EXHIBIT 10.7
NATURAL HEALTH TRENDS CORP.
RESTRICTED ACTIVITY AND PROPRIETARY RIGHTS
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ASSIGNMENT AGREEMENT
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Consultant's Name: Terry L. LaCore ("LaCore")
Date: October 31, 2006
In consideration of LaCore's engagement by Natural Health Trends Corp.
(including their subsidiaries, successors and assigns, the "Company")
and in consideration for and as a condition to the transactions
contemplated by that certain Agreement dated as of the date hereof by
and between the Company, Mark D. Woodburn and LaCore, LaCore hereby
agrees with the Company as follows:
1. Confidential Information. LaCore may have received or may
receive and otherwise be exposed to confidential or competitively sensitive
information of the Company, or of a third party with which the Company has a
business relationship, relating to the Company's or such third party's current
or prospective business, research and development activities, products,
technology, strategy, organization and/or finances (collectively, "Confidential
Information"). Such Confidential Information, which may be disclosed orally or
in writing, shall include, without limitation, Technology (as defined in Section
2(a)), Work Product (as defined in Section 2(a)), plans, strategies,
negotiations, customer or prospect identities, market analyses, projections,
forecasts, cost and performance data, sales data, financial statements, price
lists, pre-release information regarding the Company's products, personnel lists
and data, and all documents and other materials (including any notes, drawings,
reports, manuals, notebooks, summaries, extracts or analyses), whether in
written or electronic form, that disclose or embody such Confidential
Information.
Confidential Information shall not include information that is now, or
hereafter becomes, through no act or failure to act on LaCore's part, generally
known to the public; information that was rightfully in LaCore's possession
without confidentiality restriction prior to the Company's disclosure to LaCore;
information that was rightfully obtained by LaCore from a third party who has
the right, without obligation to the Company, to transfer or disclose such
information; or information which LaCore is required to disclose pursuant to
judicial order, provided that in the latter case LaCore shall promptly notify
the Company and take reasonable steps to assist the Company in protecting the
Company's rights prior to disclosure. At all times, both during LaCore's
relationship with the Company and after the termination thereof, LaCore will
keep all Confidential Information in strict confidence; will not use
Confidential Information except for the purpose of providing services to the
Company; and will not divulge, publish, disclose or communicate Confidential
Information, in whole or in part, to any third party. LaCore further agrees that
LaCore will not allow any unauthorized person access to Confidential
Information, either before or after the termination of this Agreement, and will
take all action reasonably necessary and satisfactory to the Company to protect
the confidentiality of Confidential Information. LaCore agrees not to reproduce
or copy by any means Confidential Information, except as reasonably required to
accomplish the purposes of this Agreement, and further agrees not to remove any
proprietary rights legend from such Confidential Information or copies thereof
made in accordance with this Agreement. Upon termination of LaCore's services
for any reason, or upon demand by the Company at any time, LaCore's right to use
Confidential Information shall immediately terminate, and LaCore shall return
promptly to the Company, or destroy, at the Company's option, all tangible and
electronic materials that disclose or embody Confidential Information.
2. Assignment of Work Product.
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(a) For purposes of this Agreement: "Technology" shall
mean all ideas, concepts, inventions, discoveries,
developments, creations, methods, techniques,
processes, machines, products, devices, compositions
of matter, improvements, modifications, designs,
systems, specifications, schematics, formulas, mask
works, works of authorship, software, algorithms,
data and know-how, whether or not patentable or
copyrightable, and all related notes, drawings,
reports, manuals, notebooks, summaries, memoranda and
other documentation; "Intellectual Property Rights"
shall mean all worldwide intellectual property rights
including, without limitation, all rights relating to
the protection of inventions, including patents,
patent applications and certificates of invention;
all rights associated with works of authorship,
including copyrights and moral rights; all rights
relating to the protection of trade secrets and
confidential information; all rights related to the
protection of trademarks, logos and service marks;
any rights analogous to those set forth herein, and
all other proprietary rights related to intangible
property; and "Work Product" shall mean any and all
Technology made, conceived, designed, created,
discovered, invented or reduced to practice by LaCore
during the term of this Agreement that (i) results
from LaCore's performance of services for the
Company, (ii) is related to the business of the
Company or (iii) is based upon the use of
Confidential Information.
