Exhibit 10.3
EXECUTIVE SERVICES AGREEMENT
This Agreement ("Agreement") is entered into as of this 20th day of
November, 2002 by and between Vital Living, Inc., a Nevada corporation
("Company") and Xxxxxxx Xxxxxx ("Employee"), in connection with Company's
engagement of Employee's personal services as President and such other duties as
described herein.
1. DUTIES AND ACCEPTANCE:
(a) Engagement by Company.
Company hereby engages Employee, and Employee hereby agrees to
serve as President and Chief Operating Officer on the terms and conditions of
this Agreement. Throughout the Term of this Agreement, Employee, subject to the
provisions contained herein, to devote substantially all of his work time to the
engagement described hereunder, and Employee shall not engage in or participate
in the operation or management of, or render any services to, any other
business, enterprise or individual, directly or indirectly, other than
performance of services for subsidiaries of the Company and the activities
listed on Exhibit A hereto. Employee may act as a non-employee director of any
enterprise, subject to the approval of the Company, such approval not to be
unreasonably withheld. Employee, pursuant to the terms of the Stockholders
Agreement being entered into concurrently herewith, will also be a member of the
Company's Board of Directors.
(b) Location Where Services are to Be Rendered:
Employee shall render his services at Company's offices in
Boonton, New Jersey; provided, however, that Employee shall render services at
such other locations from time-to-time as the proper performance of Employee's
duties may reasonably require, including but not limited travel to the Company's
offices in Phoenix Arizona. Notwithstanding the foregoing, Employee need not
relocate to render his duties hereunder, or be required to spend substantial
periods of time away from New Jersey other than for periodic meetings at the
Company's offices in Phoenix, Arizona, and customary trade shows and sales.
(c) Reporting
(i) Employee shall report to, and serve under the direction
and subject to the control of Company's CEO and Board of Directors.
(ii) Employee shall be the principal officer of the Company
responsible for the operations of the Company, and in connection therewith, he
shall have the authority to (A) hire or fire any personnel, except for the CEO
(B) execute any agreement not inconsistent with the then effective directions or
resolutions of the Board of Directors and (C) approve and sign checks but any
check over $25,000, shall require the signature of at least two of the following
employees (Xxxx Xxxxx, Xxxxxx Xxxxxx or Xxxxxxx Xxxxxx).
(iii) Notwithstanding (ii) above, if any other employee is
hired at a level senior to Employee, or Employee is required to report to any
officer other than the CEO or to the entire Board of Directors, Employee shall
have the right to accelerate the right to terminate the agreement, without
cause, as provided in Section 6 below.
2. TERM:
The term of Employee's engagement hereunder shall be for a period of
three (3) year terms commencing as of November 20, 2002 and ending November 19,
2005 (such period, as may
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be modified by the provisions of this paragraph or unless sooner terminated
pursuant to Section 6 hereof (the "Termination Sections"), being referred to
herein as the "Term").
3. COMPENSATION AND BENEFITS:
(a) Compensation
During the Term, Employee shall receive compensation (the "Base
Compensation") at the rate of $ 140,000 per annum during the first year of the
Term, $160,000 during the second year of the Term beginning November 20, 2003
and ending November 19, 2004 , and $180,000 during the third year of the Term
beginning November 20, 2004 and continuing during the third year of Employment
which shall end on November 19, 2005. Employee's Base Compensation shall be
payable no less frequently than bi-monthly, depending on the payroll system
adopted by the Company.
(b) Mandatory Bonus
Employee shall be entitled to participate in a profit sharing
plan to be enacted by the Board of Directors, which plan shall provide for
distributions to selected executive employees of an aggregate of up to 6% of the
net pre-tax profit of the Company, determined as soon as practical after the end
of each fiscal year, plus such other bonuses as may be determined by the Board
of Directors of the Company from time to time.
