Exhibit 10.1

Vitamin Shoppe, Inc.

Executive Severance Pay Policy

Amended and Restated Effective as of October 29, 2014 (the “Effective Date”)

 

I. POLICY

This Executive Severance Pay Policy (the “Policy”) constitutes a program whereby
Vitamin Shoppe, Inc. and its subsidiaries or affiliated companies (collectively,
the “Company”) provide severance pay and other benefits to certain of its
executive employees who are involuntarily terminated other than terminated for
cause from employment with the Company and who otherwise meet all of the
requirements for benefits hereunder. The Policy, as set forth in this document,
is both a plan document and the summary plan description (as these terms are
used for purposes of the Employees Retirement Income Security Act of 1974
(“ERISA”)). In general, the intent of this Policy is to provide severance pay
for those executive employees who are terminated involuntarily by the Company
other than for Cause (as defined herein). In no circumstances is the Policy
intended to provide benefits to executive employees who resign or quit their
employment with the Company voluntarily, except in certain limited circumstances
and for specified reasons following a Change in Control of the Company, as set
forth herein. This Policy only shall apply to U.S. based executive employees.

 

II. ELIGIBILITY

The Policy provides benefits to executive employees who are designated on the
Company’s books and records as Vice Presidents or above, as may be selected by
the Company in its discretion, and who are involuntarily separated from the
Company under circumstances described herein on or after the Effective Date
(“Participants”). The Policy is an amendment and restatement of any prior policy
or practice governing severance pay, and, therefore, supersedes any and all such
prior policies or practices. Except as used in the context of any administrative
provision of this Policy, the term Company as used herein shall mean Vitamin
Shoppe Industries Inc., Vitamin Shoppe, Inc. and VS Direct, Inc., Vitamin Shoppe
Mariner, Inc., Vitamin Shoppe Global, Inc., Vitapath Canada Limited, VS Hercules
LLC, FDC Vitamins, LLC d/b/a Nutriforce, Betancourt Sports Nutrition, LLC, and
any entities that are controlled by any of such entities, unless the context
shall dictate otherwise, and the obligations hereunder shall be joint and
several. In the context of any administrative provision of this Policy, the term
Company as used herein shall mean Vitamin Shoppe Industries Inc.

In the event any executive employee is eligible for benefits under this Policy
and for severance or similar benefits under a separate agreement with the
Company, the executive employee shall receive the greater of the amount provided
under that separate agreement or under this Policy, as more specifically set
forth in Section III.F. herein, but shall not be eligible for both, such that
the executive employee shall not be entitled to duplicate benefits under the
Policy and any separate agreement.

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In order to be eligible to receive benefits under the Policy, each executive
employee who is otherwise eligible for such benefits must also sign, and not
revoke, within sixty (60) days following termination of employment, a general
release in favor of the Company in such form as may be established by the
Company for this purpose from time to time, or any benefits under the Policy
will be forfeited.

 

III. ADMINISTRATION

A. Exclusions

Under no circumstance will Severance Pay, as set forth in Section III.B., be
granted to any executive employee of the Company (i) who is terminated by the
Company for Cause (as defined in this Section III.A. below), or (ii) who
terminates his or her employment voluntarily (such as by resignation or
retirement), except in certain limited circumstances and for specified reasons
following a Change in Control of the Company (as defined in this Section III.A.
below and as provided in Section III.B.(2) below).

Cause means any of the following with respect to an executive employee:

 

  1. Theft or misappropriation of funds or other property of the Company or any
subsidiary or affiliated company;

 

  2. Alcoholism or drug abuse, either of which materially impair the ability of
the executive employee to perform his/her duties and responsibilities hereunder
or is injurious to the business of the Company;

 

  3. The conviction of a felony or pleading guilty or nolo contender to a felony
involving moral turpitude;

 

  4. Intentionally causing the Company

to violate any local, state or federal law, rule or regulation that harms or may
harm the Company in any material respect;

 

  5. Gross negligence or willful misconduct in the conduct or management of the
Company or any subsidiary or affiliated company which materially affects the
Company, not remedied within thirty (30) days after receipt of written notice
from the Company;

 

  6.

Willful refusal to comply with any significant policy, directive or decision of
the Chief Executive Officer, any other executive(s) of the Company to whom the
executive employee reports, or the Board in furtherance of a lawful business
purpose or willful refusal to perform the duties reasonably assigned to the
executive employee by the Chief Executive Officer, any other executive(s) of the
Company to whom the

 

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  executive employee reports or the Board consistent with the executive
employee’s functions, duties and responsibilities, in each case, in any material
respect, not remedied within thirty (30) days after receipt of written notice
from the Company;

 

  7. Breach (other than by reason of physical or mental illness, injury, or
condition) of any other material obligation to the Company or any subsidiary or
affiliated company that is or could reasonably be expected to result in material
harm to the Company not remedied within thirty (30) days after receipt of
written notice of such breach from the Company;

 

  8. Violation of the Company’s operating and or financial/accounting procedures
which results in material loss to the Company, as determined by the Company; or

 

  9. The death or disability of the executive employee. For purposes of this
Policy, “disability” shall mean the executive employee’s inability, with
reasonable accommodation, to perform effectively the essential functions of his
duties hereunder because of physical or mental disability for a cumulative
period of 180 days in any consecutive 210-day period or other long term
disability under the terms of the Company’s long-term disability plan, as then
in effect.

