Exhibit 10.4
EMPLOYMENT AGREEMENT
AGREEMENT, dated as of October 1, 2002, by and between NBTY, Inc., a
Delaware corporation (the "Company"), and ▇▇▇▇▇▇ ▇▇▇▇▇ (the "Executive").
WHEREAS, the Company recognizes that the Executive's talents and
abilities are unique, and have been integral to the success of the Company
and thus wishes to secure the ongoing services of the Executive on the
terms and conditions set forth herein and to prevent any other competitive
business from securing his services, and in utilizing his experience,
background and know how; and
WHEREAS, the Executive desires to continue his employment on the
terms and conditions set forth in this Agreement; and
WHEREAS, the Board of Directors of the Company ("Board") recognizes
that the possibility of an unsolicited tender offer or other takeover bid
for the Company is unsettling to senior executives of the Company.
Therefore, these arrangements are being made to help assure a continuing
dedication by such senior executives to their duties to the Company
notwithstanding the possibility of a tender offer or takeover bid. In
particular, the Board and the Compensation Committee of the Board (the
"Committee") believe it important, should the Company receive proposals
from third parties with respect to its future, to enable senior executives,
without being influenced by the uncertainties of their own situation, to
assess and advise the Board whether such proposals would be in the best
interests of the Company and its shareholders and to take such other action
regarding such proposals as the Board might determine to be appropriate.
The Board and the Committee also wish to demonstrate to executives of the
Company that the Company is concerned with the welfare of its executives
and intends to see that loyal executives are treated fairly.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants set forth below, the parties hereby agree as follows:
1. Employment. The Company hereby employs the Executive as
President and Chief Financial Officer of the Company, and the Executive
hereby accepts such employment, on the terms and conditions set forth
below.
2. Term. Unless earlier terminated in accordance with Section 6
hereof, the Executive shall be employed by the Company on the terms and
conditions hereof pursuant to this Agreement for a period beginning on the
date hereof (the "Effective Date") and ending on the fifth (5th)
anniversary of the date hereof (the "Employment Period"); provided,
however, that the Employment Period shall automatically be extended on each
anniversary of the Effective Date for an additional one year period unless
the Executive or the Company shall give the other at least thirty (30)
days' written notice to the contrary.
3. Position and Duties. During the Employment Period, the
Executive shall serve as President and Chief Financial Officer of the
Company, with such duties, authority and responsibilities as are normally
associated with and appropriate for such positions. The Executive shall
report directly to the Board or any committees thereof at the request of
the Board. The Executive shall devote substantially all of his working
time, attention and energies during normal business hours (other than
absences due to illness or vacation) to the performance of his duties for
the Company. The Executive shall comply fully and promptly with the
various policies, procedures and rules governing employees promulgated
and/or as amended from time to time by the Company. Notwithstanding the
above, the Executive shall be permitted, to the extent such activities do
not substantially interfere with his performance of his duties and
responsibilities hereunder or violate Section 10 of this Agreement, to (i)
manage his personal, financial and legal affairs, (ii) with the approval of
the Board, serve on civic or charitable boards or committees; (iii) with
the approval of the Board, serve on boards of other companies, and the
Executive shall be entitled to receive and retain all remuneration received
by him from the items listed in clauses (i) through (iii) of this
paragraph.
4. Place of Performance. During the Employment Period, the
Company shall maintain executive offices for the Executive in Bohemia, New
York and the Executive shall not be required to relocate to any other
location beyond a twenty-five (25) mile radius surrounding Bohemia, New
York. During the Employment Period, the Company shall provide the
Executive with an office and appropriate staff.
5. Compensation and Related Matters.
(a) Base Salary. During the Employment Period, the Company shall
pay the Executive an annual base salary at the rate of not less than Four
Hundred Twenty Thousand Dollars ($420,000) per year ("Base Salary"). The
Executive's Base Salary shall be paid in approximately equal installments
in accordance with the Company's customary payroll practices, less all
applicable tax withholdings for state and federal income taxes, FICA and
other deductions as required by law and/or authorized by the Executive.
Each year during the Employment Period, pursuant to the Company's policy
for senior executives, the Company shall effect a performance and salary
review of the Executive and may increase (but not decrease) the Base Salary
in such amount as the Committee, in its sole discretion, determines, but in
no event shall the increase over the prior Base Salary be less than the
percentage increase in the Consumer Price Index published by the Bureau of
Labor Statistics of the United States Department of Labor for each twelve
(12) month period beginning on January 1 of such year. January 2002 shall
be the "Base Year" and the corresponding Index number for the month of
January on each anniversary of the Effective Date shall be the current
Index number. If the Executive's Base Salary is increased by the Company,
such increased Base Salary shall then constitute the Base Salary for all
purposes of this Agreement.
(b) Annual Bonus. For each full fiscal year of the Company that
begins and ends during the Employment Period, the Executive shall be
eligible to earn an annual
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cash bonus in such amount as shall be determined by the Compensation
Committee, in its sole discretion (the "Annual Bonus"), taking into account
such factors as the achievement by the Company of performance goals
established by the Compensation Committee for each such fiscal year (or
portion of each fiscal year), which may include targets related to the
earnings before interest, taxes, depreciation and amortization ("EBITDA")
of the Company, and other relevant factors; provided, however, that the
Annual Bonus shall be no less than fifty percent (50%) of the then Base
Salary.
