EMPLOYMENT AGREEMENT
THIS
EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into as of the
I"
day of May
2007
(the "Effective Date"), between Z Trim Holdings, inc., an Illinois corporation,
whose principal
place of
business is 0000 Xxxxxx Xxxxx, Xxxxxxxxx, Xxxxxxxx 00000 and any of its
successors or affiliated companies (collectively, the "Company") and Xxxx X.
Xxxxxxxx, an individual (hereinafter collectively referred to as the
"Employee"), located at 0000 Xxxxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000
RECITALS
WHEREAS,
the Company is principally engaged in the business of development and marketing
of
life-changing technologies (the "Business").
WHEREAS,
the Company desires to employ the Employee and the Employee desires to enter
into
the
employ of the Company.
WHEREAS,
the Company has established a valuable reputation and goodwill in its business,
with
expertise in all aspects of the Business.
WHEREAS,
the Employee has established a valuable reputation and goodwill in his business,
with expertise in certain, but not all, aspects of the Company's business by
virtue of the Employee's employment
with the Company, will become familiar with and possessed with the manner,
methods, trade
secrets
and other confidential information pertaining to the Company's Business,
including the Company's client base.
NOW,
THEREFORE, in consideration of the mutual agreements herein made, the Company
and
the
Employee do hereby agree as follows:
| 1. |
Recitals.
The above recitals are true, correct, and are herein incorporated
by
reference.
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2. Employment.
The Company hereby employs the Employee, and the Employee hereby accepts
employment, upon the terms and conditions hereinafter set forth.
3. Authority
and Power during Employment Period.
a. Duties
and Responsibilities. During the Term of this Agreement, the Employee shall
serve as "Chief Financial Officer" of the Company and shall have such
responsibilities and duties as customarily undertaken by individuals in similar
positions.
b. Time
Devoted. Throughout the Term of this Agreement, the Employee shall devote
substantially
all of the Employee's business time and attention to the business and affairs
of
the Company
consistent with the Employee's position with the Company, except for reasonable
vacations, illness or incapacity. Employee shall have 25 sick days, personal
and
vacation days annually in the aggregate.
c. Best
Efforts. Throughout the Term of this Agreement, the Employee agrees to use
his
best
efforts to promote the Company's Business. For purposes of this Agreement,
"best
efforts" shall
Initials
1
be
defined as the Employee carrying out his assigned duties and responsibilities,
adhering to the covenants contained in paragraphs 7(a) and 7(b) of this
Agreement, and complying with the policies and procedures related to the
Company's operation of its Business.
4.
Term.
The Term of employment hereunder will commence on the Effective Date as set
forth above, and finish two (2) year from the Effective Date. and can be renewed
every year for one (1) year thereafter based on the mutual desire by the
parties, unless this Agreement shall have been earlier terminated pursuant
to
Section 7 of this Agreement.
5. Compensation.
a. Salary.
The Employee shall be paid a base salary, payable in accordance with the
Company's policies from time to time for salaried employees, at the rate of
fifteen thousand four hundred seventeen dollars ($15,417.00) per
month.
| b. |
Stock
& Options. The Employee shall receive 750,000 options under the
Company's 2004 Stock Equity Plan. The options shall be priced at
market
price on the first date of commencement
of services under this agreement and vest 500,000 on that first date
and
the remaining
250,000 shall vest on the first day of the one year anniversary of
this
agreement.
The options shall be exercisable for a (3) year period of time from
the
date of vesting.
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6. Consequences
of Termination of Employment.
a. Disability.
In the event of the Employee's disability, the Employee shall be entitled to
compensation in accordance with the Company's disability compensation practice
for its salaried employees. "Disability," for the purposes of this Agreement,
shall be deemed to have occurred in the event (A) the Employee is unable by
reason of sickness or accident. to perform his duties under this Agreement
for
an aggregate of 90 days in any 12-month period or 45 consecutive days, or (B)
the Employee has a guardian of his person or estate appointed by a court of
competent jurisdiction. Termination
due to disability shall be deemed to have occurred upon the first day of the
month following
the
determination of disability as defined in the preceding sentence.
b. Termination
by the Company for Cause.
| i. |
Nothing
herein shall prevent the Company from terminating the Employee for
"Cause," as hereinafter defined. The Employee shall continue to receive
salary only for the period ending with the date of such termination
as
provided in this Section 6(b). Any rights and benefits the Employee
may
have in respect of any other
compensation shall be determined in accordance with the terms of
such
other
compensation arrangements or such plans or
programs.
