EMPLOYMENT AGREEMENT

Exhibit 10.1

EMPLOYMENT AGREEMENT

This Employment Agreement (“Agreement”) is made and entered into effective as of November 20, 2006, (“Effective Date”), by and between Alvin McCurdy (“Employee”), and Natural Alternatives International, Inc., a Delaware corporation (“Company”). Company and Employee may be referred to collectively as the “Parties.”

RECITALS

A. Company wishes to retain the services of Employee as Vice President of Operations, but only on the terms and subject to the conditions set forth in this Agreement.

B. Employee desires to enter into the employ of Company and is willing to do so on the terms and conditions set forth in this Agreement.

NOW, THEREFORE, in consideration of the mutual promises and covenants set forth in this Agreement and intending to be legally bound, the Parties agree as follows:

AGREEMENT

1. Employment . Employee accepts the offer of Company for employment as Company’s Vice President of Operations beginning November 20, 2006. Employee’s employment will be at-will and may be terminated by either Employee or Company at any time for any reason or no reason, with or without Cause (defined below), upon written notice to the other or without any notice upon the death of Employee. The at-will status of the employment relationship may not be modified except by an agreement in writing signed by the President or Chief Executive Officer of the Company and Employee, the terms of which were approved in advance in writing by Company’s Board of Directors.

2. Employee Handbook . Employee and Company understand and agree nothing in Company’s Employee Handbook is intended to be and nothing in it should be construed to be a limitation of Company’s right to terminate, transfer, demote, suspend and administer discipline at any time for any reason. Employee and Company understand and agree nothing in Company’s Employee Handbook is intended to and nothing in such Handbook should be construed to create an implied or express contract of employment contrary to this Agreement.

3. Position and Responsibilities .

a. During Employee’s employment with Company, Employee shall have such responsibilities, duties and authority as Company, through its Board of Directors, may from time to time assign to Employee and that are normal and customary duties of a Vice President of Operations of a publicly held corporation. Employee shall perform any other duties reasonably required by Company and, if requested by Company, shall serve as a director and/or as an additional officer of Company or any subsidiary or affiliate of Company without additional compensation.

b. Employee, in Employee’s capacity as Vice President of Operations for Company, shall diligently and to the best of Employee’s ability perform all duties that such position entails. Employee shall devote such time, energy, skill and effort to the performance of Employee’s duties hereunder as may be fairly and reasonably necessary to faithfully and diligently further the

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business and interests of Company and its subsidiaries. Employee agrees not to engage in any other business activity that would materially interfere with the performance of Employee’s duties under this Agreement. Employee represents to Company that Employee has no other outstanding commitments inconsistent with any of the terms of this Agreement or the services to be rendered under it.

c. Employee shall render Employee’s service at Company’s offices in the County of San Diego, California or such other location as is mutually agreed upon by Company and Employee. It is understood, however, and agreed that Employee’s duties may from time to time require travel to other locations including other offices of Company and its subsidiaries both within and outside the United States.

4. Compensation .

a. Salary . During the term of Employee’s employment, Company agrees to pay Employee a base salary of Two Hundred Ten Thousand Dollars ($210,000) per year payable no less frequently than monthly in accordance with Company’s general payroll practices. For the first year of employment, the base salary will be prorated from the start date of employment. The amount of Employee’s base salary as set forth in this Section 4(a) may be adjusted from time to time by an agreement in writing signed by the President or Chief Executive Officer of Company and Employee, the terms of which were approved in advance in writing by Company’s Board of Directors.

b. Periodic Overnight Lodging and Commuting Expenses . Employee shall be entitled to receive reimbursement for costs associated with periodic, local overnight lodging expenses arising out of Company business and up to Two Hundred Fifty Dollars ($250) per month for costs associated with Employee’s commute from his current residence.

c. Additional Benefits . During Employee’s employment with Company, in addition to the other compensation and benefits set forth in this Agreement, Employee shall be entitled to receive and/or participate in such other benefits of employment generally available to Company’s other corporate officers when and as Employee becomes eligible for them. Company reserves the right to modify, suspend or discontinue any and all benefit plans, policies and practices at any time without notice to or recourse by Employee so long as such action is taken generally with respect to other similarly situated persons and does not single out Employee.

d. No Other Compensation . Employee acknowledges and agrees that except as expressly provided in this Agreement and as set forth in Company’s Employee Handbook or any other written compensation arrangement approved by Company’s Board of Directors, Employee is not entitled to any other compensation or benefits from Company.

e. Withholdings . All compensation under this Agreement shall be paid less withholdings required by federal and state law and less deductions agreed to by Company and Employee.