(c) Automobile Allowance. The Company shall provide the Executive
with an automobile allowance to cover the cost of purchasing or leasing of
a suitable vehicle in the amount of One Thousand Seven Hundred Fifty
Dollars ($1,750) per month. Such automobile allowance shall be paid
monthly, and may be increased pursuant to procedures set forth in Section
5(a) below (as so increased from time to time, the "Auto Allowance"). The
Company shall also reimburse the Executive for all costs incurred by the
Executive to insure and maintain such vehicle.
(d) Business, Travel and Entertainment Expenses. The Company shall
promptly reimburse the Executive for all business, travel and entertainment
expenses consistent with the Executive's titles including, without
limitation, first class transportation or travel on a private plane.
(e) Vacation. The Executive shall be entitled to six (6) weeks of
vacation per year. Vacation not taken during the applicable fiscal year
(but not in excess of three weeks) shall be carried over to the next
following fiscal year.
(f) Welfare, Pension and Incentive Benefit Plans. During the
Employment Period and subject to his fulfillment of the applicable
eligibility requirements of the various welfare benefit plans and programs,
the Executive (and his eligible spouse and dependents) shall be entitled to
participate in all the welfare benefit plans and programs maintained by the
Company from time to time for the benefit of its senior executives
including, without limitation, all medical, hospitalization, dental,
disability, accidental death and dismemberment and travel accident
insurance plans and programs. In addition, during the Employment Period
and subject to his fulfillment of the applicable eligibility requirements
of such employee benefit plans and programs, the Executive shall be
eligible to participate in all pension, retirement, savings and other
employee benefit plans and programs maintained from time to time by the
Company for the benefit of its senior executives, other than any annual
cash incentive plan. The Executive shall pay for the portion of the cost
of such benefits as established by the Company to be paid by its senior
executives.
(g) Stock Options.
(i) The Executive shall be eligible to receive incentive
stock options, non-qualified stock options and other equity awards
(collectively, the "Options"), as determined and granted to the
Executive from time to time by the Board and/or the Committee;
provided that the Options shall become 100% vested and exercisable
upon
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a Change in Control (as defined below); and the Options shall expire
upon the earlier to occur of (i) ten (10) years from the date of
grant (the "Option Term") or (ii) except as otherwise provided in
Section 8, ninety (90) days following the termination of Executive's
employment with the Company.
(ii) If the Company shall receive any tax benefits from the
failure of any Options granted hereunder to qualify as incentive
stock options other than because of the limitation contained in
Section 422(d) of the Internal Revenue Code of 1986, as amended, or
any successor thereto, or because of Executive's failure to exercise
such Options in a timely way or to hold the shares of Common Stock
acquired pursuant thereto for a sufficient period of time after the
grant or exercise of the Options, the Company shall pay to the
Executive the amount of such benefits within ten (10) business days
of the receipt of such benefit by the Company.
(h) Private Clubs. The Company shall pay for the costs and
expenses of maintaining a membership at one (1) private country club and
one (1) health club suitable to the Executive's position.
6. Termination. The Executive's employment hereunder may be
terminated during the Employment Period under the following circumstances:
(a) Death. This Agreement and the Employment Period shall
terminate upon the Executive's death.
(b) Disability. If, as a result of the Executive's incapacity due
to physical or mental illness as determined by a physician selected by the
Executive, and reasonably acceptable to the Company, (i) the Executive
shall have been substantially unable to perform his duties hereunder for
six consecutive months, or for an aggregate of 180 days during any period
of twelve consecutive months and (ii) within thirty days after written
Notice of Termination (as defined in Section 7 below) is given to the
Executive after such six- or twelve-month period, the Executive shall not
have returned to the substantial performance of his duties on a full-time
basis, the Company shall have the right to terminate the Executive's
employment hereunder for "Disability" and this Agreement shall be
terminated if the Company chooses to exercise such a right.
(c) Cause. The Company shall have the right to terminate the
Executive's employment for "Cause." For purposes of this Agreement, the
Company shall have "Cause" to terminate the Executive's employment only
upon the Executive's:
(i) conviction of a felony (or entered a plea of nolo
contender to a crime that constitutes a felony) or willful gross
misconduct that, in either case, results in material and demonstrable
damage to the business or reputation of the Company; or
(ii) willful and continued failure by Executive to perform his
duties hereunder (other than such failure resulting from the
Executive's incapacity due to physical or mental illness or after the
issuance of a Notice of Termination by the
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Executive for Good Reason, as defined below) within ten business days
after the Company delivers to him a written demand for performance
that specifically identifies the actions to be performed; or
(iii) the breach by the Executive of any term of this
Agreement.
For purposes of this Section 6(c), no act or failure to act by the
Executive shall be considered "willful" if such act is done by the
Executive in the good faith belief that such act is or was to be beneficial
to the Company or one or more of its businesses, or such failure to act is
due to the Executive's good faith belief that such action would be
materially harmful to the Company or one of its businesses. "Cause" shall
not exist unless and until the Company has delivered to the Executive a
copy of a resolution duly adopted by a majority of the entire membership of
the Board at a meeting of the Board called and held for such purpose after
reasonable (but in no event less than thirty days') notice to the Executive
and an opportunity for the Executive, together with his counsel, to be
heard before the Board, finding that in the good faith opinion of the Board
that "Cause" exists, and specifying the particulars thereof in detail.