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| ii. |
"Cause"
shall mean (A) committing or participating in an injurious act of
fraud,
gross neglect, misrepresentation, embezzlement or dishonesty against
the
Company; (B) committing or participating in any other injurious act
or
omission wantonly. willfully, recklessly or in a manner which was
grossly
negligent
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2
against
the Company, monetarily or otherwise; (C) engaging in a criminal enterprise
involving
moral turpitude; (D) an act or acts (1) constituting a felony under the laws
of
the
United
States or any state thereof; or (2) if applicable, loss of any state or federal
license required
for the Employee to perform the Employee's material duties or responsibilities
for
the
Company; (E) the Employee's breach of any provision of this Agreement; or (F)
any assignment of this Agreement by the Employee in violation of Section 13
of
this Agreement.
| iii. |
Notwithstanding
anything else contained in this Agreement, this Agreement will not
be
deemed to have been terminated for Cause unless and until there shall
have
been delivered to the Employee a notice of termination stating that
the
Employee committed one of the types of conduct, and employee has
been
given a reasonable opportunity to cure such Cause (to the company's
reasonable satisfaction) which shall not exceed 45 days. Notwithstanding
anything contained herein to the contrary. this Agreement may be
terminated at any time upon the mutual written consent of the Company
and
the Employee.
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d.
Death.
In the event of the death of the Employee during the Term of the Agreement,
compensation shall be paid to the Employee's designated beneficiary, or, in
the
absence of such designation, to the estate or other legal representative of
the
Employee for a period of one hundred eighty
(180) days from and after the date of death. Other death benefits will be
determined in accordance
with the
terms of the Company's benefit programs and plans.
7. Covenant
Not to Compete and Non-Disclosure of Information
a.
Covenant
Not to Compete. The Employee acknowledges and recognizes the highly competitive
nature of the Company's Business and the goodwill, continued patronage, and
specifically the names
and
addresses of the Company's Clients (as hereinafter defined) constitute a
substantial asset of the
Company
having been acquired through considerable time, money and effort. Accordingly,
in consideration of the execution of this Agreement, the Employee agrees to
the
following:
i. That
during the Restricted Period (as hereinafter defined) and within the Restricted
Area (as hereinafter defined), the Employee will not, individually or in
conjunction with others, directly or indirectly, engage in any Business
Activities (as hereinafter defined), whether as an officer, director,
proprietor, employer, partner, independent contractor, investor (other than
as a
holder solely as an investment
of less than one percent (1 %) of the outstanding capital stock of a publicly
traded corporation),
consultant. advisor, agent or otherwise.
ii. That
during the Restricted Period and within the Restricted Area, the Employee will
not, directly or indirectly, compete with the Company by soliciting, inducing
or
influencing any of the Company's Clients which have a business relationship
with
the Company at the time during the Restricted Period to discontinue or reduce
the extent of such relationship with the Company.
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| iii. |
That
during the Restricted Period and within the Restricted Area, the
Employee
will not (A) directly or indirectly recruit, solicit or otherwise
influence any employee or agent of
the
|
Company
to discontinue such employment or agency relationship with the Company, or
(B)
employ or seek to employ, or cause or permit any business which competes
directly or indirectly with the Business Activities
of the Company (the "Competitive Business") to employ or seek to employ for
any
Competitive
Business
employs or seeks to employ such person employed by the Company.
iv. That
during the Restricted Period the Employee will not interfere with, or disrupt
or
attempt to disrupt any past, present or prospective relationship, contractual
or
otherwise, between the Company and any supplier, customer or agent of the
Company.
b. Non-Disclosure
of Information. The Employee acknowledges that the Company's trade secrets,
private or secret processes, methods and ideas, as they exist from time to
time.
customer lists and
information concerning the Company's products, services, training methods,
development, technical information, marketing activities and procedures, credit
and financial data concerning the Company and/or the Company's Clients (the
"Proprietary Information") are valuable, special and unique assets of the
Company, access to and knowledge of which are essential to the performance
of
the Employee hereunder. In light of the highly competitive nature of the
industry in which the company's business is conducted, the Employee agrees
that
all Proprietary Information, heretofore or in the future obtained by the
Employee as a result of the Employee's association with the Company shall be
considered confidential.
