (other than
      Executive’s continued payments of his current portion of such costs), and
      participate in, for a period of 18 months from the Termination Date, any life
      insurance, dental insurance, disability insurance, health insurance or hospital
      plans of the Company in effect at the time of termination (as such plans may
      be
      amended from time to time thereafter); provided, that, in the event of
      Executive’s termination of employment “in connection with a Change in Control”
(as defined in Section 3), such benefits shall be substantially similar in
      the
      aggregate to (or greater than) the benefits provided to Executive and his
      covered dependents immediately prior to the Change in Control (or, if greater,
      the benefits provided to Executive and his covered dependents immediately prior
      to Executive’s termination of employment).

     

    4.  Code
      Section
      409A.   If Executive is a “specified employee”, as defined in
      Code Section 409A(a)(2)(B)(i), with respect to the Company and its
      affiliates,  any benefit payable under this Agreement that constitutes
      a deferral of compensation subject to Internal Revenue Code Section 409A that
      is
      payable upon or within the six months following Executive’s Separation from
      Service, shall be paid upon the date which is six months after the date of
      Executive’s Separation from Service (or, if earlier, the date of Executive’s
      death). If any benefit payable under this Agreement is exempt from Code Section
      409A (for example, certain amounts payable upon an involuntary separation from
      service), such benefit shall not be delayed, but shall be paid in accordance
      Section 3 of this Agreement.

     

     

    
      
        
        

      

      
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    5.  Parachute
      Payments.

     

    (a)  If
      it is determined
      (as hereafter provided) that any payment, compensation or other benefit provided
      by the Company (or any successor entity) to or for the benefit of Executive
      under this Agreement or any other plan, agreement or arrangement (the
“Payments”) would be subject to the excise tax imposed by Code Section 4999 (a
“Parachute Tax”), or any tax, interest, penalty or other expense incurred by
      Executive pursuant to Code Section 409A (a “Deferred Compensation Tax”) to which
      Executive would not have been subject but for the Company’s failure to pay any
      severance amounts pursuant to the provisions of Section 3 and Section 4 of
      this
      Agreement or other failure to make such payments in a manner that avoids such
      payments qualifying as deferred compensation under Section 409A of the Code
      (collectively, a “Payment”), then Executive shall be entitled to receive an
      additional payment or payments (a “Gross-Up Payment”) in an amount such that,
      after payment by Executive of all taxes (including any Parachute Tax or Deferred
      Compensation Tax) imposed upon the Gross-Up Payment, Executive retains an amount
      of the Gross-Up Payment equal to the Parachute Tax or Deferred Compensation
      Tax
      imposed upon the Payment.

     

    (b)  Subject
      to the
      provisions of Section 5(a) hereof, all determinations required to be made under
      this Section 5, including whether a Parachute Tax or Deferred Compensation
      Tax
      is payable by Executive with regard to a Payment and the amount of such
      Parachute Tax or Deferred Compensation Tax and whether a Gross-Up Payment is
      required and the amount of such Gross-Up Payment, shall be made by the
      nationally recognized firm of certified public accountants (the “Accounting
      Firm”) used by the Company prior to the Change in Control (or, if such
      Accounting Firm declines to serve, the Accounting Firm shall be a nationally
      recognized firm of certified public accountants selected by the
      Company).  For purposes of making the calculations required by this
      Section, the Accounting Firm may make reasonable assumptions and approximations
      concerning applicable taxes and may rely on reasonable, good faith
      interpretations concerning the application of Sections 280G, 4999 and 409A
      of
      the Code, provided that the Accounting Firm’s determinations must be made with
      substantial authority (within the meaning of Section 6662 of the
      Code).  The Accounting Firm shall be directed by the Company or
      Executive to submit its preliminary determination and detailed supporting
      calculations to both the Company and Executive within 15 calendar days after
      the
      determination date, if applicable, and any other such time or times as may
      be
      requested by the Company or Executive.  If the Accounting Firm
      determines that any Parachute Tax or Deferred Compensation Tax is payable by
      Executive with regard to a Payment, the Company shall pay the required Gross-Up
      Payment to, or for the benefit of, Executive within five business days after
      receipt of such determination and calculations.  If the Accounting
      Firm determines that no Parachute Tax or Deferred Compensation Tax is payable
      by
      Executive with regard to a Payment, it shall, at the same time as it makes
      such
      determination, furnish Executive with an opinion that he has substantial
      authority not to report any Parachute Tax or Deferred Compensation Tax on his
      federal tax return.  Any good faith determination by the Accounting
      Firm as to whether a Gross-Up Payment is to be made with regard to a Payment
      and
      the amount of the Gross-Up Payment shall be binding upon the Company and
      Executive absent a contrary determination by the Internal Revenue Service or
      a
      court of competent jurisdiction; provided, however, that no such determination
      shall eliminate or reduce the Company’s obligation to provide any Gross-Up
      Payments that shall be due as a result of such contrary
      determination.  As a result of the uncertainty in the application of
      Code Section 4999 or Code Section 409A at the time of any determination by
      the
      Accounting Firm hereunder, it is possible that Gross-Up Payments that will
      not
      have been made by the Company should have been made (an “Underpayment”),
      consistent with the calculations required to be made hereunder.  In
      the event that the Company exhausts or fails to pursue its remedies pursuant
      to
      Section 5(f) hereof and Executive thereafter is required to make a payment
      of
      any Parachute Tax or Deferred Compensation Tax, Executive shall direct the
      Accounting Firm to determine the amount of the Underpayment that has occurred
      and to submit its determination and detailed supporting calculations to both
      the
      Company and Executive as promptly as possible.  Any such Underpayment
      shall be promptly paid by the Company to, or for the benefit of, Executive
      within five business days after receipt of such determination and
      calculations.

     

     

    
      
        
        

      

      
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    (c)  The
      Company and
      Executive shall each provide the Accounting Firm access to and copies of any
      books, records and documents in the possession of the Company or Executive,
      as
      the case may be, reasonably requested by the Accounting Firm, and otherwise
      cooperate with the Accounting Firm in connection with the preparation and
      issuance of the determination contemplated by Section 5(b) hereof.

     

    (d)  The
      federal tax
      returns filed by Executive (or any filing made by a consolidated tax group
      which
      includes the Company) shall be prepared and filed on a basis consistent with
      the
      determination of the Accounting Firm with respect to the Parachute Tax or
      Deferred Compensation Tax payable by Executive.  Executive shall make
      proper payment of the amount of any Parachute Tax or Deferred Compensation
      Tax,
      and at the request of the Company, provide to the Company true and correct
      copies (with any amendments) of his federal income tax return as filed with
      the
      Internal Revenue Service, and such other documents reasonably requested by
      the
      Company, evidencing such payment.  If prior to the filing of
      Executive’s federal income tax return, the Accounting Firm determines in good
      faith that the amount of the Gross-Up Payment should be reduced, Executive
      shall
      within five business days pay to the Company the amount of such
      reduction.

     

    (e)  The
      fees and
      expenses of the Accounting Firm for its services in connection with the
      determinations and calculations contemplated by Sections 5(b) and (d) hereof
      shall be borne by the Company.  If such fees and expenses are
      initially advanced by Executive, the Company shall reimburse Executive the
      full
      amount of such fees and expenses within five business days after receipt from
      Executive of a statement therefor and reasonable evidence of his payment
      thereof.

