Exhibit 10.3


 


EMPLOYMENT AGREEMENT


 


This Agreement, is
effective as of the 1st day of November, 1994 (the “Effective Date”), and is by
and between NATURE’S SUNSHINE PRODUCTS, INC., a Utah Corporation, having its
principal place of business in Provo, Utah (“NSP”), and DOUGLAS
FAGGIOLI the undersigned individual (“Employee”).


 


RECITALS


 


WHEREAS, NSP is in the
business of (i) manufacturing and selling numerous consumer products and
services, including but not limited to herbs, vitamins, minerals, health foods,
food supplements, skin care products and other health-related products, and (ii) distribution
of products and services by the method of multilevel marketing/direct sales
distribution;


 


WHEREAS, Employee has
been employed by NSP since April 18, 1983;
and


 


WHEREAS, both NSP and
Employee desire to embody the terms and conditions of Employee’s employment in
a written agreement which shall supersede and revoke any and all prior
agreements of employment, whether written or oral.


 


NOW, THEREFORE, in
consideration of the mutual agreements herein contained, the parties hereby
agree as follows:


 


GENERAL
PROVISIONS


 


1.                                      Employment:  NSP hereby employs Employee and Employee hereby agrees
to serve NSP as Vice President-Finance, Chief Financial
Officer.  Employee shall devote
Employee’s full time and efforts to NSP during the term of Employee’s
employment and shall act with complete loyalty to NSP.


 


NSP may assign Employee
such additional or substitute titles and duties as NSP shall determine in its
sole discretion.  Employee shall at all
times act in a professional manner. 
Employee shall perform the duties set forth in Exhibit “A”,
attached hereto, and such other duties as NSP may specify, in a competent and
responsible manner and to NSP’s reasonable satisfaction.  Employee agrees to abide by the policies and
procedures as may be set forth in handbooks, manuals and other materials
provided by NSP.


 


2.                                      Term:  The term of Employee’s employment shall be twelve
months, and shall hereinafter be referred to as the “Initial Term.”  The Initial Term shall begin as of the
Effective Date.  Unless and until
Employee’s employment with NSP is terminated by NSP or Employee for any reason
or no reason, at the end of the Initial Term this Agreement shall automatically
be renewed and extended for additional periods of twelve months each and
Employee’s employment with NSP shall continue during the extended period.


 


3.                                      Compensation:


 


(a)           Base Salary:  As compensation, NSP shall pay Employee a base salary
of $123,500 per year (“Base Salary”).  Base Salary shall be paid according to NSP’s
payroll schedule.


 


(b)                                  Discretionary Bonus:  Employee shall also be eligible to participate in the
executive bonus program or any successor program (the “EBP”).  Payment of any bonus under the EBP is in NSP’s
sole discretion according to the then current practice and criteria established
by NSP.


 

















 


(c)                                  Employee’s Benefits:  Until Employee’s employment is terminated, Employee
shall be entitled to all standard employee benefits then in effect for
employees of NSP holding comparable titles or positions (the “Benefits”).


 


4.                                      Termination:


 


(a)                                  Discretionary Termination by NSP: 
NSP may terminate Employee’s employment at will, subject to this
Agreement and NSP’s obligation to pay Severance Pay to Employee as provided in Section 5.


 


(b)                                  Discretionary Termination by
Employee:  Employee may terminate Employee’s employment
by giving NSP at least two weeks’ notice of said resignation.


 


(c)                                  Termination for Cause by NSP: 
Notwithstanding anything in this Agreement, during the Initial Term and
thereafter NSP may terminate Employee’s employment immediately for Cause.  For purposes of this Agreement, “Cause” shall
include (i) material breach by Employee of this Agreement, (ii) performance
by Employee deemed unsatisfactory to NSP acting reasonably, provided NSP’s
expectations for specific improvement are communicated to Employee in writing
with a ninety day probation period allowed for the requisite improvement, (iii) Employee’s
dishonesty or violation of company rules by Employee including that
certain Confidentiality Agreement by and between NSP and Employee, or (iv) Employee’s
conviction of or entrance of a plea of nolo contendere
to a felony or to any other crime punishable by incarceration.


 


(d)                                  Termination upon Death or Incapacity
of Employee:  Employee’s employment with NSP shall, at the
exclusive election of NSP, terminate upon the death or Incapacity of
Employee.  For purposes of Sections 4 and
5, termination of Employee’s employment by reason of Employee’s death or
Incapacity shall be considered termination of Employee’s employment by NSP without Cause and Employee shall receive the Severance Pay,
if any, pursuant to Section 5.


