EXHIBIT 10.1
[Letterhead of Natural Health Trends Corp.]
January 3, 2007
Mr. Gernot Senke
284 Partridge Run
Mountainside, NJ 07092
Re: Employment Terms
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Dear Gernot:
I am pleased to set forth the terms and conditions of your employment
with Natural Health Trends Corp. (the "Company"). We look forward to your
significant contributions toward the achievement of our goals.
The Position
Commencing no later than February 12, 2007 (the "Commencement Date"),
you will be appointed as the Company's Chief Operating Officer. You will report
to the Company's President and CEO.
Compensation Package
Your base salary is $265,000 per year and you will also be eligible to
receive annual incentive compensation equal to 40% of your base salary if
certain annual performance goals for the Company's operations are achieved.
These goals will be established by the President/CEO and the Compensation
Committee at the beginning of each fiscal year. The incentive bonus will be paid
in cash immediately following the completion of the Company's year end audit of
its financial statements.
Benefits Package / Relocation
In connection with your relocation to the Dallas metroplex area, the
Company will (i) reimburse you for reasonable out-of-pocket expenses related to
the relocation of your household goods and personal property, and (ii) guaranty
that you receive the Fair Value for the sale of your primary residence located
at 284 Partridge Run, Mountainside, NJ 07092. "Fair Value" shall mean the
average of two (2) appraisals provided by independent, reputable appraisal
companies; provided however, if the difference between such appraisals is more
than 5% of the lower value, then a third appraisal shall be retained and Fair
Value shall mean the average of the two closest appraisals.
Your compensation will also include participation in our standard
benefits program available to our U.S. based employees. For a period not to
exceed three (3) months, you will also be provided with a temporary living
allowance equal to $5,000 per month and reimbursement of automobile rental
expenses and costs incurred by you in connection with your travel to and from
the Dallas area.
Equity Participation
I am also happy to inform you that the Company's Compensation Committee
has authorized the grant on the Commencement Date to you of options to purchase
35,000 shares of the Company's common stock, pursuant to and in accordance with
the Company's 2007 Equity Incentive Plan. The exercise price of the options will
be equal to the closing price of Company's common stock on the Commencement Date
as reported on The NASDAQ National Market. The options will vest over a three
year period and will expire 5 years following the Commencement Date (unless your
employment with the Company is sooner terminated).
Vacation
You will be entitled to four (4) weeks vacation per annum, in
accordance with the Company's vacation policy.
Severance
Following the relocation of your permanent residence to the Dallas
metroplex area, you will be entitled to Severance Payments (as defined below) if
any of the following events occur:
(i) the Company terminates you without Cause (as defined below) during
the period commencing on the date that is thirty (30) days prior to a Change of
Control (as defined below) through and including the date that is 18 months
following such Change of Control (a "Change of Control Termination");
(ii) you provide the Company with written notice of your resignation
for Good Reason (as defined below) and the Company has not cured such event
within 30 days following its receipt of such written notice; or
(iii) the Company terminates you without Cause (other than in
connection with a Change of Control as contemplated in (i) above).
However, in order to receive any Severance 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.
As used herein, the term:
(a) "Severance Payments" shall mean the continuation of the payment of
your base salary then in effect (plus health and medical insurance coverage as
previously provided to you) for a period of up to 12 months following the
termination date, or until such earlier date on which you become engaged in any
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Competitive Activity (as defined in the Non-Competition Agreement) or otherwise
breach the terms and conditions of the Non-Competition Agreement (each, a
"Severance Payment Termination Event"); provided however, that with respect to a
Change of Control Termination, the Employee shall be entitled to receive
Severance Payments for a period of up to two (2) years only, subject to earlier
discontinuation following a Severance Payment Termination Event;
(b) "Cause" shall include, without limitation, the following: (i)
failure or neglect, by you to perform the duties of your position; (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; (vi) your failure
to devote your full time and best efforts to the Company's business and affairs;
(vii) your failure to work exclusively 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 (other than for Good Reason).
(c) "Change of Control" shall mean: (i) when any "person" as defined in
Section 3(a)(9) of the Securities and Exchange Act of 1934, as amended (the
"Exchange Act"), and as used in Section 13(d) and 14(d) thereof, including a
"group" as defined in Section 13(d) of the Exchange Act, but excluding the
Company or any subsidiary or any affiliate of the Company or any employee
benefit plan sponsored or maintained by the Company or any subsidiary of the
Company (including any trustee of such plan acting as trustee), becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act) of
securities of the Company representing more than 50% of the combined voting
power of the Company's then outstanding securities; or (ii) when, during any
period of twenty-four (24) consecutive months, the individuals who, at the
beginning of such period, constitute the Board of Directors (the "Incumbent
Directors") cease for any reason other than death to constitute at least a
majority thereof, provided, however, that a director who was not a director at
the beginning of such 24-month period shall be deemed to have satisfied such
24-month requirement (and be an Incumbent Director) if such director was elected
by, or on the recommendation of or with the approval of, at least two-thirds of
the directors who then qualified as Incumbent Directors either actually (because
they were directors at the beginning of such 24-month period) or through the
operation of this provision; or (iii) the occurrence of a transaction requiring
stockholder approval under applicable state law for the acquisition of the
Company by an entity other than the Company or a subsidiary or an affiliated
company of the Company through the purchase of assets, or by merger, or
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otherwise; provided however, that none of the foregoing shall constitute a
Change of Control if such transaction, event or occurrence shall be approved by,
or consented to, by the Employee;
(d) "Good Reason" shall mean the occurrence of any of the following
without your written consent or approval: (A) the assignment to you of duties
inconsistent with this Agreement or a material diminution in your title or
authority; (B) any change in reporting responsibility so that you report to any
person other than the President or CEO, or (C) any material breach of the
Agreement by this Company.
Non-Competition and Confidentiality Agreement
You agree to enter into a Non-Competition and Proprietary Rights
Assignment Agreement, a form of which is attached hereto as Exhibit B (the
"Non-Competition Agreement"), pursuant to which you will agree that you will
keep in confidence the Company's confidential information, you will not compete
with the Company, and you will not solicit employees or independent distributors
of the Company.
Arbitration
All disputes between Parties in connection with arising out of the
existence, validity, construction, performance and termination of this Agreement
shall be finally settled by arbitration. The arbitration shall be held in
Dallas, Texas in accordance with the Rules of the American Arbitration
Association by one or more arbitrators appointed in accordance with the said
Rules and the award of such arbitrators shall be final and binding upon the
Parties. The non-prevailing party shall pay for all reasonable costs and
expenses incurred in connection with such dispute, including filing and
arbitrator fees as well as the reasonable costs and expenses of opposing legal
counsel.
Employment At Will
You understand that your employment will be at will, and either you or
the Company may terminate the relationship at any time upon four (4) weeks
notice; provided however, that the at will relationship will not in any way
affect the Company's obligation to pay severance to you as set forth above under
"Severance".
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We all look forward to working with you and know that you will do an
outstanding job in this critical role. All of the benefits described in this
letter are conditioned upon your acceptance of this offer. Please indicate your
acceptance and agreement with the terms of this letter by signing below in the
space provided and by signing the Non-Competition Agreement.
Sincerely,
NATURAL HEALTH TRENDS CORP.
By: /s/ STEPHANIE S. HAYANO
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Name: Stephanie S. Hayano
Title: President and CEO
Agreed to and Accepted:
/s/ GERNOT SENKE
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Gernot Senke
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