Exhibit 10.2
EXECUTIVE SERVICES AGREEMENT
This Agreement ("Agreement") is entered into as of this 20 day of
November, 2002 by and between Vital Living, Inc., a Nevada corporation
("Company") and Xxxxxx Xxxxxx ("Employee"), in connection with Company's
engagement of Employee's personal services as Vice Chairman of the Board of
Directors, Executive Vice President, Treasurer and Secretary 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 Vice Chairman of the Board of Directors, Executive Vice President,
Treasurer and Secretary 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 the performance of
services for subsidiaries of the Company and 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 Voting Agreement being entered into
concurrently herewith, will also be a member of the Company's Board of
Directors.
(b) Location Services are to Be Rendered:
Employee shall render his services at Company's offices in
Phoenix, Arizona; 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 Boonton, New Jersey. Notwithstanding the foregoing, the Company's
principal corporate offices shall remain Phoenix, Arizona and Employee need not
relocate to render his duties hereunder, or be required to spend substantial
periods of time away from Phoenix, Arizona other than for periodic meetings at
MAF BioNutrionals, LLC, the Company's subsidiary in Boonton, New Jersey and for
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 or President and Chief Operating
Officer.
(ii) Employee shall be a principal officer of the Company.
Employee shall have the authority to (A) hire or fire any personnel, except for
the CEO and President, (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 President 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.
1
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 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.
2
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 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 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, and shall stay in first class
accommodations (i.e., Hyatt's 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
3
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
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) the willful failure, which failure has not been cured within 10 days after
written notice of such by the Board of Directors, by Employee in substantially
performing his duties hereunder, other than a failure resulting from the
Employee's complete or partial incapacity due to physical or mental illness or
impairment; (ii) a
4
willful breach by the Employee of a material provision of this Agreement after
written notice and such breach has not been cured for 10 days; (iii) any action
or activity, including statements made to the press or other third parties, or
lewd or lascivious public conduct, the effect of which is to subject the Company
or its other officers and directors to ridicule or derision or which shall cause
a material adverse impact to the business of the Company; or (iv) 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.
(d) Designation of Beneficiary.
The parties hereto agree that Employee shall designate, by written
notice to the Company, a beneficiary to 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.
5
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 Arizona by and pursuant to the Labor
Arbitration Rules of the American Arbitration Association with discovery
proceedings pursuant to Arizona. 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: Vital Living, Inc.
0000 X. 00xx Xxxxxx
Xxxxxxx, Xxxxxxx 00000-0000
Facsimile: 602-952-6907
With a copy to: Xxxxx Xxxxxx & Xxxx LLP
1900 Avenue of the Stars
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxx X. Xxxx, Esq.
Facsimile: 000-000-0000
To Employee: Xxxxxx Xxxxxx
Vital Living, Inc.
0000 X. 00xx Xxxxxx
Xxxxxxx, Xxxxxxx 00000-0000
Facsimile: 602-952-6907
(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.
6
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.
(b) Notwithstanding the foregoing, this Agreement is subject to the
terms of that certain guarantee, dated as of the date hereof, between Xxxxxx
Xxxxx and Employee.
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.
7
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.
By:
---------------------------
Its:
-------------------------
Agreed to and Accepted:
By:
---------------------------
Xxxxxx Xxxxxx
SS:
------------------------
8
