Change of Control Agreement

 

 

 

 

 

                              EMPLOYMENT AGREEMENT

 

 

     EMPLOYMENT  AGREEMENT,  dated as of July 1, 2000,  by and  between The Hain

Celestial Group,  Inc., a Delaware  corporation  (the  "Company"),  and Irwin D.

Simon ("Executive").

 

                              W I T N E S S E T H:

 

 

     WHEREAS,  the Company desires that Executive continue to serve as President

and Chief Executive  Officer of the Company and Executive is willing to continue

to serve; and

 

     WHEREAS,  the  Company  and  Executive  wish to  enter  into  an  agreement

embodying the terms of his employment as President and Chief  Executive  Officer

(the "Agreement").

 

     NOW, THEREFORE,  in consideration of the mutual covenants herein contained,

the Company and Executive hereby agree as follows:

 

     1.  Employment.  Upon the  terms  and  subject  to the  conditions  of this

Agreement,  the  Company  hereby  agrees to  continue  to employ  Executive  and

Executive  hereby  agrees to continue his  employment  by the Company  until the

third anniversary of the date set forth above (the "Initial Term"). In addition,

on or after  April 1,  2001, the Executive and the Company may mutually agree in

writing  to  extend  the term of this  Agreement  for one  additional  year (the

"Extended Term"). The period during which Executive is employed pursuant to this

Agreement shall be referred to as the "Employment Period."

 

     2. Position,  Duties and Location.  During the Employment Period, Executive

shall serve as President and Chief Executive Officer of the Company and shall be

nominated for election,  and if so elected shall continue to serve,  as Chairman

of the Board of Directors of the Company (the "Board").  In addition,  Executive

shall  serve in such  other  position  or  positions  with the  Company  and its

subsidiaries  commensurate  with his position and  experience as the Board shall

from time to time specify.  During the Employment  Period,  Executive shall have

the duties, responsibilities and obligations customarily assigned to individuals

serving as the president and chief  executive  officer of comparable  companies,

and such other duties,  responsibilities  and  obligations  consistent with such

positions as the Board shall from time to time  specify.  During the  Employment

Period,  the Executive will be the most senior executive to report to the Board.

Executive  shall devote his full business  time to the services  required of him

hereunder,  except for vacation  time and  reasonable  periods of absence due to

sickness,  personal  injury or other  disability,  and  shall  use  commercially

reasonable  efforts to perform  such  services  in a manner  consonant  with the

duties of his position and to improve and advance the business and  interests of

the Company and its  subsidiaries.  Nothing  contained in this  Section 2  shall

preclude  Executive  from  (i) serving on the board of directors of any business

corporation,   unless  such  service  would  be  contrary  to  applicable   law,

(ii) serving  on the board of directors  of, or working for, any  charitable  or

community  organization  or  (iii) pursuing  his  personal  financial  and legal

affairs,  so long as  such  activities,  individually  or  collectively,  do not

interfere with the performance of Executive's duties hereunder or violate any of

the provisions of Section 6 hereof.  Executive's place of employment shall be at

the Company's principal executive office in Uniondale, New York.

 

     3. Compensation.

 

     (a) Base Salary.  The Company shall pay Executive a base salary for each of

the Company's fiscal years during the Employment  Period at the following annual

rates:

 

               For the Fiscal Year Ending            Amount

 

            June 30, 2001                           $460,000

            June 30, 2002                           $520,000

            June 30, 2003                           $600,000

            June 30, 2004 (if this agreement is     $650,000

            extended under Section 1)

 

     The Board (or the appropriate committee of the Board) shall annually review

Executive's  base salary in light of  competitive  practices,  the base salaries

paid to other executive officers of the Company and the performance of Executive

and the Company,  and may, in its  discretion,  increase such base salary by any

additional amount it determines to be appropriate;  provided,  however, any such

increase  shall  not  reduce  or  limit  any  other  obligation  of the  Company

hereunder.  Executive's  base salary (as set forth or as may be  increased  from

time to time) shall not be  reduced.  Executive's  annual  base  salary  payable

hereunder,  as it may be  increased  from time to time is  referred to herein as

"Base  Salary." The Company  shall pay  Executive  his Base Salary in accordance

with the normal payroll practices of the Company for its executive officers.

 

     (b) Annual  Bonus.  For each  calendar  year ending  during the  Employment

Period,  Executive shall be eligible to receive an annual bonus,  payable in the

form of  cash or  otherwise,  as may be  determined  as set  forth  below  to be

commensurate with the Company's and/or Executive's performance.

 

     For the fiscal year ending June 30, 2001, Executive's annual bonus shall be

determined  by the  Compensation  Committee  of  the  Board  (the  "Compensation

Committee") based on the Executive's and the Company's  performance  during such

fiscal year.

 

     For  each  subsequent  fiscal  year  during  the  term of  this  Agreement,

Executive's  performance  objectives will be based on a weighted  average of 50%

gross revenue growth and 50% earnings per share growth.  Executive's performance

objectives  for each such  fiscal  year will be a 12%  increase,  in the case of

gross revenue,  and a 20% increase,  in the case of earnings per share, over the

gross revenue and earnings per share actually achieved by the Company during the

immediately preceding fiscal year. Based on these objectives, Executive's annual

bonus will be allocated as follows:

 

         Objectives                    Bonus (as a % of Base Salary)

         Exceed by 10%                 200%

         Exceed by less than 10%       pro rata between 100% and 200%

         Meet objectives               100%

         Miss by less than 10%         pro rata between 50% and 100%

         Miss by 10%                   50%

         Miss by greater than 10%      No bonus

 

     Notwithstanding the foregoing, in the case that the Company enters into any

acquisition or other business transactions during the Employment Period with the

prior  approval  of the Board  that,  in the  Executive's  reasonable  judgment,

materially affects the Executive's ability to achieve the foregoing  performance

objectives, the Executive may request that the Compensation Committee review his

performance  objectives.  Following such review, the Compensation  Committee may

make any appropriate  modifications  to the Executive's  performance  objectives

that  it  deems  necessary  to  cause  such  performance  objectives  to  remain

consistent with those contemplated in this Section 3(b).

 

     (c) Options.

 

     (i) On or before July 31, 2000,  in  recognition  of services  performed by

Executive during the fiscal year ended June 30, 2000, Executive shall be granted

options  exercisable  for 300,000  shares of the  Company's  common  stock at an

exercise price of the market price on the date of grant under the Company's 1994

Stock Incentive and Award Plan or any substantially  similar plan adopted by the

Company from time to time (the "Plan"). The date of grant shall be determined by

the Executive and the Board and the options will vest immediately.

 

     (ii)  On or  before  July  31st  of each of the  fiscal  years  during  the

Employment  Period  (including the fiscal year ending June 30, 2001),  including

the  Extended  Term in the event this  Agreement  is extended  under  Section 1,

Executive  shall be  granted  options  exercisable  for  300,000  shares  of the

Company's  common stock at an exercise  price of the market price at the date of

grant under the Plan. The date of grant shall be determined by the Executive and

the Board and the options will vest immediately.

 

     4. Benefits, Perquisites and Expenses.

 

     (a) Benefits.  During the Employment Period, Executive shall be eligible to

participate  in (i) each welfare  benefit plan  sponsored or  maintained  by the

Company,  including,  without  limitation,  each  group  life,  hospitalization,

medical,  dental,  health,  accident or disability  insurance or similar plan or

program  of  the  Company,   and  (ii)  each   pension,   retirement,   deferred

compensation, savings or employee stock purchase plan sponsored or maintained by

the Company, and (iii) to the extent of any awards made from time to time by the

Board committee  administering  the plan, each stock option,  restricted  stock,

stock bonus or similar equity-based compensation plan sponsored or maintained by

the Company, in each case, whether now existing or established hereafter, to the

extent that  Executive  is eligible  to  participate  in any such plan under the

generally  applicable  provisions  thereof.  Nothing in this  Section 4(a) shall

limit the Company's right to amend or terminate any such plan in accordance with

the procedures set forth therein.

 

     (b) Perquisites.  During the Employment Period, Executive shall be entitled

to at least four weeks' paid vacation annually, shall be entitled to observe all

Jewish  holidays and shall also be entitled to receive such  perquisites  as are

generally  provided  to  other  senior  executive  officers  of the  Company  in

accordance  with  the  then  current  policies  and  practices  of the  Company.

Executive's  unused  vacation days may not be accumulated and carried forward to

following years, but at the end of each calendar year Executive shall be paid in

cash for all unused vacation days. During the Employment Period, Executive shall

receive an  automobile  allowance  of not less than  $800.00 per month,  and the

Company shall pay insurance premiums in respect of the automobile with liability

limits not less than $1 million/$3 million.

 

     (c) Business Expenses.  During the Employment Period, the Company shall pay

or reimburse Executive for all reasonable expenses incurred or paid by Executive

in the performance of Executive's duties hereunder, upon presentation of expense

statements or vouchers and such other information as the Company may require and

in  accordance  with the  generally  applicable  policies and  procedures of the

Company.

