PROPOSAL FIVE:

APPROVAL OF AMENDMENTS TO RESTATED ARTICLES OF INCORPORATION
TO MODIFY CERTAIN PROVISIONS RELATING TO THE TERMS OF DIRECTORS

        Our Board of Directors is requesting that shareholders approve amendments to the Articles of Incorporation that will modify certain provisions relating to terms of the Board members.

Purpose and Effect of Proposed Amendments

        Article IX of the Articles of Incorporation provides, in pertinent part, the following:

The Board of Directors shall be and is divided into three classes, Class I, Class II, and Class III, which shall be as nearly equal in number as possible. Each director shall serve for a term ending on the date of the third Annual Meeting following the Annual Meeting at which such director was elected; provided, however, that each initial director in Class I shall hold office until the Annual Meeting of Shareholders in 1985; each initial director in Class II shall hold office until the annual meeting of Shareholders in 1986; and each initial director in Class III shall hold office until the Annual Meeting of Shareholders in 1987.

        Our Board of Directors believes that the Articles of Incorporation do not adequately address the terms of directors elected to office by shareholders or appointed to fill vacancies on the Board. As a result, the Board believes that it is necessary to modify the foregoing provision in order to clarify the terms of the directors, including the initial terms of the directors that we are asking shareholders to elect under Proposal One. Accordingly, the Board proposes to replace the foregoing provision in its entirety with the following text:

The Board of Directors shall be divided into three classes as nearly equal in number as may be feasible, hereby designated as Class I, Class II and Class III, with the term of office of one

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class expiring at each annual meeting. Each director shall be elected to serve a term ending at the third annual meeting of shareholders following the annual meeting of shareholders at which such director was elected, or until his or her earlier death, resignation or removal; provided, however, that (i) the directors in Class I at the time of the effectiveness of these Restated Articles shall serve for a term ending on the Corporation's first annual meeting of shareholders following the effectiveness of these Restated Articles, (ii) the directors in Class II at the time of the effectiveness of these Restated Articles shall serve for a term ending on the Corporation's second annual meeting of shareholders following the effectiveness of these Restated Articles and (iii) the directors in Class III at the time of the effectiveness of these Restated Articles shall serve for a term ending on the Corporation's third annual meeting of shareholders following the effectiveness of these Restated Articles. When a vacancy on the Board of Directors is filled, the director chosen to fill that vacancy shall complete the term of the director he or she succeeds (or shall complete the term of the class of directors in which the new directorship was created). Notwithstanding the foregoing, each director shall hold office until his or her successor shall have been elected and qualified or until such director's earlier death, resignation or removal. No reduction of the authorized number of directors shall have the effect of removing any director prior to the expiration of such director's term of office. When the number of directors is changed, each director then serving as such shall nevertheless continue as a director of the class of which he or she is a member until the expiration of his or her current term, and any newly created directorships or any decrease in directorships shall be so assigned among the classes by a majority of the directors then in office, though less than a quorum, as to make all classes as nearly equal in number as may be feasible.

It should be noted that, pursuant to Proposals Ten and Thirteen, future amendments of this section of the Restated Articles of Incorporation would require the approval of at least three-fourths (75%) of the outstanding shares of the Company voting in person or by proxy at a meeting of the shareholders.

Vote Required

        Approval of Proposal Five requires the affirmative vote of three-fourths (75%) of the total outstanding shares of Common Stock. Abstentions will count as votes AGAINST the proposal.

Recommendation of the Board of Directors

         The Board of Directors unanimously recommends a vote FOR the proposal to amend the Articles of Incorporation to modify certain provisions relating to the terms of Board members.

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PROPOSAL SIX:

APPROVAL OF AMENDMENT TO RESTATED ARTICLES OF INCORPORATION THAT
ELIMINATES PERSONAL LIABITIY, TO THE EXTENT PERMITTED BY LAW, OF THE
COMPANY'S DIRECTORS AND OFFICERS, AND PROVIDES FOR THE INDEMNIFICATION
OF ITS DIRECTORS, OFFICERS, EMPLOYEES, FIDUCIARIES AND AGENTS

        Our Board of Directors is requesting that shareholders approve an amendment to the Articles of Incorporation that will eliminate personal liability, to the extent permitted by law, of our directors and officers and provide for the indemnification of our directors, officers, employees, fiduciaries or agents.