(c) Grant of Stock Employee and or its designees shall be entitled to
receive up to 500,000 shares of the Company's Common Stock relative to service
rendered in connection with the November 2002 private placement of up to
$2,100,000 of the Company's securities. In the event that a private placement
closes raising proceeds of at least $1,350,000 (net of all expenses and
commissions) involving the issuance of no more than 2,000,000 shares of Common
Stock (excluding warrants) Employee will receive a performance bonus of 500,000
shares of Common Stock. This amount will be reduced in the event that the share
issuance is greater than 2,000,000 but less than 2,500,000. By way of example,
if the Company raised $1,350,000 but was required to issue 2,100,000 shares,
Employee would receive 400,000 shares of Common Stock (i.e., 80% of the
500,000). If the Company raised $1,400,000 but issued 2,600,000 shares, Employee
would receive no shares of Common Stock. Any additional shares issued under this
section (whether to Coppel or any designee) shall be subject to the same terms
of any lockup agreement entered into in connection with the Company's
acquisition of MAF BioNutritionals LLC or the related private placement.
4. PARTICIPATION IN EMPLOYEE BENEFIT PLANS
(a) Fringe Benefits.
Employee shall be permitted during the Term to participate in any
group life, medical, hospitalization, dental, and disability plans, to the
extent that Employee is eligible under the provisions of such plans, and in any
other plans and benefits, if any, generally maintained by Company for Employees
of the stature and rank of Employee during the Term hereof, each in accordance
with the terms and conditions of such plans (collectively referred to herein as
"Fringe Benefits"); provided, however, that Company shall not be required to
establish or maintain any such Fringe Benefits. To the extent that the Company
does nor initially have customary health benefits, the Company will reimburse
Employee for any health insurance premium costs. Notwithstanding the foregoing,
the Company will obtain term life insurance on the life of the Employee in the
principal amount of $1,000,000, and Employee shall be entitled to designate any
beneficiary with respect to such policy. The employee will also allow the
Company to have in place a key man insurance policy designating the Company as
the insured in the amount of $1,000,000.
(b) Vacation.
Employee shall have the right during each year of the term, in
addition to 5 sick days and days in which
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Company is closed, to take an aggregate of four weeks of paid vacation time at
such time as may be mutually agreed by the Company and Employee. Unused vacation
or sick days shall not accumulate.
(c) Expenses.
Company will reimburse Employee for actual and necessary travel and
accommodation costs, entertainment and other business expenses incurred as a
necessary part of discharging the Employee's duties hereunder, subject to
receipt of reasonable and appropriate documentation by Company. If Employee is
required to undertake any travel on behalf of the Company, Employee may be
furnished business class air travel for international travel only, and shall
stay in first class accommodations (i.e., Hyatts Marriott or Hilton Hotels). If
available, Company may purchase upgrade certificates for use by Employee with
respect to his air travel.
(d) Staffing and Other Matters.
Employee will be afforded office space and an assistant. The Company
will provide Employee with a cell phone and directly pay all costs related to
the cell phone and all his monthly cell phone expenses.
(e) Automobile Allowance
Employee shall receive a monthly automobile allowance of $600 per
month.
5. CERTAIN COVENANTS OF EMPLOYEE:
Without in any way limiting or waiving any right or remedy accorded
to Company or any limitation placed upon Employee by law, Employee agrees as
follows:
(a) Confidential Information.
Employee agrees that, neither during the Term nor at any time within
2 years thereafter, neither Employee nor any affiliate thereof shall (i)
disclose to any person, firm, or corporation who is not employed by the Company
or its affiliates or subsidiaries (a "Protected Company") or who is not engaged
to render services to any Protected Company or (ii) use for the benefit of
himself, or others, any confidential information of any Protected Company
obtained by the Employee during the Term or any time thereafter, including,
without limitation, "know-how" trade secrets, details of supplier's,
manufacturer's, distributor's contracts, financial data, operational methods,
technical processes, designs and design projects, and other proprietary
information of any Protected Company; provided, however, that this provision
shall not preclude Employee from (x) making any disclosure required by any
applicable law or (y) using or disclosing information known generally to the
public (other than information known generally to the public as a result of any
violation of this Section 5(a) by or on behalf of the or Employee).
(b) Property of Company.