This Section 6(c) shall not prevent the Executive from challenging in any
court of competent jurisdiction the Board's determination that Cause exists
or that the Executive has failed to cure any act (or failure to act) that
purportedly formed the basis for the Board's determination. However, after
giving notice to the Executive and complying with the procedures set forth
in this Section 6(c), the Company may relieve the Executive of his duties
on an interim basis.
(d) Good Reason. The Executive may terminate his employment for
"Good Reason" after giving the Company detailed written notice thereof, if
the Company shall have failed to cure the event or circumstance
constituting "Good Reason" within ten business days after receiving such
notice. Good Reason shall mean the occurrence of any of the following
without the written consent of the Executive:
(i) the assignment to the Executive of duties inconsistent
with this Agreement and his position (including the office to which
he reports, status, offices and title), a change in his titles or
authority or other action by the Company which results in a
diminution of such position, authority, duties or responsibilities;
(ii) any reduction by the Company of, or the Company's failure
to pay, the Executive's Base Salary or Annual Bonus in breach of
Sections 5(a) and (b) above;
(iii) any failure by the Company to provide benefits required
by Section 5;
(iv) the requirement of the Executive to relocate to locations
other than that provided in Section 4 hereof;
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(v) the failure of the Company to comply with and satisfy
Section 13(a) of this Agreement;
(vi) as a result of a Change in Control (as defined below) and
a change in circumstances thereafter significantly affecting the
Executive's position, including, without limitation, a change in
scope of the business or other activities for which he was
responsible immediately prior to the Change in Control, Executive has
been rendered substantially unable to carry out, or has been
substantially hindered in the performance of, any of the authority,
duties and responsibilities contemplated by Section 3 above; or
(vii) any material breach of this Agreement by the Company.
The Executive's right to terminate his employment hereunder for Good
Reason shall not be affected by his incapacity due to physical or mental
illness. The Executive's continued employment shall not constitute consent
to, or a waiver of rights with respect to, any act or failure to act
constituting Good Reason hereunder.
(e) Without Cause. So long as the Company complies in full with all
of its obligations set forth in Section 8 below, the Company shall have the
right to terminate the Executive's employment hereunder without Cause by
providing the Executive with a Notice of Termination to that effect.
(f) Without Good Reason. The Executive shall have the right to
terminate his employment hereunder without Good Reason by providing the
Company with a Notice of Termination to that effect.
(g) Upon a Change in Control. The Company shall have the right to
terminate the Executive's employment hereunder as a result of a Change in
Control by providing the Executive with a Notice of Termination to that
effect. For purposes of this Agreement, "Change in Control" shall mean
the happening of any of the following:
(i) The members of the Board at the beginning of any
consecutive twenty-four calendar month period, but not including any
period prior to the Effective Date (the "Incumbent Directors"), cease
for any reason other than due to death or such director's desire to
not stand for re-election to the Board to constitute at least a
majority of the members of the Board; provided that any director
whose election, or nomination for election by the Company's
stockholders, was approved by a vote of at least a majority of the
members of the Board then still in office who were members of the
Board at the beginning of such twenty-four calendar month period
shall be deemed an Incumbent Director;
(ii) any "person", including a "group" (as such terms are used
in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934),
but excluding the Company, any of its affiliates or any employee
benefit plan of the Company is or becomes after the Effective Date a
"beneficial owner" (as such term is used in Section 13(d) and 14 of
the Securities Exchange Act of 1934) directly or indirectly of
securities of the Company (not
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including in the securities beneficially owned by such person any
securities acquired directly from the Company) representing 15% or
more of the combined voting power of the Company's then outstanding
securities;
(iii) the stockholders of the Company approve a definitive
agreement (1) for the merger or other business combination of the
Company with or into another entity if (A) a majority of the
directors of the surviving entity were not directors of the Company
immediately prior to the effective date of such merger or
combination, or (B) the stockholders of the Company immediately prior
to the effective date of such merger or combination own less than 50%
of the combined voting power of the then outstanding securities in
such surviving entity or (2) for the sale or other disposition of all
or substantially all of the assets of the Company; or
(iv) the purchase of 15% or more of the Company's then
outstanding securities pursuant to any tender or exchange offer made
by any "person", including a "group" (as such terms are used in
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934),
other than the Company, any of its affiliates or any employee benefit
plan of the Company.
7. Termination Procedure.
(a) Notice of Termination. Any termination of the Executive's
employment by the Company or by the Executive during the Employment Period
(other than pursuant to Section 6(a)) shall be communicated by written
Notice of Termination to the other party. For purposes of this Agreement, a
"Notice of Termination" shall mean a notice indicating the specific
termination provision in this Agreement relied upon and setting forth in
reasonable detail the facts and circumstances claimed to provide a basis
for termination of the Executive's employment under that provision.
(b) Date of Termination. "Date of Termination" shall mean (i) if
the Executive's employment is terminated by his death, the date of his
death, (ii) if the Executive's employment is terminated pursuant to Section
6(b), thirty (30) days after the date of receipt of the Notice of
Termination (provided that the Executive does not return to the substantial
performance of his duties on a full-time basis during such thirty (30) day
period), and (iii) if the Executive's employment is terminated for any
other reason, the date on which a Notice of Termination is given or any
later date (within thirty (30) days after the giving of such notice) set
forth in such Notice of Termination. Notwithstanding the foregoing, in the
event that the Executive has given the Company his Notice of Termination
for Good Reason or otherwise, the Board may elect to have such resignation
become effective immediately or at such other date, not later than the
effective date specified in the Notice of Termination, as the Board may
determine.
