**Exhibit 10.3**

 

**EMPLOYMENT AGREEMENT**

 

This Agreement, iseffective as of the 1st day of November, 1994 (the “Effective Date”), and is byand between NATURE’S SUNSHINE PRODUCTS, INC., a Utah Corporation, having itsprincipal place of business in Provo, Utah (“NSP”), and **DOUGLASFAGGIOLI**the undersigned individual (“Employee”).

 

**RECITALS**

 

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

 

WHEREAS, Employee hasbeen employed by NSP since **April 18, 1983**;and

 

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

 

NOW, THEREFORE, inconsideration of the mutual agreements herein contained, the parties herebyagree as follows:

 

**GENERALPROVISIONS**

 

**1****.****                                     ****Employment: **NSP hereby employs Employee and Employee hereby agreesto serve NSP as **Vice President-Finance, Chief FinancialOfficer**.  Employee shall devoteEmployee’s full time and efforts to NSP during the term of Employee’semployment and shall act with complete loyalty to NSP.

 

NSP may assign Employeesuch additional or substitute titles and duties as NSP shall determine in itssole discretion.  Employee shall at alltimes 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 andresponsible manner and to NSP’s reasonable satisfaction.  Employee agrees to abide by the policies andprocedures as may be set forth in handbooks, manuals and other materialsprovided by NSP.

 

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

 

**3****.****                                     ****Compensation:**

 

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

 

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

 

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**(c)****                                 ****Employee’s Benefits: **Until Employee’s employment is terminated, Employeeshall be entitled to all standard employee benefits then in effect foremployees 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 thisAgreement and NSP’s obligation to pay Severance Pay to Employee as provided in Section 5.

 

**(b)****                                 ****Discretionary Termination byEmployee:**  Employee may terminate Employee’s employmentby 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 andthereafter NSP may terminate Employee’s employment immediately for Cause.  For purposes of this Agreement, “Cause” shallinclude (i) material breach by Employee of this Agreement, (ii) performanceby Employee deemed unsatisfactory to NSP acting reasonably, provided NSP’sexpectations for specific improvement are communicated to Employee in writingwith a ninety day probation period allowed for the requisite improvement, (iii) Employee’sdishonesty or violation of company rules by Employee including thatcertain Confidentiality Agreement by and between NSP and Employee, or (iv) Employee’sconviction 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 Incapacityof Employee:**  Employee’s employment with NSP shall, at theexclusive election of NSP, terminate upon the death or Incapacity ofEmployee.  For purposes of Sections 4 and5, termination of Employee’s employment by reason of Employee’s death orIncapacity 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 periodof 95 consecutive days or more, unable to perform Employee’s dutieseffectively, for reasons such as emotional, mental or physical illness,deficiency or disability.  In thisAgreement, if any question arises as to the “Incapacity” of Employee, NSP shallpromptly engage three physicians who are members of the American MedicalAssociation to examine Employee and determine if Employee is able to performthe duties of Employee’s employment with NSP. In the event Employee appears to have mental capacity to act, one ofsaid three physicians shall be selected by Employee, one shall be selected byNSP, and one shall be selected by the other two physicians.  The decision of the three physicians shall beconclusive for all purposes of this Agreement.

 

**5****.****                                     ****Effect of Termination onCompensation:**

 

**(a)****                                 ****Discretionary Termination by NSP:** If Employee’s employment is terminated by NSP *withoutCause*, Employee shall be entitled to receive as severance pay (“SeverancePay”) the following:  (i) an amountequal to Base Salary for the twelve (12)) months from the date of termination(the “Severance Pay Period”) and (ii) continuation of any coverage ineffect at the date of termination for Employee and his or her family at NSP’sexpense under NSP’s major medical and life insurance plans during the SeverancePay Period.

 

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**(b)****                                 ****Non-Renewal by NSP Without Cause;Death; Incapacity: **If NSP *withoutCause* does *not* renewEmployee’s employment at the end of the Initial Term, or the end of anyemployment period thereafter, or if Employee’s employment is terminated byreason of Employee’s death or Incapacity, then Employee (or Employee’s estateor designated beneficiary, as the case may be) shall receive Severance Pay forthe applicable Severance Pay Period.

