Exhibit 10.2
EMPLOYMENT
AGREEMENT
AGREEMENT, dated
as of March 1, 2008, by and between NBTY, Inc., a
Delaware corporation (the “Company”), and HARVEY KAMIL
(the “Executive”).
WHEREAS, the
Company recognizes that the Executive’s talents and abilities
are unique, and have been integral to the success of the Company
and thus wishes to secure the ongoing services of the Executive on
the terms and conditions set forth herein and to prevent any other
competitive business from securing his services, and utilizing his
experience, background and know how; and
WHEREAS, the
Company and the Executive entered into an Employment Agreement
dated as of October 1, 2002 which terminated on
September 30, 2007 (the “Old Agreement”), and
desire to continue Executive’s employment on the terms and
conditions set forth in this Agreement; and
WHEREAS, the Board
of Directors of the Company (“Board”) recognizes that
the possibility of an unsolicited tender offer or other takeover
bid for the Company is unsettling to senior executives of the
Company. Therefore, these arrangements are being made to help
assure a continuing dedication by such senior executives to their
duties to the Company notwithstanding the possibility of a tender
offer or takeover bid. In particular, the Board and the
Compensation Committee of the Board (the “Committee”)
believe it important, should the Company receive proposals from
third parties with respect to its future, to enable senior
executives, without being influenced by the uncertainties of their
own situation, to assess and advise the Board whether such
proposals would be in the best interests of the Company and its
shareholders and to take such other action regarding such proposals
as the Board might determine to be appropriate. The Board and the
Committee also wish to demonstrate to executives of the Company
that the Company is concerned with the welfare of its executives
and intends to see that loyal executives are treated
fairly.
NOW, THEREFORE, in
consideration of the premises and the mutual covenants set forth
below, the parties hereby agree as follows:
1.
Employment . The Company
hereby continues to employ the Executive as President and Chief
Financial Officer of the Company, and the Executive hereby accepts
such employment, on the terms and conditions set forth below.
2.
Term . Unless earlier
terminated in accordance with Section 6 hereof, the Executive
shall be employed by the Company on the terms and conditions hereof
pursuant to this Agreement for a period beginning on the date
hereof (the “Effective Date”) and ending on the third
(3 rd ) anniversary of the date hereof (the
“Employment Period”); provided, however,
that on the second (2 nd ) anniversary of the Effective
Date and each anniversary of the Effective Date thereafter the
Employment Period shall automatically be extended, in each case,
for an additional one year period unless the Executive or the
Company gives the other prior written notice to the contrary, so
long as
such notice is provided
at least sixty (60) days prior to the second (2 nd )
anniversary of the Effective Date or the anniversary date of the
Effective Date thereafter.
3.
Position and Duties .
During the Employment Period, the Executive shall serve as
President and Chief Financial Officer of the Company, with such
duties, authority and responsibilities as are normally associated
with and appropriate for such positions. The Executive shall report
directly to the Board or any committees thereof at the request of
the Board. The Executive shall devote substantially all of his
working time, attention and energies during normal business hours
(other than absences due to illness or vacation) to the performance
of his duties for the Company. The Executive shall comply fully and
promptly with the various policies, procedures and
rules governing employees promulgated and/or as amended from
time to time by the Company. Notwithstanding the above, the
Executive shall be permitted, to the extent such activities do not
substantially interfere with his performance of his duties and
responsibilities hereunder or violate Section 10 of this
Agreement, to (i) manage his personal, financial and legal
affairs, (ii) with the approval of the Board, serve on civic
or charitable boards or committees; (iii) with the approval of
the Board, serve on boards of other companies, and the Executive
shall be entitled to receive and retain all remuneration received
by him from the items listed in clauses (i) through
(iii) of this paragraph.
4.
Place of Performance .
During the Employment Period, the Company shall maintain executive
offices for the Executive in Ronkonkoma, New York and the Executive
shall not be required to relocate to any other location beyond a
twenty-five (25) mile radius surrounding Ronkonkoma, New York.
During the Employment Period, the Company shall provide the
Executive with an office and appropriate staff.
