Exhibit 10.10


 


NATURE’S SUNSHINE PRODUCTS, INC.


1995 STOCK OPTION PLAN


 

















 


TABLE OF CONTENTS


 


	
  I. THE PLAN

  	
   

  	
   

  
	
   

  	
  1.1

  	
  Purpose

  	
   

  	
  3

  
	
   

  	
  1.2

  	
  Administration
  and Authorization; Power and Procedure

  	
   

  	
  3

  
	
   

  	
  1.3

  	
  Participation

  	
   

  	
  4

  
	
   

  	
  1.4

  	
  Shares
  Available for Options

  	
   

  	
  4

  
	
   

  	
  1.5

  	
  Grant of
  Options

  	
   

  	
  5

  
	
   

  	
  1.6

  	
  Term of
  Options

  	
   

  	
  5

  
	
   

  	
  1.7

  	
  Limitations
  on Exercise of Options

  	
   

  	
  5

  
	
   

  	
  1.8

  	
  Acceptance
  of Notes to Finance Exercise

  	
   

  	
  6

  
	
   

  	
  1.9

  	
  No
  Transferability

  	
   

  	
  6

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  II. EMPLOYEE
  OPTIONS

  	
   

  	
  7

  
	
   

  	
  2.1

  	
  Grants

  	
   

  	
  7

  
	
   

  	
  2.2

  	
  Option Price

  	
   

  	
  7

  
	
   

  	
  2.3

  	
  Limitations
  on Grant and Terms of Incentive Stock Options

  	
   

  	
  7

  
	
   

  	
  2.4

  	
  Limits on
  10% Holders

  	
   

  	
  8

  
	
   

  	
  2.5

  	
  Option
  Repricing/Cancellation and Regrant/Waiver of Restrictions

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  III. OTHER
  PROVISIONS

  	
   

  	
  9

  
	
   

  	
  3.1

  	
  Rights of
  Eligible Employees, Participants and Beneficiaries

  	
   

  	
  9

  
	
   

  	
  3.2

  	
  Adjustments;
  Acceleration

  	
   

  	
  9

  
	
   

  	
  3.3

  	
  Effect of
  Termination of Employment

  	
   

  	
  10

  
	
   

  	
  3.4

  	
  Compliance
  with Laws

  	
   

  	
  10

  
	
   

  	
  3.5

  	
  Tax
  Withholding

  	
   

  	
  11

  
	
   

  	
  3.6

  	
  Plan
  Amendment, Termination and Suspension

  	
   

  	
  11

  
	
   

  	
  3.7

  	
  Privileges
  of Stock Ownership

  	
   

  	
  12

  
	
   

  	
  3.8

  	
  Effective
  Date of the Plan

  	
   

  	
  12

  
	
   

  	
  3.9

  	
  Term of the
  Plan

  	
   

  	
  12

  
	
   

  	
  3.10

  	
  Governing
  Law; Construction; Severability

  	
   

  	
  13

  
	
   

  	
  3.11

  	
  Captions

  	
   

  	
  13

  
	
   

  	
  3.12

  	
  Effect of
  Change of Subsidiary Status

  	
   

  	
  13

  
	
   

  	
  3.13

  	
  Non-Exclusivity
  of Plan

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  IV.
  DEFINITIONS

  	
   

  	
  14

  
	
   

  	
  4.1

  	
  Definitions

  	
   

  	
  14

  



 


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NATURE’S SUNSHINE PRODUCTS, INC.


1995 STOCK OPTION PLAN


 


I.  THE PLAN


 


1.1                                 Purpose


 


The purpose of this Plan is to promote the success of the Company by
providing an additional means through the grant of stock options to attract,
motivate, retain and reward key employees, including officers, whether or not
directors, of the Company with incentives for high levels of individual
performance and improved financial performance of the Company. “Corporation”
means Nature’s Sunshine Products, Inc., a Utah corporation, and “Company”
means the Corporation and its Subsidiaries, collectively. These terms and other
capitalized terms are defined in Article IV.


 


1.2                                 Administration
and Authorization; Power and Procedure


 


(a)          Committee.  This Plan shall be administered by and all
Options to Eligible Employees shall be authorized by the Committee. Action of
the Committee with respect to the administration of this Plan shall be taken
pursuant to a majority vote or by written consent of its members.