 

     (d)  Indemnification.  During the  Employment  Period,  the  Company  shall

indemnify Executive and hold Executive harmless from and against any claim, loss

or cause of action arising from or out of Executive's performance as an officer,

director or employee of the Company or any of its  subsidiaries  or in any other

capacity,  including any fiduciary  capacity,  in which Executive  serves at the

request of the Company to the maximum extent permitted by applicable law and the

Company's Amended and Restated Certificate of Incorporation and By-Laws.

 

     5. Termination of Employment.

 

     (a) Early Termination of the Employment Period.  Notwithstanding Section 1,

the Employment  Period shall end upon the earliest to occur of (i) a termination

of Executive's  employment on account of Executive's  death,  (ii) a termination

due to Executive's  Disability,  (iii) Termination for Cause, (iv) a Termination

Without Cause,  (v) a  Termination  for Good Reason or (vi)  Termination Not for

Good Reason.

 

     (b)  Benefits  Payable  Upon Early  Termination.  Following  the end of the

Employment Period pursuant to Section 5(a),  or following a Change of Control of

the Company  after which the  Executive  remains  employed by the Company or its

successor under the terms of this Agreement,  Executive (or, in the event of his

death,  his surviving  spouse,  if any, or his estate) shall be paid the type or

types  of  compensation,  without  duplication,  determined  to  be  payable  in

accordance  with  the  following  table at the  times  established  pursuant  to

Section 5(c):

 

                                                        Additional    Severance

                       Earned Salary  Vested Benefits   Benefits      Benefits

Termination due to     Payable        Payable          Available     Not payable

death

Termination due to     Payable        Payable          Available     Not payable

Disability

Termination for Cause  Payable        Payable          Not available Not payable

Termination for Good   Payable        Payable          Available       Payable

Reason

Termination Without    Payable        Payable          Available       Payable

Cause

Termination Not for    Payable        Payable          Not available Not payable

Good Reason

Change of Control of   Not payable    Not payable      Not available   Payable

the Company (without

Termination)

 

     (c) Timing of  Payments.  Earned  Salary  shall be paid in cash in a single

lump sum as soon as  practicable,  but in no event more than 10 days,  following

the end of the Employment Period. Vested Benefits shall be payable in accordance

with the terms of the plan,  policy,  practice,  program,  contract or agreement

under which such  benefits  have been  awarded or accrued.  Additional  Benefits

shall be provided or made available at the times specified below as to each such

Additional Benefit. Unless otherwise specified, Severance Benefits shall be paid

in a single lump sum cash payment as soon as practicable,  but in no event later

than 10 days after the Executive's termination.

 

     (d) Definitions.  For purposes of Sections 5 and 6, capitalized  terms have

the following meanings:

 

     "Additional Benefits" means, the benefits described below:

 

     (i) All of the  Executive's  benefits  accrued  under the employee  option,

pension,  retirement,  savings and  deferred  compensation  plans of the Company

shall  become  vested  in  full;  provided,  however,  that to the  extent  such

accelerated  vesting of benefits  cannot be  provided  under one or more of such

plans  consistent  with  applicable  provisions of the Internal  Revenue Code of

1986, as amended (the "Code"), such benefits shall be paid to the Executive in a

lump sum within 10 days after  termination of employment  outside the applicable

plan;

 

     (ii) Executive  (and, to the extent  applicable,  his  dependents)  will be

entitled to continue  participation in all of the Company's medical,  dental and

vision care plans (the "Health Benefit Plans"),  until the 24 month  anniversary

of   Executive's   termination   of   employment;   provided  that   Executive's

participation  in the Company's  Health Benefit Plans shall cease on any earlier

date that Executive  becomes eligible for comparable  benefits from a subsequent

employer.  Executive's  participation in the Health Benefit Plans will be on the

same terms and conditions (including, without limitation, any contributions that

would have been required from  Executive)  that would have applied had Executive

continued to be employed by the Company.  To the extent any such benefits cannot

be provided  under the terms of the  applicable  plan,  policy or  program,  the

Company  shall  provide a  comparable  benefit  under  another  plan or from the

Company's general assets; and

 

     (iii) An amount equal to (A) two times Base Salary in effect on the date of

termination,  plus (B) two times the average  annual bonus paid to the Executive

over two  immediately  preceding  fiscal years,  including any annual bonus paid

pursuant to Section 3(b), plus (c) the Executive's  accrued annual bonus through

the date of termination, determined in accordance with clause (B) above.

 

     "Black-Scholes  Value" means the value of options to purchase the Company's

common stock for which such value is to be determined  under this Agreement,  as

calculated  by the  Accountants  (as  defined  in  Section  5(f))  or any  other

compensation  consultant  mutually  agreeable to the parties (the  "Compensation

Consultant")  using the  Black-Scholes  method of valuation in determining  such

valuation,  the  Compensation  Consultant in its good faith  discretion shall be

responsible for designating commercially reasonable and customary parameters for

the Black-Scholes  method,  which shall be outlined to Executive in writing upon

the  determination of the  Black-Scholes  Value for purposes of making a payment

under the Agreement.

 

     "Change  of  Control  of the  Company"  means  and  shall be deemed to have

occurred if:

 

     (i)  any person (within the meaning of the Securities Exchange Act of 1934,

as amended (the  "Exchange  Act")),  other than the  Company,  is or becomes the

"beneficial  owner" (as defined in Rule 13d-3 under the Exchange Act),  directly

or indirectly, of Voting Securities representing 50 percent or more of the total

voting power of all the then-outstanding Voting Securities; or

 

     (ii)  the  individuals  who, as of the date hereof,  constitute  the Board,

together with those who first become directors subsequent to such date and whose

recommendation, election or nomination for election to the Board was approved by

a vote of at least a majority of the  directors  then still in office who either

were  directors  as of the date  hereof  or whose  recommendation,  election  or

nomination for election was previously so approved (the "Continuing Directors"),

cease for any reason to constitute a majority of the members of the Board; or

 

     (iii)  the  stockholders  of the Company  approve a merger,  consolidation,

recapitalization or reorganization of the Company or a subsidiary, reverse split

of any class of Voting Securities,  or an acquisition of securities or assets by

the  Company  or a  subsidiary,  or  consummation  of any  such  transaction  if

stockholder  approval is not obtained,  other than any such transaction in which

the  holders  of  outstanding   Voting  Securities   immediately  prior  to  the

transaction receive (or, in the case of a transaction involving a subsidiary and

not the  Company,  retain),  with  respect  to such  Voting  Securities,  voting

securities  of the  surviving or  transferee  entity  representing  more than 60

percent  of  the  total  voting  power   outstanding   immediately   after  such

transaction,  with the voting power of each such  continuing  holder relative to

other such continuing holders not substantially altered in the transaction; or

 

     (iv)  the   stockholders   of  the  Company  approve  a  plan  of  complete

liquidation  of the Company or an agreement for the sale or  disposition  by the

Company of all or substantially all of the Company's assets.

 

     "Disability" means long-term disability within the meaning of the Company's

long-term disability plan or program.

 

     "Earned  Salary"  means any Base Salary  earned,  but unpaid,  for services

rendered to the Company on or prior to the date on which the  Employment  Period

ends pursuant to Section 5(a) hereof.

 

     "Severance Benefit" means an amount equal to:

 

     (i) an amount equal to the Black-Scholes Value,  determined as of the most

recent option grant date to Executive under this  Agreement,  of all options for

the Company's  common stock  contemplated but not yet granted under Section 3(c)

(including the options to be granted during the Extended Term; provided,  if the

event  giving rise to the payment of these  Severance  Benefits  occurs prior to

Apri1 1, 2001, the extension option contemplated under Section 1 shall be deemed

exercised  as of that date) and  (ii)  an  amount  equal to the  above-mentioned

Black-Scholes  Value of options  exercisable for an additional 300,000 shares of

the Company's common stock. In addition, in the event the Executive's employment

is terminated  hereunder and all of the shares of common stock issuable upon the

exercise  of options are not  eligible  for resale by  Executive  within 90 days

following  the date of the event  giving rise to the payment of these  Severance

Benefits  either  under  Rule  144  or  pursuant  to an  effective  registration

statement,  and following written request by the Executive, the Company fails to

file  and  cause  to have  become  effective  within  90 days of such  notice  a

registration  statement  relating to such  resale and to keep such  registration

statement  effective for a period of 90 days  thereafter,  Executive may, at his

option,  exchange  such options for an amount equal to the  Black-Scholes  Value

thereof computed in accordance with the preceding sentence.

 

     "Termination  for Cause" means a termination of  Executive's  employment by

the Company due to  (i Executive's  conviction of a felony or a crime involving

moral turpitude,  or  (ii)Executive's  willful and continued failure to perform

the material duties of his position,  which failure continues for a period of 30

days after Executive's receipt of written notice from the Company specifying the

exact details of such alleged failure and which has had (or is expected to have)

a material adverse effect on the business of the Company or its subsidiaries.

