Exhibit 10.12
NON-COMPETITION
AGREEMENT
THIS NON-COMPETITION AGREEMENT (this
“ Agreement ”) made as of this 2 day of August,
2004 (the “Effective Date”), by and among Wayne M.
Richman (the “ Executive ”), Vitamin Shoppe
Industries Inc., a New York corporation (the “ Company
”), and VS Holdings, Inc., a Delaware corporation (“
Holdings ”).
WITNESSETH
:
WHEREAS, Executive and Company have
entered into that certain Letter Agreement dated April 14,
2004 (the “Letter Agreement”) pursuant to which
Executive has agreed to commence employment with Company;
and
WHEREAS, the parties desire to
expand upon and clarify certain of the provisions of the Letter
Agreement with respect to Employee’s ability to work for the
Company, his agreement not to compete with the Company, and
severance from the Company.
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 Executive Vice
President and Chief Operating Officer of each of Holdings and the
Company and, in such capacity, shall be responsible for the general
management of the certain portions of the business, affairs and
operations of Holdings and the Company, shall perform such duties
as are customarily performed by a chief operating officer 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 Chief Executive
Officer and the Board of Directors of Holdings and the Company.
Executive acknowledges that his scope of responsibilities has
changed from the scope in the Letter Agreement, and hereby consents
to such changes. The Executive shall report to the Chief Executive
Officer of the Company and the Board of Directors of Holdings 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 Holdings’ and the Company’s business.
2. Term . Subject to the
terms and provisions of Section 3, the employment relationship
between Executive and Company shall be
“employment-at-will” and shall not be for any definite
period of time and may be terminated by either Executive, or by
Company, at any time and for any, or for no, reason.
3. Termination . The
Executive’s term of employment under this Agreement may be
terminated as follows:
(A) At the Executive’s
Option . The Executive may terminate his employment at any time
upon at least thirty (30) 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 3(I) hereof.
(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 3(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 not remedied within thirty (30) days after receipt
of written notice from the Company which materially affects the
Company; (vi) willful refusal to comply with any significant
policy, directive or decision of the Chief Executive Officer or the
Board in furtherance of a lawful business purpose or willful
refusal to perform the duties reasonably assigned to the Executive
by the Chief Executive Officer 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 thirty (30) 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 thirty (30) days after receipt of written notice from
the Company. 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 3(I) 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 3(C), the Company shall:
(i) Pay the Executive his then base
salary (“Base Salary”) from the date of the termination
of the Executive’s employment through the date that is twelve
(12) months following Executive’s termination. Such
payments shall be payable on a quarterly basis following the
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 cash Annual Cash Bonus
(hereinafter defined) for any calendar year prior to the calendar
year in which the Executive’s employment is terminated, and
(y) for the calendar year in which the Executive’s
employment is terminated, the pro rata amount of the Annual Cash
Bonus for such year calculated by multiplying (A) a fraction
the numerator of which is the number of calendar months that the
Executive was employed by the Company in such calendar year and the
denominator of which is 12 (provided that for 2004 the denominator
shall be seven [7]), and (B) an amount equal to the current
fiscal year’s Annual Cash Bonus.
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(iii) Until the earlier to occur of
(x) twelve (12) months following 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,
the Company shall acquire, with the same cost sharing, individual
insurance policies providing comparable coverage for the Executive
for the Insurance Continuation Period; 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 3(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 paragraphs 3(C)(i) and 3(C)(ii)
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.
(D) At the Election of the
Executive for Certain Reasons . The Executive may terminate his
employment immediately upon written notice to the Company following
a material adverse change in the Executive’s total
compensation (as provided in the Letter Agreement), function,
duties or responsibilities from those described in Section 1
hereof without the written consent of the Executive which is not
remedied by the Company within 30 days after Executive gives
written notice to the Holdings’ Board of Directors of such
change (an “ Adverse Change in Status ”). In the
event the Executive exercises his right to terminate his employment
under this Section 3(D), the Company shall:
(i) Pay to the Executive his Base
Salary from the date of the termination through the date that is
twelve (12) months following Executive’s termination.
Such payments shall be payable on a quarterly basis following the
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 prior to the calendar year in which the
Executive’s employment is terminated, and (y) for the
calendar year in which the Executive’s employment is
terminated, the pro rata amount of the Annual Cash Bonus for such
year calculated by multiplying (A) a fraction the numerator of
which is the number of calendar months that the Executive was
employed by the Company in such calendar year and the denominator
of which is 12 (provided that for 2004 the denominator shall be
seven [7]), and (B) an amount equal to the current
year’s Annual Cash Bonus.
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(iii) Until the earlier to occur of
(x) twelve (12) months following 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 “ Extended 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,
the Company shall acquire, with the same cost sharing, individual
insurance policies providing comparable coverage for the Executive
for the Extended Insurance Continuation Period; 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.
(E) Disability of Executive .
In the event of the disability of the Executive, the Company may,
unilaterally, terminate the Executive’s employment hereunder
at any time upon written notice to the Executive. In the event the
Executive’s employment is terminated pursuant to this
Section 3(E), 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 3(I) hereof. For
purposes of this Agreement, “disability” shall mean the
inability, by reason of bodily injury or physical or mental
disease, or any combination thereof, of the Executive to perform
his customary or other comparable duties with the Company for
ninety (90) consecutive days. In the event the parties are
unable to agree as to whether the Executive is suffering a
disability, the Executive and the Company shal
