Document:

Exhibit 10.2

 

EMPLOYMENT
AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (the “Agreement”),
is made on this 12th day of March, 2010 (the “Effective Date”), by
and between Nature’s Sunshine Products, Inc., a Utah Corporation, having
its principal place of business in Provo, Utah (“the Company” or “NSP”) and
Michael Dean (“Executive”).

 

The Company desires to engage Executive to provide services for NSP and
Executive desires to provide such services on the terms and conditions below.

 

1.                                       Employment.

 

1.1.                              Positions and
Duties.

 

1.1.1.                     Initial
Position.  Beginning
on the Effective Date, Executive will initially serve as the CEO-Elect of the
Company, reporting directly to the Company’s Board of Directors (“Board”).  He will have such duties, responsibilities,
powers and authorities as assigned to him by the Board.

 

1.1.2.                     President and
Chief Executive Officer. 
Effective July 1, 2010, Executive will serve as the President and
Chief Executive Officer of the Company, reporting directly to the Board.  In addition, without additional compensation,
if requested by the Company, and upon the consent of Executive, which consent
will not be unreasonably withheld, Executive will serve in other officer
positions of the Company and its subsidiaries.

 

1.1.3.                     Duties.  Executive shall devote his best efforts and
substantially all of his business time and services to the Company to perform
such duties as may be customarily incident to such positions of an enterprise
of the size and nature of the Company and as may reasonably be assigned from
time to time by the Board of the Company or the Company, as the case may
be.  Executive will render his services
hereunder to the Company, shall use his best efforts, judgment and energy in
the performance of the duties assigned to him, and shall abide by the Company’s
Code of Conduct and any other applicable Company policies, and shall comply
with any and all applicable laws, including but not limited to insider
trading/reporting requirements and the policies and procedures as may be set
forth in the employee handbook, manuals and other materials provided by the
Company.  Nothing in this Section 1.1.3
will prevent Executive from attending to other personal business interests to
the extent such attention does not interfere with his duties as outlined herein.

 

1.2.                              Place of
Performance. Executive shall perform his services hereunder at
the Company’s executive offices in Provo, Utah; provided, however, that Executive will be required to travel
from time to time as reasonably required for business purposes.

 

2.                                       Compensation
and Benefits.

 

2.1.                              Base Salary. Executive
shall receive an annual salary of $400,000.00 paid in accordance with the
Company’s payroll practices, as in effect from time to time.  Base salary shall be subject to review on at
least an annual basis by the Board. Executive understands that no 

 

 

further
compensation will be given for his/her name being used as an officer or
shareholder of any corporation, subsidiary or branch.

 

2.2.                              Discretionary
Bonus.  Executive shall also be
eligible to participate in the Company’s executive bonus program or any
successor program (the “EBP”) and receive a discretionary bonus for each
calendar year of up to one hundred percent (100%) of his base salary for such
year.  Payment of any bonus under the EBP
is in sole discretion of the Board and such payments will be made in accordance
with the terms of the EBP, but in no event earlier than January 1 or later
than March 31 of the calendar year following the calendar year for which
that bonus is earned.

 

2.3.                              Employee
Benefits. Executive will be eligible to participate in
retirement/savings, health insurance, term life insurance, long term disability
insurance and other employee benefit plans, policies or arrangements maintained
by the Company for its employees generally and, at the discretion of the Board,
in incentive plans, stock option plans and change in control severance plans
maintained by the Company for its executives, if any, subject to the terms and
conditions of such plans, policies or arrangements.  The benefits in which Executive shall be
eligible to participate as of the Effective Date are set forth in Exhibit B
hereto.

 

2.4.                              Stock Options.  On the Effective Date, the
Company shall grant to Executive an option (the “Option”) to purchase 200,000
shares of NSP common stock under the Company’s 2009 Stock Incentive Plan (the “Plan”).  The Option will have an exercise price per
share equal to the closing price of NSP common stock on the grant date.  The Option will become exercisable with
respect to (i) 150,000 shares in three equal annual installments upon
Executive’s completion of each year of employment over the three (3)-year
period measured from the Effective Date, (ii) 16,666 shares upon the
Company achieving a 6% operating income margin, based on the Company’s
financial results as reported in local currencies, for four (4) out of
five (5) consecutive fiscal quarters commencing on or after April 1,
2010, provided Executive remains employed with the Company through the last day
of the last fiscal quarter in which the performance goal is achieved; (iii) 16,666
shares upon the Company achieving an 8% operating income margin, based on the
Company’s financial results as reported in local currencies, for four (4) out
of five (5) consecutive fiscal quarters commencing on or after April 1,
2010, provided Executive remains employed with the Company through the last day
of the last fiscal quarter in which the performance goal is achieved; and (iv) 16,667
shares upon the Company achieving a 10% operating income margin, based on the
Company’s financial results as reported in local currencies, for four (4) out
of five (5) consecutive fiscal quarters commencing on or after April 1,
2010, provided Executive remains employed with the Company through the last day
of the last fiscal quarter in which the performance goal is achieved.  The Option will have a term of ten (10) years
subject to earlier termination upon Executive’s termination of employment as
set forth in the form Stock Option Agreement under the Plan.  The remaining terms of the Option shall be as
set forth in such Stock Option Agreement. 
The Company represents that the Options shall be covered by a valid Form S-8
Registration Statement and that the Company will maintain such coverage
throughout the life of the Option.

 

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3.                                       Indemnification;
D&O Insurance.  The Company
will indemnify Executive for and hold Executive harmless from and against any
and all losses, costs, damages or expenses (including attorneys’ fees) arising
out of any claim or legal proceeding brought against Executive, relating in any
way to services performed by Executive for the Company.  This indemnification provision is intended to
be broadly interpreted and to provide for indemnification to the full extent
permitted by law.  The Company will
maintain directors’ and officers’ liability insurance in amounts and on terms
reasonable and customary for similarly situated companies.  The Company represents that it currently
maintains $25,000,000.00 in directors’ and officers’ liability insurance, which
level of insurance the Company will maintain during the term of this Agreement.

 

4.                                       Expenses.

 

4.1.                                  Reimbursement
of Business Expenses.  In
accordance with the Company’s normal policies for expense reimbursement, the
Company shall reimburse Executive for all reasonable travel, entertainment and
other expenses incurred or paid by Executive in connection with, or related to,
the performance of Executive’s duties, responsibilities or services under this
Agreement, upon presentation of documentation, including expense statements,
vouchers and/or such other supporting information as the Company may request.

 

4.2.                                  Reimbursement
of Relocation/Commuting Expenses.

 

4.2.1.                     The Company shall reimburse
Executive for reasonable moving expenses incurred by Executive in connection
with the relocation of Executive and his family from the Los Angeles,
California area to the Salt Lake City/Provo, Utah area.  However, in order to qualify for such
reimbursement, the relocation expenses must be incurred not later than September 1,
2010.  The reasonable moving expenses
eligible for reimbursement under this Section 4.2.1 are set forth
in Exhibit B.