 

     "Termination for Good Reason" means a termination of Executive's employment

by Executive  following (i)a  diminution in Executive's  positions,  duties and

responsibilities  from those described in Section 2 hereof,  (ii) the removal of

Executive from, or the failure to re-elect Executive as Chairman of the Board of

the Company or as Chief Executive  Officer of the Company,  (iii) a reduction in

Executive's  annual Base Salary,  (iv) a  material  breach by the Company of any

other provision of this Agreement or (vii) a Change in Control of the Company.

 

     "Termination  Not For Good Reason"  means any  termination  of  Executive's

employment by Executive other than  Termination for Good Reason or a termination

due to Executive's Disability or death.

 

     "Termination Without Cause" means any termination of Executive's employment

by the  Company  other  than a  Termination  for Cause or a  termination  due to

Executive's Disability.

 

     "Vested  Benefits"  means  amounts  which are vested or which  Executive is

otherwise entitled to receive under the terms of or in accordance with any plan,

policy,  practice or program of, or any contract or agreement  with, the Company

or any of its  subsidiaries,  at or  subsequent  to the date of his  termination

without  regard to the  performance  by  Executive  of further  services  or the

resolution of a contingency.

 

     "Voting  Securities or Security"  means any securities of the Company which

carry the right to vote generally in the election of directors.

 

     (e) Full Discharge of Obligations. Except as expressly provided in the last

sentence of this Section 5(e), the amounts payable to Executive pursuant to this

Section 5 and Section 7(d)  following  termination of his employment  (including

amounts  payable with respect to Vested  Benefits) shall be in full and complete

satisfaction of Executive's rights under this Agreement. Except as otherwise set

forth in Section 6,  after the effective date of a termination of employment for

any reason,  Executive  shall have no further  obligations or liabilities to the

Company.  Nothing in this Section 5(e) shall be construed to release the Company

from its commitment to indemnify  Executive and hold Executive harmless from and

against any claim, loss or cause of action as described in Section 4(d).

 

     (f) Excise Tax Gross-Up.

 

     (i) Anything in this Agreement to the contrary notwithstanding, if it shall

be determined  that any payment,  distribution or benefit  provided  (including,

without limitation, the acceleration of any payment, distribution or benefit and

the acceleration of  exercisability of any stock option) to Executive or for his

benefit  (whether paid or payable or distributed or  distributable)  pursuant to

the terms of this  Agreement  or otherwise (a  "Payment")  would be subject,  in

whole or in part,  to the  excise tax  imposed by Section  4999 of the Code (the

"Excise Tax"),  then the Executive shall be entitled to receive from the Company

an additional  payment (the "Gross-Up  Payment") in an amount such that the net

amount of the Payment and the Gross-Up  Payment  retained by Executive after the

calculation  and  deduction  of all Excise  Taxes  (including  any  interest  or

penalties  imposed  with  respect to such taxes) on the Payment and all federal,

state and local  income  tax,  employment  tax and  Excise  Tax  (including  any

interest  or  penalties  imposed  with  respect to such  taxes) on the  Gross-Up

Payment  provided  for in this  Section 5(f) and taking into account any lost or

reduced tax deductions on account of the Gross-Up Payment, shall be equal to the

Payment.

 

     (ii) All  determinations  required  to be made  under  this  Section  5(f),

including  whether and when the  Gross-Up  Payment is required and the amount of

such  Gross-Up  Payment,  and the  assumptions  to be used in  arriving  at such

determinations  shall be made by the  Accountants (as defined below) which shall

provide  Executive and the Company with detailed  supporting  calculations  with

respect to such  Gross-Up  Payment  within ten (10) days  after  termination  of

Executive's  employment  or such other  event which  results in a Payment  which

could  necessitate  a Gross-Up  Payment.  For  purposes of this  Agreement,  the

"Accountants"  shall  mean Ernst & Young LLP or  successor  firm  providing  its

services to the Company in  connection  with its annual  audit.  For purposes of

determining the amount of the Gross-Up Payment, Executive shall be deemed to pay

Federal income taxes at the applicable  marginal rate of federal income taxation

for the calendar year in which the Gross-Up Payment is to be made and to pay any

applicable  state and local  income  taxes at the  applicable  marginal  rate of

taxation for the calendar year in which the Gross-Up  Payment is to be made, net

of the  reduction  in federal  income  taxes which  could be  obtained  from the

deduction  of such state or local  taxes if paid in such year  (determined  with

regard to  limitations  on  deductions  based  upon the  amount  of  Executive's

adjusted gross income).  To the extent  practicable,  any Gross-Up  Payment with

respect to any  Payment  shall be paid by the Company at the time  Executive  is

entitled to receive the  Payment and in no event shall any  Gross-Up  Payment be

paid later  than 10 days after the  receipt  by  Executive  of the  Accountants'

determination.  Any  determination by the Accountants  shall be binding upon the

Company and Executive,  including for purposes of withholding on amounts payable

under this  Agreement.  As a result of uncertainty in the application of Section

4999 of the Code at the time of the  initial  determination  by the  Accountants

hereunder,  it is  possible  that the  Gross-Up  Payment  made will have been an

amount  that is greater or less than the Company  should  have paid  pursuant to

this Section 5(f) (an  "Overpayment" or  "Underpayment",  respectively).  In the

event that the Gross-Up  Payment is determined by the Accountants or pursuant to

any proceeding or negotiations with the Internal Revenue Service to be less than

the amount  initially  determined by the  Accountants,  Executive shall promptly

repay the Overpayment to the Company;  provided,  however, that in the event any

portion of the Gross-Up Payment to be repaid to the Company has been paid to any

Federal,  state or local tax authority,  repayment thereof shall not be required

until actual refund or credit of such portion has been made to Executive. In the

event that the Company exhausts its remedies pursuant to  Section 5(f)(iii)  and

Executive  is  required to make a payment of any Excise  Tax,  the  Underpayment

shall be promptly paid by the Company to or for Executive's benefit.

 

     (iii)  Executive  shall  notify the  Company in writing of any claim by the

Internal  Revenue Service that, if successful,  would require the payment by the

Company  of a  Gross-Up  Payment.  Such  notification  shall be given as soon as

practicable  after  Executive  is  informed  in  writing of such claim and shall

apprise the Company of the nature of such claim and the date on which such claim

is  requested  to be  paid.  Executive  shall  not pay such  claim  prior to the

expiration of the 30-day period following the date on which Executive gives such

notice  to the  Company  (or such  shorter  period  ending  on the date that any

payment of taxes,  interest and/or penalties with respect to such claim is due).

If the Company  notifies  Executive in writing  prior to the  expiration of such

period that it desires to contest such claim, Executive shall:

 

     (A)  give the Company any information  reasonably  requested by the Company

relating to such claim;

 

     (B)  take  such  action in  connection  with  contesting  such claim as the

Company  shall  reasonably  request  in  writing  from time to time,  including,

without limitation, accepting legal representation with respect to such claim by

an attorney reasonably selected by the Company;

 

     (C)  cooperate  with the  Company  in good  faith  in order to  effectively

contest such claim; and

 

     (D)  permit the Company to participate in any proceedings  relating to such

claims;

 

     provided,  however,  that the Company shall bear and pay directly all costs

and  expenses   (including   additional  interest  and  penalties)  incurred  in

connection  with  such  contest  and  shall  indemnify  Executive  for and  hold

Executive  harmless from, on an after-tax  basis,  any Excise Tax, income tax or

employment tax (including  interest and penalties with respect  thereto) imposed

as a  result  of such  representation  and  payment  of all  related  costs  and

expenses.  Without limiting the foregoing  provisions of this Section 5(f),  the

Company shall control all proceedings taken in connection with such contest and,

at its sole  option,  may  pursue or forgo any and all  administrative  appeals,

proceedings,  hearings and conferences  with the taxing  authority in respect of

such claim and may, at its sole option,  either direct  Executive to pay the tax

claimed and sue for a refund or contest the claim in any permissible manner, and

Executive  agrees to  prosecute  such  contest  to a  determination  before  any

administrative  tribunal,  in a court of initial jurisdiction and in one or more

appellate courts,  as the Company shall determine.  The Company's control of the

contest  shall be limited  to issues  with  respect to which a Gross-Up  Payment

would be payable hereunder and Executive shall be entitled to settle or contest,

as the case may be, any other issue  raised by the Internal  Revenue  Service or

any other taxing authority.

 

     6. Noncompetition and  Confidentiality.  In consideration of the salary and

benefits to be provided by the Company  hereunder,  including  particularly  the

severance  arrangements  set forth  herein,  Executive  agrees to the  following

provisions of this Section 6.

 

     (a)  Noncompetition.  During the Employment  Period and during the two year

period  following  any  termination  of  Executive's  employment,  other  than a

Termination Without Cause or a Termination for Good Reason,  Executive shall not

directly  or  indirectly  own,  manage,   operate,   control,  be  employed  by,

participate  in or,  provide  services or financial  assistance  to any business

which directly  competes with Company or any of its  subsidiaries  or engages in

the type of  business(es)  principally  conducted  by the  Company or any of its

subsidiaries,  except that Executive may own for investment purposes up to 5% of

the capital stock of any such company.

