Exhibit 10.54

 

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (this “Agreement”) is entered into by and between
NATURADE, INC., a Delaware corporation (the “Company”), and Marwan Zreik (the
“Employee”) as of June 1, 2004 (the “Effective Date”).

 

XIX. Employment

 

The Company employs the Employee and the Employee accepts employment
(hereinafter, the “Employment”) upon the terms and conditions of this Agreement.

 

XX. Duties

 

Employee shall perform the duties of Executive Vice President Sales, and such
other duties of a responsible nature consistent with his position as may be
prescribed from time to time by the Board of Directors of the Company (the
“Board”). Employee is to devote all of his working time and efforts to the
business and affairs of the Company. During the Employment, Employee shall
report to the Chief Executive Officer of the Company and the Board

 

XXI. Term

 

The term of this Agreement shall begin on (the Effective Date and, subject to
extension and termination as provided herein, shall expire on June 01, 2005 (the
“Initial Termination Date”). The period commencing on the Effective Date and
expiring on the Initial Termination Date shall be referred to hereinafter as the
“Initial Term” and, together with any extension thereof, the “Term.”
Notwithstanding the foregoing, this Agreement and the Employment shall be
automatically extended after the Initial Term for an indefinite period. The
effective date of any termination hereunder is referred to hereinafter as the
“Termination Date.”

 

XXII. Compensation

 

1. Base Salary

 

The Company shall pay the Employee for all services rendered a salary of
$150,000.00 per year; payable in such manner as the Company shall pay its
executives.

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2. Annual Incentive Compensation

 

Zreik shall be entitled to a bonus opportunity for each fiscal year in an amount
directly related to the Company’s performance for said fiscal year. The company
shall utilize the following formula for the purposes of determining the annual
bonus in any fiscal year in which the Company has positive net income: Actual
net income/budgeted net income x 35% x BASE SALARY. Actual net income must be at
least 100% of budgeted net income for any bonus payout to occur. Said bonus
shall be paid to Zreik in a lump sum within 60 days of the end of the fiscal
year upon confirmation by the CEO of Zreik’s performance.

 

3. Automobile Allowance

 

The company shall also provide Zreik with an automobile allowance of $300.00 per
month, to enable Kasprisin to perform his duties under this AGREEMENT.

 

4. Stock Options

 

Upon commencement of the Employment, the Board of Directors will grant the
Employee the option to purchase 50,000 shares of the Company’s common stock (the
“Options”) subject to the terms and conditions of the Company’s Stock Option
Agreement to be executed by the Company and the Employee (the “Option
Agreement”). Such Options shall be granted at Fair Market Value (as defined in
the Option Agreement) and shall vest in accordance with the following vesting
schedule:

 

 

Number of Options

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Vesting Date

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12,500

   Six Month from Effective Date

12,500

   Twelve Months from Effective Date

12,500

   Eighteen Months from Effective Date

12,500

   Twenty-four Months from Effective Date

 

The Options shall terminate in accordance with the terms and conditions of the
Option Agreement.

 

5. Fringe Benefits

 

Employee and his dependents shall be eligible for all fringe benefits provided
to its employees. In addition, the Employee shall be entitled to four (4) weeks
paid vacation during each year of the Term.

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XXIII. Extent of Services

 

During the Term, Employee shall not, without the prior written consent of the
Company, be engaged in any other business activity whether or not such business
activity is pursued for gain, profit or other pecuniary advantage. This shall
not be construed as preventing Employee from investing his assets in such form
or manner as will not require the performance of services of Employee in the
operation of the affairs of the enterprises or companies in which said
investments are made.

 

XXIV. Competitive Activities

 

During the Term, Employee shall not, directly or indirectly, either as an
employee or employer, consultant, agent, principal, partner, stockholder (of
more than 5% of the outstanding stock on any entity), corporate officer,
director, or in any other individual or representative capacity, engage or
participate in any business that is in competition with the business of the
Company. The parties agree that the terms of this paragraph are reasonable and
in compliance with applicable law and, in that regard, anything to the contrary
appearing in this Agreement notwithstanding, if a court shall determine that the
scope of this paragraph shall be unenforceable, such court is hereby authorized
and empowered to restrict the geographic area and the scope of activities to
which this paragraph pertains to the minimum extent necessary so that this
paragraph as so restricted shall be rendered enforceable.