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5. Termination .

a. Due to Death . Employee’s employment with Company shall terminate automatically in the event of Employee’s death. Company shall have no obligation to Employee or Employee’s estate for base salary or any other form of compensation or benefit other than amounts accrued through the date of Employee’s death except as otherwise required by law or pursuant to a specific written policy, agreement or benefit plan of Company.

b. Without Cause, Severance Benefit . In the event Employee is terminated by Company without Cause and not as a result of death, upon Employee’s delivery to Company of an executed general release in a form substantially similar to that set forth in Attachment #3 attached to this Agreement (“Release”), Employee shall be entitled to receive a severance benefit, including standard employee benefits available to Company’s other corporate officers, in an amount equal to three (3) months compensation. If Employee does not execute and deliver the Release, Employee shall only be entitled to receive a severance benefit in an amount equal to one (1) months compensation. One half of any severance benefit owing under this Agreement shall be paid within ten (10) days of termination and the balance shall be payable no less frequently than monthly in accordance with Company’s general payroll practices over the applicable severance period of one (1) month or three (3) months.

c. With Cause, No Severance Benefit . Company may terminate Employee for Cause. For purposes of this Agreement, “Cause” shall mean the occurrence of one or more of the following events: (i) Employee’s commission of any fraud against Company; (ii) Employee’s intentional appropriation for Employee’s personal use or benefit the funds of Company not authorized in writing by the Board of Directors; (iii) Employee’s conviction of any crime involving moral turpitude; (iv) Employee’s conviction of a violation of any state or federal law that could result in a material adverse impact upon the business of Company; (v) Employee engaging in any other professional employment or consulting or directly or indirectly participating in or assisting any business that is a current or potential supplier, customer or competitor of Company without prior written approval from Company’s Board of Directors; (vi) Employee’s failure to comply with Company’s written policy on acceptance of gifts and gratuities as in effect from time to time; or (vii) when Employee has been disabled and is unable to perform the essential functions of the position for any reason notwithstanding reasonable accommodation and has received from Company compensation in an amount equivalent to Employee’s severance benefit payment. No severance benefit shall be due to Employee if Employee is terminated for Cause, including if Employee is terminated for Cause upon or after a Change in Control (defined below), except in the event of disability as set forth above.

d. Resignation or Retirement, No Severance Benefit . This Agreement shall be terminated upon Employee’s voluntary retirement or resignation. No severance benefit shall be due to Employee if Employee resigns or retires from employment for any reason or at any time including upon or after a Change in Control.

e. Payment Through Date of Termination . Except as otherwise set forth in this Agreement, upon termination of this Agreement for any reason, Employee shall be entitled to receive any unpaid compensation earned through the effective date of termination. If this Agreement is terminated for any reason before year-end bonus or other compensation becoming payable to Employee, then such bonus and other compensation shall be forfeited in full by Employee.

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6. Termination Obligations .

a. Return of Company Property . Upon termination of this Agreement and cessation of Employee’s employment, Employee agrees to return all Company Property (as such term is defined in Attachment #2 to this Agreement) to Company promptly, but in no event later than two (2) business days following termination of employment.

b. Termination of Benefits . All benefits to which Employee is otherwise entitled shall cease upon Employee’s termination unless explicitly continued either under this Agreement or under any specific written policy or benefit plan of Company.

c. Termination of Other Positions . Upon termination of Employee’s employment with Company, Employee shall be deemed to have resigned from all other offices and directorships then held with Company or its subsidiaries unless otherwise expressly agreed in a writing signed by the Parties.

d. Employee Cooperation . Following termination of Employee’s employment, Employee shall cooperate fully with Company in all matters including but not limited to advising Company of all pending work on behalf of Company and the orderly transfer of work to other employees or representatives of Company. Employee shall also cooperate in the defense of any action brought by any third party against Company that relates in any way to Employee’s acts or omissions while employed by Company.

e. Survival of Obligations . Employee’s obligations under this Section 6 shall survive the termination of employment and the termination of this Agreement.