 

     (b)  Confidentiality.  Executive agrees that,  during the Employment Period

and thereafter,  he shall hold and keep confidential any trade secrets, customer

lists  and  pricing  or  other  confidential  information,  or  any  inventions,

discoveries,  improvements,  products, whether patentable practices,  methods or

not, directly or indirectly useful in or relating to the business of the Company

or its  subsidiaries as conducted by it from time to time, as to which Executive

shall at any time during the Employment Period become informed, and he shall not

directly or  indirectly  disclose any such  information  to any person,  firm or

corporation  or use the same except in connection  with the business and affairs

of the Company or its subsidiaries. The foregoing prohibition shall not apply to

the extent such  information,  knowledge or data (a) was  publicly  known at the

time of  disclosure  to  Executive,  (b)  become  publicly  known  or  available

thereafter  other than by any means in  violation of this  Agreement,  or (c) is

required  to be  disclosed  by  Executive  as a matter of law or pursuant to any

court or regulatory order.

 

     (c)  Company  Property.  Except  as  expressly  provided  herein,  promptly

following Executive's  termination of employment,  Executive shall return to the

Company all property of the Company and its subsidiaries.

 

     (d)  Injunctive  Relief  and Other  Remedies  with  Respect  to  Covenants.

Executive  acknowledges  and  agrees  that  the  covenants  and  obligations  of

Executive with respect to noncompetition,  confidentiality and Company property,

relate to special,  unique and extraordinary matters and that a violation of any

of the terms of such covenants and obligations may cause the Company irreparable

injury  for  which  adequate  remedies  are not  available  at  law.  Therefore,

Executive  agrees  that the Company  shall be  entitled  to seek an  injunction,

restraining  order or such other  equitable  relief  (without the requirement to

post bond) restraining  Executive from committing any violation of the covenants

and  obligations  contained in this Section 6. This remedy is in addition to any

other rights and remedies the Company may have at law or in equity.

 

     7. Miscellaneous.

 

     (a)  Survival.  Sections 4 (relating  to  indemnification),  5 (relating to

early  termination  and  change of  control),  6  (relating  to  noncompetition,

nonsolicitation  and  confidentiality),  7(b)  (relating to  arbitration),  7(c)

(relating  to binding  effect),  7(d)  (relating  to  full-settlement  and legal

expenses) and 7(n)  (relating to governing  law) shall  survive the  termination

hereof.

 

     (b) Arbitration.  Any dispute or controversy arising under or in connection

with this Agreement shall be resolved by binding  arbitration.  This arbitration

shall be held in New York City and except to the extent  inconsistent  with this

Agreement,  shall be  conducted  in  accordance  with the  Expedited  Employment

Arbitration Rules of the American Arbitration  Association then in effect at the

time of the arbitration, and otherwise in accordance with principles which would

be applied by a court of law or equity.  The  arbitrator  shall be acceptable to

both the Company and  Executive.  If the parties  cannot agree on an  acceptable

arbitrator,  the  dispute  shall  be held by a panel of  three  arbitrators  one

appointed  by each of the  parties  and the  third  appointed  by the  other two

arbitrators.

 

     (c) Binding Effect.  This Agreement shall be binding on, and shall inure to

the  benefit  of, the  Company  and any person or entity  that  succeeds  to the

interest of the Company  (regardless of whether such succession does or does not

occur by  operation  of law) by reason  of the sale of all or a  portion  of the

Company's stock, a merger, consolidation or reorganization involving the Company

or, unless the Company otherwise elects in writing,  a sale of the assets of the

business  of the Company (or  portion  thereof)  in which  Executive  performs a

majority  of his  services.  This  Agreement  shall also inure to the benefit of

Executive's heirs, executors, administrators and legal representatives.

 

     (d) Full-Settlement;  Legal Expenses.  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  set-off,  counterclaim,  recoupment,

defense or other  claim,  right or action  which the  Company  may have  against

Executive  or others.  In no event shall  Executive  be  obligated to seek other

employment or take any other action by way of mitigation of the amounts  payable

to Executive under any of the provisions of this  Agreement.  The Company agrees

to pay, upon written demand  therefor by Executive,  all legal fees and expenses

which Executive may reasonably incur as a result of any dispute or contest by or

with the  Company or others  regarding  the  validity or  enforceability  of, or

liability under,  any provision of this Agreement  (including as a result of any

contest by  Executive  about the amount of any payment  hereunder)  if Executive

substantially  prevails  in the  dispute or contest or the dispute or contest is

settled,  plus in each case interest at the applicable Federal rate provided for

in Section  7872(f)(2) of the Code. In any such action  brought by the Executive

for damages or to enforce any provisions of this Agreement,  the Executive shall

be entitled to seek both legal and  equitable  relief and  remedies,  including,

without limitation, specific performance of the Company's obligations hereunder,

in his sole discretion.

 

     (e)  Assignment.  Except as  provided  under  Section  7(c),  neither  this

Agreement nor any of the rights or  obligations  hereunder  shall be assigned or

delegated by any party  hereto  without the prior  written  consent of the other

party.

 

     (f) Entire  Agreement.  This  Agreement  constitutes  the entire  agreement

between the parties  hereto with respect to the matters  referred to herein.  No

other  agreement  (other than awards made in accordance with the terms of one of

the Company's applicable  compensatory plans, programs or arrangements) relating

to the terms of Executive's employment by the Company, oral or otherwise,  shall

be  binding  between  the  parties.  There  are  no  promises,  representations,

inducements  or  statements  between  the  parties  other  than  those  that are

expressly contained herein. Executive acknowledges that he is entering into this

Agreement of his own free will and accord, and with no duress,  that he has read

this  Agreement and that he understands  it and its legal  consequences  and has

been  advised to consult  with an  attorney  before  executing  this  Agreement.

Executive   waives  any  conflict  of  interest  which  may  arise  due  to  the

representation by the Executive,  on the one hand, and the Company, on the other

hand, by Cahill  Gordon & Reindel from time to time in  connection  with various

legal matters, including regarding this Agreement.

 

     (g)  Severability;  Reformation.  In the  event  that  one or  more  of the

provisions of this Agreement shall become invalid,  illegal or  unenforceable in

any  respect,  the  validity,  legality  and  enforceability  of  the  remaining

provisions contained herein shall not be affected thereby. In the event that any

of the provisions of any of Section 6 is not  enforceable in accordance with its

terms,  Executive  and the Company  agree that such Section shall be reformed to

make such Section enforceable in a manner which provides the Company the maximum

rights permitted at law.

 

     (h)  Waiver.  Waiver by any party  hereto of any  breach or  default by the

other party of any of the terms of this Agreement  shall not operate as a waiver

of any other breach or default,  whether similar to or different from the breach

or default waived. No waiver of any provision of this Agreement shall be implied

from any course of dealing  between  the  parties  hereto or from any failure by

either  party  hereto to assert its or his rights  hereunder  on any occasion or

series of occasions.

 

     (i)  Notices.  Any notice  required or desired to be  delivered  under this

Agreement  shall be in writing  and shall be  delivered  personally,  by courier

service,  by certified mail, return receipt requested,  or by telecopy and shall

be  effective  upon actual  receipt by the party to which such  notice  shall be

directed,  and shall be  addressed  as follows (or to such other  address as the

party entitled to notice shall hereafter  designate in accordance with the terms

hereof):

 

     If to the Company:

 

                           The Hain Celestial Group, Inc.

                           50 Charles Lindbergh Blvd.

                           Uniondale, New York 11553

                           Attention:  Secretary

 

     If to Executive:

 

                           Irwin D. Simon

                           c/o The Hain Celestial Group, Inc.

                           50 Charles Lindbergh Blvd.

                           Uniondale, New York  11553

 

     Copy to:

 

                           Cahill Gordon & Reindel

                           80 Pine Street

                           New York, New York  10005

                           Attention:  Roger Meltzer, Esq.

 

     (j)  Amendments.  This  Agreement  may not be altered,  modified or amended

except by a written instrument signed by each of the parties hereto.

 

     (k)  Headings.  Headings  to  paragraphs  in  this  Agreement  are  for the

convenience  of the parties only and are not intended to be part of or to affect

the meaning or interpretation hereof.

 

     (l) Counterparts.  This Agreement may be executed in counterparts,  each of

which shall be deemed an original but all of which shall  constitute one and the

same instrument.

 

     (m) Withholding.  Any payments  provided for herein shall be reduced by any

amounts  required  to be  withheld  by the  Company  from  time  to  time  under

applicable  Federal,  State or local income tax laws or similar statutes then in

effect.

 

     (n) Choice of Law.  This  Agreement  shall be governed by and  construed in

accordance  with  the  laws of the  State  of New  York,  without  reference  to

principles of conflict of laws thereof.

 

 

 

     IN WITNESS  WHEREOF,  Executive has hereunto set his hand and,  pursuant to

the  authorization  from its Board of  Directors,  the Company has caused  these

presents to be executed as of the day and year first above written.