In
recognition of this fact, the Employee agrees that the Employee, during the
Restricted Period, will not use or disclose any of such Proprietary Information
for the Employee's own purposes or for the benefit of any person or other entity
or organization (except the Company) under any circumstances unless such
Proprietary Information has been publicly disclosed generally or, unless upon
written advice of
legal
counsel reasonably satisfactory to the Company, the Employee is legally required
to disclose such Proprietary
Information. Documents (as hereinafter defined) prepared by the Employee or
that
come into
the
Employee's possession during the Employee's association with the Company are
and
remain the property
of the Company, and when this Agreement terminates, such Documents shall be
returned to the
Company
at the Company's principal place of business, as provided in the Notices
provision (Section 9) of this Agreement.
c. Documents.
"Documents" shall mean all original written, recorded, or graphic matters
whatsoever, and any and all copies thereof, including, but not limited to:
papers; email; books; records; tangible things; correspondence; communications;
telex messages; memoranda; work-papers; reports; affidavits; statements;
summaries; analyses; evaluations; client records and information; agreements;
agendas; advertisements; instructions; charges; manuals; brochures;
publications; directories; industry lists; schedules; price lists; client lists;
statistical records; training manuals; computer printouts; books of account;
records and invoices reflecting business operations; all things similar to
any
of the foregoing however denominated. In all cases where originals are not
available, the term "Documents" shall also mean identical copies of original
documents or non-identical copies thereof.
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d. Company's
Clients. The "Company's Clients" shall be deemed to be any persons,
partnerships, corporations, professional associations or other organizations
for
whom the Company has performed Business Activities.
e. Restricted
Period. The `"Restricted Period" shall be deemed as the term of this Agreement
and six (6) months following termination of this Agreement.
f. Restricted
Area. The Restricted Area shall be deemed to mean within any county of any
state
in which the Company is providing service at the time of termination of this
Agreement.
g. Business
Activities. "Business Activities" shall be deemed to include the Business and
any additional activities that the Company or any of its affiliates may engage
in during the term of this Agreement.
h. Covenants
as Essential Elements of this Agreement. It is understood by and between the
parties hereto that the foregoing covenants contained in Sections 7(a) and
7(b)
are essential elements of this Agreement, and that but for the agreement by
the
Employee to comply with such covenants, the Company would not have agreed to
enter into this Agreement. Such covenants by the Employee shall be construed
to be agreements independent of any other provisions of this Agreement. The
existence of any other
claim or cause of action, whether predicated on any other provision in this
Agreement, or otherwise, as
a
result of the relationship between the parties shall not constitute a defense
to
the enforcement of such
covenants against the Employee.
i. Survival
After Termination of Agreement. Notwithstanding anything to the contrary
contained in this Agreement, the covenants in Sections 7(a) and 7(b) shall
survive the termination of this Agreement and the Employee's employment with
the
Company.
j. Remedies.
i.
The
Employee acknowledges and agrees that the Company's remedy at law for a breach
or threatened breach of any of the provisions of Section 7(a) or 7(b) herein
would be inadequate and the breach shall be per se deemed as causing irreparable
harm to the Company. In recognition of this fact, in the event of a breach
or
threatened breach by the Employee of any of the provisions of Section 7(a)
or
7(b),
the
Employee agrees that, in addition to any remedy at law available to the Company,
including, but
not
limited to monetary damages, all rights of the Employee to payment or otherwise
under this Agreement and all amounts then or thereafter due to the Employee
from
the Company under this Agreement may be terminated and the Company, without
posting any bond, shall be entitled to obtain, and
the
Employee agrees not to oppose the Company's request for equitable relief in
the
form of specific
performance, temporary restraining order. temporary or permanent injunction
or
any other equitable remedy which may then be available to the
Company.
ii.
The
Employee acknowledges that the granting of a temporary injunction, temporary
restraining order or permanent injunction merely prohibiting the use of
Proprietary Information
would
not be an adequate remedy upon breach or threatened breach of Section 7(a)
or
7(b) and consequently agrees. upon proof of any such breach, to the granting
of
injunctive relief prohibiting any form of competition with the Company. Nothing
herein contained shall be construed as prohibiting the Company from pursuing
any
other remedies available to it for such breach or threatened
breach.
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8.
Withholding. Anything to the contrary notwithstanding, all payments required
to
be made by the Company hereunder to the Employee or the Employee's estate or
beneficiaries shall be subject to the withholding of such amounts, if any,
relating to tax and other payroll deductions, the Company may accept other
arrangements pursuant to which it is satisfied that such tax and other payroll
obligations will be satisfied in a manner complying with applicable law and
regulation.
9.
Notices.