(c) Resignation. Upon termination of the Executive's employment,
Executive (unless otherwise requested by the Board) concurrently shall
resign any directorships which he holds with the Company and all affiliates
of the Company.
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8. Compensation Upon Termination or During Disability. In the
event the Executive's employment terminates during the Employment Period,
the Company shall provide the Executive with the payments and benefits set
forth below within 10 business days following the Date of Termination
(except for the payment set forth in Section 8 (a)(vi), which shall be paid
as provided in such Section).
(a) Termination By Company without Cause or By Executive for Good
Reason. If the Executive's employment is terminated by the Company without
Cause (other than Disability) or by the Executive for Good Reason, in each
case before a Change in Control has occurred:
(i) the Company shall pay to the Executive, on or before the
Date of Termination, a lump sum payment equal to the greater of:
(1) the sum of (A) Base Salary, accrued vacation pay
and Auto Allowance, in each case through the Date of
Termination, (B) Base Salary and Auto Allowance that would have
been payable for the remaining term of the Employment Period
had such termination not taken place, and (C) Annual Bonus in
the amount of fifty percent (50%) of the then Base Salary that
would have been payable for the remaining term of the
Employment Period had such termination not taken place, and
(2) the sum of (A) Base Salary, accrued vacation pay
and Auto Allowance, in each case through the Date of
Termination, (B) three (3) times the Executive's Base Salary
and (C) three (3) times the Annual Bonus paid with respect to
the fiscal year ended immediately preceding the date of such
termination;
(ii) the Company shall continue to provide the Executive and
his eligible spouse and dependents for a period equal to the greater
of (A) the remaining term of the Employment Period, or (B) three (3)
years following the Date of Termination, the medical,
hospitalization, dental and life insurance program and other benefits
provided for in Section 5(f), as if he had remained employed;
provided, that if the Executive, his spouse or his eligible
dependents cannot continue to participate in the Company programs
providing such benefits, the Company shall arrange to provide the
Executive and his spouse and dependents with the economic equivalent
of the benefits they otherwise would have been entitled to receive
under such plans and programs; and provided, further, that such
benefits shall terminate on the date or dates the Executive becomes
eligible to receive equivalent coverage and benefits under the plans
and programs of a subsequent employer at an equivalent cost to the
Executive (such coverage and benefits to be determined on a coverage-
by-coverage, or benefit-by-benefit, basis);
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(iii) all outstanding equity incentive awards (including,
without limitation, stock options granted under the Stock Option
Plan) shall immediately vest and, if such termination occurs prior to
a Change in Control, any then outstanding stock options or similar
awards held by Executive shall remain exercisable for a period of one
year from the date of such termination or, if earlier, until the end
of the Option Term and, if such termination occurs after a Change in
Control, Executive shall be entitled to receive from the Company a
lump sum amount equal to the "spread" (i.e., the closing price of one
share of common stock of the Company on the Date of Termination minus
the exercise price set forth in the stock option agreement or other
agreement governing the option or similar award, multiplied by the
number of shares of common stock of the Company that are subject to
such stock option agreement or other agreement governing the option
or similar award) on any then outstanding stock options or similar
awards held by Executive in exchange for the surrender and
cancellation of such awards;
(iv) the Company shall, consistent with past practice,
reimburse the Executive pursuant to Section 5 for business expenses
incurred but not paid prior to such Date of Termination;
(v) the Executive shall be entitled to any other rights,
compensation and/or benefits as may be due to the Executive in
accordance with the terms and provisions of any agreements, plans or
programs of the Company (other than any severance-based plan or
program); and
(vi) If (x) a Change in Control shall occur following such
Date of Termination and (y) it shall be determined that a Payment (as
defined in Section 9(d) below) would be subject to Excise Tax (as
defined in Section 9(d)), then the Executive shall be entitled to
receive a Gross-Up Payment (as defined in Section 9(d)), as provided
in Section 9(d) and Exhibit A hereto. The Gross-Up Payment shall be
paid pursuant to Exhibit A hereto.
The payments and benefits provided for as subclause (A) of clause (i)
above and in clause (iv) above are hereinafter referred to as the "Accrued
Obligations". The receipt of any amounts to be paid under this subsection
(a) is conditioned upon the Executive or his personal representative's
execution and delivery of a general release reasonably satisfactory to the
Company releasing the Company, its officers, agents, stockholders and
affiliates from any liability for any matter in law or equity concerning
any aspect of his employment.
(b) Cause or By Executive Without Good Reason. If the Executive's
employment is terminated by the Company for Cause or by the Executive other
than for Good Reason, then the Company shall provide the Executive with his
Accrued Obligations and shall have no further obligation to the Executive
hereunder.
(c) Disability. During any period that the Executive fails to
perform his duties hereunder as a result of incapacity due to physical or
mental illness ("Disability Period"), the Executive shall continue to
receive his full Base Salary set forth in Section 5(a) until
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his employment is terminated pursuant to Section 6(b). In the event the
Executive's employment is terminated for Disability pursuant to Section
6(b):
(i) the Company shall provide the Executive with the excess,
if any, of his Base Salary over the amount of any long-term
disability benefits that he receives under the Company's welfare
benefit plans and programs, payable in accordance with the normal
payroll practices of the Company, for the remainder of the Employment
Period;
(ii) all outstanding equity incentive awards (including
without limitation stock options granted under the Stock Option Plan)
shall immediately vest and any then outstanding stock options or
similar awards held by Executive shall remain exercisable for a
period of one year from the date of such termination or, if earlier,
until the end of the Option Term;
(iii) the Company shall, consistent with past practice,
reimburse the Executive pursuant to Section 5 hereof for business
expenses incurred but not paid prior to such Date of Termination; and
(iv) the Executive shall be entitled to any other rights,
compensation and/or benefits as may be due to Executive in accordance
with the terms and provisions of any agreements, plans or programs of
the Company (other than any severance-based plan or program).
Following the Company's payments and provisions of all of the
foregoing, the Company shall have no further obligations to the Executive
hereunder.
(d) Death. If the Executive's employment is terminated by his
death, the Company shall provide to the Executive's beneficiary, legal
representatives or estate, as the case may be, the Executive's Base Salary,
payable in accordance with the normal payroll practices of the Company, for
a period equal to the remaining term of the Employment Period and the
Company shall have no further obligations to the Executive's beneficiary,
legal representative or estate hereunder.
(e) Mitigation. The Executive shall not be required to mitigate
damages with respect to the termination of his employment under this
Agreement by seeking other employment or otherwise, and there shall be no
offset against amounts due the Executive under this Agreement on account of
subsequent employment except as specifically provided in this Section 8.
Additionally, amounts owed to the Executive under this Agreement shall not
be offset by any claims the Company may have against the Executive, and the
Company's obligation to make the payments provided for in this Agreement,
and otherwise to perform its obligations hereunder, shall not be affected
by any other circumstances, including, without limitation, any
counterclaim, recoupment, defense or other right which the Company may have
against the Executive or others.
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9. Change in Control Benefits.
(a) In the event the Executive's employment is terminated by the
Company for any reason other than Cause or Disability, or in the event the
Executive resigns for Good Reason, in each case after a Change in Control
has occurred, the Company shall pay Executive, as liquidated damages, a
lump sum cash payment in lieu of all severance benefits provided under
Section 8 (a)(i) above, equal to two and ninety-nine hundredths (2.99)
times the average compensation received by the Executive during the five
years immediately preceding the Date of Termination.
(b) The Company shall, consistent with past practice, reimburse the
Executive pursuant to Section 5 for business expenses incurred but not paid
prior to such Date of Termination;
(c) All outstanding equity incentive awards (including, without
limitation, stock options granted under the Stock Option Plan) shall
immediately vest, and the Executive Shall be entitled to receive a lump sum
amount equal to the "spread" on any then outstanding stock options or
similar awards held by the Executive, as provided in Section 8(a)(iii)
above;
(d) Notwithstanding anything in this Agreement to the contrary, in
the event it shall be determined that any payment or distribution by the
Company to or for the benefit of the Executive (whether paid or payable
pursuant to the terms of this Agreement or otherwise) (a "Payment") would
be subject to the excise tax imposed by Section 4999 (or any successor
provision) of the Internal Revenue Code of 1986, as amended, or any
successor thereto, or any interest or penalties are incurred by the
Executive with respect to such excise tax (such excise tax, together with
any such interest or penalties, are hereinafter collectively referred to as
the "Excise Tax"), then the Executive shall be entitled to receive an
additional payment (a "Gross-Up Payment") in an amount such that after
payment by the Executive of all taxes (including interest and penalties
imposed with respect to such taxes), including, without limitation, any
income taxes (and any interest and penalties imposed with respect thereto)
and Excise Tax imposed upon the Gross-Up Payment, the Executive retains an
amount of the Gross-Up Payment equal to the Excise Tax imposed on the
Payment, in accordance with the procedures set forth in Exhibit A hereto;
(e) Mitigation. The Executive shall not be required to mitigate
damages with respect to the termination of his employment under this
Agreement by seeking other employment or otherwise, and there shall be no
offset against amounts due the Executive under this Agreement on account of
subsequent employment except as specifically provided in this Section 9.
Additionally, amounts owed to the Executive under this Agreement shall not
be offset by any claims the Company may have against the Executive, and the
Company's obligation to make the payments provided for in this Agreement,
and otherwise to perform its obligations hereunder, shall not be affected
by
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any other circumstances, including, without limitation, any counterclaim,
recoupment, defense or other right which the Company may have against the
Executive or others.
10. Confidential Information; Non-Competition.
(a) Executive acknowledges that in his employment hereunder he will
occupy a position of trust and confidence.
(b) Except as may be required or appropriate in connection with his
carrying out his duties under this Agreement, the Executive shall not,
without the prior written consent of the Company or as may otherwise be
required by law or any legal process, or as is necessary in connection with
any adversarial proceeding against the Company (in which case the Executive
shall cooperate with the Company, at the Company's expense, in obtaining a
protective order against disclosure by a court of competent jurisdiction),
communicate, to anyone other than the Company and those designated by the
Company or on behalf of the Company in the furtherance of its business or
to perform his duties hereunder, any of the following, in each case without
limitation in time: any trade secrets, confidential information, knowledge
or data relating to the Company and its businesses, operations, inventions,
products, strategies, and investments, obtained by the Executive during the
Executive's employment by the Company that is not generally available
public knowledge (other than by acts by the Executive in violation of this
Agreement). Executive acknowledges that such confidential information is
specialized, unique in nature and of great value to the Company, and that
such confidential information gives the Company a competitive advantage.
