exv10w1



 






Exhibit 10.1








NOTICE OF GRANT OF STOCK OPTION




          Notice is hereby given of the following option grant (the “Option”) to purchase Common Stock
of Natural Health Trends Corp. (the “Corporation”):




	 	 	 
	Optionee:

	 	                                        
	 
	 	 
	Grant Date:

	 	                                        
	 
	 	 
	Exercise Price:

	 	$           per share (Grant Date)
	 
	 	 
	Number of Option Shares:

	 	             shares of Common Stock
	 
	 	 
	Expiration Date:

	 	                                        
	 
	 	 
	Type of Option:

	 	Non-Statutory Stock Option
	 
	 	 
	Date Exercisable:

	 	Upon vesting
	 
	 	 
	Vesting Schedule:
	 	 






	 	 	 
	Number of Option Shares	 	Date of Vesting
	                     (1/3)
	 	November 25, 2006
	                     (1/3)
	 	November 25, 2007
	                     (1/3)
	 	November 25, 2008






          Optionee understands and agrees that the Option is granted subject to and in accordance with
the terms of the Natural Health Trends Corp. 2002 Stock Option Plan, as amended (the
“Plan”). Optionee further agrees to be bound by the terms of the Plan and the terms of the Option
as set forth in the Stock Option Agreement attached hereto as Exhibit A. Optionee hereby
acknowledges receipt of a copy of the Plan in the form attached hereto as Exhibit B. All
capitalized terms in this Notice shall have the meaning assigned to them in this Notice or in the
attached Stock Option Agreement.




DATED:                                         




	 	 	 	 	 
	NATURAL HEALTH TRENDS CORP.	 	OPTIONEE
	 

	 	 	 	 
	 

	 	 	 	 
	By:
	 	 	 	 
	 

	 	 
	 	 





 









 






Attachments:



Exhibit A — Stock Option Agreement

Exhibit B — Natural Health Trends Corp. 2002 Stock Option Plan, as amended [as previously
filed with the Securities and Exchange Commission]




 









 





EXHIBIT A

STOCK OPTION AGREEMENT




RECITALS



A. The Board has adopted the Stock Option Plan (the “Plan”) for the purpose of recruiting and
retaining the services of selected employees, directors, officers, agents, consultants, independent
contractors and advisors in the service of the Corporation (or any Parent or Subsidiary).



B. Optionee is to render valuable services to the Corporation (or a Parent or Subsidiary), and this
Agreement is executed pursuant to, and is intended to carry out the purposes of the Plan in
connection with the Corporation’s grant of an option to Optionee.



C. All capitalized terms in this Agreement shall have the meaning assigned to them in the attached
Appendix.



NOW, THEREFORE, it is hereby agreed as follows:



1. GRANT OF OPTION. The Corporation hereby grants to Optionee, as of the Grant Date, an
option to purchase up to the number of Option Shares specified in the Grant Notice. The Option
Shares shall be purchasable from time to time during the option term specified in Paragraph 2 at
the Exercise Price.



2. OPTION TERM. This option shall have a term as set forth in the Notice of Grant and
shall accordingly expire at the close of business on the Expiration Date, unless sooner terminated
in accordance with Paragraph 5 or 6.



3. LIMITED TRANSFERABILITY. During Optionee’s lifetime, this option shall be exercisable
only by Optionee and shall not be assignable or transferable other than by will or by the laws of
descent and distribution following Optionee’s death.



4. DATES OF EXERCISE. This option shall become exercisable for the Option Shares in one or
more installments as specified in the Grant Notice. As the option becomes exercisable for such
installments, those installments shall accumulate, and the option shall remain exercisable for the
accumulated installments until the Expiration Date or sooner termination of the option term under
Paragraph 5 or 6.



5. CESSATION OF SERVICE. The option term specified in Paragraph 2 shall terminate (and
this option shall cease to be outstanding) prior to the Expiration Date should Optionee die while
this option is outstanding, then the personal representative of Optionee’s estate or the person or
persons to whom the option is transferred pursuant to Optionee’s will or in accordance with the
laws of inheritance shall have the right to exercise this option. Such right shall lapse, and this
option shall cease to be outstanding, upon the earlier of (i) the expiration of the six (6)
month period measured from the date of Optionee’s death or (ii) the Expiration Date.