     

    (f)  In
      the event that
      the Internal Revenue Service claims that any payment or benefit received under
      this Agreement constitutes an “excess parachute payment” within the meaning of
      Code Section 280G(b)(1), Executive shall notify the Company in writing of such
      claim.  Such notification shall be given as soon as practicable but
      not later than 10 business days after Executive is informed in writing of such
      claim and shall apprise the Company of the nature of such claim and the date
      on
      which such claim is requested to be paid.  Executive shall not pay
      such claim prior to the expiration of the 30 day period following the date
      on
      which Executive gives such notice to the Company (or such shorter period ending
      on the date that any payment of taxes with respect to such claim is
      due).  If the Company notifies Executive in writing prior to the
      expiration of such period that it desires to contest such claim, Executive
      shall
      (i) give the Company any information reasonably requested by the Company
      relating to such claim; (ii) take such action in connection with contesting
      such
      claim as the Company shall reasonably request in writing from time to time,
      including without limitation, accepting legal representation with respect to
      such claim by an attorney reasonably selected by the Company and reasonably
      satisfactory to Executive; (iii) cooperate with the Company in good faith in
      order to effectively contest such claim; and (iv) permit the Company to
      participate in any proceedings relating to such claim; provided, however, that
      the Company shall bear and pay directly all costs and expenses (including,
      but
      not limited to, additional interest and penalties and related legal, consulting
      or other similar fees) incurred in connection with such contest and shall
      indemnify and hold Executive harmless, on an after-tax basis, for and against
      for any Parachute Tax or income tax or other tax (including interest and
      penalties with respect thereto) imposed as a result of such representation
      and
      payment of costs and expenses.

     

    (g)  The
      Company shall
      direct Executive with regard to all proceedings taken in connection with such
      contest and, at its sole option, may pursue or forgo any and all administrative
      appeals, proceedings, hearings and conferences with the taxing authority in
      respect of such claim and may, at its sole option, either direct Executive
      to
      pay the tax claimed and sue for a refund or contest the claim in any permissible
      manner and Executive agrees to prosecute such contest to a determination before
      any administrative tribunal, in a court of initial jurisdiction and in one
      or
      more appellate courts, as the Company shall determine; provided, however, that
      if the Company directs Executive to pay such claim and sue for a refund, the
      Company shall advance the amount of such payment to Executive on an
      interest-free basis (to the extent permitted by applicable law), and shall
      indemnify and hold Executive harmless, on an after tax basis, from any Parachute
      Tax or Deferred Compensation Tax (or other tax including interest and penalties
      with respect thereto) imposed with respect to such advance or with respect
      to
      any imputed income with respect to such advance; and provided, further, that
      if
      Executive is required to extend the statue of limitations to enable the Company
      to contest such claim, Executive may limit this extension solely to such
      contested amount.  The Company’s right to direct Executive with regard
      to the contest shall be limited to issues with respect to whether and the extent
      to which a payment or benefit is an “excess parachute payment” pursuant to Code
      Section 280G(b)(1), the imposition of the Parachute Tax under Code Section
      4999
      and the imposition of the Deferred Compensation Tax under Code Section 409A,
      and
      Executive shall be entitled to settle or contest, as the case may be, any other
      issue raised by the Internal Revenue Service or any other taxing
      authority.  In addition, the Company shall not direct Executive to
      take a position or agree to any final resolution if such position or resolution
      could reasonably be expected to adversely affect Executive unrelated to matters
      covered hereto, unless Executive consents in writing to such position or
      agreement.

     

     

    
      
        
        

      

      
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    (h)  If,
      after the
      receipt by Executive of an amount advanced by the Company in connection with
      the
      contest of the Parachute Tax or Deferred Compensation Tax claim, Executive
      receives any refund with respect to such claim, Executive shall promptly pay
      to
      the Company the amount of such refund (together with any interest paid or
      credited thereon after taxes applicable thereto); provided, however, if the
      amount of that refund exceeds the amount advanced by the Company Executive
      may
      retain such excess.  If, after the receipt by Executive of an amount
      advanced by the Company in connection with a Parachute Tax or Deferred
      Compensation Tax claim, a determination is made that Executive shall not be
      entitled to any refund with respect to such claim and the Company does not
      notify Executive in writing of its intent to direct Executive to contest the
      denial of such refund prior to the expiration of 30 days after such
      determination such advance shall be deemed to be in consideration for services
      rendered after the Termination Date.

     

    6.  Confidential
      Information and Inventions.

     

    (a)  Except
      as otherwise
      required by Executive’s employment duties for the Company, Executive shall
      maintain in strict confidence and shall not directly, indirectly or otherwise,
      use, publish, disclose or disseminate, or use for Executive’s benefit or the
      benefit of any person, firm, corporation or entity, any Confidential Information
      of or relating to the Company or its affiliates (or which the Company or its
      affiliates has a right to use).  For purposes of this Agreement,
“Confidential Information” shall mean all confidential and proprietary
      information of the Company and its parents, subsidiaries and affiliates, whether
      in oral, written or electronic form or obtained by observation or otherwise,
      whether or not legended or otherwise identified as confidential or proprietary
      information, and whether or not discovered or developed by Executive or known
      or
      obtained by Executive as a consequence of Executive’s employment with the
      Company at any time as employee or agent.  Confidential Information
      shall include, without limitation, all scientific, clinical, engineering,
      technical, process, method or commercial data, information or know-how, relating
      to the research, development, manufacture, distribution, sale or marketing
      of
      any vitamins, minerals, nutritional supplements, sports nutrition products,
      beverages, food bars, powdered food supplements, or other products or product
      lines of the Company.  Confidential Information shall also include, without
      limitation, all customer lists, pricing data, sources of supply and related
      supplier and vendor information, purchasing, operating or other cost data,
      manufacturing methods, quality control information, regulatory information,
      employee and compensation information, financial data, trade secrets, formulas,
      intellectual property, manuals, financial data, forecasts, business plans,
      expansion or acquisition plans and product development information and
      plans.  Notwithstanding the foregoing, Confidential Information shall
      not include (i) information, from a source other than the
      Company,  which is in Executive’s possession on the date hereof or
      subsequently becomes available to Executive so long as such information was
      lawfully obtained and is not, to the knowledge of Executive, subject to another
      confidentiality agreement or obligation of secrecy to the Company or another
      person, or (ii) information which becomes generally available to the public
      other than directly or indirectly as a result of disclosure by Executive or
      another party bound by legal obligations prohibiting such
      disclosure.

     

    (b)  Executive
      hereby
      assigns and transfers to the Company any and all works of authorship, inventions
      and innovations (whether deemed patentable or not), which relate to the business
      of the Company and which are made by Executive (or by Executive jointly with
      others) during the term of Executive’s employment and/or within one year after
      the termination of Executive's employment with the Company, if such work of
      authorship, invention, or innovation is based upon or relates to Confidential
      Information acquired by Executive during the term of employment with the
      Company.  For purposes of copyright law, any such work of authorship
      shall be deemed a work made for hire.  Executive agrees to promptly
      disclose to the Company all such works of authorship, inventions, and
      innovations.  Executive agrees to execute any document reasonably
      requested by the Company that is necessary or appropriate to document, perfect,
      or effect the intention of this Section 6 or to secure any patent, copyright
      registration (as a work made for hire), trademark registration or other
      protection thereof for the Company.

     

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

     

    (c)  Upon
      termination of
      Executive’s employment, Executive shall immediately deliver to the Company all
      Confidential Information embodied in any form (including any form of computer
      media), including all copies, then in Executive’s possession or control, whether
      prepared by Executive or others, as well as other Company property in
      Executive’s possession or control.

     

    7.  Successors
      and
      Binding Agreement.

     

    (a)  The
      Company will
      require any successor (whether direct or indirect, by purchase, merger,
      consolidation, reorganization or otherwise, including, without limitation,
      any  successor due to a Change in Control) to the business or assets
      of the Company, by agreement in form and substance reasonably satisfactory
      to
      Executive, expressly assume and agree to perform this Agreement in the same
      manner and to the same extent the Company would be required to perform if no
      such succession had taken place.  This Agreement will be binding upon
      and inure to the benefit of the Company and any successor to the Company,
      including, without limitation, any person directly or indirectly acquiring
      the
      business or assets of the Company in a transaction constituting a Change in
      Control (and such successor shall thereafter be deemed the “Company” for the
      purpose of this Agreement), but will not otherwise be assignable, transferable
      or delegable by the Company.