 

                                     THE HAIN CELESTIAL GROUP, INC.

 

 

                                     By: /s/Gary M. Jacobs

                                        --------------------------------

                                        Name: Gary M. Jacobs

                                        Title: Executive Vice President, Finance

 

 

                                        /s/Irwin D. Simon

                                        --------------------------------

                                        Irwin D. Simon

 

 

</TEXT>

</DOCUMENT>

 

<DOCUMENT>

<TYPE>EX-10

<SEQUENCE>4

<FILENAME>0004.txt

<DESCRIPTION>CHANGE IN CONTROL AGREEMENT

<TEXT>

 

 

Exhibit 10.1

 

                           CHANGE IN CONTROL AGREEMENT

 

 

                  THIS CHANGE IN CONTROL  AGREEMENT dated as of _________,  2000

(this  "Agreement"),  is made by and between The Hain Celestial  Group,  Inc., a

Delaware  corporation  having its  principal  offices  at 50  Charles  Lindbergh

Boulevard,  Uniondale,  New York 11553 (the  "Company"),  and [Executive  Name],

[Executive Title] (the "Executive").

 

                  WHEREAS,  the  Company  considers  it  essential  to the  best

interests  of  its  shareholders  to  foster  the  continued  employment  of key

executive management personnel; and

 

                  WHEREAS,  the Board of Directors of the Company (the  "Board")

recognizes  that,  as is the case  with  many  publicly-held  corporations,  the

possibility  of a Change in Control  (as  defined  in Section  1.4 below) of the

Company exists from time to time and that such possibility, and the uncertainty,

instability  and  questions  which it may  raise  for and  among  key  executive

management  personnel,  may result in the  premature  departure  or  significant

distraction  of such  management  personnel  to the  material  detriment  of the

Company and its stockholders; and

 

                  WHEREAS,  the  Board has  determined  that  appropriate  steps

should be taken to reinforce,  focus and  encourage the continued  attention and

dedication  of key members of the  executive  management  of the Company and its

subsidiaries,  including (without  limitation) the Executive,  to their assigned

duties without  distraction in the face of potentially  disturbing or unsettling

circumstances  arising  from the  possibility  of a  Change  in  Control  of the

Company;

 

                  NOW THEREFORE, in consideration of the premises and the mutual

covenants  herein  contained,  the Company  and the  Executive  hereby  agree as

follows:

 

         1.       Definitions.  For purposes of this Agreement, the

following terms have the meanings set forth below:

 

                  1.1 "Annual Base Salary"  shall mean the  Executive's  rate of

regular base annual compensation prior to any reduction under a salary reduction

agreement pursuant to section 401(k) or section 125 of the Internal Revenue Code

of 1986,  as  amended  from time to time  (the  "Code"),  and shall not  include

(without limitation) cost of living allowances, fees, retainers, reimbursements,

bonuses, incentive awards, prizes or similar payments.

 

                                       17

 

<PAGE>

 

 

 

                           1.2 [Intentionally Omitted]

 

 

 

 

                  1.3 "Cause" for  termination  by the Company or any subsidiary

of the Executive's  employment,  after any Change in Control, shall mean (i) the

willful and  continued  failure by the  Executive to  substantially  perform the

Executive's  duties with the Company,  or a subsidiary  of the Company,  as such

duties  may  reasonably  be  defined  from  time to time by the Board (or a duly

designated  and  authorized  committee  thereof),  or to abide by the reasonable

written  policies of the Company or of the Executive's  primary  employer (other

than any such failure resulting from the Executive's  incapacity due to physical

or mental illness or any such actual or  anticipated  failure after the issuance

of a Notice of Termination by the Executive for Good Reason  pursuant to Section

4.1) after a written  demand for  substantial  performance  is  delivered to the

Executive by the Board, which demand specifically identifies the manner in which

the Board  believes  that the  Executive  has not  substantially  performed  the

Executive's duties or has not abided by any reasonable written policies, or (ii)

the  continued  and  willful  engaging  by the  Executive  in  conduct  which is

demonstrably  and  materially  injurious  to the  Company  or its  subsidiaries,

monetarily  or  otherwise.  For  purposes  of  clauses  (i)  and  (ii)  of  this

definition,  no act, or failure to act, on the Executive's  part shall be deemed

"willful"  unless done, or omitted to be done, by the Executive in bad faith and

without  reasonable  belief that the Executive's  act, or failure to act, was in

the best interests of the Company or its subsidiaries.

 

                  1.4      "Change in Control" shall mean and be deemed to have

occurred if:

                           (i)  The  acquisition  by any  Person  of  beneficial

         ownership  (within  the  meaning  of Rule 13d-3  promulgated  under the

         Securities  Exchange Act of 1934, as amended (the  "Exchange  Act")) of

         50% or more of the combined voting power of the then outstanding Voting

         Stock of the  Company;  provided,  however,  that for  purposes of this

         Section  1.4(i),  the  following  acquisitions  shall not  constitute a

         Change of  Control:  (A) any  issuance  of Voting  Stock of the Company

         directly from the Company that is approved by the  Incumbent  Board (as

         defined in Section 1.4(ii)  below),  (B) any acquisition by the Company

         of Voting Stock of the Company or (C) any  acquisition  of Voting Stock

         of the  Company by any Person  pursuant to a Business  Combination  (as

         defined in Section 1.4(iii) below) that complies with clauses

 

                                       18

 

<PAGE>

 

 

 

         (A), (B) and (C) of Section 1.4(iii) below; or

 

                           (ii)   individuals   who,  as  of  the  date  hereof,

         constitute  the Board (the  "Incumbent  Board") cease for any reason to

         constitute at least a majority of the Board;  provided,  however,  that

         any individual becoming a member of the Board (a "Director") subsequent

         to the date hereof whose  election,  or nomination  for election by the

         Company's  stockholders,  was approved by a vote of at least two-thirds

         of the  Directors  then  comprising  the  Incumbent  Board (either by a

         specific  vote or by approval of the proxy  statement of the Company in

         which such person is named as a nominee for director, without objection

         to such  nomination)  shall be  deemed  to have  been a  member  of the

         Incumbent Board, but excluding,  for this purpose,  any such individual

         whose  initial  assumption of office occurs as a result of an actual or

         threatened  election  contest (within the meaning of Rule 14a-11 of the

         Exchange  Act) with  respect to the election or removal of Directors or

         other actual or threatened solicitation of proxies or consents by or on

         behalf of a Person other than the Board; or

 

                           (iii)  consummation  of a  reorganization,  merger or

         consolidation,  a sale or other disposition of all or substantially all

         of the assets of the Company,  or other transaction  (each, a "Business

         Combination"),   unless,  in  each  case,  immediately  following  such

         Business  Combination,  (A) all or substantially all of the individuals

         and  entities  who were the  beneficial  owners of Voting  Stock of the

         Company  immediately  prior to such Business  Combination  beneficially

         own, directly or indirectly, more than 50% of the combined voting power

         of the then outstanding  shares of Voting Stock of the entity resulting

         from such  Business  Combination  (including,  without  limitation,  an

         entity which as a result of such transaction owns the Company or all or

         substantially  all of the Company's  assets either  directly or through

         one  or  more  subsidiaries)  in  substantially  the  same  proportions

         relative to each other as their  ownership,  immediately  prior to such

         Business  Combination,  (B) no Person  (other  than the Company or such

         entity  resulting from such Business  Combination)  beneficially  owns,

         directly or indirectly, 50% or more of the combined voting power of the

         then  outstanding  shares of Voting Stock of the entity  resulting from

         such Business Combination and (C) at least a majority of the members of

         the board of  directors  of the  entity  resulting  from such  Business

         Combination were

 

                                       19

 

<PAGE>

 

 

 

         members of the Incumbent Board at the time of the

         execution of the initial agreement or of the action of

         the Board providing for such Business Combination; or

 

                           (iv) the  stockholders of the Company approve (a) the

         sale or  disposition  by the Company (other than to a subsidiary of the

         Company) of all or substantially  all of the assets of the Company,  or

         (b) a complete liquidation or dissolution of the Company.

 

                  1.5 "Company"  shall mean The Hain Celestial  Group,  Inc. and

any successor to its business and/or assets which assumes (either expressly,  by

operation  of law or  otherwise)  and/or  agrees to perform  this  Agreement  by

operation of law or otherwise (except in determining,  under Section 1.3 hereof,

whether or not any Change in Control of the Company has  occurred in  connection

with such succession).

 

                  1.6  "Disability"  shall mean and be deemed the reason for the

termination by the Executive of the Executive's  employment,  if, as a result of

the  Executive's  incapacity  due to physical or mental  illness,  the Executive

shall have been absent from the full-time  performance of the Executive's duties

for a period of three (3) consecutive months.