6. CORPORATE TRANSACTION.



(a) In the event of any Corporate Transaction, the Option Shares at the time subject to this
option but not otherwise vested shall automatically vest in full so that this option shall,
immediately prior to the effective date of the Corporate Transaction, become exercisable for all of
the Option Shares as fully-vested shares and may be exercised for any or all of those Option Shares
as vested shares.



(b) Immediately following the Corporate Transaction, this option shall terminate and cease to be
outstanding.



This Agreement shall not in any way affect the right of the Corporation to adjust, reclassify,
reorganize or otherwise change its capital or business structure or to merge, consolidate,
dissolve, liquidate or sell or transfer all or any part of its business or assets.



7. ADJUSTMENT IN OPTION SHARES. Should any change be made to the Common Stock by reason
of any stock split, stock dividend, recapitalization, combination of shares, exchange of shares or
other change affecting the outstanding Common Stock as a class without the Corporation’s receipt of
consideration, appropriate adjustments shall be made to (i) the total number and/or class of
securities subject to this option and (ii) the Exercise Price in order to reflect such change and
thereby preclude a dilution or enlargement of benefits hereunder.



8. STOCKHOLDER RIGHTS. The holder of this option shall not have any stockholder rights
with respect to the Option Shares until such person shall have exercised the option, paid the
Exercise Price and become the record holder of the purchased shares.



9. MANNER OF EXERCISING OPTION.



(a) In order to exercise this option with respect to all or any part of the Option Shares for
which this option is at the time exercisable, Optionee (or any other person or persons exercising
the option) must take the following actions:




     (i) pay the aggregate Exercise Price for the



 









 







purchased shares in one or more of the following forms: (A) cash or check made payable to the
Corporation; or (B) if the Common Stock is registered under Section 12 of the 1934 Act at the time
the option is exercised, (1) in shares of Common Stock held by Optionee (or any other person or
persons exercising the option) for the lesser of (a) six months or (b) the requisite period
necessary to avoid a charge to the Corporation’s earnings for financial reporting purposes and
valued at Fair Market Value on the Exercise Date; or (2) to the extent the option is exercised for
vested Option Shares, through a special sale and remittance procedure pursuant to which Optionee
(or any other person or persons exercising the option) shall concurrently provide irrevocable
instructions (a) to a Corporation-designated broker-age firm to effect the immediate sale of the
purchased shares and remit to the Corporation, out of the sale proceeds available on the settlement
date, sufficient funds to cover the aggregate Exercise Price payable for the purchased shares plus
all applicable Federal, state and local income and employment taxes required to be withheld by the
Corporation by reason of such exercise and (b) to the Corporation to deliver the certificates for
the purchased shares directly to such brokerage firm in order to complete the sale.



     (ii) Furnish to the Corporation appropriate documentation that the person or persons
exercising the option (if other than Optionee) have the right to exercise this option.



     (iii) Make appropriate arrangements with Corporation (or Parent or Subsidiary employing or
retaining Optionee) for satisfaction of all Federal, state and local income and employment
withholding requirements applicable to the option exercise.


(b) As soon as practical after the Exercise Date, the Corporation shall issue to or on behalf of
Optionee (or any other person or persons exercising this option) a certificate for the purchased
Option Shares.



(c) In no event may this option be exercised for any fractional shares.



10. LAWS AND REGULATIONS.



(a) The exercise of this option and the issuance of the Option Shares upon such exercise shall be
subject to compliance by the Corporation and Optionee with all applicable requirements of law
relating thereto and with all applicable regulations of any stock exchange (or the Nasdaq Stock
Market, if applicable) on which the Common Stock may be listed for trading at the time of such
exercise and issuance.



(b) The inability of the Corporation to obtain approval from any regulatory body having authority
deemed by the Corporation to be necessary to the lawful issuance and sale of any Common Stock
pursuant to this option shall relieve the Corporation of any liability with respect to the
non-issuance or sale of the Common Stock as to which such approval shall not have been obtained.
The Corporation, however, shall use its best efforts to obtain all such approvals.



11. SUCCESSORS AND ASSIGNS. Except to the extent otherwise provided in Paragraphs 3 and 5,
the provisions of this Agreement shall inure to the benefit of, and be binding upon, the
Corporation and its successors and assigns and Optionee, Optionee’s assigns and the legal
representatives, heirs and legatees of Optionee’s estate.



