Exhibit
10.3


 


EXECUTIVE SERVICES
AGREEMENT


 


This Agreement (“Agreement”)
is entered into as of this 14th day of October, 2003, by and between
Doctors for Nutrition Inc. (the “Company”) and Bruce Howe (“Employee”), in
connection with the Company’s engagement of Employee’s personal services as
President and such other duties as described herein.


 


WHEREAS, Vital Living, Inc.,
a Nevada corporation (“VL”),  and  Bruce Howe (“Employee”)  are parties to a Stock Purchase Agreement
dated October 14, 2003, (the “Stock Purchase Agreement”) pursuant to which
the Company has sold  all the
outstanding stock of the Company to Vital Living, Inc.


 


WHEREAS, as a condition to
the closing of the Stock Purchase Agreement, the Company is required to enter
into and deliver this Agreement to Employee.


 


1.                                      DUTIES AND ACCEPTANCE:


 


(a)                                  Engagement by the Company


 


The Company hereby engages
Employee, and Employee hereby agrees to serve as President of the Company on
the terms and conditions of this Agreement. 
Throughout the Term of this Agreement, Employee, subject to the
provisions contained herein, agrees to devote 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
provide voluntary non-remunerated community and charitable service work such
that it does not interfere with any services to be rendered hereunder.


 


(b)                                 Location Services are to Be Rendered


 


Employee shall render his
services at the Company’s offices in the general area of  San Diego, California; 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 to travel to the Company’s offices in Phoenix, Arizona,
Springville, Utah, 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 the Board of Directors of the Company,
which shall be controlled by Vital Living, Inc., the sole shareholder of the
Company, which Vital Living may designate such employee and/or consultant to
whom Employee shall report.


 


(ii)                                       Employee shall be a principal officer of the
Company.  Employee shall have the
authority to execute any agreement not inconsistent with the then effective
directions or resolutions of the Board of Directors and approve and sign checks
or agreements which bind the Company, but any check or agreement that binds the
Company over $25,000 or collectively totals or binds the Company over $25,000 in
any calendar quarter, shall require the signature of at least one of the
following employees; Brad Edson or Stuart Benson, or such other individuals as
VL may designate.


 


(iii)                                    Employee shall be entitled to a seat on the
Company’s Board of Directors.


 


2.                                      TERM:


 


The term of Employee’s engagement hereunder shall be
for a period of three (3) years commencing 
October 15, 2003, and ending 
three years later on October 14, 2006 (such period, unless sooner
terminated pursuant to Section 6 hereof (the “Termination  Sections”), being referred to herein as the
“Term”).


 


3.                                      COMPENSATION
AND BENEFITS:


 


(a)               Compensation


 


Employee shall receive
compensation (the “Base Compensation”) at the rate of $100,000  per annum during the first year of the Term,
$115,000 during the second year of the Term and $130,000 during the third year
of the Term. Employee’s Base Compensation shall be payable every two weeks,
according to the normal payroll practices of the Company, and depending on the
payroll system adopted by the Company.  Employee shall be eligible to receive increases in the Base
Compensation on each one year anniversary of this Agreement.  In addition, within 30 days following the
date of this Agreement, Employee shall be paid a one time bonus of $25,000.


 


(b)              Mandatory Bonus                 (i)                                     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 VL, determined as soon as practical after
the end of each fiscal year, plus such other bonuses, stock options, stock
warrants or other incentives as may be determined by the Board of Directors of
VL, from time to time.


 


(ii)                                  In addition, if the Company’s EBITDA (as
defined in the Stock


 

















 


Purchase Agreement) for the period from
October 1, 2003 through September 30, 2004 is no less than $250,000,
then Employee shall be paid a one time bonus of $25,000, which amount shall be
paid within 30 days of when it is determined that Employee is entitled to such
bonus.


 


(c)               Employee shall be granted the option to
acquire 300,000 shares of VL common stock at the market price on the day of
closing this transaction, but in no event shall the option price be below $1.00
per share, which shall vest, so long as Employee remains employed by the
Company,  over a three year period as
follows: (i) the option to purchase the first 100,000 shares shall vest on
October 31, 2004 if the Company’s EBITDA (as defined in the Stock Purchase
Agreement) for the period from October 1, 2003 through September 30,
2004 is no less than 20% of the Company’s gross revenue for such period and no
less than $250,000 (if these financial thresholds are not met the option for
the first 100,000 shares shall expire); (ii) the option to purchase the second
100,000 shares shall vest on October 31, 2005 if the Company’s EBITDA (as
defined in the Stock Purchase Agreement) for the period from October 1,
2004 through September 30, 2005 is no less than 20% of the Company’s gross
revenue for such period and no less than $350,000 (if these financial
thresholds are not met the option for the second 100,000 shares shall expire);
and (iii) the option to purchase the third 100,000 shares shall vest on
October 31, 2006 if the Company’s EBITDA (as defined in the Stock Purchase
Agreement) for the period from October 1, 2005 through September 30,
2006 is no less than 20% of the Company’s gross revenue for such period and no
less than $500,000 (if these financial thresholds are not met the option for
the third 100,000 shares shall expire). 
In the event Employee is terminated by the Company during the Term
without Cause, then any of the above options whose potential vesting date has
not occurred at the time of termination, shall immediately vest.  Any options that have vested pursuant to the
foregoing shall expire and be of no further force or effect if not exercised
within is six months after the termination of Employee’s employment with Company.


 


4.                                      PARTICIPATION IN EMPLOYEE
BENEFIT PLANS


 


(a)  Fringe Benefits


 


Employee shall be permitted
during the Term to participate in any individual group life, medical,
hospitalization, 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 the Company for executive 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 the Company shall not be required to
establish or maintain any such Fringe Benefits.