5.
Compensation and Related
Matters .
(a)
Base Salary. During the Employment Period, the Company shall
pay the Executive an annual base salary at the rate of not less
than Six Hundred Thousand Dollars ($600,000) per year retroactive
to October 1, 2007 (“Base Salary”). The
Executive’s Base Salary shall be paid in approximately equal
installments in accordance with the Company’s customary
payroll practices, less all applicable tax withholdings for state
and federal income taxes, FICA and other deductions as required by
law and/or authorized by the Executive. In the first fiscal quarter
of 2008 and each subsequent year during the Employment Period,
pursuant to the Company’s policy for senior executives, the
Company shall effect a performance and salary review of the
Executive and may increase (but not decrease) the Base Salary in
such amount as the Committee, in its sole discretion, determines,
but in no event shall the increase over the prior Base Salary be
less than the percentage increase in the Consumer Price Index
published by the Bureau of Labor Statistics of the United States
Department of Labor for each twelve (12) month period beginning on
January 1 of such year. January 2008 shall be the
“Base Year” and the corresponding Index number for the
month of January on each anniversary of the Effective Date
shall be the current Index number. If the Executive’s Base
Salary is
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increased by the
Company, such increased Base Salary shall then constitute the Base
Salary for all purposes of this Agreement.
(b)
Annual Bonus Opportunity. For the fiscal year ending
September 30, 2008 and for each full fiscal year of the
Company that begins thereafter during the Employment Period, the
Executive shall be eligible to earn an annual bonus in such amount
as shall be determined by the Compensation Committee, in its sole
discretion (the “Annual Bonus”), provided, that the
Annual Bonus for any fiscal year shall not exceed 200% of
Executive’s Base Salary in effect on the first day of such
fiscal year (it being understood that the targeted amount of the
Annual Bonus (the “Target Bonus”) shall be 100% of
Executive’s Base Salary in effect on the first day of such
fiscal year). The Annual Bonus shall be paid in cash and may be
paid under the Company Executive Bonus Plan in effect on the
Effective Date or other Company bonus plan. Any such cash amount
shall be paid by March 15 th of the year following
the end of the fiscal year for which the Annual Bonus was
earned.
(c)
Automobile Allowance. The Company shall lease an automobile
for the Executive at a rental cost of up to Two Thousand Dollars
($2,000) per month. The Company shall also reimburse the Executive
for all costs incurred by the Executive to insure and maintain such
vehicle. Reimbursement of such costs shall be provided to the
Executive in accordance with the Company’s normal business
practices but not later than the end of the calendar year following
the calendar year in which the cost was incurred.
(d)
Business, Travel and Entertainment Expenses. The Company
shall promptly reimburse the Executive for all business, travel and
entertainment expenses consistent with the Executive’s titles
including, without limitation, first class transportation or travel
on a private plane. Reimbursement of such expenses shall be
provided to the Executive in accordance with the Company’s
normal business practices but not later than the end of the
calendar year following the calendar year in which the expense was
incurred.
(e)
Vacation. The Executive shall be entitled to six
(6) weeks of vacation per year. Vacation not taken during the
applicable fiscal year (but not in excess of three weeks) shall be
carried over to the next following fiscal year.
(f)
Welfare, Pension and Incentive Benefit Plans. During the
Employment Period and subject to his fulfillment of the applicable
eligibility requirements of the various welfare benefit plans and
programs, the Executive (and his eligible spouse and dependents)
shall be entitled to participate in all the welfare benefit plans
and programs maintained by the Company from time to time for the
benefit of its senior executives including, without limitation, all
medical, hospitalization, dental, disability, accidental death and
dismemberment and travel accident insurance plans and programs. In
addition, during the Employment Period and subject to his
fulfillment of the applicable eligibility requirements of such
employee benefit plans and programs, the
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Executive shall be
eligible to participate in all pension, retirement, savings and
other employee benefit plans and programs maintained from time to
time by the Company for the benefit of its senior executives, other
than any annual cash incentive plan. The Executive shall pay for
the portion of the cost of such benefits as established by the
Company to be paid by its senior executives. Payments and benefits
provided under such plans shall be in the form and at the time each
such plan so provides.
