EXHIBIT 10.3
NATURES
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 Natures
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 Companys
Common Stock on the date of this agreement) according to the terms and
conditions set forth in this Agreement and in the Natures 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
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Number of Shares
with respect to which
the Option is exercisable
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March 12, 2011
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50,000
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March 12, 2012
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50,000
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March 12, 2013
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50,000
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Upon the Company reaching the following operating income margin
levels, based on the Companys financial results as reported in local
currencies, for four (4) out of five (5) consecutive fiscal
quarters
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Number of Shares
with respect to which
the Option is exercisable
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6%
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16,666
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8%
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16,666
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10%
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16,667
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(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 Employees employment shall be terminated
for any reason, voluntary or involuntary, other than for Cause (as defined in Section 3(e))
or Employees 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 Employees employment.
(b) If Employees 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 Employees 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
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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) Employees 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 Employees 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
Employees 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 Companys 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 Companys then
outstanding securities entitled to then vote generally in the election of
directors of the Company; or
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(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 Companys
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 Companys 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 Employees 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, Employees legal representative nor a permissible assignee of this
Option shall have any of the rights and privileges of a stockholder of
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the Company with respect to the Shares, unless and until such Shares
have been issued in the name of Employee, Employees 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
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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 holders 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.
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IN WITNESS WHEREOF, the Company and Employee have executed this
Agreement on the date set forth in the first paragraph.
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NATURES
SUNSHINE PRODUCTS, INC.
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By:
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/s/Stephen M. Bunker
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Name:
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Stephen M. Bunker
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Title:
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Chief Financial Officer
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MICHAEL
DEAN
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/s/ Michael Dean
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Name:
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Michael Dean
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