 


(b)         Plan Options; Interpretation; Powers of
Committee.  Subject to the express
provisions of this Plan, the Committee shall have the authority:


 


(i)                         to
determine from among those persons eligible the particular Eligible Employees
who will receive any Options;


 


(ii)                      to grant Options to Eligible
Employees, determine the price at which the Options may be exercised (equal to
at least Fair Market Value), the amount of securities to be subject to such
Options, and determine the other specific terms and conditions of such Options
consistent with the express limits of this Plan, and establish the installments
(if any) in which such Options shall become exercisable, or determine that no
delayed exercisability is required, and establish the events of termination of
such Options;


 


(iii)                   to approve the forms of Option
Agreements (which need not be identical either as to type of option or as among
Participants);


 


(iv)                  to construe and interpret this Plan
and any agreements defining the rights and obligations of the Company and
employee Participants under this Plan, further define the terms used in this
Plan, and prescribe, amend and rescind rules and regulations relating to
the administration of this Plan;


 


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(v)                     to cancel, modify, or waive the
Corporation’s rights with respect to, or modify, discontinue, suspend, or terminate
any or all outstanding Options held by Eligible Employees, subject to any
required consent under Section 3.6;


 


(vi)                  to accelerate or extend the
exercisability or extend the term of any or all such outstanding Options within
the maximum ten-year term of Options under Section 1.6; and


 


(vii)               to make all other determinations and
take such other action as contemplated by this Plan or as may be necessary or
advisable for the administration of this Plan and the effectuation of its
purposes.


 


(c)          Binding Determinations. Any
action taken by, or inaction of, the Corporation, any Subsidiary, the Board or
the Committee relating or pursuant to this Plan shall be within the absolute
discretion of that entity or body and shall be conclusive and binding upon all
persons. No member of the Board or Committee, or officer of the Corporation or
any Subsidiary, shall be liable for any such action or inaction of the entity
or body, of another person or except in circumstances involving bad faith, of
himself or herself. Subject only to compliance with the express provisions
hereof, the Board and Committee may act in their absolute discretion in matters
within their authority related to this Plan.


 


(d)         Reliance on Experts. In
making any determination or in taking or not taking any action under this Plan,
the Committee or the Board, as the case may be, may obtain and may rely upon
the advice of experts, including professional advisors to the Corporation. No
director, officer or agent of the Company shall be liable for any such action or
determination taken or made or omitted in good faith.


 


(e)          Delegation. The
Committee may delegate ministerial, non-discretionary functions to individuals
who are officers or employees of the Company.


 


1.3                                 Participation


 


Options may be
granted by the Committee only to those persons that the Committee determines to
be Eligible Employees. An Eligible Employee who has been granted an Option may,
if otherwise eligible, be granted additional Options if the Committee shall so determine.
Non-Employee Directors shall not be eligible to receive any Options through
this Plan.


 


1.4                                 Shares
Available for Options


 


Subject to the
provisions of Section 3.2, the capital stock that may be delivered under
this Plan shall be shares of the Corporation’s authorized but unissued Common
Stock and any shares of its Common Stock held as treasury shares. The shares
may be delivered for any lawful consideration.


 


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(a)          Number of Shares. The
maximum number of shares of Common Stock that may be issued pursuant to Options
granted to Eligible Employees under this Plan is 1,100,000 shares, subject to
adjustments contemplated by Section 3.2.


 


(b)         Calculation of Available
Shares and Replenishment. Shares subject to outstanding Options that are
derivative securities (as defined in Rule 16a-1(c) under the Exchange
Act) shall be reserved for issuance. If any Option shall expire or be canceled or
terminated without having been exercised in full, the unpurchased share subject
thereto shall again be available for the purposes of the Plan, subject to any
applicable limitations under Rule 16b-3. If the Corporation withholds
shares of Common Stock pursuant to Section 3.5, the number of shares that would have been deliverable with respect
to an Option but that are withheld pursuant to the provisions of Section 3.5
may in effect not be issued, but the aggregate number of shares issuable with respect
to the applicable Option and under the Plan shall be reduced by the number of
shares withheld and such shares shall not be available for additional Options
under this Plan.


 


1.5                                 Grant
of Options


 


Subject to the
express provisions of this Plan, the Committee shall determine the number of
shares of Common Stock subject to each Option and the exercise price thereof. Each
Option shall be evidenced by an Option Agreement signed by the Corporation and
by the Participant.


 


1.6                                 Term
of Options


 


Each Option and
all executory rights or obligations under the related Option Agreement shall
expire on such date as shall be determined by the Committee but not later than
ten (10) years after the Grant date.