(g)
Stock-Based Awards . The Executive shall be eligible to
receive such incentive stock options, non-qualified stock options
and/or stock appreciation rights (collectively referred to herein
as “Options”) and/or such other equity awards
(collectively with Options referred to as “Stock-Based
Awards”), as may be determined and granted to the Executive
from time to time by the Compensation Committee under the stock
option plan in effect at such time (such stock option plan, or any
successor plan is referred to as the “Stock Option
Plan”); provided that the Options shall ‘become 100%
vested and exercisable upon a Change in Control (as defined below)
unless otherwise expressly provided in the applicable award
agreement; and the Options shall expire upon the earlier to occur
of (i) ten (10) years from the date of grant (the
“Option Term”) or (ii) except as otherwise
provided in Section 8, one year following the termination of
Executive’s employment with the Company.
6.
Termination . The
Executive’s employment hereunder may be terminated during the
Employment Period under the following circumstances (upon any such
termination the Employment Period shall end):
(a)
Death. The Employment Period shall terminate upon the
Executive’s death.
(b)
Disability. If, as a result of the Executive’s
incapacity due to physical or mental illness as determined by a
physician selected by the Executive, and reasonably acceptable to
the Company, (i) the Executive shall have been substantially
unable, even with reasonable accommodation, to perform his duties
hereunder for six consecutive months, or for an aggregate of 180
days during any period of twelve consecutive months and
(ii) within thirty days after written Notice of Termination
(as defined in Section 7 below) is given to the Executive
after such six- or twelve-month period, the Executive shall not
have returned to the substantial performance of his duties on a
full-time basis, the Company shall have the right to terminate the
Executive’s employment hereunder for
“Disability”.
(c)
Cause. The Company shall have the right to terminate the
Executive’s employment for “Cause.” For purposes
of this Agreement, the Company shall have “Cause” to
terminate the Executive’s employment only upon the
Executive’s:
(i)
conviction of (or entering of a guilty or a nolo contendere plea to
a crime that constitutes) a felony of any type or a misdemeanor
involving moral turpitude; or
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(ii)
illegal or gross misconduct, in either case, that is willful and
that results in material and demonstrable damage to the business or
reputation of the Company; or
(iii)
willful and continued failure by Executive to perform his duties
hereunder (other than such failure resulting from the
Executive’s incapacity due to physical or mental illness or
after the issuance of a Notice of Termination by the Executive for
Good Reason, as defined below) within ten (10) business days
after the Company delivers to him a written demand for performance
that specifically identifies the actions to be performed; or
(iv)
engaging in fraud in connection with the business of the Company or
embezzlement or knowing or willful misappropriation of the
Company’s funds or property;
(v)
habitual abuse of narcotics or alcohol; or
(vi)
the willful breach by the Executive of any term of this
Agreement.
For purposes of
this Section 6(c), no act or failure to act by the Executive
shall be considered “willful” if (x) such act is
done by the Executive in the good faith belief that such act is or
was to be beneficial to the Company or one or more of its
businesses, or (y) such failure to take action is due to the
Executive’s good faith belief that such action would be
materially harmful to the Company or one or more of its businesses.
“Cause” shall not exist unless and until the Company
has delivered to the Executive a copy of a resolution duly adopted
by a majority of the entire membership of the Board at a meeting of
the Board called and held for such purpose after reasonable (but in
no event less than thirty days’) notice to the Executive and
an opportunity for the Executive, together with his counsel, to
cure such event or circumstance (if curable) and to be heard before
the Board, finding that in the good faith opinion of the Board that
“Cause” exists, and specifying the particulars thereof
in detail. Notwithstanding the foregoing, if the Board reasonably
believes in good faith that facts exist that may justify a
termination for Cause, the Board retains the right to
(i) immediately suspend the Executive’s employment
(without any obligation to pay or provide any benefits described in
Section 6) and (ii) call the Board meeting and comply
with the other requirements described in the preceding sentence
within thirty (30) days thereafter. This
Section 6(c) shall not prevent the Executive from
challenging in any court of competent jurisdiction the
Board’s determination that Cause exists or that the Executive
has failed to cure any act (or failure to act) that purportedly
formed the basis for the Board’s determination. However,
after giving notice to the Executive and complying with the
procedures set forth in this Section 6(c), the Company may
relieve the Executive of his duties on an interim basis.