 

  10. Violation of the Company’s confidentiality and non-compete requirements or
Code of Business Conduct.

In addition to the foregoing, with respect to any particular executive employee,
Cause also shall include the elements of a “cause” definition set forth in a
separate agreement, if any, between the Company and such executive employee. If
subsequent to the commencement of payment of benefits under the Policy, the
Company discovers that the executive employee committed acts while employed with
the Company which would have constituted Cause for termination, or the executive
employee otherwise should not have been considered to be eligible for benefits
under the Policy, the Company may cease further payments of benefits hereunder
and may require the executive employee to reimburse the Company for all benefits
paid previously.

Change in Control. Severance Pay under this Policy for termination of an
executive employee’s employment upon or within two years after a Change in
Control either (i) by the Company other than for Cause or (ii) by the executive
employee due to an Adverse Change in Status shall be governed by
Section III.B(2) of this Policy. For purposes of this Policy, “Change in
Control” shall mean the first (and only the first) to occur of the following:

(a) any “person” as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (the “1934 Act”) (other than the
Company, any trustee or other fiduciary holding securities under any

 

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employee benefit plan of the Company, or any company owned, directly or
indirectly, by the stockholders of the Company in substantially the same
proportions as their ownership of common stock of the Company), becoming the
beneficial owner (as defined in Rule 13d-3 under the 1934 Act), directly or
indirectly, of securities of the Company representing more than 50% of the
combined voting power of the Company’s then outstanding securities on the date
in which any “person” directly or indirectly becomes the beneficial owner; or

(b) a merger or consolidation of the Company with any other corporation, other
than a merger or consolidation which would result in the voting securities of
the Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting securities of
the surviving entity) more than 50% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately after
such merger or consolidation; provided, however, that a merger or consolidation
effected to implement a recapitalization of the Company (or similar transaction)
in which no person (other than those covered by the exceptions in paragraph (a)
of this definition) acquires more than 50% of the combined voting power of the
Company’s then outstanding securities shall not constitute a Change in Control
of the Company on the date in which the merger or consolidation as stated herein
is finalized; or

(c) The sale of all or substantially all of the Company’s assets other than the
sale or disposition of all or substantially all of the assets of the Company to
a person or persons who beneficially own, directly or indirectly, 50% or more of
the combined voting power of the outstanding voting securities of the Company at
the time of the sale.

(d) Relocation. If the executive employee’s position is required to permanently
commute or relocate more than a fifty (50) mile radius of the Company office
location at the time of the change of control.

For purposes of this Policy, “Adverse Change in Status” shall mean a material
adverse change in the executive employee’s total compensation, function, duties,
title or responsibilities from those in effect on the date that the actions
constituting the Change in Control shall have commenced without the written
consent of the executive employee that is not remedied by the Company within
thirty (30) days after the executive employee gives written notice to the Board,
which written notice must be provided within ninety (90) days of such change.

Change in Position. Severance Pay under the Policy will not be granted if,
either prior to the occurrence of a Change in Control or more than two years
after a Change in Control, the Company restructures or eliminates the position
in which the executive employee was employed and the executive employee rejects
an offer of employment by the Company of a position with the same or better
compensation and benefits, taken as a whole, as the executive employee’s
compensation and benefits with the Company immediately prior

 

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to such change in position, and in the same metropolitan area as the executive
employee’s employment with the Company, all within the sole discretion of the
Company. Change in position upon or within two years following a Change in
Control may result in Severance Pay if the change is an Adverse Change in
Status.

B. Severance Pay

(1) Non-Change in Control Severance: Executive employees who meet all of the
requirements for benefits under the Policy prior to the occurrence of a Change
in Control or more than two years after a Change in Control will be eligible to
receive Severance Pay under this Section III.B(1) of the Policy, subject to
Section III.B(3). The severance period and Severance Pay is as follows: (i) if
severance occurs within the first year of employment, then the amount of
Severance Pay will be equal to twenty-six (26) weeks of the executive’s annual
base salary; or (ii) if severance occurs after the first year of employment,
then the amount of Severance Pay will be equal to fifty-two (52) weeks of the
executive employee’s annual base salary. In addition, if, but only if, the
executive employee is terminated after June 30th of the year, then the executive
employee shall receive the amount of bonus based on Company performance, if and
to the extent earned that fiscal year under any bonus plan of the Company,
prorated to the date of termination. Such bonus will be paid at the time the
bonuses are paid by the Company to all eligible executive employees. Subject to
Section III.B(3), Severance Pay shall be payable in installments over the
severance period, commencing on the sixty-fifth (65th) day following the
executive employee’s separation from service, provided, however, that if the
required release agreement has become effective, in the sole discretion of the
Company, payment could be made at any time within thirty (30) days prior to this
designated commencement date, with the first installment equal to any weekly
amounts that would have otherwise accrued during the sixty-five (65) day period
following the executive employee’s separation from service and the remaining
weekly amounts paid in installments over the remainder of the severance period,
all in accordance with the Company’s regular payroll practices. Bonus payments
shall be paid by the Company to the executive employee within thirty (30) days
after the determination thereof, and in all events on or before March 15th of
the calendar year following the calendar year in which the bonus was earned. All
accrued but unused vacation as of the date of termination will be paid with the
last paycheck the executive receives from the Company and in accordance with its
regular payroll practices. In addition, as the executive employee may be called
upon to assist the Company during the severance period (as described in Section
III.B.(3) below), the executive employee shall remain for the severance period
entitled to any rights or benefits under any equity agreement or plan to the
extent such rights had vested through the date of termination and as provided in
such agreement or plan. All payments of Severance Pay shall be subject to all
applicable federal, state and local tax withholding, and any other withholding
requirements applicable to such payments.