7. Change in Control . In the event of any Change in Control, the following provisions will apply.

a. Any of the following shall constitute a “Change in Control” for the purposes of this Agreement:

(i) The consummation of a merger or consolidation of Company with or into another entity or any other corporate reorganization, if more than 50% of the combined voting power of the continuing or surviving entity’s securities outstanding immediately after such merger, consolidation or other reorganization is owned by persons who were not stockholders of Company immediately prior to such merger, consolidation or other reorganization;

(ii) The sale, transfer or other disposition of all or substantially all of Company’s assets;

(iii) A change in the composition of Company’s Board of Directors, as a result of which fewer than 50% of the incumbent directors are directors who either (i) had been directors of Company on the date 24 months prior to the date of the event that may constitute a Change in Control (the “original directors”) or (ii) were elected, or nominated for election, to the Board of Directors with the affirmative votes of at least a majority of the aggregate of the original directors who were still in office at the time of the election or nomination and the directors whose election or nomination was previously so approved, or

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(iv) Any transaction as a result of which any person is the “beneficial owner” (as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended (“Exchange Act”)), directly or indirectly, of securities of Company representing at least 20% of the total voting power represented by Company’s then outstanding voting securities. For this purpose, the term “person” shall have the same meaning as when used in Sections 13(d) and 14(d) of the Exchange Act but shall exclude (i) a trustee or other fiduciary holding securities under an employee benefit plan of Company or of a parent or subsidiary of Company and (ii) a corporation owned directly or indirectly by the stockholders of Company in substantially the same proportions as their ownership of the common stock of Company.

A transaction shall not constitute a Change in Control if its sole purpose is to change the state of Company’s incorporation or to create a holding company that will be owned in substantially the same proportions by the persons who held Company’s securities immediately before such transaction.

b. In the event of a Change in Control, this Agreement shall continue in effect unless terminated by Employee or Company.

c. If Employee is terminated without Cause following a Change in Control by Company and/or the surviving or resulting corporation, upon Employee’s delivery to Company of an executed Release, Employee shall be entitled to receive as severance pay or liquidated damages, or both, a lump sum payment (“Change in Control Severance Payment”) in an amount equal to one (1) year’s compensation or such greater amount as the Board of Directors determines from time to time pursuant to terms which may not be revoked or reduced thereafter. If Employee does not execute and deliver the Release, Employee shall only be entitled to receive a Change in Control Severance Payment in an amount equal to one (1) months compensation.

d. Any Change in Control Severance Payment shall be made not later than the fifteenth (15th) day following the effective date of Employee’s termination without Cause in connection with a Change in Control; provided, however, that if the amount of such payment cannot be finally determined on or before such date, Company shall pay to Employee on such date a good faith estimate of the minimum amount of such payment, and shall pay the remainder of such payment (together with interest at the rate provided in Section 1274(b)(2)(B) of the Internal Revenue Code of 1986, as amended (“Code”)), as soon as the amount thereof can be determined, but in no event later than the thirtieth (30th) day after the applicable termination date. If the amount of the estimated payment exceeds the amount subsequently determined to have been due, such excess shall constitute a loan by Company to Employee payable on the fifteenth (15th) day after receipt by Employee of a written demand for payment from Company (together with interest calculated as set forth above). The total of any payment pursuant to this Section 7 shall be limited to the extent necessary, in the opinion of legal counsel acceptable to Employee and Company, to avoid the payment of an “excess parachute” payment within the meaning of Section 280G of the Code or any similar successor provision.

e. In the event of termination of Employee’s employment under Section 7(c), and provided Employee delivers to Company an executed Release, Company shall cause each then-outstanding stock option granted by Company to Employee as of the date of termination to become fully exercisable and to remain exercisable for the term of the option.

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8. Arbitration . Employee and Company agree to the Mutual Agreement to Mediate and Arbitrate Claims attached to and incorporated into this Agreement as Attachment #1. Employee’s obligations under this Section 8 and the terms of the Mutual Agreement to Mediate and Arbitrate Claims shall survive the termination of employment and the termination of this Agreement.

9. Confidential Information and Inventions . Employee and Company agree to the Confidential Information and Invention Assignment Agreement, Covenant of Exclusivity and Covenant Not to Compete attached to and incorporated into this Agreement as Attachment #2. Employee’s obligations under this Section 9 and the terms of the Confidential Information and Invention Assignment Agreement, Covenant of Exclusivity and Covenant Not to Compete shall survive the termination of employment and the termination of this Agreement.