 

XXV. Non-Disclosure; Nonsolicitation; Nondisparagement

 

1. Employee shall not during the Term or at any time thereafter (i) disclose to
any person not employed by the Company or any person, firm or corporation
engaged to render services to Company except during the Term for the benefit of
Company, or (ii) use for the benefit of himself, or others, any Confidential
Information (as defined below) obtained by Employee prior to the Effective Date,
during the Term or any time thereafter, including, without limitation,
“know-how”, trade secrets, details of the Company’s contracts with third
parties, pricing policies, financial data, operational methods, marketing and
sales information or strategies, product development techniques or plans or any
strategies relating thereto, technical processes, designs and design projects,
and other proprietary information of Company (“Confidential Information”);

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provided, however, that this provision shall not preclude Employee from (x) upon
advice of counsel and after reasonable notice to Company, 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 paragraph VII by or on behalf of Employee).

 

2. As requested by the Company from time to time and upon the termination of the
Employment for any reason, Employee will promptly deliver to the Company all
copies and embodiments, in whatever form, of all Confidential Information in
Employee’s possession or within Employee’s control (including, but not limited
to, written records, notes, photographs, manuals, notebooks, documentation,
program listings, flow charts, magnetic media, disks, diskettes, tapes and all
other materials containing any such Confidential Information) regardless of the
location or form of such material and, if requested by the Company, will provide
the Company with written confirmation that all such materials have been
delivered to the Company.

 

3. The Employee shall not, either directly or indirectly, call on, solicit or
take away or assist to be called on, solicited or taken away, any of the
customers, employees or independent contractors of the Company on whom the
Employee called or with whom the Employee became acquainted during the
Employee’s employment with or hiring by the Company, either for the Employee’s
own benefit, or for the benefit of any other person, firm or corporation. The
Employee shall not disclose the name of any employee, customer, sales
representative or other employee of the Company to any third party, unless the
disclosure occurs during the Employee’s employment with the Company and is
reasonably required by the Employee’s position with the Company. The Employee
shall not now or in the future disrupt, damage, impair or interfere with the
business of the Company in any manner, including, without limitation, inducing
an employee to leave the employ of the Company or inducing an employee, a
consultant, a sales representative or an independent contractor to sever that
person’s relationship with the Company either by interfering with or raiding the
Company’s employees or sales representatives, disrupting its relationships with
customers, agents, independent contractors, representatives or vendors, or
otherwise.

 

In the event of a breach or threatened breach by Employee of the provisions of
paragraph VI above or this paragraph VII, the Company will be entitled to
injunctive or other equitable relief restraining Employee from any breach or
threatened breach of paragraph VI above or this paragraph VII. Nothing herein
shall be construed as prohibiting the Company from pursuing any other remedies
available to the Company for such breach or threatened breach, including the
recovery of damages from Employee.

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XXVI. Expenses

 

The Employee may incur reasonable expenses, in accordance with Company policies
for such expenses, for promoting the Company’s business, including expenses for
entertainment, travel and similar items. The Company will reimburse the Employee
for all such expenses upon the Employee’s presentation of an itemized account of
such expenditures and supporting documentation, in accordance with Company
policy.