 

4.2.2.                     During the period between
the Effective Date and September 1, 2010, and prior to Executive’s
relocation to the Salt Lake City/Provo, Utah area, the Company shall reimburse
Executive for reasonable commuting expenses between Executive’s home in Los
Angeles and the Company’s principal offices and reasonable dining and
lodging/temporary housing expenses.

 

4.3.                                  Conditions to
Reimbursement.  Executive
must submit proper documentation for each relocation and reimbursable expense
eligible for reimbursement under this Section 4 within sixty (60)
days after the later of (i) Executive’s incurrence of such expense or (ii) Executive’s
receipt of the invoice for such expense. 
If such expense qualifies hereunder for reimbursement, then the Company
will reimburse Executive for that expense within ten (10) business days
thereafter.  Each reimbursement must be
made no later than the end of the calendar year following the calendar year in
which the expense was incurred. The amount of reimbursements in any calendar
year shall not affect the expenses eligible for reimbursement in any other
taxable year.  Executive’s right to
reimbursement may not be liquidated or exchanged for any other benefit.

 

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5.                                       Termination.  Upon cessation of his employment with the
Company, Executive will be entitled only to such compensation and benefits as
described in this Section 5.

 

5.1.                              Termination
without Cause.  The Company
may terminate Executive’s employment at any time without Cause (as defined
below).  If Executive’s employment by the
Company is terminated by the Company without Cause, Executive will be entitled
to:

 

5.1.1.                     payment of all
accrued and unpaid base salary through the date of such termination;

 

5.1.2.                     provided the
Release under Section 5.2 has been executed and become effective
and enforceable in accordance with its terms following expiration of the
applicable revocation period and Executive complies with the Restrictive
Covenants (as set forth in Section 6), monthly severance payments equal to
one-twelfth of Executive’s base salary as of the date of such termination for a
period equal to twelve (12) months (the “Severance Period”).  The first such payment will be made on the
sixtieth (60th) day following Executive’s “separation from service” (as such
term is defined under Internal Revenue Code Section 409A (“Code Section 409A”)
and the Treasury Regulations thereunder and the remaining payments will be made
in accordance with the Company’s normal payroll schedule for salaried
employees; and

 

5.1.3.                     provided the
Release under Section 5.2 has been executed and become effective
and enforceable in accordance with its terms following expiration of the
applicable revocation period and Executive complies with the Restrictive
Covenants (as set forth in Section 6), the Company will reimburse
Executive for the cost he incurs for continuation of Executive’s health
insurance coverage under COBRA (and for his or her family members if Executive
provided for their coverage during his or her employment) during the Severance
Period and in accord with the NSP plan applicable to NSP employees currently in
effect.  Executive shall, within thirty
(30) days after each monthly COBRA payment during the Severance Period for
which he is entitled to reimbursement in accordance with the foregoing, submit
appropriate evidence of such payment to the Company, and the Company shall
reimburse Executive, within ten business days following receipt of such
submission.  During the period such
health care coverage remains in effect hereunder, the following provisions
shall govern the arrangement:  (i) the
amount of the COBRA costs eligible for reimbursement in any one (1) calendar
year of coverage will not affect the amount of such costs eligible for
reimbursement in any other calendar year for which such reimbursement is to be
provided hereunder; (ii) no COBRA costs will be reimbursed after the close
of the calendar year following the calendar year in which those costs were
incurred; and (iii) Executive’s right to the reimbursement of such costs
cannot be liquidated or exchanged for any other benefit.  In the event the Company’s reimbursement of
the reimbursable portion of any COBRA payment hereunder results in Executive’s
recognition of taxable income (whether for federal, state or local income tax
purposes), the Company will report such taxable income as taxable W-2 wages and
collect the applicable withholding taxes, and Executive will be responsible for
the payment of any additional income tax liability resulting from such
coverage.

 

5.2.                              Release and
Restrictive Covenants. 
Notwithstanding any provision of this Agreement, the payments and
benefits described above are conditioned on Executive’s execution and delivery
to the Company of a release substantially identical to that attached hereto as Exhibit

 

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A in a manner consistent
with the requirements of the Older Workers Benefit Protection Act, if
applicable, and any applicable state law (the “Release”).  In addition, the continuation of the payments
and benefits described above is conditioned on Executive’s compliance with the
Restrictive Covenants set forth in Section 6 of this Agreement.  A breach of these Restrictive Covenants by
the Executive shall constitute a breach of this Agreement, which shall relieve
the Company of any further obligation under this Agreement.

 

5.3.                              Termination for
Cause.  The Company may terminate
Executive’s employment immediately for Cause. 
If Executive’s employment with the Company is terminated by the Company
for Cause then the Company’s obligation to Executive will be limited solely to
the payment of accrued and unpaid base salary through the date of such
termination.  To terminate Executive’s
employment for Cause, the Board must determine in good faith that Cause has
occurred.

 

“Cause” means:

 

a)                                      conviction of,
or the entry of a plea of guilty or no contest to, a felony or any crime that
may materially adversely affect the business, standing or reputation of the
Company;

 

b)                                     dishonesty,
fraud, embezzlement or other misappropriation of funds;

 

c)                                      material breach
of this Agreement; or

 

d)                                     willful refusal
to perform the lawful and reasonable directives of the Board.

 

5.4.                              Termination for
Good Reason.  Executive
shall have the right to terminate his employment with the Company for Good
Reason.  For purposes of this Agreement,
Executive’s termination for Good Reason will be deemed to occur if (i) without
Executive’s express written consent, there is a material breach by the Company
of any material contractual obligation to Executive under the terms of this
Agreement or Executive’s duties or responsibilities as set forth in this
Agreement are materially diminished; (ii) Executive provides written
notice of such breach or diminution to the Company within thirty (30) days of
Executive’s knowledge of the occurrence of the breach or diminution; (iii) the
Company fails to cure the breach or diminution within thirty (30) days after
receipt of such notice and (iv) Executive terminates his employment with
the Company within thirty (30) days following the expiration of such cure
period.  Upon such termination for Good
Reason, Executive will be entitled to the same benefits set forth in Section 5.1
of this Agreement as if his employment was terminated by the Company without
Cause, provided Executive complies with the Release and Restrictive Covenant
requirements set forth in Section 5.2 of this Agreement.

 

5.5                                 Resignation by
Executive Without Good Reason.  Executive may resign his/her employment other
than for Good Reason by giving the Company four weeks’ notice of said
resignation.  If Executive resigns, then
the Company’s obligation to Executive will be limited solely to the payment of
accrued and unpaid base salary through the date of such termination.

 

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5.6                                 Termination
upon Death or Incapacity of Executive.  Executive’s employment with the Company shall
terminate upon the death or incapacity of Executive.  In the event of termination of Executive’s
employment by reason of Executive’s death or incapacity, the provisions
governing termination without Cause, above, shall apply.  “Incapacity” shall mean that the Executive is
unable to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment that can be expected to result in
death or can be expected to last for a continuous period of not less than 12
months, or that the Executive has been determined to be totally disabled by the
Social Security Administration.