 

                  1.7 "Good  Reason" for  termination  by the  Executive  of the

Executive's  employment  in  connection  with or as a result  of any  Change  in

Control shall mean the occurrence (without the Executive's prior express written

consent) of any one of the following  acts, or failures to act,  unless,  in the

case of any act or failure to act  described in clauses (i),  (iv),  (v) or (vi)

below,  such act or failure to act is corrected by the Company or any subsidiary

prior to the Date of Termination specified in the Notice of Termination given in

respect thereof:

 

                           (i) the  assignment to the Executive of any duties or

         responsibilities  inconsistent  with the Executive's  most  significant

         position(s) (including without limitation status,  offices,  titles and

         reporting  responsibilities/rights)  as an  executive  officer  of  the

         Company  and/or a subsidiary  held during the one hundred  eighty (180)

         day  period  immediately  preceding  any  related  Potential  Change in

         Control,  or  a  substantial  adverse  alteration  of  the  Executive's

         position  or  title(s)  with the  Company or any  subsidiary  or in the

         nature of such status, offices, titles and reporting  responsibilities/

         rights;

 

 

                                       20

 

<PAGE>

 

 

 

                           (ii) a  reduction  in  the  Executive's  Annual  Base

         Salary as in effect on the date of this Agreement or as the same may be

         increased at any time thereafter and from time to time;

 

                           (iii)  the  relocation  of  the  Company's  principal

         executive  offices to a location  more than  thirty (30) miles from its

         location on the date of this  Agreement  (or, if  different,  more than

         thirty (30) miles from where such offices are located immediately prior

         to any  Potential  Change of Control) or the  Company's  requiring  the

         Executive  to be based  anywhere  other  than the  location  where  the

         Executive is performing his duties  immediately  prior to any Potential

         Change in Control, except for required travel on the Company's business

         to an extent  substantially  consistent with the  Executive's  business

         travel obligations as of the date of the Potential Change in Control;

 

                           (iv) any failure by the Company to comply with any of

         the provisions of this Agreement, other than an isolated, insubstantial

         and  inadvertent  failure  not  occurring  in bad  faith  and  which is

         remedied by the Company  promptly after receipt of notice thereof given

         by the Executive;

 

                           (v) the  failure by the  Company or a  subsidiary  to

         continue  in effect  any  pension  benefit  or  incentive  or  deferred

         compensation plan in which the Executive participates immediately prior

         to any Potential Change in Control which is material to the Executive's

         total  compensation,  unless an equitable  arrangement  (embodied in an

         ongoing  substitute or alternative  plan or arrangement)  has been made

         with  respect  to  such  plan,  or  the  failure  by the  Company  or a

         subsidiary  to continue the  Executive's  participation  therein (or in

         such  substitute or  alternative  plan or  arrangement)  on a basis not

         materially  less  favorable,  both in terms of the  amount of  benefits

         provided  and the level of the  Executive's  participation  relative to

         other  participants,  as existed at the time of the Potential Change in

         Control;

 

                           (vi) the  failure by the Company or a  subsidiary  to

         continue to provide  the  Executive  with  health and welfare  benefits

         substantially  similar to those enjoyed by the  Executive  under any of

         the Company's or a subsidiary's  retirement,  life insurance,  medical,

         health

 

                                       21

 

<PAGE>

 

 

 

         and accident, or disability or similar plans in which the Executive was

         participating  at the time of any  Potential  Change  in  Control,  the

         taking  of any  action  by the  Company  or a  subsidiary  which  would

         directly  or  indirectly  materially  reduce  any of such  benefits  or

         deprive the  Executive of any material  fringe  benefit  enjoyed by the

         Executive  at the  time of the  Potential  Change  in  Control,  or the

         failure by the Company or a subsidiary  to provide the  Executive  with

         the number of paid  vacation days to which the Executive is entitled in

         accordance with the Company or a subsidiary's normal vacation policy in

         effect at the time of the Potential Change in Control;

 

     (vii) any purported termination of the Executive's  employment which is not

effected  pursuant to a Notice of  Termination  satisfying the  requirements  of

Section 4.1; and/or

 

     (viii) a  termination  by the  Executive of his  employment  for any reason

during the last 30 days of the Window Period.

 

                  1.8  "Person"  shall  have the  meaning  ascribed  thereto  in

Section  3(a)(9) of the Exchange Act, as modified,  applied and used in Sections

13(d) and 14(d) thereof;  provided,  however, a Person shall not include (i) the

Company or any of its  subsidiaries,  (ii) a trustee or other fiduciary  holding

securities  under  an  employee  benefit  plan  of  the  Company  or  any of its

subsidiaries (in its capacity as such), (iii) an underwriter temporarily holding

securities pursuant to an offering of such securities,  or (iv) a corporation or

other entity owned,  directly or indirectly,  by the stockholders of the Company

in substantially  the same character and proportions as their ownership of stock

of the Company.

 

                  1.9      "Potential Change in Control" shall mean and be

deemed to have occurred if:

 

                           (i)      the Company enters into an agreement the

         consummation of which would result in the occurrence of

         a Change in Control;

 

                           (ii)     the Board adopts a resolution to the

         effect that, for purposes of this Agreement, a Potential

         Change in Control has occurred; and/or

 

                           (iii)            any Person becomes, after the date

         hereof, the Beneficial Owner, directly or indirectly, of

 

                                       22

 

<PAGE>

 

 

 

         securities  of the Company  representing  twenty five percent  (25%) or

         more of the combined  voting power of the  Company's  then  outstanding

         securities,  or any Person increases such Person's beneficial ownership

         of such  securities  by five (5)  percentage  points  or more  over the

         percentage so owned by such Person on the date hereof.

 

                  1.10     "Voting Power" means securities entitled to vote

generally in the election of directors.

 

                  1.11     "Window Period" shall mean the thirteen (13) month

period following a Change in Control.

 

         2. Term of this  Agreement.  This Agreement  shall commence on the date

hereof and shall  continue in effect as long as the Executive is employed by the

Company, provided,  however, that if (i) a Change in Control shall have occurred

during  the  Executive's  employment  with the  Company,  this  Agreement  shall

continue in effect until the  termination  of the applicable  Window Period,  or

(ii) if a Potential Change in Control shall have occurred during the Executive's

employment  with the Company,  this Agreement shall continue in effect until one

(1) year after the  Executive's  termination of employment with the Company (the

"Term").

 

         3.       Severance Payments.

 

                  3.1  Severance.  The  Company  shall  pay  the  Executive  the

payments  described in Section 3.1.1 and 3.1.2 (the  "Severance  Payments") upon

the termination of the Executive's employment with the Company during the Window

Period (including, but not limited to, the Executive's termination of employment

for Good Reason,  death or  Disability),  unless such  termination is (i) by the

Company for Cause,  or (ii) by the Executive  without Good Reason.  In addition,

the Executive's  employment shall be deemed to have been terminated  immediately

following a Change in Control by the Company  without  Cause or by the Executive

for  Good  Reason  if  (a)  the  Executive  reasonably   demonstrates  that  the

Executive's employment was terminated prior to a Change in Control without Cause

(1) at the  request  of a Person  who has  entered  into an  agreement  with the

Company the  consummation  of which will  constitute a Change in Control (or who

has taken other steps  reasonably  calculated  to effect a Change in Control) or

(2) otherwise in connection  with, as a result of or in anticipation of a Change

in Control, (b) the Executive terminates his employment for Good Reason prior to

a  Change  in  Control  and  the  Executive  reasonably  demonstrates  that  the

circumstance(s)  or event(s) which  constitute  such Good Reason occurred (1) at

the request of such Person or (2) otherwise in  connection  with, as a result of

or in anticipation of a Change in

 

                                       23

 

<PAGE>

 

 

 

Control,  or (c) the Executive dies or is terminated due to Disability,  in each

case,  after the occurrence of a Potential  Change in Control and related Change

in Control  actually occurs within one (1) year after the Date of Termination or

the date of death,  as the case may be. The  Executive's  right to terminate the

Executive's  employment for Good Reason shall not be affected by the Executive's

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.

 

 

                           3.1.1  In  lieu  of  any  further  salary  and  bonus

         payments  to the  Executive  for  periods  subsequent  to the  Date  of

         Termination,  the  Company  shall pay to the  Executive  (i) a lump sum

         severance  payment in cash (or at the  Executive's  sole and  exclusive

         option  receive  such  amounts  as  salary   continuation   during  the

         applicable  periods  set forth  below),  equal to (x) two (2) times the

         highest Annual Base Salary paid or payable to the Executive  during the

         thirty-six (36) month period  immediately  preceding the month in which

         the Change in Control  occurs,  and (y) the  aggregate  of the  maximum

         bonuses  (as defined in the Annual  Incentive  Plan (a copy of which is

         attached  hereto as Exhibit A) or if no Plan is in effect,  the highest

         annual  amount paid or payable to the Executive  during the  thirty-six

         (36) month period  immediately  preceding the month in which the change

         in control  occurs)  which could have been earned,  vested or otherwise

         paid for the year in which the Change in Control  occurs (for  purposes

         herein,  the maximum  bonuses  shall  automatically  vest and be deemed

         earned in their  entirety  as if the  Executive  was  employed  for the

         entire applicable year period in which the Change in Control occurs and

         shall be  deemed  payable  to the  Executive  in full as of the Date of

         Termination),  and (ii) all unpaid accrued vacation through the Date of

         Termination  in accordance  with the  Company's  plans and practices in

         effect  immediately prior to the Change in Control,  provided that such

         unpaid  vacation  has been  accrued  on the  books and  records  of the

         Company prior to the Date of Termination.