 

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(2) Change in Control Severance: Executive employees whose employment is
terminated upon or within two years after a Change in Control either by the
Company other than for Cause or by the executive employee due to an Adverse
Change in Status, and who in either case meet all the requirements for benefits
under the Policy, will be eligible to receive Severance Pay under this
Section III.B(2) of this Policy, under either subsection (a) or (b), as
described therein, and subject to Section III.B(3).

(a) Named Executive Officers, Section 16 Officers and Senior Vice Presidents. At
the time the Change of Control occurs, if the executive employees were a named
executive officer, a section 16 officer or held the title of Senior Vice
President, the severance period for those executive employees who are “named
executive officers and Senior Vice Presidents” of Vitamin Shoppe, Inc shall be
two years and the Severance Pay is as follows:

(i) a lump sum cash payment equal to the result of multiplying (A) the sum of
(x) the executive employee’s base salary, plus (y) the executive employee’s
target annual bonus by (B) 2.00; and

(ii) if the Company’s performance equals or exceeds the business plan for the
year in which the Change in Control occurs, a cash payment equal to the
executive employee’s target (100%) annual bonus for the fiscal year in which the
executive employee’s date of termination occurs, multiplied by a fraction the
numerator of which shall be the number of full calendar months the executive
employee was employed by the Company during the fiscal year in which the date of
termination occurred and the denominator of which is 12; and

(iii) for two (2) years after the executive employee’s date of termination, the
executive employee, his or her eligible spouse and his or her eligible
dependents will continue to be entitled to participate in the executive
employee’s group health plans in which the executive employee participates
immediately prior to his or her date of termination at the same rate as paid by
similarly situated employees from time to time, provided that the executive
employee timely elects continuation coverage under Section 4980B(f) of the Code;
and provided, further, that to the extent that such health plan does not permit
continuation of the executive employee’s or his or her spouse’s or dependents’
participation throughout such period, the Company shall provide the executive
employee, on the first business day of each calendar quarter, in advance, with
an amount which is equal to the Company’s cost of providing such benefits, less
the applicable employee rate of participation; and

(iv) for a period of one (1) year following the executive employee’s date of
termination, the Company shall make certain reasonable executive-level
outplacement services available to the executive employee, as provided by the
outplacement providers with whom the Company has a relationship at the time of
the executive employee’s date of termination.

Subject to Section III.B(3), the cash payments specified in paragraphs (i) and
(ii) of this Section III.B(2)(a) shall be paid on the sixty-fifth (65th) day (or
the

 

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next following business day if the sixty-fifth (65th) day is not a business day)
following the date of termination. All accrued but unused vacation as of the
date of termination will be paid with the last paycheck the executive employee
receives from the Company and in accordance with its regular payroll practices.
In addition, as the executive employee may be called upon to assist the Company
during the severance period (as described in Section III.B.(3) below), the
executive employee shall remain for the severance period entitled to any rights
or benefits under any equity agreement or plan to the extent such rights had
vested through the date of termination and as provided in such agreement or
plan. All payments of Severance Pay shall be subject to all applicable federal,
state and local tax withholding, and any other withholding requirements
applicable to such payments.

(b) Other Executive Officers. The severance period for those executive employees
who are not “named executive officers, section 16 officers or held the title of
Senior Vice President” of Vitamin Shoppe, Inc., as determined under
Section III.B(2)(a) above, shall be the sum of twelve (12) months plus one month
for each completed year of service with the Company, measured as the date of the
executive employee’s termination of employment, with the sum not to exceed 24
months total, and the Severance Pay, subject to Section III.B(3), is as follows:

(i) a lump sum cash payment equal to the result of multiplying (A) the sum of
(x) the executive employee’s base salary, plus (y) the executive employee’s
target annual bonus by (B) the sum of (x) 1.00 plus (y) one-twelfth (1/12) for
each completed year of service by the executive employee with the Company,
measured as of the date of the executive employee’s termination of employment,
with the sum not to exceed a total of 2.00; and