 

5.7                                 Foreign
Entities.  Without regard
to the circumstances of Executive’s termination from employment, Executive
hereby also covenants that upon termination, if she/he is listed as an officer,
director, partner, secretary or shareholder on any corporation, subsidiary or
branch on behalf of Nature’s Sunshine Products, Inc. or any related entity,
he/she will sign over any and all rights to stock (except Company stock and
stock rights that Executive holds personally) and/or resign as an officer or
director prior to departure from the Company as required by the law applicable
to the entity or by that entity’s procedural requirements.

 

6.                                       Restrictive
Covenants.  In
recognition of the compensation and other benefits provided to Executive
pursuant to this Agreement, Executive agrees to be bound by the provisions of
this Section (the “Restrictive Covenants”). These Restrictive Covenants
will apply without regard to whether any termination or cessation of Executive’s
employment is initiated by the Company or Executive, and without regard to the
reason for that termination or cessation.

 

6.1.                              Covenant Not To
Compete.  Executive covenants that,
during his employment by the Company and for a period of twelve (12) months
following immediately thereafter, (the “Restricted
Period”), Executive will not do any of the following, directly or
indirectly:

 

6.1.1.                     engage, be employed by,
participate in, plan for or organize any Competing Business of the Company or
any subsidiary or joint venture of the Company; “Competing Business” means any
business enterprise that distributes through a multilevel marketing program or that
engages in any activity that competes anywhere in the world with any activity
in which the Company is then engaged, including sales or distribution of  herbs, vitamins or nutritional supplements or
any product, which the Company sells or distributes at the time of Executive’s
termination;

 

6.1.2.                     become interested in (as
owner, stockholder, lender, partner, co-venturer, director, officer, employee,
agent or consultant) any person, firm, corporation, association or other entity
engaged in a Competing Business. Notwithstanding the foregoing, Executive may
hold up to 2% of the outstanding securities of any class of any publicly-traded
securities of any company;

 

6.1.3.                     influence or attempt to
influence any employee, sales leader, manager, coordinator, consultant,
supplier, licensor, licensee, contractor, agent, strategic partner,
distributor, customer or other person to terminate his or her employment with
the Company or modify any written or oral agreement, relationship, arrangement
or course of dealing the Company; or

 

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6.1.4.                     solicit for employment or
employ or retain (or arrange to have any other person or entity employ or
retain) any person who has been employed or retained by any member of the
Company within the preceding twelve (12) months. For this purpose,
advertisements for employment placed in newspapers of general circulation will
not be considered solicitation.

 

6.1.5.                     Extension of
Restrictive Covenants.  The
Company may elect to extend the twelve (12) month post-termination non-compete
and non-solicitation period by up to twelve (12) additional months by
delivering written notice of such extension to Executive at least thirty (30)
days prior to the end of that twelve (12) month period and by making monthly
payments to Executive for the number of months equal to the length of the
extension specified by the Company in its notice to the Executive.  The amount of each such additional monthly
payment will be equal to one-twelfth of the base salary in effect at the time
of Executive’s termination of employment.

 

6.2.                              Confidentiality.  Executive recognizes and acknowledges that
the Proprietary Information (as defined below) is a valuable, special and
unique asset of the business of the Company. 
As a result, both during the Term and thereafter, Executive will not,
without the prior written consent of the Company, for any reason divulge to any
third-party or use for his/her own benefit, or for any purpose other than the
exclusive benefit of the Company, any Proprietary Information.  Notwithstanding the foregoing, if Executive
is compelled to disclose Proprietary Information by court order or other legal
process, to the extent permitted by applicable law, he shall promptly so notify
the Company so that it may seek a protective order or other assurance that
confidential treatment of such Proprietary Information shall be afforded, and
Executive shall reasonably cooperate with the Company in connection
therewith.  If Executive is so obligated
by court order or other legal process to disclose Proprietary Information,
Executive will disclose only the minimum amount of such Proprietary Information
as is necessary for Executive to comply with such court order or other legal
process.

 

6.3.                              Property of the
Company.

 

6.3.1.                     Proprietary
Information.  All right,
title and interest in and to Proprietary Information will be and remain the
sole and exclusive property of the Company. 
Executive will not remove from the Company’s offices or premises any
documents, records, notebooks, files, correspondence, reports, memoranda or
similar materials of or containing Proprietary Information, or other materials
or property of any kind belonging to the Company unless necessary or
appropriate in the performance of his duties to the Company.  If Executive removes such materials or
property in the performance of his duties, he will return such materials or
property promptly after the removal has served its purpose.  Executive will not make, retain, remove
and/or distribute any copies of any such materials or property, or divulge to
any third person the nature of and/or contents of such materials or property,
except to the extent necessary to perform his/her duties on behalf of the
Company.  Upon termination of Executive’s
employment with the Company, s/he will leave with the Company or promptly
return to the Company all originals and copies of such materials or property
then in his/her possession.

 

6.3.1.1. “Proprietary
Information”  means any and
all proprietary information developed or acquired by the Company that has not
been specifically authorized to 

 

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be disclosed.  Such Proprietary
Information shall include, but shall not be limited to, the following items and
information relating to the following items: (a) all trade secrets
(including research and development, know-how, formulas, compositions,
manufacturing and production processes and techniques, methodologies, technical
data, designs, drawings and specifications) as well as all inventions (whether
patentable or unpatentable and whether or not reduced to practice) and all
improvements thereto, (b) computer codes and instructions, processing
systems and techniques, inputs, and outputs (regardless of the media on which
stored or located) and hardware and software configurations, designs,
architecture and interfaces, (c) business research, studies, procedures
and costs, (d) financial data, (e) distributor network information,
the identities of actual and prospective distributors and distribution methods,
(f) marketing data, methods, plans and efforts, (g) the identities of
actual and prospective suppliers, (h) the terms of contracts and
agreements with, the needs and requirements of and the Company’s course of
dealing with, actual or prospective suppliers, (i) personnel information, (j) customer
and vendor credit information, and (k) information received from third
parties subject to obligations of nondisclosure or non-use.  Failure by the Company to mark any of the
Proprietary Information as confidential or proprietary shall not affect its
status as Proprietary Information.