 

                           3.1.2  After  the Date of  Termination,  the  Company

         shall  continue  to  provide  the  Executive   and/or  the  Executive's

         dependents, as the case may be, with (i) life, disability, accident and

         health insurance benefits ("Benefits  Coverage")  substantially similar

         to those  which the  Executive  and/or the  Executive's  dependents  is

         receiving  immediately prior to any related Potential Change in Control

         or the receipt of the Notice of Termination  (without  giving effect to

         any reduction

 

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         in such  benefits  subsequent  to a Change in Control  which  reduction

         constitutes  Good Reason),  whichever is greater,  until the earlier to

         occur of such time as the  Executive  is  provided  with  substantially

         comparable  Benefits  Coverage  with a new employer or twenty four (24)

         months;  (ii)  the  automobile  allowance,  gas  and  other  automobile

         benefits the Executive was receiving  immediately  prior to any related

         Potential Change in Control or the receipt of the Notice of Termination

         (without giving effect to any reduction in such benefits  subsequent to

         a Change in Control which reduction constitutes Good Reason), whichever

         is greater,  for a period of twelve (12) months; and (iii) outplacement

         services,  the scope and  provider  of which  shall be  selected by the

         Executive with the cost of such services and related  expenses borne by

         the Company,  subject to the submission of reasonable  documentation in

         accordance  with  the  Company's   standard  practice  to  substantiate

         expenses.

 

                           3.1.3 During the term of this  Agreement  and through

         the  period  of   twenty-four   (24)  months   following  the  Date  of

         Termination,  all  benefits  under any  pension  or  retirement  plans,

         employees stock ownership plan or any other plan or agreement  relating

         to retirement benefits  ("Retirement  Benefits") in which the Executive

         participates  shall continue to accrue to the  Executive,  crediting of

         service all  Retirement  Benefits  provided to the Executive as a fully

         vested  participant  under  any  such  plan or  agreement  relating  to

         retirement  benefits.  No contributions shall be required to be made by

         the  Executive  to  any  plan  providing  for  employee   contributions

         following the Date of Termination. To the extent that the amount of any

         Retirement  Benefits are or would be payable from a nonqualified  plan,

         the  Company  shall,  as  soon as  practicable  following  the  Date of

         Termination  (but in no event later than the 30th day after the Date of

         Termination), pay directly to the Executive in one lump sum, cash in an

         amount equal to the  additional  benefits that would have been provided

         had such  accrual or crediting  been taken into account in  calculating

         such Retirement Benefits.  Such lump sum payment shall be calculated as

         provided  in  the  relevant   plan  and,  in  the  case  of  a  defined

         contribution plan, shall include an amount equal to the gross amount of

         the maximum employer contributions.

 

                           3.1.4 Any  outstanding  options  to  purchase  common

         stock  of the  Company  held  by the  Executive  prior  to the  Date of

         Termination  under an  existing  stock  option plan  maintained  by the

         Company  shall  immediately  vest and  become  exerciseable  in full in

         accordance  with the terms and the provisions of the  applicable  stock

         option plan.

 

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                  3.2  Special  Reimbursement.  In the event that the  Executive

becomes  entitled to the Severance  Payments,  if any payment or benefit paid or

payable,  or received or to be  received,  by or on behalf of the  Executive  in

connection  with a Change  in  Control  or the  termination  of the  Executive's

employment,  whether any such  payments or benefits are pursuant to the terms of

this Agreement or any other plan, arrangement or agreement with the Company, any

of its subsidiaries,  any Person, or otherwise (the "Total  Payments"),  will or

would be subject to the excise tax imposed  under  section 4999 of the Code (the

"Excise Tax"), the Company shall pay to the Executive an additional  amount (the

"Gross-Up  Payment")  such that  after  payment  by the  Executive  of all taxes

(including  any  interest or  penalties  imposed  with  respect to such  taxes),

including,  without limitation, any income taxes (and any interest and penalties

imposed with respect thereto) and any Excise Tax imposed upon or attributable to

the Gross-Up  Payment,  the Executive  retains an amount of the Gross-Up Payment

equal to the Excise Tax imposed upon the Total Payments.

 

                           3.2.1 For purposes of determining  whether any of the

         Total Payments will be subject of 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  (delivered  to the  Executive)  selected by the

         Company and reasonably  acceptable to the Executive such Total Payments

         (in  whole  or in  part)  (a) do  not  constitute  parachute  payments,

         including  (without  limitation) by reason of section  280G(b)(4)(A) of

         the Code,  (b) 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,  or (c) 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.

 

                           3.2.2  In  the   event   that  the   Excise   Tax  is

         subsequently  determined  to be less than the amount taken into account

         hereunder at the time of termination of the Executive's employment, the

         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

 

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         interest  on the  amount  of such  repayment  at the rate  provided  in

         section  1274(b)(2)(B) of the Code. In the event that the Excise Tax is

         determined  to exceed the amount  taken into  account  hereunder at the

         time of the  termination of the  Executive's  employment  (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 payable by the Executive with respect

         to such  excess) at the time that the amount of such  excess is finally

         determined.  The  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 any such

         subsequent  liability  for  Excise Tax with  respect  to the  Severance

         Payments.

 

                  3.3 Date of Payment. The payment provided for in Section 3.1.1

and Section  3.2 hereof  shall be made not later than the  fifteenth  (15th) day

following the Date of  Termination;  provided,  however,  that if the amounts of

such  payments  cannot be finally  determined on or before such day, the Company

shall pay to the Executive on such day an estimate,  as determined in good faith

by the Company, of the minimum amount of such payments to which the Executive is

likely to be entitled to and shall pay the remainder of such payments  (together

with interest at the rate provided in section 1274(b)(2)(B) of the Code) as soon

as the amount thereof can be determined but in no event later than the thirtieth

(30th)  day after the Date of  Termination.  In the event that the amount of the

estimated payments exceeds the amount subsequently  determined to have been due,

such excess shall constitute a loan by the Company to the Executive,  payable on

the fifth (5th) business day after demand by the Company (together with interest

at the rate  provided in section  1274(b)(2)(B)  of the Code).  At the time that

payments  are made under  this  Section  3.3,  the  Company  shall  provide  the

Executive with a detailed  written  statement  setting forth the manner in which

such payments were  calculated  and the basis for such  calculations  including,

without  limitation,  any opinions or other advice the Company has received from

outside counsel,  auditors or consultants (and any such opinions or advice which

are in writing shall be attached to the statement).

 

                  3.4      Legal Costs.  The Company shall also reimburse the

Executive for all legal fees and expenses incurred in good faith by

the Executive as a result of any dispute with any party (including,

but not limited to, the Company and/or any affiliate of the

Company) regarding the payment of any benefit provided for in this

 

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Agreement (including, but not limited to, all such fees and expenses incurred in

disputing any  termination  or in seeking in good faith to obtain or enforce any

benefit or right provided by this Agreement or in connection  with any tax audit

or proceeding to the extent  attributable  to the application of Section 4999 of

the Code),  plus in each case interest on any delayed  payment at the applicable

Federal rate provided for in section  7872(f)(2)(A)  of the Code.  Such payments

shall be made within five (5) business  days after  delivery of the  Executive's

written  requests for payment  accompanied by such evidence of fees and expenses

incurred as the Company reasonably may require.

 

                  3.5 Employment Agreement.  The payment to the Executive of the

Severance Payments provided for in Section 3.1 shall be in lieu of any severance

payable to the Executive  under the terms of any other  employment  agreement in

effect on the Date of Termination. Except as provided in the preceding sentence,

this  Agreement is not  intended to and shall not modify or  supersede  any such

employment  agreement or other contract or arrangement between the Executive and

the Company in effect from time to time.

 

         4.       Termination Procedures and Compensation During Dispute.

 

                  4.1 Notice of  Termination.  Any purported  termination of the

Executive's  employment  with the Company (other than by reason of death) during

the Window Period shall be  communicated  by written Notice of Termination  from

one party hereto to the other party hereto in accordance  with Section 7 hereof.

For purposes of this Agreement,  a "Notice of  Termination"  shall mean a notice

which shall indicate the specific termination provision in this Agreement relied

upon and shall  set  forth in  reasonable  detail  the  facts and  circumstances

claimed to provide a basis for  termination of the  Executive's  employment with

the Company under the provision so indicated.  Further,  a Notice of Termination

for Cause is  required  to include a copy of a  resolution  duly  adopted by the

affirmative vote of not less than three-quarters  (3/4) of the entire membership

of the Board in the form and in the  manner  specified  in  Section  1.3 of this

Agreement.  For  purposes  of this  Agreement,  any  purported  termination  not

effected in accordance with the Section 4.1 shall not be considered effective.