 


1.7                                 Limitations
on Exercise of Options


 


(a)          Provisions for Exercise. No Option shall be
exercisable until at least six months after the later of (i) the initial
Grant Date or (ii) stockholder approval of the Plan, and once exercisable
an Option shall remain exercisable until the expiration or earlier termination
of the Option, unless the Committee otherwise provides. Notwithstanding the
foregoing, the Committee may reduce or eliminate the six month requirement for
Participants who are not subject to Section 16 of the Exchange Act.


 


(b)         Procedure. Any exercisable Option shall be
deemed to be exercised when the Treasurer of the Corporation receives written
notice of such exercise from the Participant, together with the required
payment made in accordance with Section 2.2(b) or 5.3, as the case
may be.


 


(c)          Fractional Shares/Minimum
Issue. Fractional share interests shall be disregarded, but may be accumulated.
The Committee, however, may determine in the case of 


 


5

















 


Eligible Employees that cash, other
securities or other property will be paid or transferred in lieu of any
fractional share interests. No fewer than 100 shares may be purchased on
exercise of any Option at one time unless the number purchased is the total number
at the time available for purchase under the Option.


 


1.8                                 Acceptance
of Notes to Finance Exercise


 


The Corporation may, with the Committee’s approval, accept one or more
notes from any Eligible Employee in connection with the exercise or receipt of
any outstanding Option, provided that any such note shall be subject to the
following terms and conditions:


 


(a)          The principal of the note shall not exceed
the amount required to paid to the Corporation upon the exercise or receipt of
one or more Options under the Plan and the note shall be delivered directly to
the Corporation in consideration of such exercise or receipt.


 


(b)         The initial term of the note shall be
determined by the Committee; provided that the term of the note, including
extensions, shall not exceed a period of 10 years.


 


(c)          The note shall provide for full recourse to
the Employee Participant and shall bear interest at a rate determined by the
Committee but not less than the applicable imputed interest rate specified by
the Code.


 


(d)         If the employment of the
Employee Participant terminates, the unpaid principal balance of the note shall
become due and payable on the 10th business day after such termination;
provided, however, that if a sale of such shares would cause such Employee
Participant to incur liability under Section 16(b) of the Exchange
Act, the unpaid balance shall become due and payable on the 10th business day
after the first day on which a sale of such shares could have been made without
incurring such liability assuming for these purposes that there are no other
transactions by the Employee Participant subsequent to such termination.


 


(e)          The note shall be secured by a pledge of any
shares or rights financed thereby in compliance with applicable law.


 


(f)            The terms, repayment provisions, and
collateral release provisions of the note and the pledge securing the note
shall conform with applicable rules and regulations of the Federal Reserve
Board as then in effect.


 


1.9                                 No
Transferability


 


Options may be
exercised only by, and shares issuable pursuant to an Option shall be issued only
to (or registered only in the name of), the Participant or, if the Participant
has died, the Participant’s Beneficiary or, if the Participant has suffered a
Disability, the Participant’s Personal Representative, if any, or if there is
none, the Participant, or (to the extent permitted by applicable law and Rule 16b-3)
to a third party pursuant to such conditions and procedures as the


 


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Committee may
establish. Other than by will or the laws of descent and distribution or
pursuant to a QDRO or other exception to transfer restrictions under Rule 1
6b-3 (except to the extent not permitted in the case of an Incentive Stock
Option), no right or benefit under this Plan or any Option, shall be transferable
by the Participant or shall be subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance or charge (other
than to the Corporation) and any such attempted action shall be void. The Corporation
shall disregard any attempt at transfer, assignment or other alienation
prohibited by the preceding sentences and shall deliver such shares of Common
Stock in accordance with the provisions of this Plan. The designation of a
Beneficiary hereunder shall not constitute a transfer for these purposes.


 


II.  EMPLOYEE
OPTIONS


 


2.1                                 Grants


 


One or more Options may be granted under this Article to any
Eligible Employee. Each Option granted may be either an Option intended to be
an Incentive Stock Option, or an Option not so intended, and such intent shall
be indicated in the applicable Option Agreement.


 


2.2                                 Option
Price


 


(a)          Pricing Limits.  The purchase price per share of the Common
Stock covered by each Option shall be determined by the Committee at the time
the Option is granted, but in the case of Incentive Stock Options shall not be
less than 100% (110% in the case of a Participant who owns or is deemed to own
under Section 424(d) of the Code more than 10% of the total combined
voting power of all classes of stock of the Corporation) of the Fair Market
Value of the Common Stock on the Grant Date.