(ii) if the Company’s performance equals or exceeds the business plan for the
year in which the Change in Control occurs, a cash payment equal to the
executive employee’s target (100%) annual bonus for the fiscal year in which the
executive employee’s date of termination occurs, multiplied by a fraction the
numerator of which shall be the number of full calendar months the executive
employee was employed by the Company during the fiscal year in which the date of
termination occurred and the denominator of which is 12; and

(iii) for the severance period after executive employee’s date of termination,
the executive employee, his or her spouse and his or her dependents will
continue to be entitled to participate in the executive employee’s group health
plans in which the executive employee participates immediately prior to his or
her date of termination at the same rate as paid by similarly situated employees
from time to time, provided that the executive employee timely elects
continuation coverage under Section 4980B(f) of the Code; and provided, further,
that to the extent that such health plan does not permit continuation of the
executive employee’s or his or her spouse’s or dependents’ participation
throughout such period, the Company shall provide the executive employee, on the
first business day of each calendar quarter, in advance, with an amount which is
equal to the Company’s cost of providing such benefits, less the applicable
employee rate of participation; and

 

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(iv) for a period of one (1) year following the executive employee’s date of
termination, the Company shall make certain reasonable executive-level
outplacement services available to the executive employee, as provided by the
outplacement providers with whom the Company has a relationship at the time of
the executive employee’s date of termination.

Subject to Section III.B(3), the cash payments specified in paragraphs (i) and
(ii) of this Section III.B(2)(b) shall be paid on the sixty-fifth (65th) day (or
the next following business day if the sixty-fifth (65th) day is not a business
day) following the date of termination. All accrued but unused vacation as of
the date of termination will be paid with the last paycheck the executive
employee receives from the Company and in accordance with its regular payroll
practices. In addition, as the executive employee may be called upon to assist
the Company during the severance period (as described in Section III.B.(3)
below), the executive employee shall remain for the severance period entitled to
any rights or benefits under any equity agreement or plan to the extent such
rights had vested through the date of termination and as provided in such
agreement or plan. All payments of Severance Pay shall be subject to all
applicable federal, state and local tax withholding, and any other withholding
requirements applicable to such payments.

 

  (3) General Provisions:

Golden Parachute Cutback: Notwithstanding anything in this Policy to the
contrary, in the event it shall be determined that (i) any payment, award,
benefit or distribution (or any acceleration of any payment, award, benefit or
distribution) by the Company (or any of its affiliated entities) or any entity
which effectuates a change in control (or any of its affiliated entities) under
Section 280G of the Internal Revenue Code to or for the benefit of an executive
employee (whether pursuant to the terms of this Policy or otherwise) would be
subject to the excise tax imposed by Section 4999 of the Code (the “Excise
Tax”), and (ii) the reduction of the amounts payable to an executive employee
under this Policy to the maximum amount that could be paid to the executive
employee without giving rise to the Excise Tax (the “Safe Harbor Cap”) would
provide the executive employee with a greater after tax amount than if such
amounts were reduced, then the amounts payable to the executive employee under
this Policy shall be reduced (but not below zero) to the Safe Harbor Cap. The
reduction of the amounts payable hereunder, if applicable, shall be made by
reducing first the Severance Pay (under Section III.B.(2)(a)(i) above) and then
bonus (under Section II.B.(2)(a)(ii) above) as applicable.

Special Provisions Regarding Code Section 409A: If any portion of the benefit
payable under the Policy is determined not to be exempt from Code Section 409A
under the separation pay and/or short-term deferral exceptions as set out in
applicable Treasury Regulations promulgated pursuant to Code Section 409A, then
payments hereunder shall be deferred to the extent

 

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necessary to avoid violation of the prohibition under Code
Section 409A(a)(2)(B)(i) (regarding payments made to certain “specified
employees” within six months after the date of such employee’s separation from
service) and will be paid or provided (or will commence being paid or provided,
as applicable) to the executive employee on the earlier of the six (6) month
anniversary of the executive employee’s date of termination or the executive
employee’s death. In addition, any payment or benefit that represents a
“deferral of compensation” within the meaning of Section 409A due upon a
termination of the executive employee’s employment shall be paid or provided to
the executive employee only upon a “separation of service” as defined in
Treasury Regulation Section 1.409A-1(h). To the extent that this Policy requires
that a payment of “deferred compensation” within the meaning of Section 409A
shall be made following the execution of a release agreement, such payment or
payments will only be made if the release agreement is executed prior to the
60th day following the termination of employment; provided, that if this 60 day
period commences in one tax year and ends in the next tax year, no payment of
deferred compensation which is the subject of such release agreement may be made
or commence (in the case of a series of payments), until the second of the tax
years. The executive employee may not designate the year of such payment.
Payments in respect of an executive employee’s termination of employment under
this Plan are designated as separate payments for all purposes under
Section 409A. Notwithstanding anything in this Policy to the contrary, the
Company does not guarantee the tax treatment of any severance payments or
benefits under this Policy, including without limitation pursuant to the Code,
federal, state or local tax laws or regulations. Neither the Company nor any of
its directors, officers, employees or advisors (other than the executive
employee) shall be held liable for taxes, penalties, interest or other monetary
amounts owed by executive employee as a result of the application of Code
Section 409A with respect to any payments made under this policy.