 

XXVII. Termination by the Company for Cause

 

This Agreement may be terminated by the Company under any of the following
circumstances:

 

1. Upon the death of Employee; or

 

2. Upon the inability of Employee to perform all of his duties hereunder by
reason of illness, physical, mental or emotional disability or other incapacity,
which inability shall continue for more than three (3) successive months or six
(6) months in the aggregate during any period of twelve (12) consecutive months,
or

 

3. For cause, defined as:

 

  (i) the willful failure of Employee (other than for the reasons described in
subparagraph IX(2) above) to (a) substantially perform his duties hereunder, or
(b) comply materially with reasonable directives of the Company, in either case
which remains uncured following ten (10) days after written notice thereof has
been provided to the Employee by the Company. No act, or failure to act, on
Employee’s part shall be considered “willful” unless done, or omitted to be
done, by him not in good faith and without reasonable belief that his action or
omission was in the best interest of the Company;

 

  (ii) conviction of a crime involving a felony, fraud embezzlement or the like,

 

  (iii) the engaging by Employee in conduct, or the taking by Employee of any
action, which is materially injurious to the Company and remains uncured
following ten (10) days after written notice thereof has been provided to the
Employee by the Company,

 

  (iv) habitual insobriety or habitual abuse of a controlled substance,

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(v) misappropriation of the Company’s funds, or

 

(vi) the failure of Employee to comply with the provisions of Paragraphs V, VI
or VII above.

 

XXVIII. Termination by Employee for Good Reason

 

This Agreement may be terminated by Employee under any of the following
circumstances (“Good Reason”):

 

1. The failure of the Company to observe or comply with any of the material
terms or provisions of this Agreement after written notice from Employee to
Company specifying the grounds for termination and the Company fails within ten
(10) days after receipt of such notice to cure such failure;

 

2. A “Change of Control” (as defined in Exhibit A hereto) pursuant to which the
Employee is not retained by the Company (or other surviving or successor entity
following such Change of Control ) on substantially the same terms as provided
herein.

 

XXIX. Termination Without Cause

 

This Agreement may be terminated by either party without cause upon thirty (30)
days’ prior written notice to the other party.

 

XXX. Severance

 

In the event this Agreement is terminated by the Company without cause pursuant
to paragraph XI, or in the event this Agreement is terminated by the Employee
for Good Reason as provided in paragraph X, the Company shall continue to pay
the Employee his then current Base Salary and provide the benefits set forth in
paragraph IV above during the period commencing on the Termination Date and
ending six (6) months thereafter. In the event of termination prior to year-end,
the Employee shall not be entitled to (i) payment of Incentive Bonus payable for
such year (unless such termination was without cause or for Good Reason, in
which event the Employee shall be entitled to the Incentive Bonus pro-rated
through the Termination Date and payable at the time set forth in paragraph
IV(B) above), or (ii) stock options which have not vested as of the Termination
Date; provided that if such termination occurs as a result of a Change of
Control as provided in paragraph X(B), all Options which have not then vested
shall immediately vest prior to the effectiveness of any such termination.

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XXXI. Waiver of Breach

 

The waiver by either party of a breach of any provision of this Agreement by the
other shall not operate or be construed as a waiver of any subsequent breach.

 

XXXII. Arbitration

 

Any dispute arising out of or relating to this Agreement or the transactions
contemplated hereby shall be finally resolved and determined by mandatory,
binding arbitration before a single arbitrator in Irvine, California, in
accordance with the then-prevailing commercial arbitration rules of the American
Arbitration Association; provided, however, that no claim for specific
performance or injunctive relief shall be required to be submitted to
arbitration; provided, further, that the arbitrator shall apply the internal
laws of the State of California. Each of the parties hereto submits to the
jurisdiction of the arbitrator appointed in accordance with such rules and
(without limiting the effect of the foregoing arbitration clause) to the
jurisdiction of any state or federal court sitting in Orange County, California,
in any action or proceeding arising out of or relating to this Agreement and
agrees that all claims in respect of the action or proceeding may be heard and
determined in any such court. Each of the parties hereto waives any defense of
inconvenient forum to the maintenance of any action or proceeding so brought and
waives any bond, surety, or other security that might be required of any other
party with respect thereto. Nothing in this paragraph XIV, however, shall affect
the right of any party to bring any action or proceeding arising out of or
relating to this Agreement or the transactions contemplated hereby in any other
court or to serve legal process in any other manner permitted by law or at
equity, for the purposes of compelling arbitration, enforcing any award in
arbitration, or seeking specific performance or injunctive relief. Any party
hereto may make service on any other party by sending or delivering a copy of
the process to the party to be served at the address and in the manner provided
for the giving of notices in paragraph XVII hereof. Each party hereto agrees
that a final award in any such arbitration or final judgment in any such action
or proceeding so brought shall be conclusive and may be enforced by entry of
such award in any court of competent jurisdiction, suit on the award or
judgment, or in any other manner provided by law or at equity. In the event of
legal action or arbitration to construe or enforce this Agreement, the
prevailing party (as determined by the court or arbitrator, as applicable) shall
be entitled to recover its reasonable attorneys’ fees and costs.