     

    (b)  This
      Agreement will
      inure to the benefit of and be enforceable by Executive’s personal or legal
      representatives, executors, administrators, successors, heirs, distributees
      and
      legatees, but will not otherwise be assignable, transferable or delegable by
      Executive.

     

    8.  Validity.  If
      any provision of this Agreement or the application of any provision hereof
      to
      any person or circumstances is held invalid, unenforceable or otherwise illegal,
      the remainder of this Agreement and the application of such provision to any
      other person or circumstances will not be affected, and the provision so held
      to
      be invalid, unenforceable or otherwise illegal will be reformed to the extent
      (and only to the extent) necessary to make it enforceable, valid or
      legal.

     

    9.  Governing
      Law;
      Jurisdiction. The laws of the state of Utah shall govern the interpretation,
      validity and performance of the terms of this Agreement, regardless of the
      law
      that might be applied under principles of conflicts of law.  Any suit,
      action or proceeding against Executive, with respect to this Agreement, or
      any
      judgment entered by any court in respect of any of such, may be brought in
      any
      court of competent jurisdiction in the State of Utah, and Executive hereby
      submits to the jurisdiction of such courts for the purpose of any such suit,
      action, proceeding or judgment.

     

    10.  Notices.  Any
      notices or communications given by any party hereto to the other party shall
      be
      in writing and personally delivered or mailed by registered or certified mail,
      return receipt requested, postage prepaid.  Notices shall be addressed
      to the parties at the addresses set forth above.   Notices shall
      be deemed given when received.  Either party may designate in writing,
      by notice to the others, such other address to which notices to such party
      shall
      thereafter be sent.

     

    11.  Further
      Assurances.  Each party agrees at any time, and from time-to-time,
      to execute, acknowledge, deliver and perform, and/or cause to be executed,
      acknowledged, delivered and performed, all such further acts, deeds assignments,
      transfers, conveyances, powers of attorney and/or assurances as may be
      necessary, and/or proper to carry out the provisions and/or intent of this
      Agreement.

     

    12.  Amendment;
      Waiver; Entire Agreement. No provision of this Agreement may be modified,
      waived or discharged unless such waiver, modification or discharge is agreed
      to
      in writing signed by Executive and the Company.  No waiver by either
      party hereto at any time of any breach by the other party hereto or compliance
      with any condition or provision of this Agreement to be performed by such other
      party will be deemed a waiver of similar or dissimilar provisions or conditions
      at the same or at any prior or subsequent time.  This Agreement
      constitutes the entire agreement of the parties with respect to the subject
      matter hereof and supersedes any and all prior agreements of the parties with
      respect to such subject matter.

     

    13.  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 agreement.

     

    

    
      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

    

    

    

     

    IN
      WITNESS WHEREOF,
      the parties have caused this Amended and Restated Agreement to be duly executed
      and delivered as of the date first set forth above.

     

    

     

    
      	 	
              SCHIFF
                NUTRITION GROUP, INC.

               

            
	
              By:

            	 
	
              Title:

            	 
	 	 
	 	 
	
              EXECUTIVE

            	 
	 	 

    

    

    

    

    
      
        
          
          

        

        
          9exv10w1

 

Exhibit 10.1

EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT AGREEMENT, made and entered into effective as of September 19, 2007 (the
“Effective Date”) by and between Walter C. Rakowich (the “Executive”) and ProLogis, a Maryland real
estate investment trust (the “Company”),

WITNESSETH THAT:

     WHEREAS, the Executive is currently employed by the Company in an executive capacity;

     WHEREAS, the Management Development and Executive Compensation Committee (the “Committee”) of
the Board of Trustees (the “Board”) of the Company has the authority to determine compensation of
the Company’s executives; and

     WHEREAS, the Committee has determined that, to ensure that the Executive receives a
competitive compensation package, to maintain continuity in the management of the Company’s
affairs, and to protect the Company’s valuable business interests, it is appropriate to enter into
this Agreement on the terms herein provided;

     NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth below, it is
hereby covenanted and agreed by the Executive and the Company as follows:

     1. Term. The parties agree that the Company will continue to employ the Executive as
its President and Chief Operating Officer, and the Executive agrees to continue in the employ of
the Company in such capacity, from and after the Effective Date through December 31, 2009 (the
“Agreement Term”).

     2. Performance of Services. The Executive’s employment with the Company shall be
subject to the following:

	(a)	 	During the Agreement Term, while the Executive is employed by the Company, the Executive
shall devote his full time, energies and talents to serving as the President and Chief
Operating Officer of the Company.
	 
	(b)	 	The Executive shall report to the Chief Executive Officer of the Company. The Executive
agrees that he shall perform his duties faithfully and efficiently subject to the directions
of the Chief Executive Officer of the Company. The Executive’s duties may include providing
services for both the Company and the Subsidiaries (as defined below), as determined by the
Board; provided, that the Executive shall not, without his consent, be assigned tasks that
would be inconsistent with those of the President and Chief Operating Officer of the Company.
The Executive shall have such authority, power, responsibilities and duties as are inherent in
his positions (and the undertakings applicable to his positions) and necessary to carry out
his responsibilities and the duties required of him hereunder.
	 
	(c)	 	Notwithstanding the foregoing provisions of this paragraph 2, during the Agreement Term, the
Executive may devote reasonable time to activities other than those required

 

 

	 	 	under this Agreement, including the supervision of his personal investments, and activities
involving professional, charitable, community, educational, religious and similar types of
organizations, speaking engagements, membership on the boards of directors of other
organizations, and similar types of activities, to the extent that such other activities do
not in the judgment of the Board, inhibit or prohibit the performance of the Executive’s
duties under this Agreement, or conflict in any material way with the business of the
Company or any Subsidiary; provided, however, that the Executive shall not serve on the
board of any for profit business, or hold any other position with any business, without the
consent of the Board.
	 
	(d)	 	For purposes of this Agreement, the term “Subsidiary” shall mean any corporation,
partnership, joint venture or other entity during any period in which at least a fifty percent
interest in such entity is owned, directly or indirectly, by the Company (or a successor to
the Company).

     3. Compensation. Subject to the terms of this Agreement, during the Agreement Term,
while the Executive is employed by the Company, the Company shall compensate him for his services
as follows:

	(a)	 	The Executive shall receive, for the Agreement Term, a minimum base salary (the “Base
Salary”) and minimum target bonus (“Target Bonus”) equal to his base salary and target bonus
as in effect immediately prior to the Effective Date, which amounts were $630,000 Base Salary
and $840,000 Target Bonus, and an actual annual bonus that, as a percentage, is the same as
awarded to other senior executives for the applicable period.
	 
	(b)	 	On the Effective Date, the Executive shall be awarded 100,000 restricted share units (“RSUs”)
under the ProLogis 2006 Long-Term Incentive Plan (the “Incentive Plan”), which RSUs shall vest
on the “Vesting Date” specified below:

	 	 	 	 	 
	Vesting Date	 	Number of Units
	December 31, 2008

	 	25,000		 
	December 31, 2009

	 	25,000		 
	December 31, 2010

	 	25,000		 
	December 31, 2011

	 	25,000		 

	(c)	 	For calendar years 2007 and 2008, the Executive shall be entitled to, at a minimum, the same
Long-Term Compensation as he was granted for calendar year 2006. For purposes of this
Agreement, “Long-Term Compensation” means, collectively, contingent performance shares, stock
options and share units and the Long-Term Compensation granted to the Executive in each of
2007 and 2008 shall be a minimum of $2.75 million annually. The Long-Term Compensation to be
granted to the Executive pursuant to this subparagraph 3(c) shall be granted under the
Incentive Plan and at the same time the applicable annual grants are made to other senior
executives of the Company. In no event shall the Executive be granted Long-Term Compensation
pursuant to this

2

 

	 	 	subparagraph 3(c) unless he is employed by the Company on the date of grant. The Long-Term
Compensation granted to the Executive pursuant to this subparagraph 3(c) shall be subject to
the same terms and conditions as apply to the annual grants of Long-Term Compensation to
other senior executives of the Company for the applicable grant, subject to the terms and
conditions of this Agreement.
	 