(b) LaCore agrees to promptly disclose to the Company in
writing all Work Product upon the development,
conception or creation thereof by LaCore, as well as,
at any time, upon the request of the Company.
(c) LaCore agrees that all Work Product shall be the sole
and exclusive property of the Company, and does
hereby irrevocably and unconditionally transfer and
assign to the Company, its successors and assigns,
all right, title and interest it may have or acquire
in or to any Work Product, including all Intellectual
Property Rights therein. LaCore further agrees that
any and all works of authorship created, authored or
developed by LaCore hereunder shall be deemed to be
"works made for hire" within the meaning of the
United States copyright law and, as such, all rights
therein including copyright shall belong solely and
exclusively to the Company from the time of their
creation. To the extent any such work of authorship
may not be deemed to be a work made for hire, LaCore
agrees to, and does hereby, irrevocably and
unconditionally transfer and assign to the Company
all right, title, and interest including copyright in
and to such work.
(d) Upon request by the Company, LaCore agrees to execute
and deliver all such documents, certificates,
assignments and other writings, and take such other
actions, as may be necessary or desirable to vest in
the Company ownership in all Work Product as provided
in this Section 2, including, but not limited to, the
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execution and delivery of all applications for
securing all United States and foreign patents,
copyrights and other intellectual property rights
relating to Work Product. The Company shall reimburse
LaCore for any reasonable expenses incurred by LaCore
at the Company's request to secure title or legal
protection on the Company's behalf for any such Work
Product. In the event that the Company is unable to
secure LaCore's signature to any document, or if
LaCore otherwise fails to take any action deemed
necessary by the Company to protect or maintain the
Company's ownership of Work Product and Intellectual
Property Rights therein, then the Company may, and
LaCore hereby irrevocably designates and appoints the
Company and its duly authorized officers and agents
as LaCore's agent and attorney-in-fact to act on and
in LaCore's behalf and stead to, execute and file any
such applications and perform all other lawfully
permitted acts to perfect LaCore's assignment and
transfer of ownership rights to the Company with the
same legal force and effect as if executed, filed and
performed by LaCore.
(e) For purposes of this Section 2(e), "Background
Technology" shall mean Technology owned by or
licensed to LaCore as of the Effective Date of this
Agreement or developed or otherwise obtained by
LaCore following the Effective Date hereof
independently of the performance of services
hereunder by LaCore. The Company acquires no rights
in the Background Technology, except as specifically
provided in this Agreement and, as between the
parties, LaCore retains all rights therein. LaCore
hereby grants to Company a royalty-free, worldwide,
non-exclusive, perpetual, sublicensable and
irrevocable right and license to use, for all
purposes in Company's business, Background Technology
that has been disclosed by LaCore to Company or that
is embodied within or related to the use, operation
or improvement of Work Product created by LaCore in
connection with LaCore's performance of services for
the Company.
3. Representation. LaCore hereby represents to the Company that
the Work Product LaCore creates under this Agreement will be original, and that
LaCore's performance of services under this agreement and the Company's use of
LaCore's Work Product will not breach any agreement LaCore has with any third
party or the intellectual property rights or other rights of any third party.
4. Return of Materials. All documents, records, apparatus,
equipment and other physical property, whether or not pertaining to Confidential
Information, which are furnished to LaCore by the Company or are produced by
LaCore in connection with LaCore's services will be and remain the sole property
of the Company. LaCore will return to the Company all such materials and
property as and when requested by the Company. In any event, LaCore will return
all such materials and property immediately upon termination of LaCore's
services for any reason. LaCore will not retain any such material or property or
any copies thereof upon such termination.