(d)
Good Reason. The Executive may terminate his employment for
“Good Reason” after giving the Company detailed written
notice thereof, if the Company
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shall have failed to
cure the event or circumstance constituting “Good
Reason” within thirty (30) business days after receiving such
notice, provided, however, that (i) if Executive
does not notify the Company in writing that a Good Reason event has
occurred within ninety (90) days after Executive has knowledge of
such event, the event will not constitute Good Reason and
(ii) if Executive does not resign within twenty-four (24)
months after Executive has knowledge that an event constituting
Good Reason has occurred and has not been cured, any resignation
based thereon shall be deemed not to be for Good Reason. Good
Reason shall mean the occurrence of any of the following without
the written consent of the Executive:
(i)
the assignment to the Executive of duties materially inconsistent
with this Agreement and his position (including the office to which
he reports, status, offices and title), a change in his titles or
authority or other action by the Company which results in a
material diminution of such position, authority, duties or
responsibilities;
(ii)
any material reduction by the Company of, or the Company’s
failure to pay, the Executive’s Base Salary in breach of
Section 5(a) above, or any material reduction in
Executive’s maximum and target bonus opportunity levels below
the 200% and 100% levels set in Section 5(b) above;
(iii)
any material failure by the Company to provide benefits required by
Section 5;
(iv)
the requirement of the Executive to relocate to locations other
than that provided in Section 4 hereof;
(v)
the failure of the Company to comply with and satisfy
Section 13(a) of this Agreement;
(vi)
as a result of a Change in Control (as defined below) and a change
in circumstances thereafter materially affecting the
Executive’s position, including, without limitation, a
material change in scope of the business or other activities for
which he was responsible immediately prior to the Change in
Control, Executive has been rendered substantially unable to carry
out, or has been substantially hindered in the performance of, any
of the authority, duties and responsibilities contemplated by
Section 3 above; or
(vii)
any material breach of this Agreement by the Company.
The
Executive’s right to terminate his employment hereunder for
Good Reason shall not be affected by his incapacity due to physical
or mental illness. The Executive’s continued employment shall
not constitute consent to, or a waiver of rights with respect to,
any act or failure to act constituting Good Reason
hereunder.
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(e)
Without Cause. So long as the Company complies in full
with all of its obligations set forth in Section 8 below, the
Company shall have the right to terminate the Executive’s
employment hereunder without Cause by providing the Executive with
a Notice of Termination to that effect.
(f)
Without Good Reason. The Executive shall have the
right to terminate his employment hereunder without Good Reason by
providing the Company with a Notice of Termination to that
effect.