The Executive agrees to deliver or return to the Company, at the Company's
request at any time or upon termination or expiration of his employment or
as soon thereafter as possible, all documents, computer tapes and disks,
records, lists, data, drawings, prints, notes and written information (and
all copies thereof) furnished by or on behalf of the Company or prepared by
the Executive in the course of his employment by the Company.
(c) The obligations contained in this Section 10 shall survive the
termination or expiration of Executive's employment with the Company and
shall be fully enforceable thereafter in accordance with its terms.
(d) During the Employment Period (and, in the event Executive
terminates his employment hereunder other than for Good Reason or
Executive's employment is terminated by the Company for cause, for a period
of one (1) year beyond the expiration of the Term), Executive shall not,
directly or indirectly, without the prior written consent of the Company,
provide services to (whether as an employee or a consultant, with or
without pay), own, manage, operate, join, control, participate in, or be
connected with (as a stockholder, partner, or otherwise), any business,
individual, partner, firm, corporation, or other entity that is then a
direct competitor of the Company or its subsidiaries (each such competitor
a "Competitor of the Company"); provided, however, that the "beneficial
ownership" by Executive, either individually or as a member of a "group,"
as such terms are used in Rule 13d of the General Rules and Regulations
under the Securities Exchange Act of 1934, as amended, of not more than
five percent (5%) of the voting stock of any
12
publicly held corporation shall not alone constitute a violation of this
Agreement and provided further that, with the consent of the Company (which
consent shall not be unreasonably withheld or delayed), the foregoing shall
not prohibit Executive from rendering services to an entity that conducts a
business that is a "Competitor of the Company" if such business does not
contribute a material portion of such entity's revenues. It is further
expressly agreed that the Company will or would suffer irreparable injury
if Executive were to compete with the Company or any subsidiary thereof in
violation of this Agreement, and that the Company would by reason of such
competition be entitled to injunctive relief in a court of appropriate
jurisdiction, and Executive further consents and stipulates to the entry of
such injunctive relief in such a court prohibiting Executive from competing
with the Company or any subsidiary of the Company in violation of this
Agreement. Executive and the Company acknowledge and agree that the
business of the Company is national in nature, and that the terms of the
non-competition agreement set forth herein shall apply on a nation-wide
basis.
11. Indemnification.
(a) General. The Company agrees that if the Executive is made a
party or is threatened to be made a party to any action, suit or
proceeding, whether civil, criminal, administrative or investigative (a
"Proceeding"), by reason of the fact that the Executive is or was a
trustee, director or officer of the Company, or any predecessor to the
Company or any of their affiliates or is or was serving at the request of
the Company, or any of their affiliates as a trustee, director, officer,
member, employee or agent of another corporation or a partnership, joint
venture, limited liability company, trust or other enterprise, including,
without limitation, service with respect to employee benefit plans, whether
or not the basis of such Proceeding is alleged action in an official
capacity as a trustee, director, officer, member, employee or agent while
serving as a trustee, director, officer, member, employee or agent, the
Executive shall be indemnified and held harmless by the Company to the
fullest extent authorized by Delaware law, as the same exists or may
hereafter be amended, against all Expenses (as defined below) incurred or
suffered by the Executive in connection therewith, and such indemnification
shall continue as to the Executive even if the Executive has ceased to be
an officer, director, trustee or agent, or is no longer employed by the
Company and shall inure to the benefit of his heirs, executors and
administrators.
(b) Expenses. As used in this Agreement, the term "Expenses" shall
include, without limitation, damages, losses, judgments, liabilities,
fines, penalties, excise taxes, settlements, and costs, attorneys' fees,
accountants' fees, and disbursements and costs of attachment or similar
bonds, investigations, and any expenses of establishing a right to
indemnification under this Agreement.
(c) Enforcement. If a claim or request under this Section 11 is not
paid by the Company or on its behalf, within thirty (30) days after a
written claim or request has been received by the Company, the Executive
may at any time thereafter bring suit against the Company to recover the
unpaid amount of the claim or request and if successful in whole or in
part, the Executive shall be entitled to be paid also the expenses of
prosecuting such
13
suit. All obligations for indemnification hereunder shall be subject to,
and paid in accordance with, applicable Delaware law, as the same exists or
may hereafter be amended.
(d) Partial Indemnification. If the Executive is entitled under any
provision of this Agreement to indemnification by the Company for some or a
portion of any Expenses, but not, however, for the total amount thereof,
the Company shall nevertheless indemnify the Executive for the portion of
such Expenses to which the Executive is entitled.
(e) Advances of Expenses. Expenses incurred by the Executive in
connection with any Proceeding shall be paid by the Company in advance upon
request of the Executive that the Company pay such Expenses, but only in
the event that the Executive shall have delivered in writing to the Company
(i) an undertaking to reimburse the Company for Expenses with respect to
which the Executive is not entitled to indemnification and (ii) a statement
of his good faith belief that the standard of conduct necessary for
indemnification by the Company has been met.
(f) Notice of Claim. The Executive shall give to the Company notice
of any claim made against him for which indemnification will or could be
sought under this Agreement. In addition, the Executive shall give the
Company such information and cooperation as it may reasonably require and
as shall be within the Executive's power and at such times and places as
are convenient for the Executive.