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XXXIII. Assignment

 

The rights and obligations of the Company under this Agreement shall inure to
the benefit of and shall be binding upon the successors and assigns of the
Company, but the rights and obligations of Employee are personal and may not be
assigned or delegated without the Company’s prior written consent.

 

XXXIV. Entire Agreement

 

This Agreement and all Exhibits attached hereto contain the entire agreement of
the parties and may not be changed orally, but only by an agreement in writing
executed by the party against whom enforcement of any waiver, change,
modification, extension or discharge is sought.

 

XXXV. Law Applicable

 

This Agreement shall be governed in all respects, whether as to validity,
construction, capacity, performance or otherwise, by the internal laws of the
State of California. In the event any provision of this Agreement shall be held
invalid by a court with jurisdiction over the parties to this Agreement, such
provision shall be deleted from the Agreement, which shall then be construed to
give effect to the remaining provisions thereof.

 

XXXVI. Notices

 

Any notice or other communication required or permitted hereunder shall be in
writing and shall be delivered personally or sent by facsimile transmission and
shall be deemed given when so delivered personally or sent by facsimile
transmission, if to the Company addressed to the Chief Executive Officer of the
Company at its then principal place of business and if to the Employee at his
home address then shown in the Company’s records. For the purpose of determining
compliance with any time limit in this Agreement, a notice shall be deemed to
have been duly given (a) on the date of service or delivery, if served
personally on the party to whom notice is to be given or sent by facsimile, or
(b) on the second business day after mailing, if mailed to the party to whom the
notice is to be given in the manner provided in this paragraph.

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IN WITNESS WHEREOF, the parties intending to be legally bound, have executed
this Agreement as of the day and year first above stated.

 

NATURADE, INC.   EMPLOYEE

/s/ Bill D. Stewart

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/s/ Marwan Zreik

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Bill D. Stewart,

 

Marwan Zreik

Chief Executive Officer

   

 

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EXHIBIT A

 

As used in this Agreement, the phrase “Change in Control” shall mean:

 

(a) Except as provided by subparagraph (b) hereof, the acquisition by any
person, entity or “group”, within the meaning of Section 13(d)(3) or 14(d)(2) of
the Securities Exchange Act of 1934, as amended (the “Exchange Act”) of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 50% or more of the combined voting power of the then
outstanding securities entitled to vote generally in the election of directors
of the Company; or

 

(b) Approval by the Board of a reorganization, merger or consolidation of the
Company with any other person, entity or corporation, other than:

 

(i) a merger or consolidation which would result in the voting securities of the
Company immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of another entity) more
than 50% of the combined voting power of the securities entitled to vote
generally in the election of directors of the Company or such other entity
outstanding immediately after such merger or consolidation; or

 

(ii) a merger or consolidation effected to implement a recapitalization of the
Company or similar transaction in which no person, entity or group acquires
beneficial ownership of 50% or more of the combined voting power of the
securities entitled to vote generally in the election of directors of the
Company outstanding immediately after such merger or consolidation; or

 

(iii) Approval by the Board of a plan of complete liquidation of the Company or
an agreement for the sale or other disposition by the Company of all or
substantially all of the Company’s assets (other than a liquidation or sale
pursuant to which all or substantially all of the Company’s assets continue to
be owned by an affiliate of the Company).