10. Competitive Activity . Employee covenants, warrants and represents that during the period of Employee’s employment with Company, Employee shall not engage anywhere, directly or indirectly (as a principal, shareholder, partner, director, manager, member, officer, agent, employee, consultant or otherwise), or be financially interested in any business that is involved in business activities that are the same as, similar to, or in competition with the business activities carried on by Company or any business that is a current or potential supplier, customer or competitor of Company without prior written approval from Company’s Board of Directors. Notwithstanding the foregoing, Employee may invest in and hold up to one percent (1%) of the outstanding voting stock of a publicly held company that is involved in business activities that are the same as, similar to, or in competition with the business activities carried on by Company or any business that is a current or potential supplier, customer or competitor of Company without the prior written approval of Company’s Board of Directors; provided, however, that if such publicly held company is a current or potential supplier, customer or competitor of Company, Employee shall advise the President of Company in writing of Employee’s investment in such company as soon as reasonably practicable.

11. Employee Conduct . Employee covenants, warrants and represents that during the period of Employee’s employment with Company, Employee shall at all times comply with Company’s written policy as in effect from time to time on the acceptance of gifts and gratuities from customers, vendors, suppliers or other persons doing business with Company. Employee represents and understands that acceptance or encouragement of any gift or gratuity not in compliance with such policy may create a perceived financial obligation and/or conflict of interest for Company and shall not be permitted as a means to influence business decisions, transactions or service. In this situation, as in all other areas of employment, Employee is expected to conduct himself or herself using the highest ethical standard.

12. Miscellaneous Provisions .

a. Entire Agreement . This Agreement and any attachments and/or exhibits contains the entire agreement between the Parties. It supersedes all other agreements either oral or in writing between the Parties with respect to Employee’s employment by Company. Each party to this Agreement acknowledges that no representations, inducements, promises or agreements, oral or otherwise, have been made by any party or anyone acting on behalf of any party that are not embodied in this Agreement and acknowledges that no other agreement, statement or promise not contained in this Agreement shall be valid or binding. To the extent the practices, policies or procedures of Company now or in the future are inconsistent with the terms of this Agreement, the provisions of this Agreement shall control.

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b. Governing Law . This Agreement shall be construed and enforced in accordance with the laws of the State of California.

c. Severability . Should any part or provision of this Agreement be held by a court of competent jurisdiction to be illegal, unenforceable, invalid or void, the remaining provisions of this Agreement shall continue in full force and effect and the validity of the remaining provisions shall not be affected by such holding.

d. Attorneys’ Fees . Except as set forth in the Mutual Agreement to Mediate and Arbitrate Claims incorporated as Attachment #1, should any party institute any action, arbitration or proceeding to enforce, interpret or apply any provision of this Agreement, the Parties agree the prevailing party shall be entitled to reimbursement by the non-prevailing party of all recoverable costs and expenses, including but not limited to reasonable attorneys’ fees.

e. Interpretation . This Agreement shall be construed as a whole according to its fair meaning and not in favor of or against any party. By way of example and not in limitation, this Agreement shall not be construed in favor of the party receiving a benefit nor against the party responsible for any particular language in this Agreement. The headings and captions contained in this Agreement are for convenience of reference only and shall not constitute a part of this Agreement and shall not be used in the construction or interpretation of this Agreement.

f. Amendment; Waiver . This Agreement may not be modified or amended by oral agreement or course of conduct, but only by an agreement in writing signed by the President or Chief Executive Officer of Company and Employee, the terms of which were approved in advance in writing by Company’s Board of Directors. The failure of either party at any time to require the performance by the other party of any provision in this Agreement or its incorporated attachments shall in no way affect the full right to require such performance at any time thereafter, nor shall the waiver by either party of a breach of any provision be taken or held to be a waiver of any succeeding breach of such provision or waiver of the provision itself or a waiver of any other provision of this Agreement.

g. Assignment . This Agreement is binding on and is for the benefit of the Parties and their respective successors, heirs, executors, administrators and other legal representatives. Neither this Agreement nor any right or obligation hereunder may be assigned by Company (except to an affiliate of Company or to a person as defined in this Agreement in accordance with a Change in Control) or by Employee.

h. No Restrictions; No Violation . Employee represents and warrants that: (i) Employee is not a party to any agreement that would restrict or prohibit Employee from entering into this Agreement or performing fully Employee’s obligations hereunder; and (ii) the execution by Employee of this Agreement and the performance by Employee of Employee’s obligations and duties pursuant to this Agreement will not result in any breach of any other agreement to which Employee is a party.