(g) Defense of Claim. With respect to any Proceeding as to which
the Executive notifies the Company of the commencement thereof:
(i) The Company will be entitled to participate therein at
its own expense;
(ii) Except as otherwise provided below, to the extent that it
may wish, the Company will be entitled to assume the defense thereof,
with counsel reasonably satisfactory to the Executive, which in the
Company's sole discretion may be regular counsel to the Company and
may be counsel to other officers and directors of the Company or any
subsidiary. The Executive also shall have the right to employ his own
counsel in such action, suit or proceeding if he reasonably concludes
that failure to do so would involve a conflict of interest between
the Company and the Executive, and under such circumstances the fees
and expenses of such counsel shall be at the expense of the Company.
(iii) The Company shall not be liable to indemnify the
Executive under this Agreement for any amounts paid in settlement of
any action or claim affected without its written consent. The Company
shall not settle any action or claim in any manner which would (x)
impose any penalty that would not be paid directly or indirectly by
the Company, (y) impose any limitation on the Executive, or (z) admit
any liability on the part of the Executive, in each case without the
Executive's written consent. Neither
14
the Company nor the Executive will unreasonably withhold or delay
their consent to any proposed settlement.
(h) Non-exclusivity. The right to indemnification and the payment
of Expenses incurred in defending a Proceeding in advance of its final
disposition conferred in this Section 11 shall not be exclusive of any
other right which the Executive may have or hereafter may acquire under any
statute or certificate of incorporation or by-laws of the Company or any
subsidiary, agreement, vote of shareholders or disinterested directors or
trustees or otherwise.
12. Legal Fees and Expenses. If any contest or dispute shall arise
between the Company and the Executive regarding any provision of this
Agreement, the Company shall reimburse the Executive for all legal fees and
expenses reasonably incurred by the Executive in connection with such
contest or dispute. Such reimbursement shall be made as soon as practicable
following the resolution of such contest or dispute (whether or not
appealed) to the extent the Company receives reasonable written evidence of
such fees and expenses.
13. Successors; Binding Agreement.
(a) Company's Successors. No rights or obligations of the Company
under this Agreement may be assigned or transferred, except that the
Company shall require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all
of the business and/or assets of the Company to expressly assume and agree
to perform this Agreement in the same manner and to the same extent that
the Company would be required to perform it if no such succession had taken
place. As used in this Agreement, "Company" shall include any successor to
its business and/or assets (by merger, purchase or otherwise) which
executes and delivers the agreement provided for in this Section 13 or
which otherwise becomes bound by all the terms and provisions of this
Agreement by operation of law.
(b) Vesting of Rights. Since Executive has rendered and continues
to render valuable services to the Company in reliance upon this Agreement,
the rights and obligations created hereunder are hereby vested, and may not
be revoked, rescinded, modified or amended by any subsequent action of the
Board.
(c) Executive's Successors. No rights or obligations of the
Executive under this Agreement may be assigned or transferred by the
Executive other than his rights to payments or benefits hereunder, which
may be transferred only by will or the laws of descent and distribution.
Upon the Executive's death, this Agreement and all rights of the Executive
hereunder shall inure to the benefit of and be enforceable by the
Executive's beneficiary or beneficiaries, personal or legal
representatives, or estate, to the extent any such person succeeds to the
Executive's interests under this Agreement. If the Executive should die
following his Date of Termination while any amounts would still be payable
to him hereunder if he had continued to live, all such amounts unless
otherwise provided herein shall be paid in accordance with the terms of
this Agreement to such person or
15
persons so appointed in writing by the Executive, or otherwise to his legal
representatives or estate.
14. Notice. For the purposes of this Agreement, notices, demands
and all other communications provided for in this Agreement shall be in
writing and shall be deemed to have been duly given when delivered either
personally or by United States certified or registered mail, return receipt
requested, postage prepaid, addressed as follows:
If to the Executive:
At his residence address most recently filed with the Company.
If to the Company:
NBTY, Inc.
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇, Chief Executive Officer
or to such other address as any party may have furnished to the others in
writing in accordance herewith, except that notices of change of address
shall be effective only upon receipt.
15. Miscellaneous. No provisions of this Agreement may be amended,
modified, supplemented or waived unless such amendment, modification or
supplement is agreed to in writing signed by the Executive and by a duly
authorized officer of the Company, and such waiver is set forth in writing
and signed by the party to be charged. No waiver by either party hereto at
any time of any breach by the other party hereto of any condition or
provision of this Agreement to be performed by such other party shall be
deemed a waiver of similar or dissimilar provisions or conditions at the
same or at any prior or subsequent time. No agreements or representations,
oral or otherwise, express or implied, with respect to the subject matter
hereof have been made by either party which are not set forth expressly in
this Agreement. The respective rights and obligations of the parties
hereunder of this Agreement shall survive the Executive's termination of
employment and the termination of this Agreement to the extent necessary
for the intended preservation of such rights and obligations.
16. Validity. The invalidity or unenforceability of any provision
or provisions of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which shall remain
in full force and effect.
17. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of
which together will constitute one and the same instrument.
16
18. Entire Agreement. This Agreement sets forth the entire
agreement of the parties hereto in respect of the subject matter contained
herein and supersedes all prior agreements, promises, covenants,
arrangements, communications, representations or warranties, whether oral
or written, by any officer, employee or representative of any party hereto
in respect of such subject matter.
19. Governing Law. Except or otherwise provided in Section 11
hereof, the validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the State of New York without
regard to its conflicts of law principles.
20. Section Headings. The section headings in this Employment
Agreement are for convenience of reference only, and they form no part of
this Agreement and shall not affect its interpretation.
