Item 5.02 Departure of Directors or Principal Officers; Election of Directors; Appointment
of Principal Officers
On July 31, 2006, Natural Health Trends Corp. (the “Company”) entered into a letter agreement
(the “Agreement”) with Stephanie Hayano pursuant to which Ms. Hayano has agreed to serve as the
President and Chief Executive Officer of the Company and to serve on the Company’s Board of
Directors. Under the Agreement, the Company has agreed to pay Ms. Hayano an annual base salary of
$300,000 plus an annual bonus equal to 50% of her base salary if certain annual performance goals
for the Company are achieved. For fiscal 2006, the Company has agreed to pay Ms. Hayano an annual
bonus equal to $62,500. In addition, the Company has agreed to pay a temporary living allowance
equal to $5,000 per month through January 31, 2007, or until she relocates to the Dallas
metropolitan area, whichever is sooner. Ms. Hayano has also been granted options to purchase
150,000 shares of the Company’s common stock at an exercise price of $2.79 per share (the closing
price on The Nasdaq Stock Market on July 31, 2006, the date of grant). The options vest in equal
annual installments over a 3 year period commencing on July 31, 2007 and expire on July 31, 2011.
Following Ms. Hayano’s relocation to the Dallas metropolitan area, she will be entitled to
severance in the event that her employment is terminated by the Company without Cause (as defined
in the Agreement) or in connection with a Change of Control (as defined in the Agreement). She is
also entitled severance in the event that she terminates her employment for Good Reason (as defined
in the agreement). Ms. Hayano shall receive as severance the continuation of her base salary for
up to two (2) years for a termination without Cause or for Good Reason, and up to three (3) years
for a termination in connection with a Change of Control.
In addition, the Company and Ms. Hayano entered into a Non-Competition and Proprietary Rights
Assignment Agreement dated July 31, 2006 pursuant to which Ms. Hayano has agreed (i) to keep
certain Company information confidential, (ii) to assign the rights to certain work product to the
Company, (iii) not to compete with the Company during the term of her employment and for six (6)
months thereafter, and (iv) not to solicit Company customers or distributors during the term of her
employment and for twelve (12) months thereafter.
Ms. Hayano, age 52, has been the president of her own consulting company since September
2004. From January 2002 to September 2004, Ms. Hayano was general manager and COO of
the Personal Care Division of Cosmopolitan Cosmetics, a $150 million division of Proctor & Gamble’s
Wella unit. From May 1999 to December 2001, she was executive vice president of AM Products, a
$120 million manufacturer of value-driven cosmetics products. From 1993 until 1999, Ms. Hayano
served as vice president of marketing for Del Laboratories’ “Sally Hansen” and “Naturistics”
brands. Ms. Hayano graduated from Cornell University with Bachelor of Arts degree in Physics.
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| Item 9.01 |
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Financial Statements and Exhibits |
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(d)
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Exhibits |
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10.1
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Employment Letter Agreement dated July 31, 2006 between the Company and Stephanie
Hayano. |
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10.2
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Non-Competition and Proprietary Rights Assignment Agreement dated July 31, 2006
between the Company and Stephanie Hayano. |
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99.1
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Press Release of the Company dated July 31, 2006 |