Any interest in trademarks, service marks, copyrights, copyright
applications, patents, patent applications, slogans, and processes which the
Employee, during the Term, may develop relating to the Business of the Company
in which the Company may then be engaged and any memoranda, notes, lists,
records and other documents (and all copies thereof) made or compiled by the
Employee or made available to the Employee concerning the business of any
Protected Company shall belong and remain in the possession of any Protected
Company, and shall be delivered to the Company promptly upon the termination of
the Employee's contractual arrangement with the Company as herein provided, or
at any other time on request.
(c) Hiring Other Employees
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Neither Employee nor any affiliate thereof (including Employee) will,
for a period of two (2) years after the Term hereof, induce any person who is a
senior Employee or officer of the Company, to terminate their contractual
relationship with the Company.
6. TERMINATION:
(a) Termination Upon Death or Disability.
If during the Term, Employee should (i) die or (ii) become so physically
or mentally disabled whether totally or partially, that Employee is unable to
perform the duties, functions and responsibilities required hereunder for (aa) a
period of three (3) consecutive months or (bb) shorter periods aggregating to
four (4) months within any consecutive period of twelve (12) months
("Disability"), then in such event, Company may, at any time thereafter, by 30
days written notice to Employee, terminate Employee's services hereunder.
Employee agrees to cause Employee to submit to reasonable medical examinations
upon the reasonable request of Company (and Employee shall be entitled to have
his physician present. The existence of Employee's disability for the purposes
of this Agreement shall be determined by a reputable physician selected by
Company who is experienced in the relevant field of medicine. If Employee's
services are terminated, as aforesaid, Employee shall be entitled to receive
Employee's Base Compensation, accrued share of the Bonus for that Fiscal Year
and unused vacation (hereinafter collectively referred to as "Fringe Benefits"),
if any, earned through the date of Employee's termination and continuing
thereafter for an additional period of six (6) months.
(b) By Resignation or By Company for Cause.
If Employee's employment with the Company terminates due to his
voluntary resignation or if the Company terminates Employee's employment due to
Cause (as defined below), Company shall pay Employee all accrued Base
Compensation (with no Bonus for the year in which the termination of employment
took place), but no other compensation or reimbursement of any kind (except
other accrued or vested sums such as awarded bonuses and profit participations),
and thereafter Company's obligations hereunder shall terminate. "Cause" means
(i) a willful breach by the Employee of a material provision of this Agreement
after written notice and such breach has not been cured within 10 days of such
notice; or (iii) a felony conviction or a material and willful violation of a
federal or state law or regulation directly arising out of the business of the
Company.
(c) Termination Without Cause.
If Employee's employment is terminated without "Cause", the Company
shall pay the Employee, within 30 days of such termination, the remaining
balance of the Base Compensation for the remainder of the Term. Additionally,
within 10 business days of a termination without Cause, Company shall repay any
indebtedness relating to that SBA loan and Boulder Note (as such terms are
defined in the Stock Purchase Agreement relating to the acquisition of MAF
BioNutritionals by the Company which is being consummated concurrently with the
execution of this Agreement; provided, however the Company shall not be required
to undertake such pre-payment in the event that the Company is "current" and
remains current in the obligations owing thereunder. The term "current" means
that the Company has paid, and continues to pays the obligations relating to
such debt as they mature or within any applicable grace period. For the
avoidance of doubt, there is no such obligation of the part of the Company to
accelerate the payment structure in the event of termination of Employee "for
cause." The Company agrees to indemnify and hold harmless the Employee from all
costs and expenses reasonably incurred in the event any obligee on the Boulder
Notes or the Commerce Bank SBA loan brings an action or seeks collecting of any
such sums from the Employee.
(d) Designation of Beneficiary.
The parties hereto agree that Employee shall designate, by written
notice to the Company, a beneficiary to
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receive the payments described in Section 6 in the event of his death and the
designation of any such beneficiary may be changed by Employee from time to time
by written notice to the Company. In the event Employee fails to designate a
beneficiary as herein provided, any payments which are to be made to the
Employee's designated beneficiary under Section 6 shall be made to Employee's
surviving spouse or estate, if any, during his lifetime.