Any notice required or permitted to be given under the terms of this Agreement
shall he sufficient if in writing and if sent postage prepaid by registered
or
certified mail, return receipt requested, by overnight delivery; by courier;
or
by confirmed telecopy, in the case of the Employee to the Employee's last place
of business or residence as shown on the records of the Company, or in the
case
of the Company to its principal office as set forth in the first paragraph
of
this Agreement, or at such other place as it may designate.
10.
Waiver.
Unless agreed in writing, the failure of either party, at any time, to require
performance by the other of any provisions hereunder shall not affect its right
thereafter to enforce the same, nor shall a waiver by either party of any breach
of any provision hereof be taken or held to be a wavier of any other preceding
or succeeding breach of any term or provision of this Agreement. No extension
of
time for the performance of any obligation or act shall be deemed to be an
extension of time for the performance of any other obligation or act
hereunder.
11.
Completeness and Modification. This Agreement constitutes the entire
understanding between the parties hereto superseding all prior and
contemporaneous agreements or understandings among the parties hereto concerning
the Employment Agreement. This Agreement may be amended, modified, superseded
or
canceled, and any of the terms, covenants, representations, warranties or
conditions hereof may be waived, only by a written instrument executed by the
parties or, in the case of a waiver, by the party to be charged.
12. Counterparts.
This Agreement may be executed in two or more counterparts, each of which shall
be deemed an original but all of which shall constitute but one
agreement.
13.
Binding
Effect/Assignment. This Agreement shall be binding upon the parties hereto,
their heirs, legal representatives, successors and assigns. This Agreement
shall
not be assignable by the Employee but shall be assignable by the Company in
connection with the sale, transfer or other disposition of any part or all
of
its business or to any of the Company's affiliates controlled by or under common
control with the Company.
14.
Governing Law. This Agreement shall become valid when executed and accepted
by
Company. The parties agree that it shall be deemed made and entered into in
the
State of Illinois and shall be exclusively governed, venued and construed under
and in accordance with the laws of the State of Illinois. Anything in this
Agreement to the contrary notwithstanding, the Employee shall conduct the
Employee's business in a lawful manner and faithfully comply with applicable
laws or regulations of the state, city or other political subdivision in which
the Employee is located.
15. Further
Assurances. All parties hereto shall execute and deliver such other instruments
and do such other acts as may be necessary to carry out the intent and purposes
of this Agreement.
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1
6.Headings.
The headings of the sections are for convenience only and shall not control
or
affect the meaning
or
construction or limit the scope or intent of any of the provisions of this
Agreement.
17. Survival.
Any termination of this Agreement shall not, however, affect the ongoing
provisions of
this
Agreement which shall survive such termination in accordance with their
terms.
18.
Severability. The invalidity or unenforceability, in whole or in part, of any
covenant, promise or undertaking, or any section, subsection, paragraph.
sentence, clause, phrase or word or of any provision of this Agreement shall
not
affect the validity or enforceability of the remaining portions
thereof.
19.
Enforcement. Should it become necessary for any party to institute legal action
to enforce the terms and conditions of
this
Agreement, the successful party will be awarded reasonable attorneys' fees
at
all trial and appellate levels, expenses and costs.
20.
Venue.
Company and Employee acknowledge and agree that the U.S. District for the
Northern District of Illinois, or if such court lacks jurisdiction, the
Nineteenth Judicial Circuit (or its successor) in and for Lake County, Illinois,
shall be the venue and exclusive proper forum in which to adjudicate any case
or
controversy arising either, directly or indirectly, under or in connection
with
this Agreement and the parties further agree that, in the event of litigation
arising out of or in connection with this Agreement in these courts, they will
not contest or challenge the jurisdiction or venue of these courts.
21. Construction.
This Agreement shall be construed within the fair meaning of each of its terms
and not against the party drafting the document.
22.
Independent Legal Counsel. The parties have either (i) been represented by
independent legal counsel in connection with the negotiation and execution
of
this Agreement, or (ii) each has had the opportunity to obtain independent
legal
counsel, has been advised that it is in their best interests to do so, and
by
execution of this Agreement has waived such right.
23. Facsimile
Copies. All duly executed facsimile copies are fully binding under any and
all
applicable laws.
THE
EMPLOYEE ACKNOWLEDGES THAT HE HAS READ ALL OF THE TERMS OF THIS AGREEMENT,
UNDERSTANDS THE AGREEMENT, AND AGREES TO ABIDE BY ITS TERMS AND
CONDITIONS.
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