5. Covenant Not to Interfere. During the term of this Agreement,
LaCore shall not, directly or indirectly, (i) recruit, solicit or otherwise
assist, induce or influence any Personnel (as hereinafter defined) of any
Company Affiliate to discontinue, reduce the extent of, discourage the
development of or otherwise harm such Personnel's relationship or commitment to
such Company Affiliate, (ii) solicit, induce or attempt to induce any
Distributor or Potential Distributor to terminate, diminish, or materially alter
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his or her relationship with a Company Affiliate; or (iii) solicit, perform or
attempt to perform any services for a Distributor or Potential Distributor,
except in accordance with this Agreement. "Company Affiliates" means the Company
and each of its current and future subsidiaries and affiliates and their
respective successors and assigns. "Distributor or Potential Distributor" is any
Person who or which, at any time during the Initial Period, (i) directly or
indirectly, worked with any Company Affiliate as an independent distributor, or
(ii) considered working with any Company Affiliate as an independent
distributor. "Personnel" means any and all employees, contractors, agents,
consultants or other Persons rendering services to any Company Affiliates for
compensation in any form, whether employed by or independent of any Company
Affiliates.
6. Acknowledgments. LaCore acknowledges and agrees that the
restrictions set forth in this Agreement are intended to protect the Company's
interest in Confidential Information and its commercial relationships and
goodwill (with its Customers, Distributors, vendors, directors and consultants),
and are reasonable and appropriate for these purposes.
7. Disclosure of Agreement. LaCore will disclose the existence
and terms of this Agreement to any prospective employer, partner, co-venturer,
investor or lender prior to entering into an employment, partnership or other
business relationship with such person or entity.
8. Third-Party Agreements and Rights. LaCore hereby confirms that
LaCore is not bound by the terms of any agreement with any previous employer or
other party which restricts in any way LaCore's use or disclosure of information
or LaCore's engagement in any business, prior to its acceptance by the Company.
LaCore represents to the Company that LaCore's execution of this Agreement,
LaCore's engagement by the Company and the performance of LaCore's proposed
duties for the Company will not violate any obligations LaCore may have to any
such previous employer or other party. In LaCore's work for the Company, LaCore
will not disclose or make use of any information in violation of any agreements
with or rights of any such previous employer or other party, and LaCore will not
bring to the premises of the Company any copies or other tangible embodiments of
non-public information belonging to or obtained from any such previous
employment or other party.
9. Injunction. LaCore agrees that it would be difficult to
measure any damages caused to the Company which might result from any breach by
LaCore of the promises set forth in this Agreement, and that in any event money
damages would be an inadequate remedy for any such breach. Accordingly, LaCore
agrees that if LaCore breaches, or proposes to breach, any portion of this
Agreement, the Company shall be entitled, in addition to all other remedies that
it may have, to an injunction or other appropriate equitable relief to restrain
any such breach without showing or proving any actual damage to the Company.
10. Insolvency. Notwithstanding the foregoing, this Agreement
shall terminate and be of no further force and effect if any of the following
events occur: (i) the Company admits in writing its inability to pay its debts
generally as they become due; (ii) the Company has a liquidator, receiver,
conservator or statutory successor of such party appointed by any court or
governmental authority having jurisdiction over it; (iii) the Company commences
a proceeding under any federal or state bankruptcy, insolvency, reorganization
or similar law, or has such a proceeding commenced against it and either has an
order of insolvency or reorganization entered against it or has the proceeding
remain undismissed and unstayed for ninety (90) days; (iv) the Company makes an
assignment for the benefit of creditors; or (v) the Company has a receiver or
trustee appointed for it or for the whole or any substantial part of its
property.
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11. Termination. This Agreement shall automatically terminate and
shall be of no further force and effect on October 31, 2007.
LACORE UNDERSTANDS THAT THIS AGREEMENT AFFECTS IMPORTANT RIGHTS. LACORE HAS READ
IT CAREFULLY AND IS SATISFIED THAT LACORE UNDERSTANDS IT COMPLETELY.
NATURAL HEALTH TRENDS CORP.
By: /s/ STEPHANIE S. HAYANO /s/ TERRY L. LACORE
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Name: Stephanie S. Hayano Name: Terry L. LaCore
Title: President and Chief Executive Officer Dated: October 31, 2006
Dated: October 31, 2006
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