 

6.3.2.                     Intellectual
Property.  Executive
agrees that all the Intellectual Property (as defined below) will be considered
“works made for hire” as that term is defined in Section 101 of the
Copyright Act (17 U.S.C. §  101) and that all right,
title and interest in such Intellectual Property will be the sole and exclusive
property of the Company.  To the extent
that any of the Intellectual Property may not by law be considered a work made
for hire, or to the extent that, notwithstanding the foregoing, Executive
retains any interest in the Intellectual Property, Executive hereby irrevocably
assigns and transfers to the Company any and all right, title, or interest that
Executive may now or in the future have in the Intellectual Property under
patent, copyright, trade secret, trademark or other law, in perpetuity or for
the longest period otherwise permitted by law, without the necessity of further
consideration.  The Company will be
entitled to obtain and hold in its own name all copyrights, patents, trade
secrets, trademarks and other similar registrations with respect to such
Intellectual Property.  Executive further
agrees to execute any and all documents and provide any further cooperation or
assistance reasonably required by the Company to perfect, maintain or otherwise
protect its rights in the Intellectual Property, at no cost to Executive.  If the Company is unable after reasonable efforts
to secure Executive’s signature, cooperation or assistance in accordance with
the preceding sentence, whether because of Executive’s incapacity or any other
reason whatsoever, Executive hereby designates and appoints the Company or its
designee as Executive’s agent and attorney-in-fact to act on his behalf solely
for the purpose of executing and filing documents and doing all other lawfully
permitted acts necessary or desirable to perfect, maintain or otherwise protect
the Company’s rights in the Intellectual Property. Executive acknowledges and
agrees that such appointment is coupled with an interest and is therefore
irrevocable.

 

6.3.2.1.  “Intellectual
Property”  means (a) all
inventions (whether patentable or unpatentable and whether or not reduced to
practice), all improvements thereto, and all patents and patent applications
claiming such inventions, (b) all trademarks, service marks, trade dress,
logos, trade names, fictitious names, brand names, brand marks and corporate
names, together with all translations, adaptations, derivations, and
combinations thereof and including all goodwill associated therewith, and all
applications, registrations, and renewals in connection therewith, (c) all
copyrightable works, all copyrights, and all applications, registrations, and 

 

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renewals in connection therewith, (d) all mask works and all
applications, registrations, and renewals in connection therewith, (e) all
trade secrets (including research and development, know-how, formulas,
compositions, manufacturing and production processes and techniques,
methodologies, technical data, designs, drawings and specifications), (I) all
computer software (including data, source and object codes and related
documentation), (g) all other proprietary rights or (h) all copies
and tangible embodiments thereof (in whatever form or medium) which, in the
case of any or all of the foregoing, have been or are developed or created in
whole or in part by Executive at any time and at any place while Executive is
employed by the Company and have been or are created for the purpose of
performing Executive’s duties on behalf of the Company.

 

6.4.                              Acknowledgements.  Executive acknowledges that the Restrictive
Covenants are reasonable and necessary to protect the legitimate interests of
the Company, that the duration and geographic scope of the Restrictive
Covenants are reasonable given the nature of this Agreement and the position
Executive holds within the Company, and that the Company would not enter into
this Agreement or otherwise employ or continue to employ Executive unless
Executive agrees to be bound by the Restrictive Covenants set forth in this Section 6.

 

6.5.                              Remedies and
Enforcement Upon Breach.

 

6.5.1.                     Intention.  It is the intention of the parties that the
foregoing restrictive covenant be enforced as written, and, in any other event,
enforced to the greatest extent (but to no greater extent) in time, territory
and degree of participation as permitted by applicable law. Accordingly, in the
event that any court to which a dispute over these restrictions may be referred
shall find any of these restrictions overly broad or unreasonable in any way,
that court must enforce the restrictions to the greatest extent deemed
reasonable.

 

6.5.2.                     Specific
Enforcement.  Executive
acknowledges that any breach by him, willfully or otherwise, of the Restrictive
Covenants will cause continuing and irreparable injury to the Company for which
monetary damages would not be an adequate remedy.  In the event of any such breach or threatened
breach by Executive of any of the Restrictive Covenants, the Company shall be
entitled to injunctive or other similar equitable relief in any court, without
any requirement that a bond or other security be posted, and this Agreement
shall not in any way limit remedies of law or in equity otherwise available to
the Company.

 

6.5.3.                     Enforceability.  If any court holds the Restrictive Covenants
unenforceable by reason of their breadth or scope or otherwise, it is the
intention of the parties hereto that such determination not bar or in any way
affect the right of the Company to the relief provided above in the courts of
any other jurisdiction within the geographic scope of such Restrictive
Covenants.

 

6.5.4.                     Disclosure of  Restrictive
Covenants.  Executive agrees to
disclose the existence and terms of the Restrictive Covenants to any employer
that Executive may work for during the Restricted Period.

 

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6.5.5.                     Extension of  Restricted
Period.  If the Executive breaches Section 6.1
in any respect, the restrictions contained in that section will be extended for
a period equal to the period that the Executive was in breach.

 

7.                                       Miscellaneous.

 

7.1.                              Other
Agreements.  Executive
represents and warrants to the Company that there are no restrictions,
agreements or understandings whatsoever to which Executive is a party that
would prevent or make unlawful his/her execution of this Agreement, that would
be inconsistent or in conflict with this Agreement or Executive’s obligations
hereunder, or that would otherwise prevent, limit or impair the performance of
Executive’s duties under this Agreement.

 

7.2.                              Successors and
Assigns.  This Agreement shall be
binding upon any successor (whether direct or indirect, by purchase, merger, consolidation
or otherwise) to all or substantially all of the business and/or assets of the
Company, and the Company shall require any such successor to expressly assume
and agree in writing to perform this Agreement in the same manner and to the
same extent that the Company would be required to perform it if no such
succession had taken place, or, in the event the Company remains in existence,
the Company shall continue to employ Executive under the terms hereof.   As used in this Agreement, the “Company”
shall mean the Company and any successor to its business and/or assets, which
assumes or is obligated to perform this Agreement by contract, operation of law
or otherwise.  This Agreement shall inure
to the benefit of and be enforceable by Executive and his personal or legal
representatives, executors, estate, trustee, administrators, successors, heirs,
distributees, devisees and legatees.  The
duties of Executive hereunder are personal to Executive and may not be assigned
by him.  If Executive dies and any amounts
become payable under this Agreement, the Company will pay those amounts to his
estate.

 

7.3.                              Governing Law
and Enforcement; Disputes.  This
Agreement shall be governed by and construed in accordance with the laws of the
State of Utah, without regard to the principles of conflicts of laws.  Any legal proceeding arising out of or
relating to this Agreement will be instituted in a state or federal court in
the State of Utah, and Executive and the Company hereby consent to the personal
and exclusive jurisdiction of such court(s) and hereby waive any objection(s) that
they may have to personal jurisdiction, the laying of venue of any such
proceeding and any claim or defense of inconvenient forum.

 

7.4.                              Waivers.  The waiver by either party of any right hereunder
or of any breach by the other party will not be deemed a waiver of any other
right hereunder or of any other breach by the other party.  No waiver will be deemed to have occurred
unless set forth in writing. No waiver will constitute a continuing waiver
unless specifically stated, and any waiver will operate only as to the specific
term or condition waived.

 

7.5.                              Severability.  Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law.  However, if any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect, such invalidity, illegality or unenforceability will not affect
any other provision, and this Agreement

 

10

 

will be reformed, construed and enforced as though the invalid, illegal
or unenforceable provision had never been herein contained.

 

7.6.                              Survival.  Section 6 of this Agreement will
survive termination of this Agreement and/or the cessation of Executive’s
employment by the Company.

