EXHIBIT 4.1
NATURAL HEALTH TRENDS CORP.
1997 STOCK OPTION PLAN
1. Purpose. The purpose of this Natural Health Trends Corp.
1997 Stock Option Plan (the "Plan") is to provide a means whereby Natural Health
Trends Corp. and any present or future subsidiaries (collectively referred to as
the "Company") may, through the grant of options to purchase shares of the
Company's common stock, $.001 par value per share (the "Common Stock"), attract
and retain persons of ability as key employees, members of the Board of
Directors and consultants and motivate such individuals to exert their best
efforts on behalf of the Company.
2. Shares Subject to the Plan. Options may be granted by the
Company from time to time to eligible individuals to purchase an aggregate of
3,000,000 shares of Common Stock and 3,000,000 of such shares shall be reserved
for options granted under the Plan (subject to adjustment as provided in Section
5(h) hereof). The shares issued upon exercise of options issued under the Plan
may be authorized and unissued shares or shares held by the Company in its
treasury. If any option granted under the Plan shall terminate or expire, new
options covering such shares may thereafter be granted to other eligible
individuals.
3. Eligibility. Options may be granted under the Plan to
employees of the Company, including officers, who are designated as key
employees by the Committee (as
defined in Section 4 hereof). Members of the Board of Directors and consultants
of the Company selected by the Committee shall also be eligible to receive
options under the Plan.
4. Administration of the Plan. The Plan shall be administered
by a committee of disinterested persons appointed by the Board of Directors of
the Company as constituted from time to time (the "Committee"). The Committee
shall consist of at least two members of the Board of Directors chosen by the
Board. During the one year prior to commencement of service on the Committee,
the Committee members will not have participated in, and while serving, such
members shall not be eligible for selection as a person to whom shares of stock
may be allocated or to whom stock options or stock appreciation rights may be
granted under the Plan or any other discretionary plan of the Company under
which participants are entitled to acquire stock, stock options or stock
appreciation rights of the Company.
Subject to the provisions of the Plan, the Committee shall
have the authority to:
(a) determine and designate from time to time those eligible
individuals to whom options are to be granted and the number of shares
to be optioned to each individual; provided, however, that no option
shall be granted after the expiration of the period of ten years from
the effective date of the Plan specified in Section 10 hereof;
(b) determine the time or times and the manner in which each
option shall be exercisable and the duration of the exercise period;
(c) extend the term of any option (including extension by
reason of any optionee's death, permanent disability or retirement);
and
(d) issue options under the Plan either as incentive stock
options in accordance with the requirements of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), or as
nonstatutory options.
The Committee may interpret the Plan, prescribe, amend and
rescind any rules and regulations necessary or appropriate for the
administration of the Plan, and make such other determinations to take such
other action as it deems necessary or advisable. Any interpretation,
determination or other action made or taken by the Committee shall be final,
binding and conclusive.
5. Terms and Conditions of Options. Each option granted under
the Plan shall be evidenced by an agreement, in form and substance approved by
the Committee from time to time, which shall be subject to the following express
terms and conditions and to such other terms and conditions as the Committee may
deem appropriate:
(a) Option Period. Each option agreement shall specify the
period for which the option thereunder is granted and shall provide
that the option shall expire at the end of such period. No option
granted under this Plan may be exercisable after the expiration of ten
years from the date the option is granted; provided, however, that any
incentive option granted to any person owning more than 10 percent of
the voting power of all classes of any member of the Company's stock
shall not be exercisable after the expiration of five years from the
date such option is granted.
(b) Option Price. The option price per share shall be
determined by the Committee at the time any option is granted, provided
that, to the extent that any options
are intended to qualify as incentive stock options, the option price
per share shall not be less than the fair market value of a share of
Common Stock on the date the option is granted, as determined by the
Committee.
(c) Exercise of Option.
(1) In the case of an optionee who is an employee, no
part of any option may be exercised until the optionee shall
have remained in the employ of the Company for such period
after the date on which the option is granted as the Committee
may specify in the option agreement, and until such other
conditions as specified in the option agreement shall have
been satisfied. Subject in each case to the provisions of
paragraphs (a) through (c) and (e) of this Section 5, any
option may be exercised, to the extent exercisable by its
terms, at such time or times as may be determined by the
Committee at the time of grant.
(2) In the case of an optionee who is a Member of the
Board of Directors or a consultant, the Committee may specify
in the option agreement any requirement as to the period of
time after the grant of the option that the optionee is
required to be a member of the Board of Directors or a
consultant to the Company or other conditions which shall be
satisfied before the option is exercisable, in whole or in
part. Any option may be exercised, to the extent exercisable
by its terms, at such time or times as may be determined by
the Committee at the time of grant. The option agreement may
also specify the extent to which the option is exercisable in
the event of the death or disability of
the optionee, by whom the option is exercisable, and the
requirements for exercise of the option in either of such
events.
(d) Payment of Purchase Price upon Exercise. The purchase
price of the shares as to which an option shall be exercised shall be
paid to the Company in full at the time of exercise.