	(d)	 	The Executive shall not be entitled to a grant of Long-Term Compensation for calendar year
2009.
	 
	(e)	 	Except as otherwise specifically provided to the contrary in this Agreement, the Executive
shall be eligible to participate in the Company’s employee benefit plans, programs, policies
and arrangements to the same extent and on the same terms as those benefits are provided by
the Company from time to time to the Company’s other similarly situated senior management
employees. However, the Company shall not be required to provide a benefit under this
subparagraph 3(e) if such benefit would duplicate (or otherwise be of the same type as) a
benefit specifically required to be provided under another provision of this Agreement. The
Executive shall complete all forms and physical examinations, and otherwise take all other
similar actions to secure coverage and benefits described in this subparagraph 3(e), to the
extent determined to be necessary or appropriate by the Company.
	 
	(f)	 	The Executive is authorized to incur reasonable expenses for entertainment, traveling, meals,
lodging and similar items in promoting the Company’s business. The Company will reimburse the
Executive for all reasonable expenses so incurred in accordance with the normal practices of
the Company during his employment with the Company; provided, however, that, the reimbursement
of any such expenses that are taxable to the Executive shall be made on or before the last day
of the year in which the expense was incurred, the amount of the expenses eligible for
reimbursement during one year will not affect the amount of expenses eligible for
reimbursement in any other year, and the right to reimbursement shall not be subject to
liquidation or exchange for another benefit.
	 
	(g)	 	Each award of Long-Term Compensation that has been granted to the Executive under the
Incentive Plan (or the ProLogis 1997 Long-Term Incentive Plan (the “1997 Plan”)) and that is
outstanding on the Effective Date (each an “Existing Award”) shall provide (or, if applicable,
shall be amended to provide) and each award of Long-Term Compensation that is granted to the
Executive under the Incentive Plan on or after the Effective Date (“New Awards”, Existing
Awards and New Awards sometimes being referred to below collectively as “Awards”) shall
provide as follows as of the Effective Date or, with respect to a New Award, the date on which
the New Award is granted:

	 	(i)	 	If the Date of Termination occurs during the Agreement Term (other than by the
Company for reasons other than for Cause or resignation by the Executive on account of
Constructive Discharge), any portion of the Awards that are not vested as of the Date
of Termination shall be forfeited as of the Date of Termination and the Executive shall
have no further rights under or with respect thereto.

3

 

	 	(ii)	 	If the Date of Termination occurs after the Agreement Term or during the
Agreement Term by the Company for reasons other than for Cause or by resignation by the
Executive on account of Constructive Discharge, any Award that is not then vested shall
continue to vest in accordance with its terms as though the Executive had remained as
an employee of the Company until such Award is fully vested.
	 
	 	(iii)	 	To the extent applicable and to the extent vested, each Award shall remain
exercisable through the Expiration Date, which shall be amended in each Existing Award
and shall be defined in each New Award as the ten year anniversary of the date of
grant, unless the Date of Termination is for Cause or resignation by the Executive
other than for Constructive Discharge in which case the Expiration Date shall be that
defined in the Incentive Plan or the 1997 Plan, as applicable..
	 
	 	(iv)	 	Notwithstanding the foregoing provisions of this paragraph 3(g), if, within
one year following the Date of Termination the Executive breaches the provisions of
paragraph 8 or subparagraph 9(b) or within two years following the Date of Termination
the Executive breaches the provisions of subparagraph 9(a), any Awards that are not
vested and, if applicable, exercisable upon the date of such breach shall be forfeited
and the Executive shall have no further rights under or with respect thereto

     4. Termination. The Executive’s employment with the Company during the Agreement Term
may be terminated by the Company or the Executive without any breach of this Agreement only under
the circumstances described in subparagraphs 4(a) through 4(f):

	(a)	 	Death. The Executive’s employment hereunder will terminate upon his death.
	 
	(b)	 	Permanent Disability. The Company may terminate the Executive’s employment during
any period in which he is Permanently Disabled. The Executive shall be considered
“Permanently Disabled” during any period in which he is unable, by reason of a medically
determinable physical or mental impairment, to engage in the material and substantial duties
of his regular occupation, and such condition is expected to be permanent, as determined by
the Board.
	 
	(c)	 	Cause. The Company may terminate the Executive’s employment hereunder at any time
for Cause. For purposes of this Agreement, the term “Cause” shall mean in the reasonable
judgment of the Board (i) the willful and continued failure by the Executive to substantially
perform his duties with the Company or any subsidiary after written notification by the
Company or subsidiary, (ii) the willful engaging by the Executive in conduct which is
demonstrably injurious to the Company or any subsidiary, monetarily or otherwise, or (iii) the
engaging by the Executive in egregious misconduct involving serious moral turpitude. For
purposes hereof, no act, or failure to act, on the Executive’s part shall be deemed “willful”
unless done, or omitted to be done, by the Executive not in good faith and without reasonable
belief that such action was in the best interest of the Company or subsidiary.

4

 

	(d)	 	Constructive Discharge. If (I) the Executive provides written notice to the Company
of the occurrence of Good Reason (as defined below) within 90 days after the Executive first
has knowledge of the circumstances constituting Good Reason, which notice specifically
identifies the circumstances which the Executive believes constitute Good Reason; (II) the
Company fails to notify the Executive of the Company’s intended method of correction within 30
days after the Company receives the notice and fails to correct such circumstances within 60
days after the Company receives the notice, or the Company fails to correct the circumstances
within 30 days after such notice; and (III) the Executive resigns within 90 days after the
latest of (A) the date of the Company’s response to the Executive’s notice, if such notice
does not indicate an intention to correct such circumstances, (B) the last day of the
correction period if the circumstances have not been corrected by such date, or (C) the date
of the Executive’s notice to the Company if the Company does not respond to the Executive’s
notice to the Company within 30 days, then the Executive shall be considered to have been
subject to a Constructive Discharge by the Company. For purposes of this Agreement, “Good
Reason” shall mean, without the Executive’s express written consent (and except in consequence
of a prior termination of the Executive’s employment), the occurrence of any of the following
circumstances:

	 	(i)	 	The material diminution in the Executive’s authority, duties or
responsibilities.
	 
	 	(ii)	 	A material reduction by the Company in the Executive’s Base Salary to an amount
that is less than required under subparagraph 3(a).
	 
	 	(iii)	 	The relocation of the Executive’s base office to an office that is more than
30 highway miles from the Executive’s base office on the Effective Date, which the
parties agree would be a material change in the geographic location at which the
Executive would be required to perform services.

	 	 	The Executive’s right to terminate his employment pursuant to this subparagraph 4(d) shall
not be affected by his incapacity due to physical or mental illness.
	 
	(e)	 	Termination by Executive. The Executive may terminate his employment hereunder at
any time for any reason by giving the Company prior written Notice of Termination (as defined
in subparagraph 4(g)), which Notice of Termination shall be effective not less than 30 days
after it is given to the Company, provided that nothing in this Agreement shall require the
Executive to specify a reason for any such termination. However, to the extent that the
procedures specified in subparagraph 4(d) are required, the procedures of this subparagraph
4(e) may not be used in lieu of the procedures required under subparagraph 4(d).
	 