 


(b)         Payment Provisions.  The purchase price of any shares purchased on
exercise of an Option granted under this Article shall be paid in full at
the time of each purchase in one or a combination of the following methods: (i) in
cash or by electronic funds transfer; (ii) by check payable to the order
of the Corporation; (iii) if authorized by the Committee or specified in the
applicable Option Agreement, by a promissory note of the Participant consistent
with the requirements of Section 1.8; (iv) by notice and third party
payment in such manner as may be authorized by the Committee; or (v) by
the delivery of shares of Common Stock of the Corporation already owned by the
Participant, provided, however, that the Committee may in its absolute
discretion limit the Participant’s ability to exercise an Option by delivering
such shares. Shares of Common Stock used to satisfy the exercise price of an Option
shall be valued at their Fair Market Value on the date of exercise and any such
shares used in payment shall have been owned by the Participant at least six
months prior to the date of exercise.


 


2.3                                 Limitations
on Grant and Terms of Incentive Stock Options


 


(a)          $100,000 Limit. To the
extent that the aggregate “fair market value” of stock with 


 


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respect to which incentive stock options
first become exercisable by a Participant in any calendar year exceeds
$100,000, taking into account both Common Stock ubject to Incentive Stock
Options under this Plan and stock subject to incentive stock options under all
other plans of the Company, such options shall be treated as nonqualified stock
options. For this purpose, the “fair market value” of the stock subject to options
shall be determined as of the date the options were optioned. In reducing the
number of options treated as incentive stock options to meet the $100,000
limit, the most recently granted options shall be reduced first. To the extent
a reduction of simultaneously granted options is necessary to meet the $100,000
limit, the Committee may, in the manner and to the extent permitted by law,
designate which shares of Common Stock are to be treated as shares acquired
pursuant to the exercise of an Incentive Stock Option.


 


(b)         Option Period. Each Incentive
Stock Option and all rights thereunder shall expire no later than ten years
after the Grant Date.


 


(c)          Other Code Limits. There
shall be imposed in any Option Agreement relating to Incentive Stock Options
such terms and conditions as from time to time are required in order that the
Option be an “incentive stock option” as that term is defined in Section 422
of the Code.


 


2.4                                 Limits
on 10% Holders


 


No Incentive Stock Option may be granted to
any person who, at the time the Option is granted, owns (or is deemed to own
under Section 424(d) of the Code) shares of outstanding Common Stock
possessing more than 10% of the total combined voting power of all classes of
stock of the Corporation, unless the exercise price of such Option is at least
110% of the Fair Market Value of the stock subject to the Option and such
Option by its terms is not exercisable after the expiration of five years from
the date such Option is granted.


 


2.5                                 Option
Repricing/Cancellation and Regrant/Waiver of Restrictions


 


Subject to Section 1.4 and Section 3.6
and the specific limitations on Options contained in this Plan, the Committee
from time to time may authorize, generally or in specific cases only, for the
benefit of any Eligible Employee, any adjustment in the exercise price, the
number of shares subject to or the term of, an Option granted under this Article by
cancellation of an outstanding Option and a subsequent regranting of an Option,
by amendment, by substitution of an outstanding Option, by waiver or by other
legally valid means. Such amendment or other action may result among other
changes in an exercise price which is higher or lower than the exercise or
purchase price of the original or prior Option, provide for a greater or lesser
number of shares subject to the Option, or provide for a longer or shorter
vesting or exercise period.


 


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III.  OTHER
PROVISIONS


 


3.1                                 Rights
of Eligible Employees, Participants and Beneficiaries


 


(a)          Employment Status. Status
as an Eligible Employee shall not be construed as a commitment that any Option
will be granted under this Plan to an Eligible Employee or to Eligible
Employees generally.


 


(b)         No Employment Contract. Nothing
contained in this Plan (or in any other documents related to this Plan or to any
Option) shall confer upon any Eligible Employee or other Participant any right
to continue in the employ or other service of the Company or constitute any
contract or agreement of employment or other service, nor shall interfere in
any way with the right of the Company to change such person’s compensation or other
benefits or to terminate the employment of such person, with or without cause, but
nothing contained in this Plan or any document related hereto shall adversely affect
any independent contractual right of such person without his or her consent
thereto.


 


(c)          Plan Not Funded. No Participant, Beneficiary
or other person shall have any right, title or interest in any fund or in any
specific asset (including shares of Common Stock, except as expressly otherwise
provided) of the Company by reason of any Option hereunder. Neither the
provisions of this Plan (or of any related documents), nor the creation or
adoption of this Plan, nor any action taken pursuant to the provisions of this
Plan shall create, or be construed to create, a trust of any kind or a
fiduciary relationship between the Company and any Participant, Beneficiary or
other person.


 


3.2                                 Adjustments;
Acceleration


 


(a)          Adjustments.           If there shall occur any
extraordinary dividend or other extraordinary distribution in respect of the Common
Stock (whether in the form of cash, Common Stock, other securities, or other
property), or any recapitalization, stock split (including a stock split in the
form of a stock dividend), reverse stock split, reorganization, merger,
combination, consolidation, split-up, spin-off, combination, repurchase, or exchange
of Common Stock or other securities of the Corporation, or there shall occur
any other like corporate transaction or event in respect of the Common Stock,
then the Committee shall, in such manner and to such extent (if any) as it deems
appropriate and equitable (1) proportionately adjust any or all of (a) the
number and type of shares of Common Stock(or other securities) which thereafter
may be made the subject of Options (including the specific maximum and numbers of
shares set forth elsewhere in this Plan), (b) the number, amount and type of
shares of Common Stock (or other securities or property) subject to any or all
outstanding Options, (c) the grant, purchase, or exercise price of any or all
outstanding Options, (d) the securities issuable upon exercise of any outstanding
Options, or (2) in the case of an extraordinary dividend or other distribution,



 


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merger, reorganization, consolidation,
combination, sale of assets, split up, exchange, or spin off, make provision for
a cash payment or for the substitution or exchange of any or all outstanding Options
or the securities deliverable to the holder of any or all outstanding Options
based upon the distribution or consideration payable to holders of the Common
Stock of the Corporation upon or in respect of such event; provided, however, in
each case, that with respect to Incentive Stock Options, no such adjustment shall
be made which would cause the Plan to violate Section 424(a) of the Code or arty
successor provisions thereto.


 


(b)         Acceleration of Options Upon
Change in Control.                   As
to any Eligible Employee Participant, unless prior to a Change in Control Event
the Committee determines that, upon its occurrence,  there shall be no acceleration  of benefits under Options  or determines that only certain or limited
benefits under Options shall be accelerated and the extent to which they shall
be accelerated, and/or establishes a different time in respect of such Event
for such acceleration, then upon the occurrence of a Change in Control Event
each Option shall become immediately exercisable. The Committee may override the
limitations on acceleration in this Section 3.2(b) by express provision in the Option
Agreement and may accord any Eligible Employee a right to refuse any acceleration,
whether pursuant to the Option Agreement or otherwise, in such circumstances as
the Committee may approve.Any acceleration of Options shall comply with applicable
regulatory requirements, including, without limitation, Section 422 of the
Code.


 


(c)          Possible Early Termination
of Accelerated Options.           If any Option
or other right to acquire Common Stock under this Plan has been fully
accelerated as permitted by Section 3.2(b) but is not exercised prior to (i)
a dissolution of the Corporation,  or (ii)
a reorganization event described in Section 3.2(a) that the
Corporation does not survive, or (iii) the consummation of reorganization
event described in Section 3.2(a) that results in a Change of Control
approved by the Board, and no provision has been made for the survival,
substitution, exchange or other settlement of such Option or right, such Option
or right shall thereupon terminate.


 


3.3                                 Effect
of Termination of Employment


 


The Committee shall establish in respect of each Option granted to an
Eligible Employee the effect of a termination of employment on the rights and
benefits thereunder and in so doing may make distinctions based upon the cause
of termination.


 


3.4                                 Compliance
with Laws


 


This Plan, the granting and vesting of Options under this Plan and the issuance
and delivery of shares of Common Stock under this Plan or under Options granted
hereunder are subject to compliance with all applicable federal and state laws,
rules and 


 


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regulations (including, but not limited to,
state and federal securities laws and federal margin requirements) and to such
approvals by any listing, regulatory or governmental authority as may, in the
opinion of counsel for the Corporation, be necessary or advisable in connection
therewith.  Any securities delivered
under this Plan shall be subject to such restrictions, and the person acquiring
such securities shall, if requested by the Corporation, provide such assurances
and representations to the Corporation as the Corporation may deem necessary or
desirable to assure compliance with all applicable legal requirements.