Forfeiture and Repayment. Amounts payable under this Policy are subject to
forfeiture and recoupment and may be cancelled without payment and/or a demand
for repayment of any previously paid amounts may be made upon the executive
employee on the basis of any provision of the Company’s forfeiture and
recoupment policies or on the basis of any of the following circumstances:
(i) if during the course of employment the executive employee engages in
conduct, or it is discovered that the executive employee has engaged in conduct,
that is (x) materially adverse to the interest of the Company, which include
failures to comply with the Company’s written rules or regulations and material
violations of any agreement with the Company, (y) fraud, or (z) conduct
contributing to any financial restatements or irregularities occurring during or
after employment; (ii) if during the course of employment, the executive
employee competes with, or engages in the solicitation and/or diversion of
customers, vendors or employees of, the Company or it is discovered that the
executive employee has engaged in such conduct; (iii) if following termination
of employment, the executive employee violates any post-termination obligations
or duties owed to, or any agreement with, the Company, which includes this
Policy, any employment agreement and other agreements restricting
post-employment conduct; (iv) if following termination

 

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of employment, the Company discovers facts that would have supported a
termination for Cause had such facts been known to the Company before the
termination of employment, and (v) if compensation that is promised or paid to
the executive employee is required to be forfeited and/or repaid to the Company
pursuant to applicable regulatory requirements as in effect from time to time
and/or such forfeiture or repayment affects amounts or benefits payable under
the Policy.

In addition, during and after the executive employee’s employment with the
Company, the executive employee is required to cooperate with any reasonable
request of the Company: (a) in the defense or prosecution of any claims or
actions that relate to events or occurrences that transpired while the executive
employee was employed by the Company, and (b) in connection with any
investigation or review of any federal, state or local regulatory,
quasi-regulatory or self-governing authority (including, without limitation, the
Securities and Exchange Commission) as any such investigation or review relates
to events or occurrences that transpired while the executive employee was
employed by the Company. The executive employee’s cooperation in connection with
the foregoing shall include, but not be limited to, being available, upon
reasonable notice, to meet with counsel to prepare for discovery or trial and to
act as a witness on behalf of the Company at mutually convenient times. The
Company will reimburse the executive employee for any reasonable out-of-pocket
expenses incurred in connection with the performance of these obligations. Any
such reimbursements are subject to generally applicable Company policies, and
shall be paid not later than the end of the calendar year following the calendar
year in which such expenses were incurred. Failure to satisfy these cooperation
obligations may result in forfeiture of payments yet to be paid under this
Policy, and recoupment of payments already paid under this Policy.

Special Provision. Notwithstanding the foregoing, the Company may, with approval
by the Compensation Committee, provide an executive employee with all or some
portion of his or her Severance Pay benefits even though the Company is not
otherwise obligated to provide such benefits under applicable provisions of the
Policy.

C. Non-Compete, Non-Solicitation and Confidentiality

The non-compete and non-solicitation provision of any agreement signed by the
executive employee shall remain in effect for the time period defined in said
agreement; provided however, that if no signed agreement exists, then during the
severance period the executive employee shall not, without the Company’s prior
written consent, directly or indirectly, own, manage, operate, join, control or
participate in the ownership, management, operation or control of, or be
connected as a director, officer, employee, partner, consultant or otherwise
with, any profit or non-profit business or organization in the United States
that, directly or indirectly, manufactures, markets, distributes or sells
(through wholesale, retail or direct marketing channels including, but not
limited to, mail order and internet distribution) vitamins, minerals,
nutritional

 

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supplements, herbal products, sports nutrition products, bodybuilding formulas
or homeopathic remedies (the “Competitive Products”) whereby a business engages
in the sale/distribution of the Competitive Products that represent one third
(1/3) of the gross sales in the proceeding twelve (12) months from the executive
employee’s termination of the employment date (the “Competitive Business”). In
addition, during this twelve (12) month period, the executive employee’s shall
not directly or indirectly join, engage in or carry on any business whose
products are competitive with the Company, including but not limited to, GNC,
Rite Aid, Whole Foods, Vitacost, Walgreens, CVS, Nature’s Bounty,
Bodybuilding.com, Swanson, Sprout’s Sunflower Markets and Vitamin Cottage.
Notwithstanding the foregoing, the executive employee may be a passive owner
(which shall not prohibit the exercise of any rights as a shareholder) of not
more than 5% of the outstanding stock of any class of any public corporation
that engages in a Competitive Business.

Non-Solicitation. For a twelve (12) month period following the termination date
of the executive employee’s employment, the executive employee shall not
directly or indirectly cause any person or entity to, either for himself or for
any other person, business, partnership, association, firm, company or
corporation, hire from the Company or attempt to hire, divert or take away from
the Company, any of the officers or employees of the Company who are employed by
the Company; or (z) cause any other person or entity to, either for himself or
for any other person, business, partnership, association, firm, company or
corporation, attempt to divert or take away from the Company or its subsidiaries
any of the business or vendors of the Company.