 

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

 

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

 

**(e)****                                 ****Limitation: **Except as provided in this Section 5, Employeeshall not be entitled to any further or other Severance Pay, Base Salary,Benefits, compensation, damages or other amounts.  Employee understands and agrees thatnotwithstanding anything in this Agreement, NSP’s obligation to pay any BaseSalary, benefits or Severance Pay after termination of employment depends uponEmployee’s compliance with the agreements and covenants of Sections 6 through9.  *Except as otherwiseexpressly provided in this Agreement, Employee shall not receive anyhealth or life insurance coverage after the date of termination, except COBRAbenefits, if any, as and to the extent prescribed by law.*

 

**PROTECTIONOF NSP**

 

**6****.****                                     ****Noncompetition andNonsolicitation:**

 

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

 

**(b)****                                 ****Employee Noncompetition andNonsolicitation Covenants: **Employee hereby covenants and agrees thatEmployee shall not, directly or indirectly, in the Restricted Territory duringthe Restricted Period, do any of the following:

 

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

 

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**(ii)**                                plan for or organize any business whichcompetes or would compete with *any herb or vitaminproduct of NSP,* or combine with any other employee or representativeof NSP to organize any such competitive business;

 

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

 

**(iv)**                               solicit any customer of NSP where theidentity or any significant information about such customer was or isConfidential Information of NSP (as such term is defined in that certainConfidentiality Agreement by and between Employee and NSP).

 

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

 

**(d)****                                 ****Intentions:** It is the intention of the parties that the foregoing restrictivecovenant be enforced as written, and, in any other event, enforced to thegreatest extent (but to no greater extent) in time, territory and degree ofparticipation 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 anyNSP employee, associate, distributor or member of the public or press.  Employee understands and agrees that Employeemay lose any right to Severance Pay if Employee breaches this covenant not todisparage.

 

**8****.****                                     ****Acknowledgement:** Employee acknowledges that Employee’s covenants and agreements inSections 6 and 7 are reasonable and necessary to protect the legitimateinterests and Confidential Information of NSP. Employee acknowledges that Section 6 is not so broad as to prevent Employeefrom earning a livelihood or practicing Employee’s chosen profession aftertermination of Employee’s employment. The parties acknowledge and agree that the compensation and benefitsprovided for under this Agreement are in substantial part consideration forEmployee’s covenants in Sections 6 and 7.

 

**9****.****                                     ****Enforcement: **For any breach of Section 6, 7, 8 or 9, Employeeagrees that NSP is entitled to equitable and other injunctive relief which mayinclude, but shall not be limited to restraining Employee from rendering anyservice or performing or participating in any activity in breach of thisAgreement.  However, no remedy availableunder this Agreement (including this Section 9) is intended to beexclusive of any other remedy, and each and every remedy shall be cumulativeand shall be in addition to every other available remedy or now hereafterexisting at law or in equity, by statute or otherwise.

 

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**MISCELLANEOUS**

 

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

 

**11****.****                              ****Interpretation: **The Section and other headings in this Agreementare for reference only and shall not affect the construction of thisAgreement.  Whenever the contextrequires, the singular shall include the plural, the plural shall include thesingular, 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, illegalor unenforceable provision(s) shall be limited, construed or eliminated tothe extent necessary to remove such invalidity, illegality or unenforceabilityand the other provisions of this Agreement shall not be affected thereby.

 

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

 

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

 

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

 

**16****.****                              ****Governing Law: **This Agreement shall be governed by the laws of theState of Utah and any litigation arising out of it shall be conducted inapplicable state courts located in Utah County or federal courts located inSalt Lake County, Utah.  The partiesexpressly consent to such jurisdiction and venue.

 

AGREED TO AND ACCEPTED ASOF 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 |
|                      |            |                                             |  |  |  |

 

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**EXHIBIT “A”**

**TO**

**EMPLOYMENTAGREEMENT**

**BETWEEN**

**NATURE’SSUNSHINE PRODUCTS, INC.**

**AND**

**DOUGLASFAGGIOLI**

 

**Duties ofEmployee**

 

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