Exhibit 10.29
EMPLOYMENT AND NON-COMPETITION
AGREEMENT
This EMPLOYMENT AND NON-COMPETITION
AGREEMENT (this “ Agreement ”) made as of this
15th day of January, 2007 (the “Effective Date”), by
and among Louis H. Weiss (the “ Executive ”), VS
Parent, Inc., a Delaware corporation (“Parent”),
Vitamin Shoppe Industries Inc., a New York corporation
(“VSI”), and VS Direct, Inc., a Delaware corporation
(the “ Company ”), and VS Holdings, Inc., a
Delaware corporation (“ Holdings ”).
W
I T N
E S S E T H
:
WHEREAS, Executive is commencing his
employment with Company and the parties desire to set forth the
terms and provisions of such employment.
NOW, THEREFORE, for good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and in consideration of the mutual covenants
and obligations herein contained, the parties hereto agree as
follows:
1. Position and
Responsibilities . The Executive shall serve as Vice President
– Direct of each of Parent, Holdings, VSI and the Company
and, in such capacity, shall be responsible for the general
management of the internet and catalog businesses of Parent,
Holdings, VSI and the Company, shall perform such duties as are
customarily performed by an officer with similar responsibilities
of a company of a similar size, and shall have such power and
authority as shall reasonably be required to enable him to perform
his duties hereunder; provided , however , that in
exercising such power and authority and performing such duties, he
shall at all times be subject to the authority of the President and
Chief Merchandising Officer, the Chief Executive Officer and the
Board of Directors of Parent, Holdings, VSI and the Company. The
Executive agrees to devote substantially all of his business time,
attention and services to the diligent, faithful and competent
discharge of such duties for the successful operation of
Parent’s, Holdings’, VSI’s and the
Company’s business.
2. Compensation; Salary, Bonus
and Other Benefits . During the term of this Agreement, the
Company shall pay the Executive the following compensation,
including the following annual salary, bonus and other fringe
benefits, subject to all applicable federal and state withholding,
payroll and other taxes.
(A) Salary . In consideration
of the services to be rendered by the Executive to the Company, the
Company shall pay to the Executive a base salary of $300,000 per
annum (such salary as it may be increased from time to time being
hereinafter referred to as the “ Base Salary ”).
Except as may otherwise be agreed, the Base Salary shall be payable
in conformity with the Company’s customary practices for
executive compensation as such practices shall be established or
modified from time to time but shall be payable not less frequently
than monthly. The Executive shall receive such increases in his
Base Salary as the Board of Directors of the Company may from time
to time approve in its sole discretion; provided ,
however , that the Executive’s Base Salary will be
reviewed not less often than annually, with the first performance
and financial review to occur by March 31, 2008. Executive
shall receive an increase in his Base Salary on or before
April 1, 2008 to $350,000 per annum. The Executive’s
Base Salary may not be decreased without his written
consent.