 

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

 

7.8.                              Entire
Agreement: Amendments.  This
Agreement, the attached exhibits, the Plan, and the Award Agreement contain the
entire agreement and understanding of the parties hereto relating to the
subject matter hereof; and merge and supersede all prior and contemporaneous
discussions, agreements and understandings of every nature relating to
Executive’s employment or engagement with, or compensation by, the Company and
any of its affiliates or subsidiaries or any of their predecessors, including,
without limitation, the Existing Agreement. 
This Agreement may not be changed or modified, except by an agreement in
writing signed by each of the parties hereto.

 

7.9.                              Withholding.  All payments to Executive will be subject to
tax withholding in accordance with applicable law.

 

7.10.                        Section Headings.  The headings of sections and paragraphs of
this Agreement are inserted for convenience only and shall not in any way
affect the meaning or construction of any provision of this Agreement.

 

7.11.                        Counterparts;
Facsimile.  This
Agreement may be executed in multiple counterparts (including by facsimile
signature), each of which will be deemed to be an original, but all of which
together will constitute one and the same instrument.

 

7.12.                        Third Party
Beneficiaries.  Subject to Section 7.2,
this Agreement will be binding on, inure to the benefit of and be enforceable
by the parties and their respective heirs, personal representatives, successors
and assigns.  This Agreement does not
confer any rights, remedies, obligations or liabilities to any entity or person
other than Executive and the Company and Executive’s and the Company’s permitted
successors and assigns, although this
Agreement will inure to the benefit of the Company.

 

8.                                       Section 409A.

 

8.1.                              Section 409A
Compliance. The parties intend that this Agreement comply with the
requirements of Code Section 409A. 
To the extent there is any ambiguity as to whether any provision of the
Agreement would otherwise contravene one or more requirements or limitations of
Code Section 409A, such provision shall be interpreted and applied in a
manner that does not result in a violation of the applicable requirements or
limitations of Code Section

 

11

 

409A and the Treasury Regulations thereunder.  For purposes of Section 409A, the right
to receive one or more payments or benefits under this Agreement shall be
treated as a right to a series of separate payments.  In no event shall Executive have the right to
designate, directly or indirectly, the calendar year of any payment subject to
Code Section 409A.

 

8.2.                              Delayed
Commencement Date. 
Notwithstanding any provision to the contrary in this Agreement, no
payments or benefits to which Executive becomes entitled in accordance with
this Agreement shall be made or paid to Executive prior to the earlier of (i) the
first day of the seventh (7th) month following the date of his separation from
service or (ii) the date of his death, if Executive is deemed, pursuant to
the procedures established by the Company’s Compensation Committee in
accordance with the applicable standards of Code Section 409A and the
Treasury Regulations thereunder and applied on a consistent basis for all
non-qualified deferred compensation plans of the Employer Group subject to Code
Section 409A, to be a “specified 
employee” within the meaning of Code Section 409A at the time of
such separation from service and such delayed commencement is otherwise
required in order to avoid a prohibited distribution under Code Section 409A(a)(2).
Upon the expiration of the applicable deferral period, all payments deferred
pursuant to this Section 8.2 shall be paid to Executive in a lump sum, and
any remaining payments due under this Agreement shall be paid in accordance
with the normal payment dates specified for them herein.

 

[This space left blank intentionally; signature page follows]

 

12

 

	
   

  	
  NATURE’S
  SUNSHINE PRODUCTS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/   Stephen M. Bunker

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Chief
  Financial Officer

  

 

 

	
   

  	
  MICHAEL
  DEAN

  
	
   

  	
   

  
	
   

  	
   

  	
  /s/
  Michael Dean

  
	
   

  	
  Executive

  

 

13

 

EXHIBIT A

 

RELEASE AGREEMENT

 

THIS RELEASE AGREEMENT (this “Release”) is
made as of the day of           
day of                   ,
                    
by and between                                       
(the “Executive”) and Nature Sunshine
Products, Inc. (the “Company”).

 

WHEREAS, Executive’s employment as an executive of the Company has
terminated; and

 

WHEREAS, pursuant to Section 5 of the Employment Agreement
by and between the Company and Executive dated                                           
(the “Agreement”), the Company has agreed to pay Executive certain amounts and
to provide him with certain rights and benefits, subject to the execution of
this Release.

 

NOW THEREFORE, in consideration of these premises and the mutual
promises contained herein, and intending to be legally bound hereby, the
parties agree as follows:

 

1.                                       Consideration. Executive
acknowledges that: (i) the payments, rights and benefits set forth in Section 5
of the Agreement constitute full settlement of all his/her rights under the
Agreement, and (ii) except as otherwise provided specifically in this
Release, the Company does not and will not have any other liability or
obligation to Executive under the Agreement. Executive further acknowledges
that, in the absence of his execution of this Release, the benefits and
payments specified in the Agreement (other than those specified) would not
otherwise be due to him/her.

 

2.                                       Release and
Covenant Not to Sue.

 

2.1.                              Executive and
the Company each hereby fully and forever releases and discharges the other,
and all of their respective predecessors and successors, assigns, stockholders,
subsidiaries, parents, affiliates, officers, directors, trustees, employees,
agents and attorneys, past and present and in their respective capacities as
such (the Company and Executive and each such respective person or entity is
each referred to as a “Released Person”)
from any and all claims, demands, liens, agreements, contracts, covenants,
actions, suits, causes of action, obligations, controversies, debts, costs,
expenses, damages, judgments, orders and liabilities, of whatever kind or
nature, direct or indirect, in law, equity or otherwise, whether known or
unknown, arising through the date of this Release, including those arising out
of Executive’s employment by the Company or the termination thereof, including,
but not limited to, any claims for relief or causes of action under the Age
Discrimination in Employment Act, 29 U.S.C. §  621 et seq., or any other
federal, state or local statute, ordinance or regulation regarding
discrimination in employment and any claims, demands or actions based upon
alleged wrongful or retaliatory discharge or breach of contract under any state
or federal law.

 

2.2.                              Executive and
the Company expressly represent that they have not filed a lawsuit or initiated
any other administrative proceeding against a Released Person and that neither
has assigned any claim against a Released Person. Executive and the Company
each 

 

 

further promise not to
initiate a lawsuit or to bring any other claim against the other or any
Released Person arising out of or in any way related to Executive’s employment
by the Company or the termination of that employment.  This Release will not prevent Executive from
filing a charge with the Equal Employment Opportunity Commission (or similar
state agency) or participating in any investigation conducted by the Equal
Employment Opportunity Commission (or similar state agency); provided, however, that any claims by
Executive for personal relief in connection with such a charge or investigation
(such as reinstatement or monetary damages) would be barred.  This Release shall not affect Executive’s
rights under the Age Discrimination in Employment Act or the Older Workers
Benefit Protection Act to have a judicial determination of the validity of this
release and waiver.

 

3.                                       Restrictive
Covenants.  Executive
acknowledges that the restrictive covenants contained in Section 6
of the Agreement will survive the termination of his employment. Executive
affirms that those restrictive covenants are reasonable and necessary to
protect the legitimate interests of the Company, that he received adequate
consideration in exchange for agreeing to those restrictions and that he will
abide by those restrictions.

 

4.                                       Non-Disparagement.  Neither Executive nor the Company will
disparage the other or any of their respective Released Persons or otherwise
take any action which could reasonably be expected to adversely affect the
personal or professional reputation of the other or their respective Released
Persons.

 

5.                                       Cooperation.  Executive further agrees that, subject to
reimbursement of his reasonable expenses, he will cooperate fully with the
Company and its counsel with respect to any matter (including litigation,
investigations, or governmental proceedings) in which Executive was in anyway
involved during his employment with the Company. Executive shall render such
cooperation in a timely manner on reasonable notice from the Company.

 

6.                                       Rescission
Right.  Executive expressly
acknowledges and recites that (a) he has read and understands the terms of
this Release in its entirety, (b) he has entered into this Release
knowingly and voluntarily, without any duress or coercion; (c) he has been
advised orally and is hereby advised in writing to consult with an attorney
with respect to this Release before signing it; (d) he was provided
twenty-one (21) calendar days after receipt of the Release to consider its
terms before signing it; (e) should he nevertheless elect to execute this
Agreement sooner than 21 days after he has received it, he specifically and
voluntarily waives the right to claim or allege that he has not been allowed by
the Company or by any circumstances beyond his control to consider this
Agreement for a full 21 days; and (f) he is provided seven (7) calendar
days from the date of signing to terminate and revoke this Release, in which
case this Release shall be unenforceable, null and void. Executive may revoke
this Release during those seven (7) days by providing written notice of revocation
to the Company at the address specified in Section 7.7 of the
Agreement.

 

7.                                       Challenge.  If Executive violates or challenges the
enforceability of any provisions of the Restrictive Covenants or this Release,
no further payments, rights or benefits under Section 5  of
the Agreement will be due to Executive (except where such provision would be
prohibited by applicable law, rule or regulation).

 

2

 

8.                                       Miscellaneous.

 

8.1.                              No Admission of  Liability.  This Release is not to be construed as an
admission of any violation of any federal, state or local statute, ordinance or
regulation or of any duty owed by the Company to Executive. The Company
specifically denies any such violations.

 

8.2.                              No Reinstatement. Executive
agrees that he will not without the consent of the Company apply for
reinstatement with the Company or seek in any way to be reinstated, re-employed
or hired by the Company in the future,

 

8.3.                              Successors and
Assigns. This Release shall inure to the benefit of and be binding upon the
Company and Executive and their respective successors, permitted assigns,
executors, administrators and heirs. Executive shall not may make any
assignment of this Release or any interest herein, by operation of law or
otherwise. The Company may assign this Release to any successor to all or
substantially all of its assets and business by means of liquidation,
dissolution, merger, consolidation, transfer of assets, or otherwise.

 

8.4.                              Severability. Whenever
possible, each provision of this Release will be interpreted in such manner as
to be effective and valid under applicable law. However, if any provision of
this Release is held to be invalid, illegal or unenforceable in any respect,
such invalidity, illegality or unenforceability will not affect any other
provision, and this Release will be reformed, construed and enforced as though
the invalid, illegal or unenforceable provision had never been herein
contained.

 

8.5.                              Entire
Agreement: Amendments. Except as otherwise provided herein, this
Release contains the entire agreement and understanding of the parties hereto
relating to the subject matter hereof, and merges and supersedes all prior and
contemporaneous discussions, agreements and understandings of every nature relating
to the subject matter hereof This Release may not be changed or modified,
except by an agreement in writing signed by each of the parties hereto.

 

8.6.                              Governing Law. This Release
shall be governed by, and enforced in accordance with, the laws of the State of
Utah, without regard to the application of the principles of conflicts of laws.

 

8.7.                              Counterparts
and Facsimiles. This Release may be executed, including execution
by facsimile signature, in multiple counterparts, each of which shall be deemed
an original, and all of which together shall be deemed to be one and the same
instrument.

 

[SIGNATURE PAGE FOLLOWS]

 

3

 

	
   

  	
  NATURE’S
  SUNSHINE PRODUCTS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  

 

 

	
   

  	
  MICHAEL
  DEAN

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Executive

  

 

4

 

EXHIBIT B

 

Eligible Benefits

 

	
   

  	
  ·

  	
  Paid
  Time Off (PTO) at 3 days upon start and accrues to 25 days during the first
  year

  
	
   

  	
   

  	
   

  
	
   

  	
  ·

  	
  Ten paid holidays each year

  
	
   

  	
   

  	
   

  
	
   

  	
  ·

  	
  Medical/dental plan coverage for Executive, Executive’s spouse and
  dependent children

  
	
   

  	
   

  	
   

  
	
   

  	
  ·

  	
  Life insurance at two times annual salary

  
	
   

  	
   

  	
   

  
	
   

  	
  ·

  	
  Wellness Benefits

  
	
   

  	
   

  	
   

  
	
   

  	
  ·

  	
  Eye care plan

  
	
   

  	
   

  	
   

  
	
   

  	
  ·

  	
  Employee Assistance Program

  
	
   

  	
   

  	
   

  
	
   

  	
  ·

  	
  One hundred percent match on contributions to the 401(k) retirement
  plan up to five percent of Executive’s income (automatic enrollment upon
  first day of employment)

  
	
   

  	
   

  	
   

  
	
   

  	
  ·

  	
  Opportunity to participate in NSP’s Supplemental Elective Deferral
  Plan

  
	
   

  	
   

  	
   

  
	
   

  	
  ·

  	
  $750 spending account on company products

  
	
   

  	
   

  	
   

  
	
   

  	
  ·

  	
  Tuition reimbursement (maximum $3,000 per year)

  
	
   

  	
   

  	
   

  
	
   

  	
  ·

  	
  Short-term and long-term disability programs

  

 

 

Relocation
reimbursement to include the following if needed:

 

1.               Relocation
assistance is provided to pay for the packing, movement and unpacking of household
goods of up to 20,000 pounds maximum. Automobile, if driven to Utah, is
reimbursed at $.50 per mile.

 

2.               If needed,
Company will pay for a period up to 30 days for household goods storage.

 

3.               Reimbursement
of realtor fees associated with the sale of home authorized at 6 percent of the
selling price of the home, up to a maximum allowable expense of $60,000.

 

5

 

4.               Reimbursement of expenses
covered relative to the purchase of a home authorized up to a maximum allowable
expense of $6,000. Covered expenses are limited to loan origination, appraisal,
credit report, mortgage application, document preparation, title search, survey
escrow, and inspection report fees. To the extent that such reimbursement
results in the recognition of taxable income by Executive, the Company will pay
Executive an additional amount sufficient to fully cover the federal, state and
local income tax liability attributable to such reimbursements, calculated as
if Executive’s marginal tax rate is 37%. 
Such tax gross up payment will be paid to Executive by the end of the
calendar year next following the calendar year in which the related taxes to which
it relates are remitted to the tax authorities.