 

                  4.2 Date of Termination.  "Date of Termination,"  with respect

to any purported  termination of the  Executive's  employment  during the Window

Period,  shall  mean  (i)  if  the  Executive's  employment  is  terminated  for

Disability,  fifteen (15) days after Notice of Termination is given, and (ii) if

the  Executive's  employment  is  terminated  for any  other  reason,  the  date

specified in the Notice of Termination (which, in the case of a termination

 

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by the Company, shall not be less than thirty (30) days (except in the case of a

termination for Cause) and, in the case of a termination by the Executive, shall

not be less than fifteen (15) days nor more than thirty (30) days, respectively,

after the date on which such Notice of Termination is given).

 

                  4.3 Dispute  Concerning  Termination.  If within  fifteen (15)

days after any Notice of Termination is given,  or, if later,  prior to the Date

of  Termination  (as  determined  without regard to this Section 4.3), the party

receiving such Notice of Termination  notifies the other party in writing that a

dispute exists concerning the termination,  the Date of Termination shall be the

date on which the dispute is finally  resolved in  accordance  with Section 4.4;

provided, however, that the Date of Termination shall be extended by a notice of

dispute only if the basis for such notice is reasonable, such notice is given in

good faith and the party  giving such  notice  pursues  the  resolution  of such

dispute with reasonable diligence.

 

                  4.4 Alternative Dispute Resolution Including Arbitration. If a

dispute  arises  out of or  related  to  this  Agreement,  the  Company  and the

Executive   agree  that  they  shall  first  seek  to  resolve  any  dispute  by

negotiation.  If the dispute has not been resolved within thirty (30) days after

the date a party  hereto  provides  notice  of  dispute  to the  other  party in

accordance with Section 4.3, either party may initiate  mediation of the dispute

by sending the other party a written  request  dispute be mediated.  The parties

shall mediate the dispute before a neutral,  third party mediator (if a mutually

agreeable mediator cannot be identified,  one shall be appointed by the American

Arbitration Association) selected by the mutual agreement of both parties within

thirty (30) days after the date of written request for mediation. If the dispute

or within  dispute  has not been  resolved  within  sixty  (60)  days  after the

original  notice of a dispute or within  thirty  (30) days after the date of the

request for mediation,  whichever is the later, then either party may proceed to

binding  arbitration  before a panel of three independent  arbitrators  selected

from a list made available by the American Arbitration Association. The mediator

shall not serve as an  arbitrator.  The  arbitration  shall be  governed  by the

current  arbitration  rules  of  the  American  Arbitration  Association  or its

successors.  Any mediation or arbitration commenced pursuant to this Section 4.4

shall  be  conducted  in  the   metropolitan   area  of  New  York,   New  York.

Notwithstanding  any provisions in such rules to the contrary,  the  arbitrators

shall issue  findings of fact and  conclusions  of law, and an award,  within 15

days of the date of the hearing unless the parties otherwise agree.

 

 

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                  4.5 Compensation  During Dispute.  If a purported  termination

occurs during the Window Period,  and such termination is disputed in accordance

with Section 4.3 above, the Company shall continue to pay the Executive the full

compensation  (including without limitation Annual Base Salary and Target Bonus)

in effect at the time of any  related  Potential  Change in  Control or when the

notice giving rise to the dispute was given  (whichever is greater) and continue

the  Executive as a  participant  in all  compensation,  incentive,  pension and

welfare benefit and insurance plans in which the Executive was  participating at

the time of any  Potential  Change in Control or when the notice  giving rise to

the  dispute  was given,  whichever  is  greater,  until the  dispute is finally

resolved in accordance with Sections 4.3 and 4.4 hereof. Amounts paid under this

Section 4.5 are in addition to all other  amounts due under this  Agreement  and

shall not be offset against or reduce any other amounts due under this Agreement

or any other plan, agreement or arrangement.

 

                  5. No Mitigation.  The Company agrees that, if the Executive's

employment is terminated during the Window Period, the Executive is not required

to seek other  employment or to attempt in any way to reduce any amounts payable

to the Executive by the Company  pursuant to Section 3 or Section 4.5.  Further,

the amount of any  payment or benefit  provided  for in Section 3 or Section 4.5

shall not be reduced by any compensation  earned by the Executive as a result of

employment by another employer,  by retirement  benefits,  or offset against any

amount  claimed  to be  owed  by  the  Executive  to the  Company  or any of its

subsidiaries, or otherwise.

 

                  6.       Successors; Binding Agreement.

 

                           6.1      Successors.  In addition to any obligations

imposed by law upon any  successor to the Company,  the Company will 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.  Failure of the Company to obtain such

assumption and agreement prior to the effectiveness of any such succession shall

be a breach of this  Agreement and shall  entitle the Executive to  compensation

from the Company in the same amount and on the same terms as the Executive would

be entitled to hereunder if the  Executive  were to  terminate  the  Executive's

employment for Good Reason during the Window  Period,  except that, for purposes

of implementing  the foregoing,  the date on which any such  succession  becomes

effective shall be deemed the Date of Termination.

 

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     6.2 Binding Agreement.  This Agreement shall inure to the benefit of and be

enforceable by the  Executive's  personal or legal  representatives,  executors,

administrators,  successors, heirs, distributees,  devisees and legatees. If the

Executive  shall die while any amount  would  still be payable to the  Executive

hereunder (other than amounts which, by their terms, terminate upon the death of

the Executive) if the Executive had continued to live, all such amounts,  unless

otherwise  provided  herein,  shall be paid in accordance  with the term of this

Agreement to the executors,  personal  representatives  or administrators of the

Executive's estate.

 

                  7. Notices. For the purpose of this Agreement, notices and all

other  communications  provided  for in this  Agreement  shall be in writing and

shall be  deemed  to have been duly  given  when  delivered  or mailed by United

States certified mail, return receipt requested,  postage prepaid,  addressed to

the  respective  addresses  set forth below,  or to such other address as either

party may have furnished to the other in writing in accordance herewith,  except

that notice of change of address shall be effective only upon actual receipt:

 

                           To the Company:

                           Irwin D. Simon

                           The Hain Celestial Group, Inc.

                           50 Charles Lindbergh Blvd.

                           Uniondale, New York 11553

                           Attention:  Chairman of the Board and

                                              Chief Executive Officer

 

                           With a copy to:

                           Roger Meltzer, Esq.

                           Cahill, Gordon & Reindel

                           80 Pine Street

                           New York, New York 10005

 

                           To the Executive:

                           [Executive Name]

                            Address

 

 

 

                  8.       Miscellaneous.  No provision of this Agreement may

be modified, waived or discharged unless such waiver, modification

or discharge is agreed to in writing and signed by the Executive

and such officer as may be specifically designated by the Board.

No waiver by either party hereto at any time of any breach by the

other party hereto of, or compliance with, any condition or

 

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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 expressly set forth in this Agreement.  The validity,

interpretation, construction and performance of this Agreement shall be governed

by the  laws of the  State of  Delaware  without  regard  to the  principles  of

conflict of laws thereof.  All references to sections of the Exchange Act or the

Code shall be deemed also to refer to and include any  successor  provisions  to

such  sections.  Any payments  provided for  hereunder  shall be paid net of any

applicable  withholding  required  under  federal,  state or  local  law and any

additional  withholding  to which the  Executive  has  agreed.  The  rights  and

obligations of the Company and the Executive  under this Agreement shall survive

the expiration of the Term.

 

 

         9.       Validity.  The invalidity or unenforceability of any

provision 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.

 

         10.      Counterparts.  This Agreement may be executed in several

counterparts, each of which shall be deemed to be an original but

all of which together will constitute one and the same instrument.

 

         11. No Limitation. Nothing in this Agreement shall prevent or limit the

Executive's  continuing or future participation in any plan, program,  policy or

practice  provided by the  Company or any of its  affiliated  companies  and for

which the Executive may qualify,  nor shall  anything  herein limit or otherwise

affect  such  rights as the  Executive  may have  under any  other  contract  or

agreement with the Company or any of its affiliated companies. Amounts which are

vested  benefits or which the  Executive is otherwise  entitled to receive under

any plan,  policy,  practice or program of or any contract or agreement with the

Company  or any of its  affiliated  companies  at or  subsequent  to the Date of

Termination shall be payable in accordance with such plan,  policy,  practice or

program  or  contract  or  agreement  except  as  explicitly  modified  by  this

Agreement.

 

         12.      Governing Law.  This Agreement shall be governed by and

construed in accordance with the laws of the State of New York

without regard to the conflicts of law provisions thereof.

 

                  IN WITNESS WHEREOF, the parties hereto have executed this

 

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Agreement as of the date and year first written above.

 

                                            THE HAIN CELESTIAL GROUP, INC.

 

                                            By: /s/Irwin D. Simon

                                               ------------------------------

                                            Name:  Irwin D. Simon

                                            Title: President & Chief Executive

                                                   Officer

 

 

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</DOCUMENT>