(g)
Upon a Change in Control. The Company shall have the
right to terminate the Executive’s employment hereunder as a
result of a Change in Control by providing the Executive with a
Notice of Termination to that effect. For purposes of this
Agreement, “Change in Control” shall mean the happening
of any of the following:
(i)
The members of the Board at the beginning of any consecutive
twenty-four calendar month period, but not including any period
prior to the Effective Date (the “Incumbent
Directors”), cease for any reason other than due to death or
such director’s desire to not stand for re-election to the
Board to constitute at least a majority of the members of the
Board; provided that any director whose election, or nomination for
election by the Company’s stockholders, was approved by a
vote of at least a majority of the members of the Board then still
in office who were members of the Board at the beginning of such
twenty-four calendar month period shall be deemed an Incumbent
Director;
(ii)
any “person”, including a “group” (as such
terms are used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934), but excluding the Executive, the
Company, any of its affiliates or any employee benefit plan of the
Company is or becomes after the Effective Date a “beneficial
owner” (as such term is used in Section 13(d) and
14 of the Securities Exchange Act of 1934) directly or indirectly
of securities of the Company (not including in the securities
beneficially owned by such person any securities acquired directly
from the Company) representing 25% or more of the combined voting
power of the Company’s then outstanding securities (the
“Company Voting Securities”); provided, however,
such event shall not be deemed to be a Change in Control if it
qualifies as a Non-Qualifying Transaction as defined in clause
(iii) below;
(iii)
the consummation of a merger, consolidation, statutory share
exchange or similar form of corporate transaction involving the
Company or any of its subsidiaries that requires the approval of
the Company’s stockholders, whether for such transaction or
the issuance of securities in the transaction (a “Business
Combination”), unless immediately following such Business
Combination: (A) more than 50% of the total voting power of
(x) the corporation resulting from such Business Combination
(the “Surviving Corporation”), or (y) if
applicable, the ultimate parent corporation that directly or
indirectly has beneficial ownership of at least 95% of the voting
securities eligible to elect directors of the
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Surviving Corporation
(the “Parent Corporation”), is represented by Company
Voting Securities that were outstanding immediately prior to such
Business Combination (or, if applicable, is represented by shares
into which such Company Voting Securities were converted pursuant
to such Business Combination), and such voting power among the
holders thereof is in substantially the same proportion as the
voting power of such Company Voting Securities among the holders
thereof immediately prior to the Business Combination, (B) no
person (other than any employee benefit plan (or related trust)
sponsored or maintained by the Surviving Corporation or the Parent
Corporation), is or becomes the beneficial owner, directly or
indirectly, of 25% or more of the total voting power of the
outstanding voting securities eligible to elect directors of the
Parent Corporation (or, if there is no Parent Corporation, the
Surviving Corporation) and (C) at least a majority of the
members of the board of directors of the Parent Corporation (or, if
there is no Parent Corporation, the Surviving Corporation)
following the consummation of the Business Combination were
Incumbent Directors at the time of the Board’s approval of
the execution of the initial agreement providing for such Business
Combination (any Business Combination which satisfies all of the
criteria specified in (A), (B) and (C) above shall be
deemed to be a “Non-Qualifying Transaction”);
or
(iv)
the stockholders of the Company approve a plan of complete
liquidation or dissolution of the Company or the consummation of a
sale of all or substantially all of the Company’s assets to a
person that is not controlled by the Company.
7.
Termination Procedure
.
(a)
Notice of Termination. Any termination of the
Executive’s employment by the Company or by the Executive
during the Employment Period (other than pursuant to
Section 6(a)) shall be communicated by written Notice of
Termination to the other party. For purposes of this Agreement, a
“Notice of Termination” shall mean a notice indicating
the specific termination provision in this Agreement relied upon
and setting forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Executive’s
employment under that provision.
(b)
Date of Termination. “Date of Termination”
shall mean (i) if the Executive’s employment is
terminated by his death, the date of his death, (ii) if the
Executive’s employment is terminated pursuant to
Section 6(b), thirty (30) days after the date of receipt of
the Notice of Termination (provided that the Executive does not
return to the substantial performance of his duties on a full-time
basis during such thirty (30) day period), and (iii) if the
Executive’s employment is terminated for any other reason,
the date on which a Notice of Termination is given or any later
date (within thirty (30) days after the giving of such notice) set
forth in such Notice of Termination. Notwithstanding the foregoing,
in the event that the Executive has given the Company his Notice of
Termination for Good Reason or otherwise, the Board may elect to
have such
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resignation become
effective immediately or at such other date, not later than the
effective date specified in the Notice of Termination, as the Board
may determine.
(c)
Resignation. Upon termination of the Executive’s
employment, Executive (unless otherwise requested by the Board)
concurrently shall resign any directorships which he holds with the
Company and all affiliates of the Company.
8.
Compensation Upon Termination or
During Disability . In the event the
Executive’s employment terminates during the Employment
Period, the Company shall provide the Executive with the payments
and benefits set forth below within 10 business days following the
Date of Termination (except for the payment set forth in
Section 8 (a)(vi), which shall be paid as provided in such
Section).