(e) Termination of Employment. Any option agreement with an
employee under this Plan shall provide that:
(1) If prior to the expiration date of the option (the
"expiration date") the employee shall for any reason
whatsoever, other than (i) his authorized retirement as
defined in (2) below, (ii) his permanent and total
disability as defined in (3) below, or (iii) his death,
cease to be employed by the Company, any unexercised
portion of the option granted shall automatically
terminate;
(2) If prior to the expiration date, the employee shall (i)
retire upon or after reaching the age which at the time
of retirement is established as the normal retirement
age for employees of the Company (such normal
retirement age now being 65 years) or (ii) with the
written consent of the Company retire prior to such age
on account of physical or mental disability (such
retirement pursuant to (i) or (ii) hereof being deemed
an "authorized retirement") any unexercised portion of
the option shall expire at the end of three months
after such authorized retirement, and during such three
month period the employee may exercise all or any part
of the then unexercised portion of the option;
(3) If prior to the expiration date, the employee shall
become permanently and totally disabled (within the
meaning of Section 22 (e)(3) of the Code) any
unexercised portion of the option shall expire at the
end of twelve months after termination of employment
from the Company due to such permanent and total
disability; and
(4) If prior to the expiration date, the employee shall die
(at a time when he is an employee of the Company or
within three months after his (i) authorized retirement
or (ii) termination due to permanent and total
disability), the legal representatives of his estate or
a legatee or legatees shall have the privilege, for a
period of six months after his death, of exercising all
or any part of the then unexercised portion of the
option.
Nothing in (2), (3) or (4) shall extend the time for
exercising any option granted pursuant to the Plan beyond the
expiration date.
(f) Transferability of Options. No option granted under the
Plan and no right arising under any such option shall be transferable
other than by will or by the laws of descent and distribution. During
the lifetime of the optionee an option shall be exercisable only by
him.
(g) Investment Representation. Each option agreement may
contain an undertaking that, upon demand by the Committee for such a
representation, the optionee (or any person acting under Section 5(e)
hereof) shall deliver to the Committee at the time of any exercise of
an option a written representation that the shares to be acquired upon
such exercise are to be acquired for investment and not for resale or
with a view
to the distribution thereof. Upon such demand, delivery of such
representation prior to the delivery of any shares issued upon exercise
of an option and prior to the expiration of the option period shall be
a condition precedent to the right of the optionee of such other person
to purchase any shares.
(h) Adjustments in Event of Change in Common Stock. In the
event of any change in the Common Stock by reason of any stock
dividend, recapitalization, reorganization, merger, consolidation,
split-up, combination or exchange of shares, or rights offering to
purchase Common Stock at a price substantially below fair market value,
or of any similar change affecting the Common Stock, the number and
kind of shares which thereafter may be optioned and sold under the Plan
and the number and kind of shares subject to option in outstanding
option agreements and the purchase price per share thereof shall be
appropriately adjusted consistent with such change in such manner as
the Committee may deem equitable to prevent substantial dilution or
enlargement of the rights granted to, or available for, participants in
the Plan.
(i) Optionees to Have No Rights as a Stockholder. No optionee
shall have any rights as a stockholder with respect to any shares
subject to his option prior to the date on which he is recorded as the
holder of such shares on the records of the Company.
(j) Plan and Option Not to Confer Rights with Respect to
Continuance of Employment. The Plan and any option granted under the
Plan shall not confer upon any optionee any right with respect to
continuance of employment by the Company, nor shall
they interfere in any way with the right of the Company to terminate
his employment at any time.
6. Limitation. Incentive stock options shall not be granted
under the Plan, which first become exercisable in any calendar year and which
permit the optionee to purchase shares of the Company having an aggregate value
in excess of $100,000, determined at the time of the grant of the options. No
optionee may exercise incentive stock options during a calendar year for the
purchase of shares having an aggregate fair market value (determined at the time
of the grant of the options) exceeding $100,000, except and to the extent that
such options were first exercisable in preceding calendar years.
7. Purchase Price. The purchase price for a share of the stock
subject to any option granted hereunder shall be determined by the Committee at
the time the option is granted, provided that, to the extent that any options
are intended to qualify as incentive stock options, the option price per share
shall not be less than the fair market value of the stock on the date of grant
of the option, said fair market value to be determined in good faith at the time
of grant of such option by decision of the Committee; and, further provided,
that in the case of an incentive option granted to any person then owning more
than 10 percent of the voting power of all classes of the Company's stock, the
purchase price per share of the stock subject to option shall be not less than
110 percent of the fair market value of the stock on the date of grant of the
option, determined in good faith as aforesaid.
8. Compliance with Laws and Regulations. The Plan, the grant
and exercise of options thereunder, and the obligation of the Company to sell
and deliver shares under such options, shall be subject to all applicable
federal and state laws, including any withholding tax requirements, rules and
regulations and to such approvals by any government or regulatory agency as may
be required. The Company shall not be required to issue or deliver any
certificates for shares of Common Stock prior to (i) the collection of an amount
from the optionee sufficient to satisfy any withholding tax requirements; (ii)
the listing of such shares on any stock exchange on which the Common Stock may
then be listed; and (iii) the completion of any registration or qualification of
such shares under any federal or state law, or any ruling or regulation of any
government body which the Company shall, in its sole discretion, determine to be
necessary or advisable.
9. Amendment or Discontinuance of the Plan. The Board of
Directors of the Company may at any time amend, suspend or terminate the Plan;
provided however, that, subject to the provisions of Section 5(h) hereof, no
action of the Board may (i) increase the number of shares reserved for options
pursuant to Section 2 hereof, and (ii) permit the granting of any option at an
option price less than that determined in accordance with Section 5(b) hereof.
Without the written consent of an optionee, no amendment, discontinuance or
termination of the Plan shall alter or impair any option previously granted to
him under the Plan.
10. Effective Date of the Plan and Jurisdiction. The effective
date of the Plan shall be the date of its adoption by the Board of Directors,
subject to its approval by the
shareholders within twelve months of the date of its adoption. Notwithstanding
the foregoing, if the Plan shall have been approved by the Board prior to such
stockholder approval, options may be granted by the Committee as provided herein
subject to such subsequent stockholder approval. The Plan shall be governed by
the laws of the State of Florida.
11. Name. The Plan shall be known as the "Natural Health
Trends Corp. 1997 Stock Option Plan."