Confidentiality. The obligation of confidentiality by the executive employee set
forth in the Company’s agreements(s) with the executive employee or policies of
the Company binding on or covering the executive employee shall remain in effect
for perpetuity regardless of any cessation of payment pursuant to this Policy,
such that the executive employee shall not disclose confidential information of
or pertaining to the Company at any time.

D. Continuing Benefits and Reimbursement of Expenses

An executive employee who is eligible for benefits under this Policy shall
retain any of his or her vested right to benefits payable under any retirement
or pension plan or under any other employee benefit plan of the Company, and all
such benefits shall continue, in accordance with, and subject to, the terms and
conditions of such plans, to be payable in full to or on account of the
executive employee after such termination. Such executive employee shall also be
reimbursed for any and all out-of-pocket expenses reasonably incurred by the
executive employee consistent with Company policy prior to the date of such
termination. To the extent that any expense reimbursement is determined to be
subject to Section 409A of the Code, the amount of any such expenses eligible
for reimbursement in one (1) calendar year shall not affect the expenses
eligible for reimbursement in any other taxable year, in no event shall any
expenses be reimbursed after the last day of the calendar year following the
calendar year in which the executive employee incurred such expenses, and in no
event shall any right to reimbursement be subject to liquidation or exchange for
another benefit.

 

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E. Continuation of Medical/Dental Benefits

An executive employee who is eligible for benefits under this Policy shall also
be offered participation in the Company’s group medical and/or dental plans if
he or she elects to participate pursuant to COBRA (Consolidated Omnibus Budget
Reconciliation Act of 1985). However, the executive employee will cease to be
eligible for these benefits if the executive employee becomes covered by medical
or dental plans of another employer or becomes eligible for Medicare. Continued
participation in the Company’s group medical and/or dental plans will be
governed for the severance period during which Severance Payments are provided
under the Policy by the terms and conditions of such plans as in effect when
employment terminates (including the executive employee making timely premium
payments in the same amount paid by then current employees), provided that if
such plans are amended as to the group of employees in which the executive
employee was included at the time of termination, the newer provisions shall
apply.

If the executive employee is entitled and elects under applicable federal law to
continue such benefits under COBRA after the severance period, the executive
employee must make timely COBRA premium payments as required to continue COBRA
coverage.

F. Employment Contracts or Other Written Agreements In Effect

If on the date of termination, an employment contract or other written agreement
between an executive employee and the Company is in effect, then the executive
employee shall receive the amount provided by the terms of such employment
contract or agreement under and pursuant to, and in accordance with the form and
time specified in, such contract or agreement. To the extent the severance pay
and benefits payable in accordance with this Policy exceeds the pay and benefits
provided in such individual agreement, the executive employee shall receive only
such excess amount under this Policy, and in accordance with the payment
schedules set forth herein. In no event shall the executive employee be entitled
to duplicate benefits under the Policy and any separate agreement.

G. Non-Uniform Determinations

The Company’s determinations under this Policy need not be uniform and may be
made by it selectively, for any nondiscriminatory reason and for no reason,
among the persons who receive, or are eligible to receive, awards hereunder
(whether or not such persons are similarly situated).

H. Policy Construction and Administration

The Company is the Plan Administrator for the Policy, and in this capacity, the
Company and/or its duly authorized designee(s) have the exclusive right,

 

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power and authority, in its sole and absolute discretion, to administer, apply,
construe and interpret the terms of this Policy, including any related plan
documents, and to decide all matters (including factual matters) arising in
connection with the operation or administration of the Policy. The Plan
Administrator is the sole judge of the application and interpretation of the
Policy and has the discretionary authority to construe the provisions of the
Policy, to resolve disputed issues of fact, and to make determinations regarding
eligibility. The Plan Administrator has the authority, in the Plan
Administrator’s sole discretion, to interpret the Policy and resolve ambiguities
therein, to develop rules and regulations to carry out the provisions of the
Policy, and to make factual determinations. However, the Plan Administrator has
the authority to delegate certain of its powers and duties to a third party. All
determinations and interpretations (including factual determinations) made by
the Company and/or its duly authorized designee(s) shall be final and binding
upon all participants, beneficiaries and any other individuals claiming benefits
or an interest under the Policy. Employees who have questions with respect to
the Policy may contact the Vice President of Human Resources.

Except to the extent this Policy is subject to ERISA, the interpretation,
construction and performance of this Policy shall be governed by and construed
and enforced in accordance with the internal laws of the State of New Jersey,
without regard to the principle of conflicts of laws, and applicable federal
laws. The invalidity or unenforceability of any provision of this Policy shall
not affect the validity or enforceability of any other provision of this Policy,
which other provisions shall remain in full force and effect.

