EXHIBIT 10.5
October 31, 2006
Mr. Mark D. Woodburn
809 Dominion Drive
Southlake, Texas 76092
Re: Consulting Terms
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Dear Mark:
We are pleased to set forth the terms and conditions of your engagement
with Natural Health Trends Corp. (the "Company"). We look forward to your
assistance towards the execution of our business plan.
Consulting
Subject to the terms of this Agreement, commencing on October 31, 2006
(the "Commencement Date"), you will be engaged as a consultant to the Company
for a one (1) year period (the "Consulting Term"). You will report directly to
the Company's Chief Executive Officer and will assist the Company with respect
to general administration, accounting, finance and strategic planning.
Fees; Expenses
During the Consulting Term, you will be paid a monthly fee of $17,000
per month and you will be responsible for payment of all taxes and social
security payments. You will also be reimbursed for bona fide business related
expenses incurred by you approved in advance in writing by the Company's Chief
Executive Officer. You will be paid on the 1st day of each month and payment
will be made to MDW Capital, Inc., 809 Dominion Drive, Southlake, Texas 76092.
Termination; Payments
You will be entitled to Subsequent Payments (as hereinafter defined)
only if the Company terminates your engagement without Cause (as hereinafter
defined). However, in order to receive any Subsequent Payments you must execute
and deliver to the Company a full general release of all claims against the
Company and its affiliates in form and substance satisfactory to the Company.
During the Severance Period (as hereinafter defined), if you elect to engage in
a Competitive Activity (as defined in that certain Restricted Activity and
Proprietary Rights Assignment Agreement dated as of the date hereof between the
Company and you (the "Restricted Activity Agreement")), you shall notify the
Company not less than five (5) business days prior to the commencement by you of
any Competitive Activity.
As used herein, the term (a) "Subsequent Payments" shall mean the
continuation of the payment of your monthly fee through the remainder of the
Consulting Term (the "Severance Period"), or until such earlier date on which
you (i) breach the terms and conditions of that certain agreement dated the date
hereof among the Company, Terry LaCore and you, or any of the other Transaction
Documents (as defined therein) (each, a "Severance Payment Termination Event),
or (ii) the date on which you engage in any Competitive Activity, other than
pursuant to a Permitted Consulting Arrangement (as defined in the Restricted
Activity Agreement); and (b) "Cause" shall include, without limitation, the
following (if such "Cause" is not cured within ten (10) days following written
notice thereof.): (i) failure or neglect by you to perform the duties described
herein or otherwise assigned to you by the Company's Chief Executive Officer;
(ii) your failure to obey orders given by the Company or your supervisors; (iii)
your misconduct in connection with the performance of any of your duties,
including, without limitation, misappropriation of funds or property of the
Company, securing or attempting to secure personally any profit in connection
with any transaction entered into on behalf of the Company, misrepresentation to
the Company, or any violation of law or regulations on Company premises or to
which the Company is subject; (iv) your commission of an act involving moral
turpitude, dishonesty, theft or unethical business conduct, or conduct which
impairs or injures the reputation of, or harms, the Company; (v) your
disloyalty, including without limitation, aiding a competitor or accepting
payment from Company suppliers, distributors, employees, or agents; (vi) your
failure to devote your best efforts to the Company's business and affairs; (vii)
except in connection with your providing consulting services pursuant to a
Permitted Consulting Arrangement, your failure to work primarily for the
Company; (viii) your failure to fully cooperate in any investigation by the
Company; (ix) your breach of this Agreement or Company rules; (x) any other act
of misconduct by you that could reasonably be expected to have a material
adverse effect on the Company, its business, prospects or reputation; (xi) your
abuse of alcohol or other drugs or controlled substances; or (xii) your
resignation.
Restricted Activity and Confidentiality Agreement
Simultaneously herewith, you will enter into the Restricted Activity
Agreement.
Consulting
For all purposes, you shall be deemed to be an independent contractor,
and not an employee, agent or partner of, or joint venturer with, the Company.
Accordingly, you shall not be entitled to any rights or benefits to which any
employee of the Company or any of its affiliates may be entitled. The Company
shall not withhold any amounts on account of any withholding or employment taxes
from any payments to you under this Agreement, and it shall be your sole
responsibility to report and pay all applicable income taxes on all such
payments. Further, you will not be entitled to bind the Company in any manner,
manage the business or affairs of the Company, or serve as the Company's agent
or representative. Either you or the Company may terminate the relationship at
any time upon written notice to the other party. You may not assign this
Agreement without the prior written consent of the Company.
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Please indicate your acceptance and agreement with the terms of this
letter by signing below in the space provided and by signing the Restricted
Activity and Proprietary Rights Assignment Agreement.
Sincerely,
NATURAL HEALTH TRENDS CORP.
By: /s/ STEPHANIE S. HAYANO
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Name: Stephanie S. Hayano
Title: Chief Executive Officer and
President
Agreed to and Accepted:
/s/ MARK D. WOODBURN
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Mark D. Woodburn
October 31, 2006
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