7. CHANGE OF CONTROL:
(a) Change of Control Event
In the event there has been a "Change of Control" (as defined below)
of the Company, Employee shall have the right, but not the obligation, to
consider such event to be a termination of this Agreement, in which event
Employee shall be entitled to rely on the rights afforded to him under Section
6(c) above.
(b) Definition.
For purposes of this Agreement, "Change of Control" shall mean:
(i) any sale of all or substantially all of the assets of the
Company, or
(ii) any stock sale, merger or other business combination in
which the current shareholders no longer own in excess of 50% of the outstanding
stock of such surviving entity.
8. EMPLOYEE'S REPRESENTATIONS AND WARRANTIES:
(a) Right to Enter Into Agreement.
Employee has the unfettered right to enter into this entire Agreement
on all of the terms, covenants and conditions hereof; and Employee has not done
or permitted to be done anything which may curtail or impair any of the rights
granted to Company herein.
(b) Breach Under Other Agreement or Arrangement.
Neither the execution and delivery of this Agreement nor the
performance by Employee of any of his obligations hereunder will constitute a
violation or breach of, or a default under, any agreement, arrangement or
understanding, or any other restriction of any kind, to which Employee is a
party or by which Employee is bound.
9. USE OF NAME:
Employee agrees that the Company shall have the right during the Term
hereof to use Employee's name, approved biography and approved likenesses in
connection with Company's business, including advertising their products and
services; and Company may grant such rights to others, but not for use as an
endorsement of any other product of serviced.
10. ARBITRATION:
Any dispute whatsoever arising out of or referable to this
Agreement, including, without limitation, any dispute as to the rights and
entitlements and performance of the parties under this Agreement or concerning
the termination of Employee's engagement or of this Agreement or its
construction or its validity or enforcement, or as to the arbitrator's
jurisdiction, or as to the arbitrability of any such dispute, shall be submitted
to final and binding arbitration in New Jersey by and pursuant to the Labor
Arbitration Rules of the American Arbitration Association with discovery
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proceedings pursuant to New Jersey. The arbitrator shall be entitled to award
any relief which might be available at law or in equity, including that of a
provisional, permanent or injunctive nature. The prevailing party in such
arbitration as determined by the arbitrator, or in any proceedings in respect
thereof as determined by the person presiding, shall be entitled to receive its
or his reasonable attorneys' fees incurred in connection therewith.
11. NOTICES:
(a) Delivery.
Any notice, consent or other communication under this Agreement
shall be in writing and shall be delivered personally, sent by facsimile
transmission or overnight courier (regularly providing proof of delivery) or
sent by registered, certified, or express mail and shall be deemed given when so
delivered personally, sent by facsimile transmission or overnight courier, or if
mailed two (2) days after the date of deposit in the United States mail as
follows: to the parties at the following addresses (or at such other address as
a party may specify by notice in accordance with the provisions hereof to the
other):
To Company:
To Employee:
With a copy to:
(b) Change of Address.
Either party may change its address for notice hereunder by notice
to the other party in accordance with this Section 11.
12. COMPLETE AGREEMENT; MODIFICATION AND TERMINATION:
(a) This Agreement contains a complete statement of all the
arrangements between the parties with respect to Employee's services to the
Company, and supersede all existing agreement between them concerning such
services. This Agreement may be amended, modified, superseded or canceled, and
the terms and conditions hereof may be waived, only by a written instrument
signed by the parties or, in the case of a waiver, by the party waiving
compliance. No delay on the part of any party in exercising any right or remedy
hereunder shall operate as a waiver thereof, nor shall any waiver on the part of
any party of any such right or remedy, nor any single or partial exercise of any
such right or remedy preclude any other or further exercise thereof or the
exercise of any other right or remedy.
13. GOVERNING LAW:
This Agreement shall be governed by and construed in accordance with
the law of the State of California applicable to agreements entered into and
performed entirely within such State.
14. HEADINGS:
The headings in this Agreement are solely for the convenience of
reference and shall not affect its interpretation.
WHEREFORE, the parties hereto have executed this Agreement as of the
day and year first above written.
Vital Living, Inc.
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By:
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Its:
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Agreed to and Accepted:
By:
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Xxxxxxx Xxxxxx
SS:
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