 

5.               Round trip airfare and other
reasonable expenses associated with house closing for home in California.

 

6EXHIBIT 10.3

 

 

NATURE’S
SUNSHINE PRODUCTS, INC.

2009
STOCK INCENTIVE PLAN

NON-INCENTIVE STOCK OPTION AGREEMENT

 

 

This NON-INCENTIVE STOCK OPTION
AGREEMENT (the “Agreement”)
is made this 12th day of March, 2010, by and between Nature’s
Sunshine Products, Inc., a Utah corporation (the “Company”) and Michael Dean, an individual
resident of Sierra Madre, California (“Employee”).

 

1.     Grant
of Option.  The Company hereby grants
Employee the option (the “Option”)
to purchase all or any part of an aggregate of 200,000 shares (the “Shares”) of Common Stock of the Company at
the exercise price of $8.51 per share (the closing price of the Company’s
Common Stock on the date of this agreement) according to the terms and
conditions set forth in this Agreement and in the Nature’s Sunshine Products, Inc.
2009 Stock Incentive Plan (the “Plan”).  The Option will not be treated as an
incentive stock option within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended (the “Code”).  The Option is issued under the Plan and is
subject to its terms and conditions.  A
copy of the Plan will be furnished upon request of Employee.

 

The Option shall terminate at the close of business ten years from the
date hereof.

 

2.     Vesting
of Option Rights.

 

(a)   Except as
otherwise provided in this Agreement, the Option may be exercised by Employee
in accordance with the following schedules and in accordance with Section 2.4
of the Employment Agreement between the Company and the Employee, dated March 12,
2010:

 

	
  On or after each of

  the following dates

  	
   

  	
  Number of Shares

  with respect to which

  the Option is exercisable

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  March 12, 2011

  	
   

  	
  50,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  March 12, 2012

  	
   

  	
  50,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  March 12, 2013

  	
   

  	
  50,000

  	
   

  

 

 

 

	
  Upon the Company reaching the following operating income margin
  levels, based on the Company’s financial results as reported in local
  currencies, for four (4) out of five (5) consecutive fiscal
  quarters

  	
   

  	
  Number of Shares

  with respect to which

  the Option is exercisable

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  6%

  	
   

  	
  16,666

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  8%

  	
   

  	
  16,666

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  10%

  	
   

  	
  16,667

  	
   

  

 

(b)   During
the lifetime of Employee, the Option shall be exercisable only by Employee and
shall not be assignable or transferable by Employee, other than by will or the
laws of descent and distribution.

 

3.     Exercise
of Option after Death or Termination of Employment.  The Option shall terminate and may no longer
be exercised if Employee ceases to be employed by the Company or its
affiliates, except that:

 

(a)   If Employee’s employment shall be terminated
for any reason, voluntary or involuntary, other than for “Cause” (as defined in Section 3(e))
or Employee’s death or disability (within the meaning of Section 22(e)(3) of
the Code), Employee may at any time within a period of 3 months after such termination exercise the Option to the
extent the Option was exercisable or becomes exercisable by Employee on the
date of the termination of Employee’s employment.

 

(b)   If Employee’s employment is terminated for
Cause, the Option shall be terminated as of the date of the act giving rise to
such termination.

 

(c)   If Employee shall die while the Option is
still exercisable according to its terms or if employment is terminated because
Employee has become disabled (within the meaning of Section 22(e)(3) of
the Code) while in the employ of the Company and Employee shall not have fully
exercised the Option, such Option may be exercised at any time within 12 months
after Employee’s death or date of termination of employment for disability by
Employee, personal representatives or administrators or guardians of Employee,
as applicable or by any person or persons to whom the Option is transferred by
will or the applicable laws of descent and distribution, to the extent of the
full number of Shares Employee was entitled to purchase under the Option on (i) the
earlier of the 

 

 

2

date of death or
termination of employment or (ii) the date of termination for such
disability, as applicable.

 

(d)   Notwithstanding the above, in no case may the
Option be exercised to any extent by anyone after the termination date of the
Option.

 

(e)   “Cause”
shall mean (i) the willful and
continued failure by Employee substantially to perform his or her duties and
obligations (other than any such failure resulting from his or her incapacity
due to physical or mental illness), (ii) Employee’s conviction or plea
bargain of any felony or gross misdemeanor involving moral turpitude, fraud or
misappropriation of funds or (iii) the willful engaging by Employee in
misconduct which causes substantial injury to the Company or its affiliates,
its other employees or the employees of its affiliates or its clients or the
clients of its affiliates, whether monetarily or otherwise.  For purposes of this paragraph, no action or
failure to act on Employee’s part shall be considered “willful” unless done or omitted to be
done, by Employee in bad faith and without reasonable belief that his or her
action or omission was in the best interests of the Company.

 

4.     Exercise of Option Upon Termination Without Cause or Upon
Change in Control.  In the event that
Employee’s employment is terminated for any reason, voluntary or involuntary,
other than for Cause, the Option shall become immediately exercisable.  In addition, upon the occurrence of a Change
in Control Event the Option shall become immediately exercisable.  For this purpose, “Change in Control Event”
shall mean:

 

(a)                                  approval by the stockholders of the
Company of the dissolution or liquidation of the Company;

 

(b)                                 approval by the stockholders of the
Company 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 Company immediately before such reorganization;

 

(c)                                  approval by the stockholders of the
Company of the sale of substantially all of the Company’s business and/or
assets to a person or entity which is not a subsidiary;

 

(d)                                 any “person” (as such term is used in
Sections 13(d) and 14(d) of the Exchange Act) (other than the Company
or any of its Affiliates and other than a person having such ownership as of
the date the Award is granted) becomes the “beneficial owner” (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of the Company
representing more than 50% of the combined voting power of the Company’s then
outstanding securities entitled to then vote generally in the election of
directors of the Company; or

 

3

(e)                                  during any period not longer than two
consecutive years, individuals who at the beginning of such period constituted
the board of directors of the Company cease to constitute at least a majority
thereof, unless the election, or the nomination for election by the Company’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 these purposes, new members
whose election or nomination was so approved).

 

Notwithstanding any of the foregoing to the contrary,
any acceleration of the Option shall be subject to and conditioned on compliance  with applicable regulatory requirements,
including, without limitation, Section 409A of the Internal Revenue Code.