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i. Counterparts . This Agreement may be executed in counterparts each of which will be deemed an original copy of this Agreement and all of which when taken together will be deemed to constitute one and the same agreement. The exchange of copies of this Agreement and of signature pages by facsimile transmission shall constitute effective execution and delivery of this Agreement as to the Parties and may be used in lieu of the original Agreement for all purposes. Signatures of the parties transmitted by facsimile shall be deemed to be their original signatures for all purposes.

j. Legal Representation; Independent Counsel. The law firm of Fisher Thurber LLP has prepared this Agreement on behalf of Company based on its instructions. Fisher Thurber LLP does not represent any other party to this Agreement. In executing this Agreement, Employee represents that Employee has neither requested nor been given legal advice or counsel by Fisher Thurber LLP or any of its attorneys. Employee is aware of Employee’s right to obtain separate legal counsel with respect to the negotiation and execution of this Agreement and acknowledges that Fisher Thurber LLP has recommended Employee retain Employee’s own counsel for such purpose. Employee further acknowledges that Employee (i) has read and understands this Agreement and its exhibits and attachments; (ii) has had the opportunity to retain separate counsel in connection with the negotiation and execution of this Agreement; and (iii) has relied on the advice of separate counsel with respect to this Agreement or made the conscious decision not to retain counsel in connection with the negotiation and execution of this Agreement.

IN WITNESS WHEREOF, the Parties have executed this Agreement effective as of the Effective Date.

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ATTACHMENT #1

MUTUAL AGREEMENT TO MEDIATE AND ARBITRATE CLAIMS

This Mutual Agreement to Mediate and Arbitrate Claims (“Agreement”) is made and entered into effective as of November 20, 2006, (“Effective Date”), by and between Alvin McCurdy (“Employee”), and Natural Alternatives International, Inc., a Delaware corporation (“Company”).

In consideration of and as a condition of Employee’s prospective employment relationship with Company, Employee’s employment rights under Employee’s Employment Agreement, Employee’s participation in Company’s benefit programs (when and if eligible), Employee’s access to and receipt of confidential information of Company, and other good and valuable consideration, all of which Employee considers to have been negotiated at arm’s length, Employee and Company agree to the following:

1. Claims Covered by this Agreement .

a. To the fullest extent permitted by law, all claims and disputes between Employee (and Employee’s successors and assigns) and Company relating in any manner whatsoever to the employment or termination of Employee, including without limitation all claims and disputes arising under this Agreement or that certain Employment Agreement entered into by and between Company and Employee on equal date hereof, as may be amended from time to time (“Employment Agreement”), shall be resolved by mediation and arbitration as set forth herein. All persons and entities specified in the preceding sentence (other than Company and Employee) shall be considered third-party beneficiaries of the rights and obligations created by this Agreement. Claims and disputes covered by this Agreement include without limitation those arising under:

(i) Any federal, state or local laws, regulations or statutes prohibiting employment discrimination (including, without limitation, discrimination relating to race, sex, national origin, age, disability, religion, or sexual orientation) and harassment;

(ii) Any alleged or actual agreement or covenant (oral, written or implied) between Employee and Company;

(iii) Any Company policy, compensation, wage or related claim or benefit plan, unless the decision in question was made by an entity other than Company;

(iv) Any public policy; and

(v) Any other claim for personal, emotional, physical or economic injury.

b. The only disputes between Employee and Company that are not included within this Agreement are:

(i) Any claim by Employee for workers’ compensation or unemployment compensation benefits; and

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(ii) Any claim by Employee for benefits under a Company plan that provides for its own arbitration procedure.

2. Mandatory Mediation of Claims and Disputes .

a. If any claim or dispute covered under this Agreement cannot be resolved by negotiation between the parties, the following mediation and arbitration procedures shall be invoked. Before invoking the binding arbitration procedure set forth below, Company and Employee shall first participate in mandatory mediation of any dispute or claim covered under this Agreement.

b. The claim or dispute shall be submitted to mediation before a mediator of the Judicial Arbitration and Mediation