Intercompany Indemnification Agreement

INTERCOMPANY INDEMNIFICATION AGREEMENT


This INTERCOMPANY INDEMNIFICATION AGREEMENT (this "Agreement") dated as of July 1, 1999 by and between VITAMINSHOPPE.COM, INC., a Delaware corporation ("VitaminShoppe.Com"), and VITAMIN SHOPPE INDUSTRIES INC., a New York corporation ("VSI"),


W I T N E S S E T H:


WHEREAS, VitaminShoppe.com and VSI have entered into a Trademark License Agreement, a Supply and Fulfillment Agreement, a Co-Marketing Agreement, an Administrative Services Agreement, a Database Agreement and a Tax Allocation Agreement, each dated of even date herewith (collectively, the "Intercompany Agreements");


WHEREAS, the execution and delivery of this Agreement by VSI is a material inducement to VitaminShoppe.com to consummate the transactions contemplated by the Intercompany Agreements; and


WHEREAS, the execution and delivery of this Agreement by VitaminShoppe.com is a material inducement to VSI to consummate the transactions contemplated by the Intercompany Agreements;


NOW, THEREFORE, the parties agree as follows:


1. INDEMNIFICATION. (a) VitaminShoppe.com agrees to indemnify and hold VSI and its officers, directors, employees, subsidiaries, affiliates other than VitaminShoppe.com and agents harmless against and in respect of any and all Losses (as defined below) incurred by any of them and third-party claims against any of them arising out of or otherwise relating to the management, conduct, operations or activities of VitaminShoppe.com after June 30, 1999. For the purposes of this Agreement, "Losses" shall mean any and all actual costs or expenses (including without limitation attorney fees billed at standard hourly rates and expenses as and when incurred in connection with any action, claim or proceeding relating thereto), judgments, amounts paid in settlement, fines, penalties, assessments and taxes. Notwithstanding the foregoing, Losses shall be reduced to reflect any insurance proceeds actually recovered by the indemnified party relating to such claim; provided that this reduction shall not be applied if to do so would excuse any insurer from any obligation to cover any loss. If an indemnified party receives insurance proceeds after it receives indemnity hereunder, then the indemnified party, within ten days after receipt of such proceeds, shall pay to the indemnifying party the amount by which the indemnifying party's payment would have been reduced if the insurance proceeds had been received before the indemnity payments.


(b) VSI agrees to indemnify and hold VitaminShoppe.com and its officers, directors, employees, subsidiaries, affiliates other than VSI and agents harmless against and in respect of any and all Losses incurred by any of them and third-party claims against any of them arising out of or otherwise relating to the management, conduct, operations or activities of VSI prior to, on


2 and after the date hereof unless such Losses or third-party claims have been expressly assumed by VitaminShoppe.com prior to the date hereof. Notwithstanding the foregoing, Losses shall be reduced to reflect any insurance proceeds actually recovered by the indemnified party relating to such claim; provided that this reduction shall not be applied if to do so would excuse any insurer from any obligation to cover any loss. If an indemnified party receives insurance proceeds after it receives indemnity hereunder, then the indemnified party, within ten days after receipt of such proceeds, shall pay to the indemnifying party the amount by which the indemnifying party's payment would have been reduced if the insurance proceeds had been received before the indemnity payments.


(c) VSI agrees to indemnify and hold VitaminShoppe.com and its officers, directors, employees, subsidiaries, affiliates other than VSI and agents harmless against and in respect of any and all Losses incurred by any of them by reason of, or arising out of, (i) any liability for income and franchise taxes arising out of the inclusion of VitaminShoppe.com and any subsidiary of VitaminShoppe.com in any consolidated federal income tax return, or any consolidated, combined or unitary state or local tax return, of VSI, except for any such liability as is directly attributable to the operations of VitaminShoppe.com and any such subsidiaries, (ii) any liability or obligations of any entity, whether or not incorporated, which is or was part of a controlled group or under common control with VitaminShoppe.com or otherwise treated as a "single employer" with VitaminShoppe.com within the meaning of section 414(b), (c), (m) or (o) of the Internal Revenue Code of 1986, as amended and (iii) any liability or obligations of VSI under the Employees Retirement Income Security Act of 1974, as amended. Notwithstanding the foregoing, Losses shall be reduced to reflect any insurance proceeds actually recovered by the indemnified party relating to such claim; provided that this reduction shall not be applied if to do so would excuse any insurer from any obligation to cover any loss. If an indemnified party receives insurance proceeds after it receives indemnity hereunder, then the indemnified party, within ten days after receipt of such proceeds, shall pay to the indemnifying party the amount by which the indemnifying party's payment would have been reduced if the insurance proceeds had been received before the indemnity payments.


2. INDEMNIFICATION PROCEDURES. (a) In the event that any third-party claim in respect of which an indemnified party might seek indemnity is asserted against or sought to be collected from such indemnified party, the indemnified party shall deliver a notice (a "Claim Notice") with reasonable promptness to the indemnifying party, which Claim Notice shall include the amount of the Losses claimed to the extent known. The indemnifying party shall notify the indemnified party within 60 days of its receipt of a Claim Notice whether the in ...