	(f)	 	Termination by Company. The Company may terminate the Executive’s employment
hereunder at any time for any reason, by giving the Executive prior written Notice of
Termination, which Notice of Termination shall be effective immediately, or such later time as
is specified in such notice. The Company shall not be required to specify a reason for the
termination under this subparagraph 4(f), provided that termination of the Executive’s
employment by the Company shall be deemed to have occurred under this

5

 

	 	 	subparagraph 4(f) only if it is not for reasons described in subparagraph 4(b), 4(c), 4(d),
or 4(e).
	 
	(g)	 	Notice of Termination. Any termination of the Executive’s employment by the Company
or the Executive (other than a termination pursuant to subparagraph 4(a)) must be communicated
by a written Notice of Termination to the other party hereto. For purposes of this Agreement,
a “Notice of Termination” means a dated notice which indicates the Date of Termination (not
earlier than the date on which the notice is provided), and which indicates the specific
termination provision in this Agreement relied on and which sets forth in reasonable detail
the facts and circumstances, if any, claimed to provide a basis for termination of the
Executive’s employment under the provision so indicated.
	 
	(h)	 	Date of Termination. “Date of Termination” means the last day the Executive is
employed by the Company and the Subsidiaries, provided that the Executive’s employment is
terminated in accordance with the foregoing provisions of this paragraph 4.
	 
	(i)	 	Effect of Termination. If, on the Date of Termination, the Executive is a member of
the Board or the board of trustees or board of directors any of the Subsidiaries, or holds any
other position with the Company and the Subsidiaries (other than the position described in
subparagraph 2(a)), the Executive shall resign from all such positions as of the Date of
Termination.

     5. Rights Upon Termination. The Executive’s right to payment and benefits under this
Agreement for periods after his Date of Termination shall be determined in accordance with the
following provisions of this paragraph 5:

	(a)	 	If the Executive’s Date of Termination occurs during the Agreement Term for any reason, the
Company shall pay to the Executive:

	 	(i)	 	The Executive’s Base Salary (to the extent not previously paid) for the period
ending on the Date of Termination.
	 
	 	(ii)	 	Payment for unused vacation days, as determined in accordance with Company
policy as in effect from time to time.
	 
	 	(iii)	 	If the Date of Termination occurs after the end of a performance period and
prior to the payment of the Target Bonus (as described in subparagraph 3(b)) for the
period, the Executive shall be paid such bonus amount at the regularly scheduled time.
	 
	 	(iv)	 	Any other payments or benefits to be provided to the Executive by the Company
pursuant to any employee benefit plans or arrangements adopted by the Company, to the
extent such amounts are due from the Company.

	 	 	Except as may otherwise be expressly provided to the contrary in this Agreement, nothing in
this Agreement shall be construed as requiring the Executive to be treated as

6

 

	 	 	employed by the Company for purposes of any employee benefit plan or arrangement following
the date of the Executive’s Date of Termination.
	 
	(b)	 	If the Executive’s Date of Termination occurs during the Agreement Term under circumstances
described in subparagraph 4(a) (relating to the Executive’s death), subparagraph 4(b)
(relating to the Executive’s being Permanently Disabled), subparagraph 4(c) (relating to the
Executive’s termination for Cause), subparagraph 4(e) (relating to the Executive’s
resignation), or if the Executive’s employment with the Company terminates after the end of
the Agreement Term then, except as otherwise expressly provided in this Agreement or otherwise
agreed in writing between the Executive and the Company, the Company shall have no obligation
to make payments under the Agreement for periods after the Executive’s Date of Termination;
provided, however that if the Date of Termination occurs as a result of the Executive’s death
or on account of the Executive being Permanently Disabled, or in the case of Executive’s death
after the Date of Termination but prior to the complete vesting of any Award, then all Awards,
to the extent then outstanding, shall be fully vested as of the Date of Termination or death,
as the case may be.
	 
	(c)	 	If the Executive’s Date of Termination occurs during the Agreement Term under circumstances
described in subparagraph 4(d) (relating to Constructive Discharge) or subparagraph 4(f)
(relating to termination by the Company without Cause), then, in addition to the amounts
payable in accordance with subparagraph 5(a), the Company shall pay or provide to the
Executive the following payments and benefits (collectively, the “Severance Benefits”):

	 	(i)	 	The Executive shall receive from the Company for the period (the “Severance
Period”) from the Date of Termination continuing through the end of the Agreement Term,
or, if later, the six-month anniversary of the Date of Termination, the Base Salary
amount described in subparagraph 3(a), as in effect on his Date of Termination, which
amounts shall be in accordance with the Company’s normal payroll practices, as well as
any portion of the Executive’s actual bonus for the Agreement Term as determined in
accordance with Paragraph 3(a) that has not yet been paid, which bonus shall be paid at
such times as such annual bonuses are paid to other similarly situated executives. The
Severance Period, and the Company’s obligation to make payments under this clause (i)
shall cease with respect to periods after the earlier to occur of the date of the
Executive’s death, or a date, if any, of the breach by the Executive of the provisions
of paragraphs 8 or 9 of this Agreement.
	 
	 	(ii)	 	Continuation of coverage for the Severance Period under the employee benefit
plans and arrangements of the Company in which the Executive was participating at the
time of his termination of employment; provided that in no event shall the benefits
provided (or made available) with respect to any plan or arrangement under this clause
(c)(ii) be materially less favorable to the Executive than the benefits most favorable
to the Executive that are provided (or were available) during the one-year period prior
to such termination of employment. To the extent applicable, in determining the amount
of benefits to which the Executive is

7

 

	 	 	 	entitled under this clause (c)(ii), it shall be assumed that the Executive shall
continue to be entitled to the Base Salary that he was receiving immediately prior
to the termination, and the bonus for the year prior to the year in which the
termination occurs. If the Company reasonably determines that the Executive cannot
participate in any benefit plan because he is not actively performing services for
the Company, then, in lieu of providing benefits under any such plan, the Company
shall make payments to the Executive equal to the reduction in funding cost
resulting from the Executive’s exclusion from such plan, which payments shall be
made no later than March 15 of the year following the Executive’s Date of
Termination in a lump sum and shall fully satisfy any obligation of the Company to
continue benefits under such plans; provided that the Company shall not be permitted
to provide substitute benefits under this clause (c)(ii) with respect to medical
insurance, life insurance or disability benefits.
	 
	 	(iii)	 	All of the RSUs granted to the Executive pursuant to subparagraph 3(b) and any
Awards granted to the Executive on or after the Effective Date, to the extent then
outstanding, shall be fully vested as of the Date of Termination.

	(d)	 	Notwithstanding any other provisions of this Agreement, no Severance Benefits will be paid or
provided under this Agreement unless and until (i) the Executive executes a release of claims
against the Company in a form prepared by the Company and agreed to by the Executive in his
reasonable discretion (the “Release”), which Release shall be executed no later than 30 days
after the Date of Termination, and (ii) as of the seventh day following the Executive’s
execution of the Release, the Release is not revoked. If the requirements set forth in
subparagraphs (i) (the “consideration requirements”) and (ii) (the “revocation requirements”)
are not satisfied, the Executive shall have no rights to or with respect to any Severance
Benefits under this Agreement. Any Severance Benefits that are not paid or provided pending
satisfaction of the consideration requirements and/or revocation requirements but that would
otherwise have been paid or provided pursuant to this Agreement had those requirements been
satisfied on the Date of Termination shall be paid or provided on the tenth day following the
last day of the revocation period.
	 