 


(e)                                  Definition of Incapacity: 
In this Agreement, “Incapacity” shall mean that Employee is for a period
of 95 consecutive days or more, unable to perform Employee’s duties
effectively, for reasons such as emotional, mental or physical illness,
deficiency or disability.  In this
Agreement, if any question arises as to the “Incapacity” of Employee, NSP shall
promptly engage three physicians who are members of the American Medical
Association to examine Employee and determine if Employee is able to perform
the duties of Employee’s employment with NSP. 
In the event Employee appears to have mental capacity to act, one of
said three physicians shall be selected by Employee, one shall be selected by
NSP, and one shall be selected by the other two physicians.  The decision of the three physicians shall be
conclusive for all purposes of this Agreement.


 


5.                                      Effect of Termination on
Compensation:


 


(a)                                  Discretionary Termination by NSP: 
If Employee’s employment is terminated by NSP without
Cause, Employee shall be entitled to receive as severance pay (“Severance
Pay”) the following:  (i) an amount
equal to Base Salary for the twelve (12)) months from the date of termination
(the “Severance Pay Period”) and (ii) continuation of any coverage in
effect at the date of termination for Employee and his or her family at NSP’s
expense under NSP’s major medical and life insurance plans during the Severance
Pay Period.


 


2

















 


(b)                                  Non-Renewal by NSP Without Cause;
Death; Incapacity:  If NSP without
Cause does not renew
Employee’s employment at the end of the Initial Term, or the end of any
employment period thereafter, or if Employee’s employment is terminated by
reason of Employee’s death or Incapacity, then Employee (or Employee’s estate
or designated beneficiary, as the case may be) shall receive Severance Pay for
the applicable Severance Pay Period.


 


(c)                                  Termination by Employee;
Termination or Non-Renewal by NSP For Cause: 
If
Employee’s employment is (i) terminated by Employee, or (ii) terminated
for Cause or for Cause not renewed by NSP, Employee shall receive only Employee’s
Base Salary and the Benefits earned through the date of such termination.


 


(d)                                  Payment:  At the option of NSP, Severance Pay may be distributed
in a lump sum or in regular biweekly checks over the Severance Pay Period.  Any Severance Pay is subject to required
payroll deductions and withholdings.


 


(e)                                  Limitation:  Except as provided in this Section 5, Employee
shall not be entitled to any further or other Severance Pay, Base Salary,
Benefits, compensation, damages or other amounts.  Employee understands and agrees that
notwithstanding anything in this Agreement, NSP’s obligation to pay any Base
Salary, benefits or Severance Pay after termination of employment depends upon
Employee’s compliance with the agreements and covenants of Sections 6 through
9.  Except as otherwise
expressly provided in this Agreement, Employee shall not receive any
health or life insurance coverage after the date of termination, except COBRA
benefits, if any, as and to the extent prescribed by law.


 


PROTECTION
OF NSP


 


6.                                      Noncompetition and
Nonsolicitation:


 


(a)                                  Definitions:  In this Section 6, the “Restricted Territory”
shall mean the United States and any country where (on the date the notice
terminating Employee’s employment is received) NSP is doing business or
planning to do business within the next year through a subsidiary or joint
venture.  In this Section 6, the “Restrictive
Period” shall mean the period (i) commencing with the Effective Date, and (ii) ending one year after the later of (x) the
date of termination of Employee’s employment (whether or not employment is
terminated by NSP or Employee, or for Cause or otherwise), or (y) the date of final payment of Severance Pay was paid
to Employee (or would have been paid but for a breach of this Agreement by
Employee or for Cause termination of Employee’s employment).


 


(b)                                  Employee Noncompetition and
Nonsolicitation Covenants:  Employee hereby covenants and agrees that
Employee shall not, directly or indirectly, in the Restricted Territory during
the Restricted Period, do any of the following:


 


(i)                                    own an interest in (other than less than
one percent of a publicly traded company), operate, join, control, participate
in or be a distributor, agent, consultant, independent contractor, employee,
officer, director, partner, principal or shareholder of any
individual, person or entity having a majority of its gross sales from
distribution of herbs and/or vitamins;


 


3

















 


(ii)                                plan for or organize any business which
competes or would compete with any herb or vitamin
product of NSP, or combine with any other employee or representative
of NSP to organize any such competitive business;


 


(iii)                            solicit, induce or influence (or seek to
induce or influence) any person under contract with NSP (including any
associate or distributor of NSP) to terminate or alter his or her relationship
with NSP; or


 


(iv)                               solicit any customer of NSP where the
identity or any significant information about such customer was or is
Confidential Information of NSP (as such term is defined in that certain
Confidentiality Agreement by and between Employee and NSP).


 


(c)                                  Extension of Restrictive
Period:  Employee agrees that NSP, in its sole discretion, may
extend the Restrictive Period and the foregoing restrictive covenants in Section 6(b) for
up to an additional year.  To do so, NSP
must (i) give Employee at least ninety days prior notice of its intention
to extend the restrictive covenant, and (ii) pay Employee an amount equal
to the Base Salary for and during the period of such extension.  Any such payments shall be paid according to
NSP’s regular payroll schedule.