 

IV. AMENDMENT OR TERMINATION OF POLICY

The Company reserves the right to amend, modify or terminate this Policy or any
portion of it at any time prior to a Change in Control or following the second
anniversary of a Change in Control, and for any reason. Any such action shall be
authorized in writing. Notwithstanding the foregoing, during the period
commencing on a Change in Control and ending on the second anniversary of the
Change in Control, the Policy may not be amended (except as may be required to
comply with applicable law) or terminated by the Company (or any successor
thereto), and any employee’s participation hereunder may not be terminated, in
each case, in any manner which is materially adverse to the interests of any
employee-participant without the prior written consent of such employee.

 

V. CLAIMS

Executive employees who are eligible for Severance Pay under this Policy will be
notified by the Company. If you believe that you did not receive the Severance
Pay and benefits to which you were entitled, you need to make a claim with Chief
Compliance Officer. The Chief Compliance Officer will review and make a decision
with respect to your claim within 90 days of receipt of your claim, unless the
Chief Compliance Officer determines that special circumstances require an
extension of time for processing the claim, in which case you will receive a
written notice of the extension before

 

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termination of the initial 90-day period. The extension notice will indicate the
special circumstances requiring the extension and the date by which the Chief
Compliance Officer expects to render the benefit determination.

If any claim is denied in whole or in part, you or your beneficiary will receive
written notification within 90 days, including the reasons for the denial;
reference to the specific Policy provisions on which the denial was based;
information about additional material needed to pursue the claim, if any, and
why such material is needed; and an explanation of the claim appeal procedure
including a statement of your right to bring a civil action under § 502(a) of
ERISA following an adverse benefit determination on appeal. Within 60 days of
the date of the notice of denial, you or your beneficiary may submit a written
request for reconsideration of the claim to Chief Compliance Officer.

You or your representative may submit written comments, documents, records, and
other information relating to the claim for Severance Pay and benefits. Upon
request and free of charge, you or your representative may have reasonable
access to, and copies of, all documents, records, and other information relevant
to your claim for Severance Pay and benefits.

The review by the Chief Compliance Officer will take into account all comments,
documents, records, and other information you submit relating to the claim,
without regard to whether such information was submitted or considered in the
initial Severance Pay and benefits determination.

The Chief Compliance Officer will make a decision on your appeal within 60 days
after the receipt of the appeal. If the Chief Compliance Officer determines that
special circumstances require an extension of time for processing the appeal,
you will receive a written notice of the extension before the end of the initial
60-day period. The extension notice shall indicate the special circumstances
requiring the extension and the date by which the Policy expects to render the
determination on appeal.

If your appeal is denied in whole or in part, you will receive a written
notification including the reasons for the denial; reference to the specific
Policy provisions on which the denial was based; a statement that you are
entitled to receive, upon request and free of charge, reasonable access to, and
copies of, all documents, records, and other information relevant to your claim
for Severance Pay and benefits; and a statement describing any voluntary appeal
procedures offered by the Plan and your right to obtain information about such
procedures, as well as a statement of your right to bring a civil action under
§ 502(a) of ERISA.

A document, record, or other information is relevant to a claim for Severance
Pay and benefits if it:

 

  •   was relied upon in making the Severance Pay and benefits determination;

 

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  •   was submitted, considered, or generated in the course of making the
Severance Pay and benefits determination, without regard to whether such
document, record, or other information was relied upon in making the Severance
Pay and benefits determination; or

 

  •   demonstrates compliance with the administrative processes and safeguards
in making Severance Pay and benefits determinations.

The [Title] will decide whether a hearing will be held on the claim and will
notify you at least 14 days before the hearing, if one is to be held.

To the extent permitted by law, decisions reached under the claims procedures
set forth in this Section V shall be final and binding on all parties. No action
(whether at law, in equity or otherwise) shall be brought by or on behalf of any
executive employee or beneficiary of an executive employee for or with respect
to benefits due under this Policy unless the person bringing such action has
timely exhausted the Policy’s claim review procedure. In any such legal action,
the claimant may only present evidence and theories which the claimant presented
during the claims procedure. Any claims which the claimant does not in good
faith pursue through the review stage of the claims procedure shall be treated
as having been irrevocably waived. Judicial review of a claimant’s denied claim
shall be limited to a determination of whether the denial was an abuse of
discretion based on the evidence and theories the claimant presented during the
claims procedure.

Any action (whether at law, in equity or otherwise) must be commenced within one
(1) year and must be brought in a court of competent jurisdiction sitting in
Hudson County, New Jersey. This one (1) year period shall be computed from the
earlier of: (a) the date a final determination denying such benefit, in whole or
in part, is issued under the Plan’s claim review procedure; and (b) the date
such individual’s cause of action first accrued (as determined under the laws of
the State of New Jersey without regard to principles of choice of laws).

 

VI. BASIC PLAN INFORMATION

Name of the Plan:

The name of the plan is the Vitamin Shoppe Executive Severance Pay Policy.

Plan Sponsor:

The Plan Sponsor’s name and address are as follows:

Vitamin Shoppe Industries Inc.