 


(b)  Vacation


 


Employee
shall have the right during each year of the Term, in addition to


 

















 


5 personal/sick days and those days in which
the Company is closed, to take an aggregate of two weeks of vacation time
during the first year of employment and three weeks of paid vacation time
during the second and third year of employment, at such times as may be
mutually agreed upon by the Company and Employee.  The
employee will not be able to accrue vacation or personal/sick time during the
term of this agreement


 


(c)  Expenses


 


The 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 the Company.  If
Employee is required to undertake any travel on behalf of the Company, Employee
may be furnished coach class air travel, and shall stay in first class
accommodations (i.e., Hyatt’s, Marriott, or Hilton Hotels).


 


(d)  Cellular Benefits


 


The Company will provide
Employee with a cell phone and directly pay all base plan costs related to the
cell phone up to $100 per month.


 


(e)  Automobile Allowance


 


Employee shall receive a
monthly automobile allowance from the Company of $500 per month.  Said allowance is full payment for all gas
and use for said automobile; provided, however, additional  mileage charges, in customary amounts, shall
be added in the event a vehicle is used for transportation to a trade show or
other extraordinary business trip.


 


5.  CERTAIN
COVENANTS OF EMPLOYEE:


 


Without in any way limiting
or waiving any right or remedy accorded to the 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 Employee).


 


(b)  Property of The 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 to 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 and/or Vital Living, Inc., 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, the Company may, at any
time thereafter, by 30 days written notice to Employee, terminate Employee’s
services hereunder. Employee agrees to submit to reasonable medical
examinations upon the reasonable request of the Company  The existence of Employee’s disability for
the purposes of this Agreement shall be determined by a reputable physician
selected by the 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, if any, earned through the date of
Employee’s termination and continuing thereafter for an additional period of
two (2) months.


 

















 


(b)  By Resignation or By The 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), the 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 the Company’s obligations
hereunder shall terminate.  “Cause”
means (i) the Employee’s repeated failure to satisfactorily perform the
Employee’s job duties or follow lawful directions of the Board of Directors of
Company consistent with Employee’s job duties, provided Employee has been
provided with written notice of such failure and a reasonable period to cure
such failure, (ii) the Employee’s conviction of a crime involving moral
turpitude, (iii) the Employee’s violation of any material provision of this
Agreement, or (iv) the Employee’s commission of any fraud against the company,
its employees, agents or customers or use or appropriation for his personal use
or benefit of any property of the Company.


 


(c)  Termination Without Cause


 


If Employee’s employment is
terminated without “Cause”, the Company shall pay the Employee his (i) base
salary for the remainder of the term on and when his salary check is due for
the remaining term of the Agreement and (ii) any accrued but unpaid bonuses,
retirement plan contributions, stock options, or stock warrants, if any, or any
other earned benefit or remuneration otherwise payable under the terms hereof.


 


(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.


 


7.    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 the 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.


 


(c)               Services Rendered Deemed Special, Etc.


 


Employee acknowledges and
agrees that the services to be rendered by Employee hereunder are of a special,
unique, extraordinary and intellectual character which gives them peculiar
value, the loss of which cannot be adequately compensated for in an action at
law and that a breach of any term, condition or covenant hereof will cause
irreparable harm and injury to the Company and in addition to any other
available remedy the Company will be entitled to seek injunctive relief.


 


8.                                      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 the Company’s
business, including advertising their products and services; and the Company
may grant such rights to others, but not for use as an endorsement of any other
product or service.


 


9.                                      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
termination of this Agreement or as to 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
law.  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.


 

















 


10.                               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 the Company:

  	
   

  	
  Doctors for Nutrition

  
	
   

  	
   

  	
  c/o Vital Living, Inc.

  
	
   

  	
   

  	
  5080 N. 40th
  Street, Suite #105

  
	
   

  	
   

  	
  Phoenix, Arizona
  85018-2147

  
	
   

  	
   

  	
  Facsimile:  602-952-6907

  
	
   

  	
   

  	
   

  
	
  With a copy to:

  	
   

  	
  Kelly Lytton & Vann
  LLP

  
	
   

  	
   

  	
  1900 Avenue of the Stars

  
	
   

  	
   

  	
  Los Angeles, California
  90067

  
	
   

  	
   

  	
  Attn:  Bruce P. Vann, Esq.

  
	
   

  	
   

  	
  Facsimile:  310-277-5953

  
	
   

  	
   

  	
   

  
	
  To Employee:

  	
   

  	
  Bruce Howe

  
	
   

  	
   

  	
  415 South Granados

  
	
   

  	
   

  	
  Solana Beach, California
  92075

  



 


(b)                                 Change of Address


 


Either party may change its
address for notice hereunder by notice to the other party in accordance with
this Section 10.


 


11.                               COMPLETE AGREEMENT;
MODIFICATION AND TERMINATION:


 


This Agreement contains a
complete statement of all the arrangements between the parties with respect to
Employee’s services to the Company, and supersedes all existing agreements
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.


 

















 


12.                               GOVERNING LAW:


 


This Agreement shall be
governed by and construed in accordance with the law of the State of Arizona
applicable to agreements entered into and performed entirely within such State.


 


13.                               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.


 


	
  Doctors for Nutrition,
  Inc.

  
	
   

  
	
  By: 

  	
   

  	
   

  
	
  Its: 

  	
   

  	
   

  
	
   

  
	
  Agreed to and Accepted:

  
	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Bruce Howe; SS: