**Exhibit 10.10**

 

**NATURE’S SUNSHINE PRODUCTS, INC.**

**1995 STOCK OPTION PLAN**

 

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**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 byproviding an additional means through the grant of stock options to attract,motivate, retain and reward key employees, including officers, whether or notdirectors, of the Company with incentives for high levels of individualperformance 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 othercapitalized terms are defined in Article IV.

 

1.2                                 Administrationand Authorization; Power and Procedure

 

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

 

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

 

(i)                         todetermine from among those persons eligible the particular Eligible Employeeswho will receive any Options;

 

(ii)                      to grant Options to EligibleEmployees, determine the price at which the Options may be exercised (equal toat least Fair Market Value), the amount of securities to be subject to suchOptions, and determine the other specific terms and conditions of such Optionsconsistent with the express limits of this Plan, and establish the installments(if any) in which such Options shall become exercisable, or determine that nodelayed exercisability is required, and establish the events of termination ofsuch Options;

 

(iii)                   to approve the forms of OptionAgreements (which need not be identical either as to type of option or as amongParticipants);

 

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

 

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(v)                     to cancel, modify, or waive theCorporation’s rights with respect to, or modify, discontinue, suspend, or terminateany or all outstanding Options held by Eligible Employees, subject to anyrequired consent under Section 3.6;

 

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

 

(vii)               to make all other determinations andtake such other action as contemplated by this Plan or as may be necessary oradvisable for the administration of this Plan and the effectuation of itspurposes.

 

(c)          Binding Determinations. Anyaction taken by, or inaction of, the Corporation, any Subsidiary, the Board orthe Committee relating or pursuant to this Plan shall be within the absolutediscretion of that entity or body and shall be conclusive and binding upon allpersons. No member of the Board or Committee, or officer of the Corporation orany Subsidiary, shall be liable for any such action or inaction of the entityor body, of another person or except in circumstances involving bad faith, ofhimself or herself. Subject only to compliance with the express provisionshereof, the Board and Committee may act in their absolute discretion in matterswithin their authority related to this Plan.

 

(d)         Reliance on Experts. Inmaking 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 uponthe advice of experts, including professional advisors to the Corporation. Nodirector, officer or agent of the Company shall be liable for any such action ordetermination taken or made or omitted in good faith.

 

(e)          Delegation. TheCommittee may delegate ministerial, non-discretionary functions to individualswho are officers or employees of the Company.

 

1.3                                 Participation

 

Options may begranted by the Committee only to those persons that the Committee determines tobe 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 throughthis Plan.

 

1.4                                 SharesAvailable for Options

 

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

 

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

 

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

 

1.5                                 Grantof Options

 

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

 

1.6                                 Termof Options

 

Each Option andall executory rights or obligations under the related Option Agreement shallexpire on such date as shall be determined by the Committee but not later thanten (10) years after the Grant date.

 

1.7                                 Limitationson Exercise of Options

 

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

 

(b)         Procedure. Any exercisable Option shall bedeemed to be exercised when the Treasurer of the Corporation receives writtennotice of such exercise from the Participant, together with the requiredpayment made in accordance with Section 2.2(b) or 5.3, as the casemay be.

 

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

 

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

 

1.8                                 Acceptanceof Notes to Finance Exercise

 

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

 

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

 

(b)         The initial term of the note shall bedetermined by the Committee; provided that the term of the note, includingextensions, shall not exceed a period of 10 years.

 

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

 

(d)         If the employment of theEmployee Participant terminates, the unpaid principal balance of the note shallbecome due and payable on the 10th business day after such termination;provided, however, that if a sale of such shares would cause such EmployeeParticipant to incur liability under Section 16(b) of the ExchangeAct, the unpaid balance shall become due and payable on the 10th business dayafter the first day on which a sale of such shares could have been made withoutincurring such liability assuming for these purposes that there are no othertransactions by the Employee Participant subsequent to such termination.

 

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

 

(f)            The terms, repayment provisions, andcollateral release provisions of the note and the pledge securing the noteshall conform with applicable rules and regulations of the Federal ReserveBoard as then in effect.

 

1.9                                 NoTransferability

 

Options may beexercised only by, and shares issuable pursuant to an Option shall be issued onlyto (or registered only in the name of), the Participant or, if the Participanthas died, the Participant’s Beneficiary or, if the Participant has suffered aDisability, the Participant’s Personal Representative, if any, or if there isnone, 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 mayestablish. Other than by will or the laws of descent and distribution orpursuant to a QDRO or other exception to transfer restrictions under Rule 16b-3 (except to the extent not permitted in the case of an Incentive StockOption), no right or benefit under this Plan or any Option, shall be transferableby the Participant or shall be subject in any manner to anticipation,alienation, sale, transfer, assignment, pledge, encumbrance or charge (otherthan to the Corporation) and any such attempted action shall be void. The Corporationshall disregard any attempt at transfer, assignment or other alienationprohibited by the preceding sentences and shall deliver such shares of CommonStock in accordance with the provisions of this Plan. The designation of aBeneficiary hereunder shall not constitute a transfer for these purposes.

 

**II.  EMPLOYEEOPTIONS**

 

2.1                                 Grants

 

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

 

2.2                                 OptionPrice

 

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

 

(b)         Payment Provisions.  The purchase price of any shares purchased onexercise of an Option granted under this Article shall be paid in full atthe time of each purchase in one or a combination of the following methods: (i) incash or by electronic funds transfer; (ii) by check payable to the orderof the Corporation; (iii) if authorized by the Committee or specified in theapplicable Option Agreement, by a promissory note of the Participant consistentwith the requirements of Section 1.8; (iv) by notice and third partypayment in such manner as may be authorized by the Committee; or (v) bythe delivery of shares of Common Stock of the Corporation already owned by theParticipant, provided, however, that the Committee may in its absolutediscretion limit the Participant’s ability to exercise an Option by deliveringsuch shares. Shares of Common Stock used to satisfy the exercise price of an Optionshall be valued at their Fair Market Value on the date of exercise and any suchshares used in payment shall have been owned by the Participant at least sixmonths prior to the date of exercise.

 

2.3                                 Limitationson Grant and Terms of Incentive Stock Options

 

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

 

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respect to which incentive stock optionsfirst become exercisable by a Participant in any calendar year exceeds$100,000, taking into account both Common Stock ubject to Incentive StockOptions under this Plan and stock subject to incentive stock options under allother plans of the Company, such options shall be treated as nonqualified stockoptions. For this purpose, the “fair market value” of the stock subject to optionsshall be determined as of the date the options were optioned. In reducing thenumber of options treated as incentive stock options to meet the $100,000limit, the most recently granted options shall be reduced first. To the extenta reduction of simultaneously granted options is necessary to meet the $100,000limit, 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 acquiredpursuant to the exercise of an Incentive Stock Option.

 

(b)         Option Period. Each IncentiveStock Option and all rights thereunder shall expire no later than ten yearsafter the Grant Date.

 

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

 

2.4                                 Limitson 10% Holders

 

No Incentive Stock Option may be granted toany person who, at the time the Option is granted, owns (or is deemed to ownunder Section 424(d) of the Code) shares of outstanding Common Stockpossessing more than 10% of the total combined voting power of all classes ofstock of the Corporation, unless the exercise price of such Option is at least110% of the Fair Market Value of the stock subject to the Option and suchOption by its terms is not exercisable after the expiration of five years fromthe date such Option is granted.

 

2.5                                 OptionRepricing/Cancellation and Regrant/Waiver of Restrictions

 

Subject to Section 1.4 and Section 3.6and the specific limitations on Options contained in this Plan, the Committeefrom time to time may authorize, generally or in specific cases only, for thebenefit of any Eligible Employee, any adjustment in the exercise price, thenumber of shares subject to or the term of, an Option granted under this Article bycancellation of an outstanding Option and a subsequent regranting of an Option,by amendment, by substitution of an outstanding Option, by waiver or by otherlegally valid means. Such amendment or other action may result among otherchanges in an exercise price which is higher or lower than the exercise orpurchase price of the original or prior Option, provide for a greater or lessernumber of shares subject to the Option, or provide for a longer or shortervesting or exercise period.

 

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**III.  OTHERPROVISIONS**

 

3.1                                 Rightsof Eligible Employees, Participants and Beneficiaries

 

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

 

(b)         No Employment Contract. Nothingcontained in this Plan (or in any other documents related to this Plan or to anyOption) shall confer upon any Eligible Employee or other Participant any rightto continue in the employ or other service of the Company or constitute anycontract or agreement of employment or other service, nor shall interfere inany way with the right of the Company to change such person’s compensation or otherbenefits or to terminate the employment of such person, with or without cause, butnothing contained in this Plan or any document related hereto shall adversely affectany independent contractual right of such person without his or her consentthereto.

 

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

 

3.2                                 Adjustments;Acceleration

 

(a)          Adjustments.           If there shall occur anyextraordinary dividend or other extraordinary distribution in respect of the CommonStock (whether in the form of cash, Common Stock, other securities, or otherproperty), or any recapitalization, stock split (including a stock split in theform of a stock dividend), reverse stock split, reorganization, merger,combination, consolidation, split-up, spin-off, combination, repurchase, or exchangeof Common Stock or other securities of the Corporation, or there shall occurany 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 deemsappropriate and equitable (1) proportionately adjust any or all of (a) thenumber and type of shares of Common Stock(or other securities) which thereaftermay be made the subject of Options (including the specific maximum and numbers ofshares set forth elsewhere in this Plan), (b) the number, amount and type ofshares of Common Stock (or other securities or property) subject to any or alloutstanding Options, (c) the grant, purchase, or exercise price of any or alloutstanding Options, (d) the securities issuable upon exercise of any outstandingOptions, 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 fora cash payment or for the substitution or exchange of any or all outstanding Optionsor the securities deliverable to the holder of any or all outstanding Optionsbased upon the distribution or consideration payable to holders of the CommonStock of the Corporation upon or in respect of such event; provided, however, ineach case, that with respect to Incentive Stock Options, no such adjustment shallbe made which would cause the Plan to violate Section 424(a) of the Code or artysuccessor provisions thereto.

 

(b)         Acceleration of Options UponChange in Control.                   Asto any Eligible Employee Participant, unless prior to a Change in Control Eventthe Committee determines that, upon its occurrence,  there shall be no acceleration  of benefits under Options  or determines that only certain or limitedbenefits under Options shall be accelerated and the extent to which they shallbe accelerated, and/or establishes a different time in respect of such Eventfor such acceleration, then upon the occurrence of a Change in Control Eventeach Option shall become immediately exercisable. The Committee may override thelimitations on acceleration in this Section 3.2(b) by express provision in the OptionAgreement and may accord any Eligible Employee a right to refuse any acceleration,whether pursuant to the Option Agreement or otherwise, in such circumstances asthe Committee may approve.Any acceleration of Options shall comply with applicableregulatory requirements, including, without limitation, Section 422 of theCode.

 

(c)          Possible Early Terminationof Accelerated Options.           If any Optionor other right to acquire Common Stock under this Plan has been fullyaccelerated 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 theCorporation does not survive, or (iii) the consummation of reorganizationevent described in Section 3.2(a) that results in a Change of Controlapproved by the Board, and no provision has been made for the survival,substitution, exchange or other settlement of such Option or right, such Optionor right shall thereupon terminate.

 

3.3                                 Effectof Termination of Employment

 

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

 

3.4                                 Compliancewith Laws

 

This Plan, the granting and vesting of Options under this Plan and the issuanceand delivery of shares of Common Stock under this Plan or under Options grantedhereunder 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 suchapprovals by any listing, regulatory or governmental authority as may, in theopinion of counsel for the Corporation, be necessary or advisable in connectiontherewith.  Any securities deliveredunder this Plan shall be subject to such restrictions, and the person acquiringsuch securities shall, if requested by the Corporation, provide such assurancesand representations to the Corporation as the Corporation may deem necessary ordesirable to assure compliance with all applicable legal requirements.

 

3.5                                 TaxWithholding

 

(a)          Cash or Shares. Upon anyexercise or vesting of any Option or upon the disposition of shares of CommonStock acquired pursuant to the exercise of an Incentive Stock Option prior to satisfactionof the holding period requirements of Section 422 of the Code, the Company shallhave the right at its option to (i) require the Participant (or PersonalRepresentative or Beneficiary, as the case may be) to pay or provide forpayment of the amount of any taxes which the Company may be required to withholdwith respect to such transaction or (ii) deduct from any amount payable incash the amount of any taxes which the Company may be required to withhold withrespect to such cash amount. In any case where a tax is required to be withheldin connection with the delivery of shares of Common Stock under this Plan, the Committeemay grant (either at the time the Option is granted or thereafter) to theParticipant the right to elect, pursuant to such rules and subject to suchconditions as the Committee may establish, to have the Corporation reduce thenumber of shares to be delivered by (or otherwise reacquire) the appropriate numberof shares valued at theft then Fair Market Value, to satisfy such withholdingobligation.

 

(b)         Tax Loans. The Committee may,in its discretion, authorize a loan to an Eligible Employee in the amount ofany taxes which the Company may be required to withhold with respect to shares ofCommon Stock received (or disposed of, as the case may be) pursuant to atransaction 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 theCommittee, under applicable law, may establish and such loan must comply with theprovisions of Section 1.8.

 

3.6                                 PlanAmendment, Termination and Suspension

 

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

 

(b)         Stockholder Approval. If anyamendment would (i) materially increase the benefits accruing to Participantsunder this Plan, (ii) materially increase the 

 

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aggregate number of securities that may beissued under this Plan, or (iii) materially modify the requirements as toeligibility for participation in this Plan, then to the extent then required byRule 1 6b-3 to secure benefits thereunder or to avoid liability under Section16 of the Exchange Act(and Rules thereunder) or required under Section 425 of theCode or any other applicable law, or deemed necessary or advisable by theBoard, such amendment shall be subject to stockholder approval.

 

(c)          Amendments to Options. Without limiting anyother express authority of the Committee under but subject to the express limitsof this Plan, the Committee by agreement or resolution may waive conditions ofor limitation on Options to Eligible Employees that the Committee in the priorexercise of its discretion has imposed, without the consent of a Participant, andmay make other changes to the terms and conditions of Options that do notaffect in any manner materially adverse to the Employee Participant, his or herrights and benefits under an Option.

 

(d)         Limitations on Amendment toPlan  and Options. No amendment, suspension  or termination of the Plan or change of oraffecting any outstanding Option shall, without written consent of the Participant,  affect in any manner materially adverse to theParticipant any rights or benefits of the Participant or obligations of the Corporationunder 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 oramendments for purposes of this Section 3.6.

 

3.7                                 Privilegesof 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 anyshares of Common Stock not actually delivered to and held of record by him orher. No adjustment will be made for dividends or other rights as a stockholdersfor which a record date is prior to such date of delivery.

 

3.8                                 EffectiveDate of the Plan

 

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

 

3.9                                 Termof the Plan

 

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

 

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3.10                           GoverningLaw; Construction; Severability

 

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

 

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

 

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

 

3.11                           Captions

 

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

 

3.12                           Effectof Change of Subsidiary Status

 

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

 

3.13                           Non-Exclusivityof Plan

 

Nothing in this Plan shall limit or be deemed to limit the authority ofthe Board or the Committee to grant options or authorize any othercompensation, with or without reference to the Common Stock, under any otherplan 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 receivethe benefits specified in the Option Agreement and under this Plan in the eventof a Participant’s death, and shall mean the Participant’s personalrepresentative, executor or administrator if no other Beneficiary is identifiedand able to act under the circumstances.

 

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

 

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

 

(i)                         Approvalby the stockholders of the Corporation of the dissolution or liquidation of theCorporation;

 

(ii)                      Approvalby the stockholders of the Corporation of an agreement to merge or consolidate,or otherwise reorganize, with or into one or more entities that are notSubsidiaries, as a result of which less than 50% of the outstanding voting securities of the surviving orresulting entity immediately after the reorganization are, or will be, owned bystockholders of the Corporation immediately before such reorganization (assumingfor purposes of such determination that there is no change in the recordownership of the Corporation’s securities from the record date for suchapproval until such reorganization and that such record owners hold nosecurities of the other parties to such reorganization);

 

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

 

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

 

(v)                     During any periodnot longer than two consecutive years, individuals who at the beginning of suchperiod constituted the Board cease to constitute at least a majority thereof, unlessthe 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 ofthe Board members then still in office who were Board members at the beginning ofsuch period (including for 

 

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

 

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

 

(e)          “Commission” shall meanthe Securities and Exchange Commission.

 

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

 

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

 

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

 

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

 

(j)             “Disinterested shallmean disinterested within the meaning of any applicable regulatoryrequirements, including Rule 16b-3.

 

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

 

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

 

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

 

(n)         “Fair Market Value” shallmean (i) if the stock is listed or admitted to trade on a nationalsecurities 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 principalnational securities exchange on which the stock is so listed or admitted totrade, on such date, or, if there is no trading of the stock on such date, thenthe closing price of the stock as quoted on such Composite Tape on the nextpreceding date on which there was trading in such shares; (ii) if the stock is notlisted or admitted to trade on a national securities exchange, the last sales pricefor the stock on such date, as furnished by the National Association ofSecurities Dealers, Inc. (“NASD”) through the NASDAQ National MarketReporting System or a similar organization if the NASD is no longer reporting suchinformation; (iii) if the stock is not listed or admitted to trade 

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(w)       “Personal Representative” shallmean the person or persons who, upon the disability or incompetence of aParticipant, shall have acquired on behalf of the Participant, by legalproceeding or otherwise, the power to exercise the rights or receive benefits underthis Plan and who shall have become the legal representative of theParticipant.

 

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

 

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

 

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

 

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

 

(cc)                “Securities Act” shallmean 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 stockor voting power is beneficially owned directly or indirectly by theCorporation.

 

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

 

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