2101 91st Street

North Bergen, NJ 07047

 

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Type of Plan:

The plan is intended to be an employee welfare benefit plan, as defined in
Section 3(1) of ERISA, as a top-hat plan under Section 2520.104-24 of the
Department of Labor Regulations, maintained primarily for the purpose of
providing employee welfare benefits to the extent that it provides welfare
benefits; and an employee pension plan as defined in Section 3(2) of ERISA, as a
top-hat plan under Section 2520.104-23 of the Department of Labor Regulations
exempt from Sections 201, 301 and 401 of ERISA, as a plan that is unfunded and
maintained primarily for the purpose of providing deferred compensation, to the
extent that it provides such compensation, in each case for a select group of
management or highly compensated employees (i.e., a “top hat” plan).

Plan Administrator:

The Plan Administrator is the Company. The Plan Administrator’s name, address
and telephone number are as follows:

Vitamin Shoppe Industries Inc.

2101 91st Street,

North Bergen, NJ 07047

Tel.: 201-868-5959

Fax: 201-624-3804

All correspondence or inquires to the Plan Administrator should be directed to
the attention of Vice President, Human Resources.

Employer and Plan Identification Numbers:

The employer identification number for the Sponsor is 13-2993785

The Executive Severance Pay Policy’s identification number is 505

Agent for Service of Legal Process:

The agent for service of legal process is:

Vitamin Shoppe Industries Inc.

2101 91st Street

North Bergen, NJ 07047

Attention: General Counsel

Plan Year:

The Policy is administered on a calendar year basis, so that the Plan Year ends
on December 31.

Source of Severance Benefits:

The Policy is an unfunded plan maintained primarily for the purpose of providing
severance pay for eligible employees. All payments under the Policy are made
from the Company’s general assets. Benefits under this Policy are not insured
under Title IV of ERISA.

 

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Statement of ERISA Rights:

As a participant in the Policy, you are entitled to certain rights and
protections under ERISA. ERISA provides that all plan participant shall be
entitled to:

Receive Information About Your Plan and Benefits

Examine, without charge, at the Plan Administrator’s office and at other
specified locations, all documents governing the plan, and a copy of the latest
annual report (Form 5500 Series), if any, filed by the plan with the U.S.
Department of Labor and available at the Public Disclosure Room of the Employee
Benefits Security Administration.

Obtain, upon written request to the Plan Administrator, copies of documents
governing the operation of the plan, and copies of the latest annual report
(Form 5500 Series), if any, and updated summary plan description, if any. The
Plan Administrator may make a reasonable charge for the copies.

Receive a summary of the plan’s annual financial report, if any. The plan
administrator may be required by law to furnish each participant with a copy of
this summary annual report.

Prudent Actions by Plan Fiduciaries

In addition to creating rights for plan participants, ERISA imposes duties upon
the people who are responsible for the operation of the employee benefit plan.
The people who operate your plan, called “fiduciaries” of the plan, may have a
duty to do so prudently and in the interest of you and other plan participants
and beneficiaries. No one, including your employer, your union, or any other
person, may fire you or otherwise discriminate against you in any way to prevent
you from obtaining a (pension or welfare) benefit or exercising your rights
under ERISA.

Enforce Your Rights

If your claim for a benefit is denied or ignored, in whole or in part, you have
a right to know why this was done, to obtain copies of documents relating to the
decision without charge, and to appeal any denial, all within certain time
schedules.

Under ERISA, there are steps you can take to enforce the above rights. For
instance, if you request a copy of plan documents or the latest annual report,
if any, from the plan and do not receive them within 30 days, you may file suit
in a Federal court. In such a case, the court may require the plan administrator
to provide the materials and pay you up to $110 a day until you receive the
materials, unless the materials were not sent because of reasons beyond the
control of the administrator or were not required to be generated. If you have a

 

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claim for benefits which is denied or ignored, in whole or in part, you may file
suit in a state or Federal court. In addition, if you disagree with the plan’s
decision or lack thereof concerning the qualified status of a domestic relations
order, you may file suit in Federal court. If it should happen that plan
fiduciaries misuse the plan’s money, or if you are discriminated against for
asserting your rights, you may seek assistance from the U.S. Department of
Labor, or you may file suit in a Federal court. The court will decide who should
pay court costs and legal fees. If you are successful the court may order the
person you have sued to pay these costs and fees. If you lose, the court may
order you to pay these costs and fees, for example, if it finds your claim is
frivolous.

Assistance with Your Questions

If you have any questions about your plan, you should contact the plan
administrator. If you have any questions about this statement or about your
rights under ERISA, or if you need assistance in obtaining documents from the
plan administrator, you should contact the nearest office of the Employee
Benefits Security Administration, U.S. Department of Labor, listed in your
telephone directory or the Division of Technical Assistance and Inquiries,
Employee Benefits Security Administration, U.S. Department of Labor, 200
Constitution Avenue N.W., Washington, D.C. 20210. You may also obtain certain
publications about your rights and responsibilities under ERISA by calling the
publications hotline of the Employee Benefits Security Administration.

 

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