 


3.5                                 Tax
Withholding


 


(a)          Cash or Shares. Upon any
exercise or vesting of any Option or upon the disposition of shares of Common
Stock acquired pursuant to the exercise of an Incentive Stock Option prior to satisfaction
of the holding period requirements of Section 422 of the Code, the Company shall
have the right at its option to (i) require the Participant (or Personal
Representative or Beneficiary, as the case may be) to pay or provide for
payment of the amount of any taxes which the Company may be required to withhold
with respect to such transaction or (ii) deduct from any amount payable in
cash the amount of any taxes which the Company may be required to withhold with
respect to such cash amount. In any case where a tax is required to be withheld
in connection with the delivery of shares of Common Stock under this Plan, the Committee
may grant (either at the time the Option is granted or thereafter) to the
Participant the right to elect, pursuant to such rules and subject to such
conditions as the Committee may establish, to have the Corporation reduce the
number of shares to be delivered by (or otherwise reacquire) the appropriate number
of shares valued at theft then Fair Market Value, to satisfy such withholding
obligation.


 


(b)         Tax Loans. The Committee may,
in its discretion, authorize a loan to an Eligible Employee in the amount of
any taxes which the Company may be required to withhold with respect to shares of
Common Stock received (or disposed of, as the case may be) pursuant to a
transaction described in subsection (a) above. Such a loan shall be for a term,
at a rate of interest and pursuant to such other terms and conditions as the
Committee, under applicable law, may establish and such loan must comply with the
provisions of Section 1.8.


 


3.6                                 Plan
Amendment, Termination and Suspension


 


(a)          Board Authorization. The
Board may, at any time, terminate or, from time to time, amend, modify or suspend
this Plan, in whole or in part. No Options may be granted during any suspension
of this Plan or after termination of this Plan, but the Committee shall retain
jurisdiction as to Options then outstanding in accordance with the terms of
this Plan.


 


(b)         Stockholder Approval. If any
amendment would (i) materially increase the benefits accruing to Participants
under this Plan, (ii) materially increase the 


 


11

















 


aggregate number of securities that may be
issued under this Plan, or (iii) materially modify the requirements as to
eligibility for participation in this Plan, then to the extent then required by
Rule 1 6b-3 to secure benefits thereunder or to avoid liability under Section
16 of the Exchange Act(and Rules thereunder) or required under Section 425 of the
Code or any other applicable law, or deemed necessary or advisable by the
Board, such amendment shall be subject to stockholder approval.


 


(c)          Amendments to Options. Without limiting any
other express authority of the Committee under but subject to the express limits
of this Plan, the Committee by agreement or resolution may waive conditions of
or limitation on Options to Eligible Employees that the Committee in the prior
exercise of its discretion has imposed, without the consent of a Participant, and
may make other changes to the terms and conditions of Options that do not
affect in any manner materially adverse to the Employee Participant, his or her
rights and benefits under an Option.


 


(d)         Limitations on Amendment to
Plan  and Options. No amendment, suspension  or termination of the Plan or change of or
affecting any outstanding Option shall, without written consent of the Participant,  affect in any manner materially adverse to the
Participant any rights or benefits of the Participant or obligations of the Corporation
under any Option granted under this Plan prior to the effective date of such change.
Changes contemplated by Section 3.2 shall not be deemed to constitute changes or
amendments for purposes of this Section 3.6.


 


3.7                                 Privileges
of Stock Ownership


 


Except as otherwise expressly authorized by the Committee or this Plan,
a Participant shall not be entitled to any privilege of stock ownership as to any
shares of Common Stock not actually delivered to and held of record by him or
her. No adjustment will be made for dividends or other rights as a stockholders
for which a record date is prior to such date of delivery.


 


3.8                                 Effective
Date of the Plan


 


This Plan
shall be effective as of December 20, 1995, the date of Board approval,
subject to stockholder approval within 12 months thereafter.


 


3.9                                 Term
of the Plan


 


No Option
shall be granted more than three years after the effective date of this Plan
(the “termination date”). Unless otherwise expressly provided in this Plan or
in an applicable Option Agreement, any Option theretofore granted may extend
beyond such date, and all authority of the Committee with respect to Options
hereunder shall continue during any suspension of this Plan and in respect of
outstanding Options on such termination date.


 


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3.10                           Governing
Law; Construction; Severability


 


(a)          Choice of Law. This
Plan, the Options, all documents evidencing Options and all other related
documents shall be governed by, and construed in accordance with the laws of
the State of Utah.


 


(b)         Severability. If any provision
shall be held by a court of competent jurisdiction to be invalid and
unenforceable, the remaining provisions of this Plan shall continue in effect.