21. Withholding. The Company shall make such deductions and
withhold such amounts from each payment made to the Executive hereunder as
may be required from time to time by law, governmental regulation or order.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
the day and year above first written.
EXECUTIVE NBTY, INC.
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------- ------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇ Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Chief Executive Officer
17
EXHIBIT A
GROSS-UP PAYMENT
In the event that any payment received by Executive or paid by the
Company on behalf of Executive under this Agreement or under any other
plan, arrangement or agreement with the Company or any person whose actions
result in a change in control of the Company (provided that the Company
approves of the arrangement pursuant to which the payment by such person is
made to Executive) or any person affiliated with the Company or such person
(collectively, the "Total Payments") will be subject to the excise tax (the
"Excise Tax") imposed by section 4999 (or any successor provision) of the
Internal Revenue Code of 1986, as amended (the "Code"), the Company shall
pay to Executive an additional amount (the "Gross-Up Payment") such that
the net amount retained or to be retained by Executive, after deduction of
any Excise Tax on the Total Payments and on any federal, state and local
income, excise and/or other taxes upon the Gross-up Payment provided for
hereunder, shall be equal to the Total Payments.
For purposes of determining whether any of the Total Payments will be
subject to the Excise Tax and the amount of such Excise Tax, (i) the Total
Payments shall be treated as "parachute payments" within the meaning of
section 280G(b)(2) of the Code, and all "excess parachute payments" within
the meaning of section 280G(b)(1) of the Code shall be treated as subject
to the Excise Tax, unless in the opinion of tax counsel selected by the
Company's independent auditors and reasonably acceptable to Executive the
Total Payments (in whole or in part) do not constitute parachute payments,
including by reason of Section 280G(b)(4)(A) of the Code, or such excess
parachute payments (in whole or in part) represent reasonable compensation
for services actually rendered, within the meaning of section 280G(b)(4)(B)
of the Code, in excess of the base amount allocable to such reasonable
compensation, or are otherwise not subject to the Excise Tax, and (ii) the
value of any non-cash benefits or any deferred payment or benefit shall be
determined by the Company's independent auditors in accordance with the
principles of sections 280G(d)(3) and (4) of the Code.
For purposes of determining the amount of the Gross-Up Payment,
Executive shall be deemed to pay federal income and other taxes at the
highest applicable marginal rate of taxation in the calendar year in which
the Gross-Up Payment is to be made and state and local income and other
taxes at the highest applicable marginal rate of taxation in the state and
locality of Executive's residence on the date the Gross-Up Payment is to be
made, net of the maximum reduction in federal income taxes which could be
obtained from deduction of such state and local taxes and any other taxes.
In the event that the Excise Tax is subsequently determined to be less than
the amount originally taken into account hereunder, Executive shall repay
to the Company, at the time that the amount of such reduction in Excise Tax
is finally determined, the portion of the Gross-Up Payment attributable to
such reduction (plus that portion of the Gross-Up Payment attributable to
the Excise Tax and federal, state and local income and other taxes imposed
on the Gross-Up Payment being repaid by Executive to the extent that such
repayment results in an actual reduction in Excise Tax and/or a federal,
state or local income tax deduction) plus
interest on the amount of such repayment at the rate provided in section
1274(b)(2)(B) of the Code (provided, however, that if all or any portion of
the amount of any repayment made to Executive by any governmental entity
shall be made at a higher rate of interest than that provided under section
1274(b)(2)(B) of the Code (the "Higher Interest Rate Amount"), Executive
shall also repay to the Company interest on the Higher Interest Rate Amount
at a rate equal to the excess of such higher rate of interest over the rate
provided under section 1274(b)(2)(B) of the Code). In the event that the
Excise Tax is determined to exceed the amount originally taken into account
hereunder (including by reason of any payment the existence or amount of
which cannot be determined at the time of the Gross-Up Payment), the
Company shall make an additional Gross-Up Payment in respect of such excess
(plus any interest, penalties or additions to tax payable by Executive with
respect to such excess) at the time that the amount of such excess is
finally determined. The parties agree that such excess will be considered
to have been finally determined at the conclusion of Internal Revenue
Service administrative appellate proceedings, unless the parties mutually
agree to pay or settle such amount earlier, or agree to pursue an appeal
further. Executive and the Company shall each reasonably cooperate with the
other in connection with any administrative or judicial proceedings
concerning the existence or amount of liability for Excise Tax with respect
to the Total Payments. In the event of an audit or other administrative or
judicial proceeding relating to or arising from the issue of potential
liability for the Excise Tax, the Company shall pay all attorneys' and
accountants' fees and other costs reasonably incurred by Executive in
connection with the audit or other proceeding to the extent such fees and
costs relate to such liability, provided, that in the case of judicial or
administrative proceedings, the Company consents to the pursuit of such
proceedings.
The Gross-Up Payment payable pursuant hereto shall be payable (or, as
applicable withheld), in whole or in part as applicable, on the earlier of
(i) the date the Company is required to withhold the Excise Tax pursuant to
section 4999 of the Code or (ii) the date Executive is required to pay the
Excise Tax.
Executive shall notify the Company of any audit or review by the
Internal Revenue Service of Executive's federal income tax return for the
year in which a payment under this Agreement is made within ten (10) days
of Executive's receipt of such audit or review. In addition, Executive
shall also notify the Company of the final resolution of such audit or
review within ten (10) days of such resolution.
2