(B) Annual Cash Bonus . For
purposes hereof, the term “Annual Cash Bonus” shall
mean a bonus that shall be achieved by the satisfaction of
operating objectives specified by the Company’s Board of
Directors and the Chief Executive Officer of the Company (to the
extent the same shall be delegated by the Board) from time to time
in their sole discretion and the term “ Performance-Based
Plan ” shall mean the then-current Company plan(s) under
which any Annual Cash Bonus has been established and is determined,
as the same may be changed from time to time. The Annual Cash Bonus
may consist of multiple components, including components based upon
the performance (1) of the Company as a whole, (2) of the
Executive and employees under the direction of the Executive,
and/or (3) of a subset of the Company which may include the
Executive (and employees under the direction of the Executive) and
employees who are not under the direction of the Executive but
which components are not Company-wide objectives. Currently, the
maximum amount payable under the Performance-Based Plan for
Executive does not exceed twenty-five percent (25%) of the
Executive’s Base Salary, and consists solely of objectives
determined on an individual basis and on a company-wide basis, any
of which may change from time to time. Executive acknowledges that
Company reserves the right to change the structure of the Annual
Cash Bonus from time to time, provided that any change will not
affect Executive’s ability to receive an Annual Cash Bonus of
up to 25% of Executive’s base salary. Executive shall be paid
his Annual Cash Bonus on or after March 16
th
of the calendar year
following the year to which such bonus relates, but before the end
of such calendar year. The parties acknowledge that the
determination of the Annual Cash Bonus for the year in which
Executive’s employment terminates (and possibly for the prior
year) shall not be known on the date Executive’s employment
terminates, and, if any, shall be paid by Company to Executive not
more than thirty (30) days after the determination thereof,
but in all events on or after March 16
th
of the calendar year
following the calendar year of termination, but before the end of
such calendar year. Notwithstanding the foregoing, in addition to
participation in the standard Performance-Based Plan in FY2007,
(i) Executive shall be entitled to a cash bonus in the amount
of not less than $50,000 (the “2007 Guaranteed Bonus”),
which shall be paid in four (4) equal quarterly payments at
the end of each quarter, (ii) Executive shall receive a bonus
equal to five percent (5%) of VSI’s incremental all-in
EBITDA above that which is budgeted for its Direct business for
FY2007, which amount shall be reduced by the amount of the 2007
Guaranteed Bonus (such amount being herein called the “2007
Individualized Bonus”) and shall be paid on or after
March 16 th of the calendar year following the
year to which such bonus relates, but before the end of such
calendar year; provided, however, that the sum of (1) the 2007
Individualized Bonus, or any successor thereto as provided in the
following sentence, plus (2) the amount paid to Executive
under any Performance-Based Plan, shall in no event exceed the sum
of $300,000 (the “Cap”). At the end of 2007 Company and
Executive will discuss if there should be a performance-based (or
other) bonus that shall be different than that determined under the
Performance-Based Plan for future years, but there is no guaranty
that Company will continue offer any bonus to Executive other than
that set forth in the same Performance-Based Plan as is applicable
to the Company’s other executives.
(C) Benefits . The Executive
will be entitled to participate, in accordance with the provisions
thereof, in any health, disability and life insurance and other
employee benefit plans and programs made available by the Company
to its management employees generally. `
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(D) Reimbursement of Expenses
. The Company shall reimburse the Executive for any and all
out-of-pocket expenses reasonably incurred by the Executive during
the term of his employment in connection with his duties and
responsibilities as Vice President – Direct of the Company,
provided that the Executive complies with the policies, practices
and procedures of the Company regarding expense reimbursement,
including submission of expense reports, receipts or similar
documentation of such expenses.
(E) Additional Stock Option
Grant . Provided that Executive is still in Company’s
employ, Executive shall be granted an additional 24,000 options
under the VS Parent, Inc. 2006 Stock Option Plan as provided
herein. The options will be granted effective January 1, 2008,
based upon the strike price set upon the closing of the
Company’s books for FY2007. One half (1/2) of the
options will be in Tranche A, and 1/6 will be in each of Tranches
B, C and D. If Company shall go public or there is a private sale
of the Company in 2007, the grant date shall be prior to the
initial public offering or private sale, as applicable. The strike
price for the Tranche A options shall be the price established for
grants at that point in time, subject to any applicable securities
law restrictions and the strike prices for Tranches B, C and D have
exercise prices of $20.00, $25.00 and $30.00, respectively or, if
higher, the fair market value of the underlying stock of the
Company on the day of the grant. In no event shall the strike price
of any tranche (A, B, C, or D) be less than the fair market value
of the underlying stock on the date that the particular option is
granted. The terms and provisions of this grant shall be the same
as the Company’s customary stock option grants.
(F) Vacation . The Executive
shall be entitled to vacation time in accordance with the plans,
practices, policies, and programs applicable to the Company’s
management employees generally, but in no event less than four
(4) weeks per year.