 


(c)          Plan Construction. It is the intent of the
Corporation that this Plan and Options hereunder satisfy and be interpreted in
a manner that in the case of Participants who are or may be subject to Section 16
of the Exchange Act satisfies the applicable requirements of Rule 16b-3 so
that such persons will be entitled to the benefits of Rule 16b-3 or other
exemptive rules under Section 16 of the Exchange Act and will not be subjected to
avoidable liability thereunder; if any provision of this Plan or of any Option would
otherwise frustrate or conflict with the intent expressed above, that provision
to the extent possible shall be interpreted and deemed amended so as to avoid
such conflict, but to the extent of any remaining irreconcilable conflict with
such intent as to such persons in the circumstances, such provision shall be
deemed void.


 


3.11                           Captions


 


Captions and headings are given to the sections and subsections of this
Plan solely as a convenience to facilitate reference.    Such
headings shall not be deemed in any way material or relevant to the
construction or interpretation of the Plan or any provision thereof.


 


3.12                           Effect
of Change of Subsidiary Status


 


For purposes of this Plan and any Option hereunder, if an entity ceases
to be a Subsidiary a termination of employment shall be deemed to have occurred
with respect to each employee of such Subsidiary who does not continue as an
employee of another entity within the Company.


 


3.13                           Non-Exclusivity
of Plan


 


Nothing in this Plan shall limit or be deemed to limit the authority of
the Board or the Committee to grant options or authorize any other
compensation, with or without reference to the Common Stock, under any other
plan or authority.


 


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IV.  DEFINITIONS


 


4.1                                 Definitions


 


(a)          “Beneficiary” shall mean the person, persons,
trust or trusts entitled by will or the laws of descent and distribution to receive
the benefits specified in the Option Agreement and under this Plan in the event
of a Participant’s death, and shall mean the Participant’s personal
representative, executor or administrator if no other Beneficiary is identified
and able to act under the circumstances.


 


(b)         “Board” shall mean the Board of Directors of
the Corporation.


 


(c)          “Change in Control Event” shall mean any of
the following:


 


(i)                         Approval
by the stockholders of the Corporation of the dissolution or liquidation of the
Corporation;


 


(ii)                      Approval
by the stockholders of the Corporation of an agreement to merge or consolidate,
or otherwise reorganize, with or into one or more entities that are not
Subsidiaries, as a result of which less than 50% of the outstanding voting securities of the surviving or
resulting entity immediately after the reorganization are, or will be, owned by
stockholders of the Corporation immediately before such reorganization (assuming
for purposes of such determination that there is no change in the record
ownership of the Corporation’s securities from the record date for such
approval until such reorganization and that such record owners hold no
securities of the other parties to such reorganization);


 


(iii)                   Approval by the
stockholders of the Corporation of the sale of substantially all of the Corporation’s
business and/or assets to a person or entity which is not a Subsidiary;


 


(iv)                  Any “person” (as
such term is used in Sections 13(d) and 14(d) of the Exchange Act) (other than a
person having such ownership at the time of adoption of this Plan) becomes the “beneficial
owner” (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Corporation representing more than 50% of the combined voting power of
the Corporation’s then outstanding securities entitled to then vote generally
in the election of directors of the Corporation; or


 


(v)                     During any period
not longer than two consecutive years, individuals who at the beginning of such
period constituted the Board cease to constitute at least a majority thereof, unless
the election, or the nomination for election by the Corporation’s stockholders,
of each new Board member was approved by a vote of at least three- fourths of
the Board members then still in office who were Board members at the beginning of
such period (including for 


 


14

















 


these purposes,
new members whose election or nomination was so approved).


 


(d)         “Code” shall mean the
Internal Revenue Code of 1986, as amended from time to time.


 


(e)          “Commission” shall mean
the Securities and Exchange Commission.


 


(f)            “Committee” shall mean
a committee appointed by the Board to administer this Plan, which committee shall
be comprised only of two or more directors or such greater number of directors
as may be required under applicable law, each of whom, during such time as one
or more Participants may be subject to Section 16 of the Exchange Act, shall be
Disinterested.


 


(g)         “Common Stock” shall mean
the Common Stock of the Corporation and such other securities or property as
may become subject to Options, pursuant to an adjustment made under Section 3.2
of this Plan.


 


(h)         “Company” shall mean,
collectively, the Corporation and its Subsidiaries.