	(e)	 	Except as may be otherwise specifically provided in an amendment of this subparagraph 5(e)
adopted in accordance with paragraph 16, the Executive’s rights under this paragraph 5 shall
be in lieu of any benefits that may be otherwise payable to or on behalf of the Executive
pursuant to the terms of any severance pay arrangement of the Company or any Subsidiary or any
other, similar arrangement of the Company or any Subsidiary providing benefits upon
involuntary termination of employment, other than the benefits provided by the Executive
Protection Agreement between the Executive and the Company. Notwithstanding any other
provision of this Agreement, in the event that the Executive becomes entitled to benefits
under the Executive Protection Agreement, the Executive shall not be entitled to any benefits
under this Agreement on account of his termination of employment with the Company and the
Subsidiaries but rather all such benefits shall be provided in accordance with the terms of
the Executive Protection Agreement.

8

 

	(f)	 	If the Executive’s Date of Termination occurs during the Agreement Term under circumstances
described in subparagraph 4(d) (relating to Constructive Discharge) or subparagraph 4(f)
(relating to termination by the Company without Cause), or if the Executive’s employment with
the Company terminates after the end of the Agreement Term then, in addition to the amounts
payable in accordance with subparagraph 5(a) and (c), if the Executive timely elects to
continue receiving group medical insurance pursuant to the federal “COBRA” law, 29 U.S.C. §
1161 et seq., the Company shall continue to pay the share of the premium for such coverage
that is paid by the Company for active similarly situated employees who receive the same type
of coverage for so long as the Executive is eligible for such COBRA continuation of coverage
(“Benefit Continuation Period”). The remaining balance of any premium costs shall be paid by
the Executive on a monthly basis for as long as, and to the extent that, the Executive remains
eligible for COBRA continuation. The Benefit Continuation Period, and the Company’s
obligation to make payments under this clause shall cease with respect to periods after the
earlier to occur of the date of the Executive’s death, or a date, if any, of the breach by the
Executive of the provisions of paragraphs 8 or 9 of this Agreement.

     6. Duties on Termination. Subject to the terms and conditions of this Agreement,
during the period beginning on the date of delivery of a Notice of Termination, and ending on the
Date of Termination, the Executive shall continue to perform his duties as set forth in this
Agreement, and shall also perform such services for the Company as are necessary and appropriate
for a smooth transition to the Executive’s successor, if any. Notwithstanding the foregoing
provisions of this paragraph 6, the Company may suspend the Executive from performing his duties
under this Agreement following the delivery of a Notice of Termination providing for the
Executive’s resignation, or delivery by the Company of a Notice of Termination providing for the
Executive’s termination of employment for any reason; provided, however, that during the period of
suspension (which shall end on the Date of Termination), the Executive shall continue to be treated
as employed by the Company for other purposes, and his rights to compensation or benefits shall not
be reduced by reason of the suspension.

     7. Mitigation and Set-Off. The Executive shall not be required to mitigate the amount
of any payment provided for in this Agreement by seeking other employment or otherwise. The
Company shall not be entitled to set off against the amounts payable to the Executive under this
Agreement any amounts owed to the Company by the Executive, any amounts earned by the Executive in
other employment after termination of his employment with the Company, or any amounts which might
have been earned by the Executive in other employment had he sought such other employment.

     8. Confidential Information. The Executive agrees that, during the Agreement Term,
and at all times thereafter:

	(a)	 	Except as may be required by the lawful order of a court or agency of competent jurisdiction,
except as necessary to carry out his duties to the Company and its Subsidiaries, or except to
the extent that the Executive has express authorization from the Company, the Executive agrees
to keep secret and confidential indefinitely, all Confidential Information, and not to
disclose the same, either directly or indirectly, to any other person, firm, or business
entity, or to use it in any way.

9

 

	(b)	 	To the extent that any court or agency seeks to have the Executive disclose Confidential
Information, he shall promptly inform the Company, and he shall take such reasonable steps to
prevent disclosure of Confidential Information until the Company has been informed of such
requested disclosure, and the Company has an opportunity to respond to such court or agency.
To the extent that the Executive obtains information on behalf of the Company or any of the
Subsidiaries that may be subject to attorney-client privilege as to the Company’s attorneys,
the Executive shall take reasonable steps to maintain the confidentiality of such information
and to preserve such privilege.
	 
	(c)	 	Nothing in the foregoing provisions of this paragraph 8 shall be construed so as to prevent
the Executive from using, in connection with his employment for himself or an employer other
than the Company or any of the Subsidiaries, knowledge which was acquired by him during the
course of his employment with the Company and the Subsidiaries, and which is generally known
to persons of his experience in other companies in the same industry.
	 
	(d)	 	For purposes of this Agreement, the term “Confidential Information” shall include all
non-public information (including, without limitation, information regarding litigation and
pending litigation) concerning the Company and the Subsidiaries which was acquired by or
disclosed to the Executive during the course of his employment with the Company, or during the
course of his consultation with the Company following his Date of Termination (regardless of
whether consultation is pursuant to paragraph 10).
	 
	(e)	 	This paragraph 8 shall not be construed to unreasonably restrict the Executive’s ability to
disclose confidential information in an arbitration proceeding or a court proceeding in
connection with the assertion of, or defense against any claim of breach of this Agreement in
accordance with paragraph 23. If there is a dispute between the Company and the Executive as
to whether information may be disclosed in accordance with this subparagraph 8(e) the matter
shall be submitted to the arbitrators or the court (whichever is applicable) for decision.

     9. Noncompetition. During the Restricted Period (as defined below) the Executive will
not, without the Company’s prior written consent (which consent shall not be unreasonably
withheld), directly or indirectly, for the Executive’s own account or for or on behalf of any other
person or entity, whether an officer, director, employee, partner, consultant, or otherwise:

	 	(a)	 	engage or participate in, directly or indirectly, alone or as principal, agent,
employee, employer, consultant, investor or partner of, or assist in the management of,
or provide advisory or other services to, or own any stock or any other ownership
interest in, or make any financial investment in, any business or entity which is
Competitive with the Company (as defined below) or purchase any property which could
reasonably be used to provide or develop a business that is Competitive with the
Company; or
	 
	 	(b)	 	solicit or attempt to hire or employ, in any fashion (whether as an employee,
independent contractor or otherwise), any employee of the Company or the Subsidiaries,
or solicit or induce, or attempt to solicit or induce, any of the

10

 

	 	 	 	Company’s or the Subsidiaries’ employees to terminate their relationship with the
Company and/or the Subsidiaries; provided, however, that this subparagraph shall not
be applicable to, and the Executive shall not be in breach of this Agreement, if
such solicitation or inducement is by an entity or individual with whom the
Executive is affiliated if the Executive was not directly involved with such
solicitation or inducement.

     For purposes of this Agreement:

	 	(i)	 	The term “Restricted Period” means, the period during which the Executive is
employed by the Company and the period following the Date of Termination and ending,
for purposes of subparagraph 9(a), on the second anniversary of the Date of Termination
and ending, for purposes of subparagraph 9(b), on the first anniversary of the Date of
Termination.
	 
	 	(ii)	 	A business or entity shall be considered “Competitive with the Company”
if it engages in any of the businesses in which the Company or any of its affiliates
engages, including the business of providing distribution facilities or services, the
acquisitions of properties for such purpose and the design of business strategies for
such purpose. For purposes of the portion of the Restricted Period following the
Executive’s Date of Termination, the businesses in which the Company or any of its
affiliates engages shall be determined as of the Executive’s Date of Termination.
	 
	 	(iii)	 	For periods after the Executive’s Date of Termination, a business entity shall
not be considered “Competitive with the Company” (as defined in clause (ii)
above) for purposes of this Agreement if it builds anything other than industrial
warehouses or acquires property for purposes of developing anything other than
industrial warehouses and the Executive’s investment in such business or entity does
not exceed $10,000,000 with respect to any one transaction or $20,000,000 in the
aggregate for all transactions for the portion of the Restricted Period following his
Date of Termination.