3. Term . The term of
Executive’s employment hereunder shall commence on the
Effective Date and shall terminate on December 31, 2009 (the
“ Initial Term ”), unless earlier terminated as
provided in Section 5 of this Agreement. Following the Initial
Term, this Agreement and the Executive’s employment hereunder
shall automatically renew for up to three (3) successive one
(1) year periods (each a “ Renewal Term ”),
unless either the Company or the Executive shall notify the other
in writing not later than twelve (12) months prior to the end
of the Initial Term or the then current Renewal Term that such
party elects for this Agreement and the Executive’s
employment hereunder to terminate at the end of the Initial Term or
such Renewal Term, as applicable; provided , however
, that each Renewal Term shall be subject to earlier termination as
provided in Section 5 of this Agreement. For purposes of this
Agreement “ Termination Date ” shall mean the
last day of the Initial Term or any Renewal Term for which the
twelve-month period for such Renewal Term to be canceled by either
party has transpired without the same having been canceled, as
applicable.
4. Key Man Life Insurance .
The Company may apply for and obtain and maintain a Key Man Life
Insurance policy in the name of the Executive in such amount as the
Company may determine, the beneficiary of which shall be the
Company. The Executive shall submit to physical examinations and
answer reasonable questions in connection with the application for
and, if obtained, the maintenance of, as may be required, such
insurance policy.
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5. Termination . The
Executive’s term of employment under this Agreement may be
earlier terminated as follows:
(A) At the Executive’s
Option . The Executive may terminate his employment at any time
upon at least sixty (60) days’ advance written notice to
the Company. In such event, the Executive shall be entitled to no
severance or other termination benefits from and after the
termination of his employment, except as provided in
Section 5(I) hereof. If, after Executive delivers notice as
provide in this Section 5(A), Company shall elect to terminate
Executive’s employment without cause, Company shall pay to
Executive his base salary through the end of Executive’s
sixty-day notice period, and continue all benefits as provided in
Section 2(C) through the end of such sixty-day period, but
shall have no other compensation obligations hereunder.
(B) At the Election of the
Company With Cause . The Company may, unilaterally, terminate
the Executive’s employment hereunder “with cause”
at any time during the term of this Agreement upon written notice
to the Executive. Termination of the Executive’s employment
by the Company shall constitute a termination “with
cause” under this Section 5(B) only if such termination
is for one or more of the following causes: (i) wrongful
misappropriation of Company assets of a material value;
(ii) alcoholism or drug addiction, any of which materially
impairs the ability of the Executive to perform his duties and
responsibilities hereunder or is seriously injurious to the
business of the Company; (iii) the conviction of a felony;
(iv) intentionally causing the Company to violate a material
local, state or federal law in any material respect; (v) gross
negligence or willful misconduct in the conduct or management of
the Company; (vi) willful refusal to comply with any
significant policy, directive or decision of the President and
Chief Merchandising Officer, the Chief Executive Officer or the
Board in furtherance of a lawful business purpose or willful
refusal to perform the duties lawfully assigned to the Executive by
the President and Chief Merchandising Officer, the Chief Executive
Officer and/or the Board consistent with the Executive’s
functions, duties and responsibilities set forth in Section 1
hereof, in each case, in any material respect, and only if not
remedied within ten (10) days after receipt of written notice
from the Company; or (vii) breach by the Executive of this
Agreement, in any material respect, not remedied within ten
(10) days after receipt of written notice from the Company
(including any termination by Executive without notice as required
in Section 5(A)). In the event of a termination “with
cause” pursuant to the provisions of clauses (i) through
(vii) above, inclusive, the Executive shall be entitled to no
severance or other termination benefits, except as provided in
Section 5(I) hereof. Employee acknowledges (i) that the
aforesaid definition of “cause” is different from the
stated definition of “cause” set forth in the VS Parent
2006 Stock Option Plan (the “Plan”), but that pursuant
to the terms and provisions of the Plan, such Plan definition of
“cause” is superseded by the terms and provisions of
any “Employment Agreement” between Executive and
Parent, and (ii) that the aforesaid definition of
“cause” shall be applicable to Executive’s
options under the Plan from and after the date hereof.