 


(i)             “Corporation” shall mean
Natures Sunshine Products, Inc., a Utah corporation, and its successors.


 


(j)             “Disinterested shall
mean disinterested within the meaning of any applicable regulatory
requirements, including Rule 16b-3.


 


(k)          “Eligible Employee” shall
mean an officer (whether or not a director) or key employee of the Company.


 


(1)          “ERISA” shall mean the
Employee Retirement Income Security Act of 1974, as amended.


 


(m)       “Exchange Act” shall mean
the Securities Exchange Act of 1934, as amended from time to time.


 


(n)         “Fair Market Value” shall
mean (i) if the stock is listed or admitted to trade on a national
securities exchange, the closing sales price of the stock on the Composite Tape,
as published in the Western Edition of The Wall Street Journal, of the principal
national securities exchange on which the stock is so listed or admitted to
trade, on such date, or, if there is no trading of the stock on such date, then
the closing price of the stock as quoted on such Composite Tape on the next
preceding date on which there was trading in such shares; (ii) if the stock is not
listed or admitted to trade on a national securities exchange, the last sales price
for the stock on such date, as furnished by the National Association of
Securities Dealers, Inc. (“NASD”) through the NASDAQ National Market
Reporting System or a similar organization if the NASD is no longer reporting such
information; (iii) if the stock is not listed or admitted to trade 


 


15

















 


on a national securities exchange and is not reported
on the National Market Reporting System, the mean between the bid and asked
price for the stock on such date, as furnished by the NASD or a similar
organization; or (iv) if the stock is not listed or admitted to trade on a
national securities exchange, is not reported on the National Market Reporting
System and if bid and asked prices for the stock are not furnished by the NASD or
a similar organization, the value as established by the Committee at such time
for purposes of this Plan.


 


(o)         “Grant Date” shall mean
the date upon which the Committee took the action granting an Option or such
later date as the Committee designates as the Grant Date at the time of the
Option is granted.


 


(p)         “Incentive Stock Option’ shall
mean an Option which is designated as an incentive stock option within the meaning
of Section 422A of the Code, the award of which contains such provisions as are
necessary to comply with that section.


 


(q)         “Nonqualified Stock
Option shall mean an Option that is designated as a Nonqualified Stock Option and
shall include any Option intended as an Incentive Stock Option that fails to meet
the applicable legal requirements thereof. Any Option granted hereunder that is
not designated as an Incentive Stock Option shall be deemed to be designated a
Nonqualified Stock Option under this Plan and not an incentive stock option under
the Code.


 


(r)            “Non-Employee Director”  shall mean a member of the Board of Directors
of the Corporation who is not an officer or employee of the Company.


 


(s)          “Option” shall mean an option
to purchase Common Stock under this Plan. The Committee shall designate any
Option granted to an Eligible Employee as a Nonqualified Stock Option or an
Incentive Stock Option.


 


(t)  “Option Agreement” shall mean any
writing setting forth the terms of an Option that has been authorized by the
Committee.


 


(u)         “Option Period” shall mean
the period beginning on the Grant Date and ending on the expiration date of such
Option.


 


(v)         “Participant” shall mean
an Eligible Employee who has been granted an Option under thisPlan.


 


(w)       “Personal Representative” shall
mean the person or persons who, upon the disability or incompetence of a
Participant, shall have acquired on behalf of the Participant, by legal
proceeding or otherwise, the power to exercise the rights or receive benefits under
this Plan and who shall have become the legal representative of the
Participant.


 


(x)           “Plan” shall mean this 1995
Stock Option Plan.


 


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(y)         “QDRO” shall mean a
qualified domestic relations order as defined in Section 414(p) of the
Code or Title I, Section 206(d)(3) of ERISA (to the same extent as if this Plan
were subject thereto), or the applicable rules thereunder.


 


(aa)                “Retirement” shall
mean retirement with the consent of the Company.


 


(bb)              “Rule 16b-3”
shall mean Rule 16b-3 as promulgated by the Commission pursuant to the Exchange
Act.


 


(cc)                “Securities Act” shall
mean the Securities Act of 1933, as amended from time to time.


 


(dd)              “Subsidiary”  shall mean any corporation or other entity  a majority of whose outstanding voting stock
or voting power is beneficially owned directly or indirectly by the
Corporation.


 


(ee)                “Total Disability”
shall mean a “permanent and total disability within the meaning of Section 22(e)(3) of
the Code and such other disabilities, infirmities, afflictions or conditions as
the Committee by rule may include.


 


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