     10. Assistance with Claims. The Executive agrees that, for the period beginning on
the Effective Date, and continuing for a reasonable period after the Executive’s Date of
Termination, the Executive will assist the Company and the Subsidiaries in defense of any claims
that may be made against the Company and the Subsidiaries, and will assist the Company and the
Subsidiaries in the prosecution of any claims that may be made by the Company or the Subsidiaries,
to the extent that such claims may relate to services performed by the Executive for the Company
and the Subsidiaries (“Proceedings”). The Executive agrees to promptly inform the Company if he
becomes aware of any lawsuits involving such claims that may be filed against the Company or any
Subsidiary. The Company agrees to provide legal counsel to the Executive in connection with such
assistance (to the extent legally permitted), and to reimburse the Executive for all of the
Executive’s reasonable out-of-pocket expenses associated with such assistance, including travel
expenses and reasonable legal expenses; provided, however, that such expenses shall be reimbursed
no later than March 15 of the year following the year in which they are incurred. If the amount
of time spent by the Executive fulfilling his obligations under

11

 

this section exceeds 20 hours, the Company shall pay the Executive an hourly rate for his time
in fulfilling his obligations, which hourly rate shall be determined by dividing the Executive’s
annual Base Salary when last employed by the Company by 1920, which payments shall be made in
accordance with the normal payroll practices of the Company. The Executive shall choose his legal
counsel in his reasonable sole discretion. For periods after the Executive’s employment with the
Company terminates, the Company agrees to provide reasonable compensation to the Executive for such
assistance, which compensation shall be paid within 30 days after the assistance is performed. The
Executive also agrees to promptly inform the Company if he is asked to assist in any investigation
of the Company or the Subsidiaries (or their actions) that may relate to services performed by the
Executive for the Company or the Subsidiaries, regardless of whether a lawsuit has then been filed
against the Company or the Subsidiaries with respect to such investigation. The Executive agrees
that the Executive shall testify truthfully in connection with any such Proceeding, shall cooperate
with the Company in connection with every such Proceeding, and that the Executive’s duty of
cooperation shall include an obligation to meet with the Company representatives and/or counsel
concerning all such Proceedings for such purposes, and at such mutually agreeable times and places,
as the Company reasonably requests and which do not unduly interfere with the Executive’s other
personal and business commitments, and to appear for deposition and/or testimony upon the Company’s
request and without a subpoena.

     11. Directors and Officers Insurance. The Executive shall be named as an insured and
covered against the same claims and at the same level of insurance under the Directors and Officers
insurance purchased by the Company for other senior executives of the Company.

     12. Remedies. The Executive acknowledges that the Company may be irreparably injured
by a violation of paragraphs 8 or 9(b) and he agrees that the Company shall be entitled to a
preliminary injunction, temporary restraining order, or other equivalent relief (but not recoupment
of any profits previously realized by the Executive relating to any equity awards or otherwise),
restraining the Executive from any breach of either paragraphs 8 or 9(b); provided, however, that
the Company’s only and exclusive remedy for a breach of subparagraph 9(a) for periods after the
Date of Termination shall be the cessation of vesting of any Awards as described in subparagraph
3(g). If a bond is required to be posted in order for the Company to secure an injunction or other
equitable remedy, the parties agree that said bond need not be more than a nominal sum.

     13. Nonalienation. The interests of the Executive under this Agreement are not
subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance,
attachment, or garnishment by creditors of the Executive or the Executive’s beneficiary.

     14. Withholding. All payments and benefits under this Agreement are subject to
withholding of all applicable taxes.

     15. Indemnity. The Company indemnify the Executive against and shall pay and advance
(to the extent permitted by applicable law) all expenses, including, without limitation, attorneys’
fees, disbursements and retainers, accounting and witness fees, travel and deposition costs,
expenses of investigations, judicial or administrative proceedings and appeals, amounts

12

 

paid in settlement by the Executive or on behalf of the Executive, actually incurred by the
Executive in connection with any threatened, pending or completed claim, action, suit or
proceeding, formal or informal, whether brought in the right of the Company or otherwise and
whether of a civil, criminal, administrative or investigative nature, by reason of the fact that
the Executive as a director, officer, employee or agent of the Company or its affiliates or as
serving at the Company’s request as a director, officer, employee, or agent of another corporation,
limited liability company, partnership, joint venture, trust, or other enterprise.

     16. Amendment. This Agreement may be amended or cancelled only by mutual agreement of
the parties in writing without the consent of any other person. So long as the Executive lives, no
person, other than the parties hereto, shall have any rights under or interest in this Agreement or
the subject matter hereof.

     17. Applicable Law. The provisions of this Agreement shall be construed in accordance
with the laws of the State of Colorado, without regard to the conflict of law provisions of any
state.

     18. Severability. The invalidity or unenforceability of any provision of this
Agreement will not affect the validity or enforceability of any other provision of this Agreement,
and this Agreement will be construed as if such invalid or unenforceable provision were omitted
(but only to the extent that such provision cannot be appropriately reformed or modified).

     19. Waiver of Breach. No waiver by any party hereto of a breach of any provision of
this Agreement by any other party, or of compliance with any condition or provision of this
Agreement to be performed by such other party, will operate or be construed as a waiver of any
subsequent breach by such other party of any similar or dissimilar provisions and conditions at the
same or any prior or subsequent time. The failure of any party hereto to take any action by reason
of such breach will not deprive such party of the right to take action at any time while such
breach continues.

     20. Successors. This Agreement shall be binding upon, and inure to the benefit of,
the Company and its successors and assigns and upon any person acquiring, whether by merger,
consolidation, purchase of assets or otherwise, all or substantially all of the Company’s assets
and business, and the successor shall be substituted for the Company under this Agreement.

     21. Notices. Notices and all other communications provided for in this Agreement
shall be in writing and shall be delivered personally or sent by registered or certified mail,
return receipt requested, postage prepaid (provided that international mail shall be sent via
overnight or two-day delivery), or sent by facsimile or prepaid overnight courier to the parties at
the addresses set forth below (or such other addresses as shall be specified by the parties by like
notice). Such notices, demands, claims and other communications shall be deemed given:

	(a)	 	in the case of delivery by overnight service with guaranteed next day delivery, the next day
or the day designated for delivery;
	 
	(b)	 	in the case of certified or registered U.S. mail, five days after deposit in the U.S. mail;
or

13

 

	(c)	 	in the case of facsimile, the date upon which the transmitting party received confirmation of
receipt by facsimile, telephone or otherwise;

provided, however, that in no event shall any such communications be deemed to be given later than
the date they are actually received. Communications that are to be delivered by the U.S. mail or
by overnight service or two-day delivery service are to be delivered to the addresses set forth
below:

to the Company:

4545 Airport Way

Denver, CO 80239

Attn: General Counsel

Fax: (303) 567-5761

or to the Executive:

5051 South Lafayette Lane

Englewood, CO 80113

All notices to the Company shall be directed to the attention of the General Counsel of the
Company, with a copy to the Secretary of the Company. Each party, by written notice furnished to
the other party, may modify the applicable delivery address, except that notice of change of
address shall be effective only upon receipt.

	 	 	22. Dispute Resolution
	 
	(a)	 	The Executive and Company agree that in the event of any controversy or claim arising out of
or relating to the Executive’s employment with and/or separation from Company, they shall
negotiate in good faith to resolve the controversy or claim privately, amicably and
confidentially. Each party may consult with counsel in connection with such negotiations.
	 