(C) At the Election of the
Company for Reasons Other than With Cause . The Company may,
unilaterally, terminate the Executive’s employment hereunder
at any time during the term of this Agreement without cause upon
five (5) business days’ prior written notice to the
Executive of the Company’s election to terminate. Upon a
termination under this Section 5(C), the Company
shall:
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(i) Pay the Executive his Base
Salary from the date of the termination of the Executive’s
employment through the earlier to occur of (1) the Termination
Date, and (2) the date that is twelve (12) months
following Executive’s termination. Such payments shall be
payable under a fixed payment schedule on a weekly basis following
the Executive’s termination in the same manner as the same
was paid prior to Executive’s termination and shall be
subject to all applicable federal and state withholding
taxes.
(ii) Pay to the Executive
(x) the full amount of any unpaid Annual Cash Bonus for any
calendar year of the Company prior to the calendar year in which
the Executive’s employment is terminated, and (y) if the
Executive’s employment is terminated after one-half
(1/2) or more of a calendar year has transpired, pay to the
Executive a portion of the Annual Cash Bonus for such calendar year
in an amount, if any, provided for in Section 5(L).
(iii) Until the earlier to occur of
(x) twelve (12) months from the date of termination of
Executive’s employment, and (y) the time when the
Executive becomes eligible for insurance coverage offered by any
subsequent employer (the “ Insurance Continuation
Period ”), allow the Executive to continue to participate
in all life, health, disability and similar insurance plans and
programs of the Company to the extent that such continued
participation is possible under the general terms and provisions of
such plans and programs, with the Company and the Executive paying
the same portion of the cost of each such plan or program as
existed at the time of the Executive’s termination. In the
event that the Executive’s continued participation in any
group plans and programs is not permitted, then in lieu thereof,
Executive shall acquire individual insurance policies providing
comparable coverage for the Executive for the Insurance
Continuation Period and Company shall reimburse Executive for the
portion of the costs that Executive shall pay, such that Executive
shall pay a net amount equal to the amount that he would have paid
had he remained an employee of the Company; provided , that
the Company shall not be obligated to pay for any such individual
coverage more than three (3) times the Company’s cost of
such group coverage.
Notwithstanding the foregoing, if
during the period from the date of the termination of the
Executive’s employment hereunder through the end of the
period for which any severance is payable pursuant to this
Section 5(C) (the “ Severance Period ”),
the Executive (i) becomes employed or (ii) performs 390
or more hours of consulting services for a single client in any
ninety (90) day period, the Executive shall promptly notify
the Company of such employment or consulting engagement, and the
severance payable pursuant to paragraph 5(C)(i) hereof shall be
reduced by the gross amount of the compensation or consulting fees
earned by the Executive during the Severance Period pursuant to
such employment or consulting engagement (the “ Alternate
Compensation ”). Executive agrees that in the event his
employment with Company is terminated as provided in this
Section 5(C), at all times more than thirty (30) days
after the date Executive’s employment with Company is
terminated, Executive shall endeavor diligently and in good faith
to obtain alternate employment that is appropriate for
Executive’s training and experience (“ Reasonable
Alternate Employment ”). Company shall have the right to
request evidence that Executive has used good faith efforts to
obtain Reasonable Alternate Employment and has not been successful
in obtaining the same and/or that Executive has not received
Alternate Compensation. If Company has provided to Executive any
“outplacement” or other employment assistance in order
to facilitate him finding alternative
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employment, Executive hereby
irrevocably authorizes any such party to respond directly to
Company with information on Executive’s efforts to obtain
Reasonable Alternate Employment.
(D) At the Election of the
Executive for Certain Reasons . The Executive may terminate his
employme