12. NOTICES. Any notice required to be given or delivered to the Corporation under the
terms of this Agreement shall be in writing and addressed to the Corporation at its principal
corporate offices. Any notice required to be given or delivered to Optionee shall be in writing and
addressed to Optionee at the address indicated on the Corporation’s books and records. All notices
shall be deemed effective upon personal delivery or upon deposit in the U.S. mail, postage prepaid
and properly addressed to the party to be notified.



13. CONSTRUCTION. This Agreement and the option evidenced hereby are made and granted
pursuant to the Plan and are in all respects limited by and subject to the terms of the Plan. All
decisions of the Plan Administrator with respect to any question or issue arising under the Plan or
this Agreement shall be conclusive and binding on all persons having an interest in this option.



14. GOVERNING LAW. The interpretation, performance and enforcement of this Agreement shall
be governed by the laws of the state in which the Corporation is incorporated without resort to
that State’s conflict-of-laws rules.



15. STOCKHOLDER APPROVAL. If the Option Shares covered by this Agreement exceed, as of the
Grant Date, the number of shares of Common Stock which may be issued under the Plan as last
approved by the stockholders, then this option shall be void with respect to such excess shares,
unless stockholder approval of an amendment sufficiently increasing the number of shares of Common
Stock issuable under the Plan is obtained in accordance with the provisions of the Plan.



16. ADDITIONAL TERMS. In the event this option is designated an Incentive Option in the
Grant Notice, the following terms and conditions shall also apply to the grant:



(a) This option shall cease to qualify for favorable tax treatment as an Incentive Option if (and
to the extent) this option is exercised for one or more Option


 









 






Shares: (i) more than three (3) months after the date Optionee ceases to be an Employee for any
reason other than death or Permanent Disability or (ii) more than twelve (12) months after the date
Optionee ceases to be an Employee by reason of Permanent Disability, if applicable.



(b) This option shall not become exercisable in the calendar year in which granted if (and to the
extent) the aggregate Fair Market Value (determined at the Grant Date) of the Common Stock for
which this option would otherwise’ first become exercisable in such calendar year would, when added
to the aggregate value (determined as of the respective date or dates of grant) of the Common Stock
and any other securities for which one or more other Incentive Options granted to Optionee prior to
the Grant Date (whether under the Plan or any other option plan of the Corporation or any Parent or
Subsidiary) first become exercisable during the same calendar year, exceed One Hundred Thousand
Dollars ($100,000) in the aggregate. To the extent the exercisability of this option is deferred by
reason of the foregoing limitation, the deferred portion shall become exercisable in the first
calendar year or years thereafter in which the One Hundred Thousand Dollar ($100,000) limitation of
this Paragraph 16(b) would not be contravened, but such deferral shall in all events end
immediately prior to the effective date of a Corporate Transaction in which this option is not to
be assumed, whereupon the option shall become immediately exercisable as a Non-Statutory Option for
the deferred portion of the Option Shares.



(c) Should Optionee hold, in addition to this option, one or more other options to purchase Common
Stock which become exercisable for the first time in the same calendar year as this option, then
the foregoing limitations on the exercisability of such options as Incentive Options shall be
applied on the basis of the order in which such options are granted.




APPENDIX



The following definitions shall be in effect under the Agreement:



A. Agreement shall mean this Stock Option Agreement.



B. Board shall mean the Corporation’s Board of Directors.



C. Code shall mean the Internal Revenue Code of 1986, as amended.



D. Common Stock shall mean the Corporation’s common stock.



E. Corporate Transaction shall mean either of the following stockholder-approved
transactions to which the Corporation is a party:



(i) a merger or consolidation in which securities possessing more than fifty percent (50%) of the
total combined voting power of the Corporation’s outstanding securities are transferred to a person
or persons different from the persons holding those securities immediately prior to such
transaction, or



(ii) the sale, transfer or other disposition of all or substantially all of the Corporation’s
assets in complete liquidation or dissolution of the Corporation.



F. Corporation shall mean Natural Health Trends Corp., a Delaware corporation.



G. Disability shall mean the inability of Optionee to engage in any substantial gainful
activity by reason of any medically determinable physical or mental impairment and shall be
determined by the Plan Administrator on the basis of such medical evidence as the Plan
Administrator deems warranted under the circumstances. Disability shall be deemed to constitute
Permanent Disability in the event that such Disability is expected to result in death or has lasted
or can be expected to last for a continuous period of twelve (12) months or more.



H. Employee shall mean an individual who is in the employ of the Corporation (or any
Parent or Subsidiary), subject to the control and direction of the employer entity as to both the
work to be performed and the manner and method of performance.