 


(d)                                  Intentions: 
It is the intention of the parties that the foregoing restrictive
covenant be enforced as written, and, in any other event, enforced to the
greatest extent (but to no greater extent) in time, territory and degree of
participation as permitted by applicable law.


 


7.                                      Non-Disparagement: 
Employee hereby also covenants not to disparage, orally or in writing,
NSP or its management (including NSP’s products, practices and policies) to any
NSP employee, associate, distributor or member of the public or press.  Employee understands and agrees that Employee
may lose any right to Severance Pay if Employee breaches this covenant not to
disparage.


 


8.                                      Acknowledgement: 
Employee acknowledges that Employee’s covenants and agreements in
Sections 6 and 7 are reasonable and necessary to protect the legitimate
interests and Confidential Information of NSP. 
Employee acknowledges that Section 6 is not so broad as to prevent Employee
from earning a livelihood or practicing Employee’s chosen profession after
termination of Employee’s employment. 
The parties acknowledge and agree that the compensation and benefits
provided for under this Agreement are in substantial part consideration for
Employee’s covenants in Sections 6 and 7.


 


9.                                      Enforcement:  For any breach of Section 6, 7, 8 or 9, Employee
agrees that NSP is entitled to equitable and other injunctive relief which may
include, but shall not be limited to restraining Employee from rendering any
service or performing or participating in any activity in breach of this
Agreement.  However, no remedy available
under this Agreement (including this Section 9) is intended to be
exclusive of any other remedy, and each and every remedy shall be cumulative
and shall be in addition to every other available remedy or now hereafter
existing at law or in equity, by statute or otherwise.


 


4

















 


MISCELLANEOUS


 


10.                               Entire Agreement:  This Agreement (including the recitals and Exhibit “A”,
attached hereto) sets forth the entire agreement and understanding between
Employee and NSP and cannot be modified or altered, nor can any provision
hereof be waived, except in writing signed by Employee and a duly authorized
officer of NSP.


 


11.                               Interpretation:  The Section and other headings in this Agreement
are for reference only and shall not affect the construction of this
Agreement.  Whenever the context
requires, the singular shall include the plural, the plural shall include the
singular, and the whole shall include any part thereof.


 


12.                               Invalidity of Provision:  If any provisions in this Agreement are held invalid,
illegal or unenforceable in any respect for any reason, such invalid, illegal
or unenforceable provision(s) shall be limited, construed or eliminated to
the extent necessary to remove such invalidity, illegality or unenforceability
and the other provisions of this Agreement shall not be affected thereby.


 


13.                               Binding Effect:  This Agreement shall inure to the benefit of and be
binding upon Employee and Employee’s heirs and personal representatives, and
upon NSP and its successors and assigns. 
Employee’s covenants and agreements of Sections 6 through 9 shall
survive the termination of Employee’s employment by any means, reason or party.


 


14.                               Waiver:  No waiver of any provision of this Agreement shall
constitute a waiver of any other provision, whether or not similar, nor shall
any waiver constitute a continuing waiver.


 


15.                               Notice:  Any notice given under this Agreement shall be in
writing and shall be sufficient if personally delivered or sent by registered
or certified mail and addressed, if to Employee, to Employee’s address set
forth in NSP’s records, or if to NSP, to its principal office.  Such notice shall be deemed given when
delivered if delivered personally, or, if sent by registered or certified mail,
at the earlier of actual receipt or three days after mailing in United States
mail, addressed as aforesaid with postage prepaid.


 


16.                               Governing Law:  This Agreement shall be governed by the laws of the
State of Utah and any litigation arising out of it shall be conducted in
applicable state courts located in Utah County or federal courts located in
Salt Lake County, Utah.  The parties
expressly consent to such jurisdiction and venue.


 


AGREED TO AND ACCEPTED AS
OF THE DATE FIRST ABOVE WRITTEN:


 


	
  Employee:

  	
   

  	
  Employer:

  
	
   

  	
   

  	
   

  
	
  DOUGLAS FAGGIOLI

  	
   

  	
  NATURE’S SUNSHINE PRODUCTS, 

  INC.

  
	
   

  	
   

  	
   

  
	
  \s\ Douglas Faggioli

  	
   

  	
  By 

  	
  \s\ Brent F. Ashworth

  
	
  Signature

  	
   

  	
   

  
	
   

  	
   

  	
  Name 

  	
  Brent F. Ashworth

  
	
   

  	
   

  	
  Title 

  	
  Vice President – Legal

  
						



 


5

















 


EXHIBIT “A”


TO


EMPLOYMENT
AGREEMENT


BETWEEN


NATURE’S
SUNSHINE PRODUCTS, INC.


AND


DOUGLAS
FAGGIOLI


 


Duties of
Employee


 


6