	(b)	 	All controversies and claims arising from or relating to this Agreement that cannot be
resolved by good-faith negotiations (“Arbitrable Disputes”) shall be resolved only by final
and binding arbitration conducted privately and confidentially in the Denver, Colorado,
metropolitan area by a single arbitrator who is a member of the panel of former judges that
makes up the Judicial Arbiter Group (“JAG”); any successor of JAG; or, if JAG or any successor
is not in existence, any entity that can provide a former judge to serve as arbitrator
(collectively, the “Dispute Resolution Service”). The parties understand and agree that this
Agreement evidences a transaction involving commerce within the meaning of 9 U.S.C. § 2, and
that this Agreement shall therefore be governed by the Federal Arbitration Act, 9 U.S.C. §§ 1,
et seq.
	 
	(c)	 	To commence an arbitration pursuant to this Agreement, a party shall serve a written
arbitration demand (the “Demand”) on the other party by certified mail, return receipt
requested, and at the same time submit a copy of the Demand to the Dispute Resolution Service,
together with a check payable to the Dispute Resolution Service in the amount of

14

 

	 	 	that entity’s then-current arbitration filing fee; provided that in no event shall the
Executive be required to pay an arbitration filing fee exceeding the sum then required to
file a civil action in the United States District Court for the District of Colorado. The
claimant shall attach a copy of this Agreement to the Demand. Within thirty days after
receiving the Demand, the respondent shall mail to the claimant a written response to the
Demand (the “Response”), and submit a copy of the Response to the Dispute Resolution
Service, together with a check for the difference, if any, between the filing fee paid by
the claimant and the Dispute Resolution Service’s then-current arbitration filing fee.
	 
	(d)	 	Promptly after service of the Response, the parties shall confer in good faith to attempt to
agree upon a suitable arbitrator. If the parties are unable to agree upon an arbitrator, the
Dispute Resolution Service shall select the arbitrator, based, if possible, on his or her
expertise with respect to the subject matter of the Arbitrable Dispute.
	 
	(e)	 	Notwithstanding the choice-of-law principles of any jurisdiction, the arbitrator shall be
bound by and shall resolve all Arbitrable Disputes in accordance with the substantive law of
the State of Colorado, federal law as enunciated by the federal courts situated in the Tenth
Circuit, and all Colorado and Federal rules relating to the admissibility of evidence,
including, without limitation, all relevant privileges and the attorney work product doctrine.
	 
	(f)	 	Before the arbitration hearing, Company shall be entitled to at least 2 depositions,
including take a discovery deposition of the Executive, and the Executive shall be entitled to
take at least two depositions, including a discovery deposition of one Company representative
as defined by and in accordance with Federal Rule of Civil Procedure 30(b)(6). Upon the
written request of either party, the other party shall promptly produce documents relevant to
the Arbitrable Dispute or reasonably likely to lead to the discovery of admissible evidence.
The manner, timing and extent of any further discovery shall be committed to the arbitrator’s
sound discretion, provided that under no circumstances shall the arbitrator allow more
depositions or interrogatories than permitted by the presumptive limitations set forth in
F.R.Civ.P. 30(a)(2)(A) and 33(a). The arbitrator shall levy appropriate sanctions, including
an award of reasonable attorneys’ fees, against any party that fails to cooperate in good
faith in discovery permitted by this subparagraph 22(f) or ordered by the arbitrator.
	 
	(g)	 	Within thirty days after the arbitration hearing is closed, the arbitrator shall issue a
written award setting forth his or her decision and the reasons therefore. The arbitrator’s
award shall be final, nonappealable and binding upon the parties, subject only to the
provisions of 9 U.S.C. § 10, and may be entered as a judgment in any court of competent
jurisdiction.
	 
	(h)	 	The parties agree that reliance upon courts of law and equity can add significant costs and
delays to the process of resolving disputes. Accordingly, they recognize that an essence of
this Agreement is to provide for the submission of all Arbitrable Disputes to binding
arbitration. Therefore, if any court concludes that any provision of this paragraph 22 is
void or voidable, the parties understand and agree that the court shall reform each such
provision to render it enforceable, but only to the extent absolutely necessary to render

15

 

	 	 	the provision enforceable and only in view of the parties’ express desire that Arbitrable
Disputes be resolved by arbitration and, to the greatest extent permitted by law, in
accordance with the principles, limitations and procedures set forth in this Agreement.

     23. Legal and Enforcement Costs. The provisions of this paragraph 23 shall apply if
it becomes necessary or desirable for the Executive to retain legal counsel or incur other costs
and expenses in connection with either enforcing any and all of his rights under this Agreement or
defending against any allegations of breach of this Agreement by the Company:

	(a)	 	The Executive shall be entitled to recover from the Company reasonable attorneys’ fees, costs
and expenses incurred by him in connection with such enforcement or defense.
	 
	(b)	 	The Executive shall submit to the Company, within 30 days of incurring an expense subject to
reimbursement pursuant to this paragraph 23, appropriate documentation evidencing that the
Executive has incurred the expense and the amount thereof. Within 30 days of receipt of such
documentation, the Company shall pay to the Executive (or, at the Executive’s direction, to
directly to the Executive’s attorney) any payments that are otherwise to be made pursuant to
this paragraph 23.
	 
	(c)	 	The Executive shall be entitled to select his legal counsel; provided, however, that such
right of selection shall not affect the requirement that any costs and expenses reimbursable
under this paragraph 23 be reasonable.
	 
	(d)	 	The Executive’s rights to payments under this paragraph 23 shall not be affected by the final
outcome of any dispute with the Company; provided, however, that to the extent that the
arbitrators shall determine that under the circumstances recovery by the Executive of all or a
part of any such fees and costs and expenses would be unjust or inappropriate, the Executive
shall not be entitled to such recovery; and to the extent that such amount have been recovered
by the Executive previously, the Executive shall repay such amounts to the Company.

     24. Survival of Agreement. Except as otherwise expressly provided in this Agreement,
the rights and obligations of the parties to this Agreement shall survive the termination of the
Executive’s employment with the Company.

     25. Entire Agreement. Except as otherwise noted herein or in any separation agreement
subsequently entered into by the Executive and the Company, this Agreement, including any
Exhibit(s) attached hereto, constitutes the entire agreement between the parties concerning the
subject matter hereof and supersedes all prior and contemporaneous agreements, if any, between the
parties relating to the subject matter hereof; provided, however, that nothing in this Agreement
shall be construed to limit any policy or agreement that is otherwise applicable relating to
confidentiality, rights to inventions, copyrightable material, business and/or technical
information, trade secrets, solicitation of employees, interference with relationships with other
businesses, competition, and other similar policies or agreement for the protection of the business
and operations of the Company and the Subsidiaries.

16

 

     26. Special Section 409A Rules. Notwithstanding any other provision of this Agreement
to the contrary, if any payment or benefit hereunder is subject to section 409A of the Internal
Revenue Code of 1986, as amended (the “Code”), and if such payment or benefit is to be paid or
provided on account of the Executive’s Date of Termination (or other separation from service):

	(a)	 	and if the Executive is a specified employee (within the meaning of section 409A(a)(2)(B) of
the Code) and if any such payment or benefit is required to be made or provided prior to the
first day of the seventh month following the Executive’s separation from service, such payment
or benefit shall be delayed until the first day of the seventh month following the Executive’s
separation from service; and

	(b)	 	the determination as to whether the Executive has had a termination of employment (or
separation from service) shall be made in accordance with section 409A and the guidance issued
thereunder.

17

 

     IN WITNESS THEREOF, the Executive has hereunto set his hand, and the Company has caused these
presents to be executed in its name and on its behalf, all as of the Effective Date.

	 	 	 	 	 	 	 
	 

	 	 	 	/s/ Walter C. Rakowich
 

	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	Executive	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	ProLogis	 	 
	 
	 	 	 	 	 	 
	 

	 	By:

Its:
	 	/s/ Jeffrey H. Schwartz
 

Chief Executive Officer
	 	 

18

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