I. Exercise Date shall mean the date on which the option shall have been exercised in
accordance with Paragraph 9 of the Agreement.



J. Exercise Price shall mean the exercise price payable per Option Share as specified in
the Grant Notice. Under no circumstances shall the Exercise Price of any option granted hereunder
ever be less than the Fair Market Value of the underlying Option Shares on the Grant Date.



K. Expiration Date shall mean the date on which the option expires as specified in the
Grant Notice.



L. Fair Market Value per share of Common Stock on any relevant date shall be determined in
accordance with the following provisions:



(i) If the Common Stock is at the time traded on the Nasdaq National Market, the Nasdaq SmallCap
Market or the OTC Bulletin Board, then the Fair Market Value shall be the closing selling price per
share of Common Stock on the date in question, as the price is reported on the Nasdaq National
Market, the Nasdaq SmallCap Market or the OTC Bulletin Board. If there is no closing selling price
for the Common Stock on the date in question, then the Fair
Market Value shall be the closing selling price on the last preceding date for which such quotation
exists.





 









 







(ii) If the Common Stock is at the time listed on any Stock Exchange, then the Fair Market Value
shall be the closing selling price per share of Common Stock on the date in question on the Stock
Exchange determined by the Plan Administrator to be the primary market for the Common Stock, as
such price is officially quoted in the composite tape of transactions on such exchange. If there is
no closing selling price for the Common Stock on the date in question, then the Fair Market Value
shall be the closing selling price on the last preceding date for which such quotation exists.



(iii) If the Common Stock is at the time neither listed on any Stock Exchange nor traded on the
Nasdaq National Market, the Nasdaq SmallCap Market or the OTC Bulletin Board, then the Fair Market
Value shall be determined by the Plan Administrator after taking into account such factors as the
Plan Administrator shall deem appropriate.



M. Grant Date shall mean the date of grant of the option as specified in the Grant Notice.



N. Grant Notice shall mean the Notice of Grant of Stock Option accompanying the Agreement,
pursuant to which Optionee has been informed of the basic terms of the option evidenced hereby.



O. Incentive Option shall mean an option which satisfies the requirements of Code Section
422.



P. Misconduct shall mean the commission of any act of fraud, embezzlement or dishonesty by
Optionee, any unauthorized use or disclosure by Optionee of confidential information or trade
secrets of the Corporation (or any Parent or Subsidiary), or any other intentional misconduct by
Optionee adversely affecting the business or affairs of the Corporation (or any Parent or
Subsidiary) in a material manner. The foregoing definition shall not be deemed to be inclusive of
all the acts or omissions which the Corporation (or any Parent or Subsidiary) may consider as
grounds for the dismissal or discharge of Optionee or any other individual in the Service of the
Corporation (or any Parent or Subsidiary).



Q. 1934 Act shall mean the Securities Exchange Act of 1934, as amended.



R. Non-Statutory Option shall mean an option not intended to satisfy the requirements of
Code Section 422.



S. Option Shares shall mean the number of shares of Common Stock subject to the option.



T. Optionee shall mean the person to whom the option is granted as specified in the Grant
Notice.



U. Parent shall mean any corporation (other than the Corporation) in an unbroken chain of
corporations ending with the Corporation, provided each corporation in the unbroken chain (other
than the Corporation) owns, at the time of the determination, stock possessing fifty percent (50%)
or more of the total combined voting power of all classes of stock in one of the other corporations
in such chain.



V. Plan shall mean the Corporation’s 2002 Stock Option Plan.



W. Plan Administrator shall mean either the Board or a committee of the Board acting in
its capacity as administrator of the Plan.



X. Service shall mean the Optionee’s performance of services for the Corporation (or any
Parent or Subsidiary) in the capacity of an Employee, a non-employee member of the board of
directors or an independent consultant.



Y. Stock Exchange shall mean the American Stock Exchange or the New York Stock Exchange.



Z. Subsidiary shall mean any corporation (other than the Corporation) in an unbroken chain
of corporations beginning with the Corporation, provided each corporation (other than the last
corporation) in the unbroken chain owns, at the time of the determination, stock possessing fifty
percent (50%) or more of the total combined voting power of all classes of stock in one of the
other corporations in such chain.



AA. Vesting Schedule shall mean the vesting schedule specified in the Grant Notice
pursuant to which the Optionee is to vest in the Option Shares in a series of installments over his
or her period of Service.