 

5.     Method of Exercise of Option.  Subject to the foregoing, the Option may be
exercised in whole or in part from time to time by serving written notice of
exercise on the Company at its principal office within the Option period.  The notice shall state the number of Shares
as to which the Option is being exercised and shall be accompanied by payment
of the exercise price.  Payment of the exercise
price shall be made (i) in cash (including bank check, personal check or
money order payable to the Company), (ii) with the approval of the Company
(which may be given in its sole discretion), by delivering to the Company for
cancellation shares of the Company’s Common Stock already owned by Employee
having a Fair Market Value (as defined in the Plan) equal to the full exercise
price of the Shares being acquired, (iii) with the approval of the Company
(which may be given in its sole discretion) and subject to Section 402 of
the Sarbanes-Oxley Act of 2002, by delivering to the Company the full exercise
price of the Shares being acquired in a combination of cash and Employee’s full
recourse liability promissory note with a principal amount not to exceed eighty percent of the exercise price
and a term not to exceed five
years, which promissory note shall provide for interest on the unpaid balance
thereof which at all times is not less than the minimum rate required to avoid
the imputation of income, original issue discount or a below-market rate loan
pursuant to Sections 483, 1274 or 7872 of the Code or any successor provisions
thereto or (iv) with the approval of the Company (which may be given in
its sole discretion) and subject to Section 402 of the Sarbanes-Oxley Act
of 2002, by delivering to the Company a combination thereof.  In addition, with the approval of the Company
(which may be given in its sole discretion), the option may be exercised by
delivering to the Employee, a number of Shares having an aggregate Fair
Market Value (determined as of the date of exercise) equal to the excess, if
positive, of the Fair Market Value of the Shares underlying the Option being
exercised, on the date of exercise, over the exercise price of the Option for
such Shares.

 

6.     Miscellaneous.

 

(a)   Plan
Provisions Control.  In the event
that any provision of the Agreement conflicts with or is inconsistent in any
respect with the terms of the Plan, the terms of the Plan shall control.

 

(b)   No
Rights of Stockholders.  Neither
Employee, Employee’s legal representative nor a permissible assignee of this
Option shall have any of the rights and privileges of a stockholder of

 

4

the Company with respect to the Shares, unless and until such Shares
have been issued in the name of Employee, Employee’s legal representative or
permissible assignee, as applicable.

 

(c)   No Right
to Employment.  The grant of the
Option shall not be construed as giving Employee the right to be retained in the
employ of, or as giving a director of the Company or an Affiliate (as defined
in the Plan) the right to continue as a director of the Company or an Affiliate
with, the Company or an Affiliate, nor will it affect in any way the right of
the Company or an Affiliate to terminate such employment or position at any
time, with or without cause.  In
addition, the Company or an Affiliate may at any time dismiss Employee from
employment, or terminate the term of a director of the Company or an Affiliate,
free from any liability or any claim under the Plan or the Agreement.  Nothing in the Agreement shall confer on any
person any legal or equitable right against the Company or any Affiliate,
directly or indirectly, or give rise to any cause of action at law or in equity
against the Company or an Affiliate.  The
Option granted hereunder shall not form any part of the wages or salary of
Employee for purposes of severance pay or termination indemnities, irrespective
of the reason for termination of employment. 
Under no circumstances shall any person ceasing to be an employee of the
Company or any Affiliate be entitled to any compensation for any loss of any
right or benefit under the Agreement or Plan which such employee might
otherwise have enjoyed but for termination of employment, whether such
compensation is claimed by way of damages for wrongful or unfair dismissal,
breach of contract or otherwise.  By
participating in the Plan, Employee shall be deemed to have accepted all the
conditions of the Plan and the Agreement and the terms and conditions of any rules and
regulations adopted by the Committee (as defined in the Plan) and shall be
fully bound thereby.

 

(d)   Governing
Law.  The validity, construction and
effect of the Plan and the Agreement, and any rules and regulations
relating to the Plan and the Agreement, shall be determined in accordance with
the internal laws, and not the law of conflicts, of the State of Utah.

 

(e)   Severability.  If any provision of the Agreement is or
becomes or is deemed to be invalid, illegal or unenforceable in any
jurisdiction or would disqualify the Agreement under any law deemed applicable
by the Committee, such provision shall be construed or deemed amended to
conform to applicable laws, or if it cannot be so construed or deemed amended
without, in the determination of the Committee, materially altering the purpose
or intent of the Plan or the Agreement, such provision shall be stricken as to
such jurisdiction or the Agreement, and the remainder of the Agreement shall
remain in full force and effect.

 

(f)    No
Trust or Fund Created.  Neither the
Plan nor the Agreement shall create or be construed to create a trust or
separate fund of any kind or a fiduciary relationship between the Company or
any Affiliate and Employee or any other person.

 

(g)   Headings.  Headings are given to the Sections and
subsections of the Agreement 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 Agreement or any provision thereof.

 

(h)   Conditions
Precedent to Issuance of Shares. 
Shares shall not be issued pursuant to the exercise of the Option unless
such exercise and the issuance and delivery of the applicable

 

5

 

Shares pursuant thereto shall comply with all relevant provisions of
law, including, without limitation, the Securities Act of 1933, as amended, the
Exchange Act of 1934, as amended, the rules and regulations promulgated
thereunder, the requirements of any applicable Stock Exchange and the Utah
Revised Business Corporation Act.  As a
condition to the exercise of the purchase price relating to the Option, the
Company may require that the person exercising or paying the purchase price
represent and warrant that the Shares are being purchased only for investment
and without any present intention to sell or distribute such Shares if, in the
opinion of counsel for the Company, such a representation and warranty is
required by law.

 

(i)    Withholding.  In order to provide the Company with the
opportunity to claim the benefit of any income tax deduction which may be
available to it upon the exercise of the Option and in order to comply with all
applicable federal or state income tax laws or regulations, the Company may
take such action as it deems appropriate to insure that, if necessary, all
applicable federal or state payroll, withholding, income or other taxes are
withheld or collected from Employee.

 

(j)    Consultation
With Professional Tax and Investment Advisors.  The holder of this Award acknowledges that
the grant, exercise, vesting or any payment with respect to this Award, and the
sale or other taxable disposition of the Shares acquired pursuant to the
exercise thereof, may have tax consequences pursuant to the Code or under
local, state or international tax laws. 
The holder further acknowledges that such holder is relying solely and
exclusively on the holder’s own professional tax and investment advisors with
respect to any and all such matters (and is not relying, in any manner, on the
Company or any of its employees or representatives).  Finally, the holder understands and agrees
that any and all tax consequences resulting from the Award and its grant,
exercise, vesting or any payment with respect thereto, and the sale or other
taxable disposition of the Shares acquired pursuant to the Plan, is solely and
exclusively the responsibility of the holder without any expectation or
understanding that the Company or any of its employees or representatives will
pay or reimburse such holder for such taxes or other items.

 

 

6

 

IN WITNESS WHEREOF, the Company and Employee have executed this
Agreement on the date set forth in the first paragraph.

 

	
   

  	
   

  	
  NATURE’S
  SUNSHINE PRODUCTS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	 

	
   

  	
   

  	
  By:

  	
  /s/Stephen M. Bunker

  	 

	
   

  	
   

  	
  Name: 

  	
  Stephen M. Bunker

  	 

	
   

  	
   

  	
  Title:

  	
  Chief Financial Officer

  	 

	
   

  	
   

  	 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
  MICHAEL
  DEAN

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ Michael Dean 

  
	
   

  	
   

  	
  Name: 

  	
  Michael Dean

  
							

 

 

 

7

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