(a)
Termination By Company without Cause or By Executive for Good
Reason. If the Executive’s employment is terminated
by the Company without Cause (other than Disability) or by the
Executive for Good Reason, in each case before a Change in Control
has occurred:
(i)
the Company shall pay to the Executive, promptly (but in no event
more than ten (10) business days) after the Date of
Termination, a lump sum payment equal to the sum of (A) Base
Salary and accrued vacation pay, in each case through the Date of
Termination, (B) three (3) times the Executive’s
Base Salary in effect immediately prior to such termination and
(C) three (3) times the average actual Annual Bonus
earned by the Executive in the three (3) fiscal years
preceding the fiscal year in which Executive’s employment is
terminated;
(ii)
the Company shall continue to provide the Executive and his
eligible spouse and dependents for a period equal to three
(3) years following the Date of Termination, the medical,
hospitalization, dental and life insurance program and other
benefits provided for in Section 5(f), as if he had remained
employed as follows: (A) during the first eighteen (18) months
following the Date of Termination, medical, hospitalization and
dental benefits shall be continued by the Company as if the
Executive was still actively employed and the Executive shall
continue to make the same co-payments he paid on the date
immediately preceding the Date of Termination and (B) for all
other benefits the Company shall promptly (but in no event more
than ten (10) days after incurring such expenses) reimburse
the Executive for the insurance premium cost incurred to purchase
the economic equivalent of the benefits they otherwise would have
been entitled to receive under such plans and programs; and
provided, further, that such benefits shall terminate
on the date or dates the Executive becomes eligible to receive
equivalent coverage and benefits under the plans and programs of a
subsequent employer at an equivalent cost to the Executive (such
coverage and benefits to be determined on a coverage-by-coverage,
or benefit-by-benefit, basis);
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(iii)
unless otherwise expressly provided in the applicable award
agreement, all outstanding equity incentive awards (including,
without limitation, stock options granted under the Stock Option
Plan) shall immediately vest and any then outstanding stock options
or similar awards held by Executive shall remain exercisable for a
period of one year from the date of such termination or, if
earlier, until the end of the Option Term;
(iv)
the Company shall, consistent with past practice, reimburse the
Executive pursuant to Section 5 for business expenses incurred
but not paid prior to such Date of Termination. Reimbursement of
such expenses shall be provided to the Executive in accordance with
the Company’s normal business practices but not later than
the end of the calendar year following the calendar year in which
the expense was incurred;
(v)
the Executive shall be entitled to any other rights, compensation
and/or benefits as may be due to the Executive in accordance with
the terms and provisions of any agreements, plans or programs of
the Company (other than any severance-based plan or program);
and
(vi)
If (x) a Change in Control shall occur following such Date of
Termination and (y) it shall be determined that a Payment (as
defined in Section 9(d) below) would be subject to Excise
Tax (as defined in Section 9(d)), then the Executive shall be
entitled to receive a Gross-Up Payment (as defined in
Section 9(d)), as provided in Section 9(d) and
Exhibit A hereto. The Gross-Up Payment shall be paid pursuant
to Exhibit A hereto.
The payments and
benefits provided for in Sections 8(a)(i)(A), 8(a)(iv) and
8(a)(v) above are hereinafter referred to as the
“Accrued Obligations”. The receipt of any amounts to be
paid under this subsection (a) (other than any Accrued
Obligations) is conditioned upon the Executive or his personal
representative’s execution and delivery (and non-revocation)
of a release in the form shown in Exhibit B hereto within
thirty (30) days of the Date of Termination. Following the
Company’s payments and provisions of all of the foregoing,
the Company shall have no further obligations to the Executive
hereunder.
(b)
Cause or By Executive Without Good Reason. If the
Executive’s employment is terminated by the Company for Cause
or by the Executive other than for Good Reason, then the Company
shall provide the Executive with his Accrued Obligations and shall
have no further obligation to the Executive hereunder.
(c)
Disability. During any period that the Executive
fails to perform his duties hereunder as a result of incapacity due
to physical or mental illness (“Disability Period”),
the Executive shall continue to receive his full Base Salary set
forth in Section 5(a) until
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