Purpose and Effect of the Proposed Amendment

        The Revised Act permits the exculpation of directors and officers and the indemnification of directors, officers, employees, fiduciaries and agents. In addition, the articles of incorporation of public companies commonly provide exculpation and indemnification of their directors, officers and other persons. Our Board of Directors believes that providing exculpation and indemnification is an important factor in attracting and retaining highly qualified individuals to serve as directors and officers of the Company and in other capacities and motivating such individuals to devote their maximum efforts toward the advancement of the Company and its business. Although the Articles of Incorporation provide some limitation of liability of our directors and officers with respect to contracts, our Board of Directors believes that it is inadequate in providing the necessary incentives to attract and retain highly qualified individuals to serve as directors and officers of the Company. As a result, we propose to remove in its entirety the following provision from the Articles of Incorporation:

No contract or other transaction between this Corporation and any other firm or corporation shall be affected by the fact that a director or officer of this Corporation has an interest in, or is a director or officer of such firm or other corporation. Any officer or director, individually or with others, may be a party to, or may have an interest in, any transaction of this Corporation or any transaction in which the Corporation is a party or has an interest. Each person who is now or may become an officer or a director of this Corporation is hereby relieved from liability that might otherwise obtain in the event that such officer or director contracts with this Corporation for the benefit of himself or any firm or other corporation in which he may have an interest, provided such officer or director acts in good faith.

        If approved, the proposed amendment will amend the Articles of Incorporation to replace the foregoing provision with following text:

To the fullest extent permitted by the Revised Act or any other applicable law as now in effect or as it may hereafter be amended, a director or officer of the Corporation shall not be personally liable to the Corporation or its shareholders for monetary damages for any action taken or any failure to take any action, as a director or officer. The Corporation is authorized to indemnify and advance expenses to its directors, officers, employees, fiduciaries, or agents to the fullest extent permitted by law. Neither the amendment, modification or repeal of this Article nor the adoption of any provision in these Restated Articles, as amended from time to time, inconsistent with this Article X shall adversely affect any right or protection of a director, officer, employee, fiduciary, or agent of the Corporation with respect to any act or omission that occurred prior to the time of such amendment, modification, repeal or adoption.

        The proposed amendment is intended to make exculpation of directors and officers a mandatory obligation of the Company. On the other hand, indemnification would only be permissive, unless indemnification is otherwise mandatory under applicable law. As a result, the Board of Directors would have the authority to determine whether or not to indemnify or advance expenses to a director, officer, employee, fiduciary or agent based on the particular set of circumstances. However, the Company may

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enter into separate indemnification agreements with its directors and officers, which would require mandatory indemnification of such directors and officers in all circumstances to the fullest extent permitted by law.

Vote Required

        Approval of Proposal Three requires the votes cast in favor of the proposal to exceed the votes cast against the proposal. For purposes of the proposal, abstentions and broker non-votes will not affect the outcome, which recognizes only actual votes cast.

Recommendation of the Board of Directors

         The Board of Directors unanimously recommends a vote FOR the proposal to amend the Articles of Incorporation to provide the exculpation of directors and officers and the indemnification of our directors, officers, employees, fiduciaries and agents.

PROPOSAL SEVEN:

APPROVAL OF AMENDMENTS TO RESTATED ARTICLES OF INCORPORATION TO INCREASE
THE AUTHORIZED SHARES OF COMMON STOCK AND TO CLARIFY CERTAIN RIGHTS AND
PREFERENCES OF COMMON STOCK

        Our Board of Directors is requesting that shareholders approve amendments to our Articles of Incorporation that will increase the number of authorized shares of Common Stock from 20,000,000 to 50,000,000 and to clarify certain rights and preferences of Common Stock.

Purpose of the Proposed Amendments

        The authorized capital of the Company currently consists of 20,000,000 shares of Common Stock. Due to the proposed authorization of Preferred Stock pursuant to Proposal Eight, if the Company issues preferred shares convertible into Common Stock, the number of shares of Common Stock currently authorized may be insufficient to permit the full conversion of such preferred shares into Common Stock, the issuance of up to 750,000 shares of Common Stock issuable upon exercise of equity awards that may be granted under the 2009 Stock Incentive Plan, which we are asking shareholders to approve under Proposal Fifteen, and the issuance of Common Stock in any other capital raising activities.

        The proposed amendments will also allow the Company to maintain sufficient shares of Common Stock for future business and financial purposes. Authorized but unissued shares of Common Stock may be used by the Company for any purpose permitted under the Revised Act, including but not limited to, paying stock dividends to shareholders, raising capital, providing equity incentives to employees, officers and directors, and entering into transactions that the Board believes provide the potential for growth and profit. Furthermore, future acquisitions may be a key component of growth and, from time to time, consideration for acquisitions may include the issuance of Common Stock. Other than the conversion of Preferred Stock and Common Stock issuable upon exercise of equity awards that may be granted under the 2009 Stock Incentive Plan, the Company currently has no arrangements, agreements or understandings for the issuance or use of the additional shares of Common Stock proposed to be authorized.

        The proposed amendments are also intended to clarify the rights and preferences of Common Stock as it relates to Preferred Stock, which we are asking shareholders to authorize under Proposal

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Eight. Our Board of Directors proposes a modification to include a new Subparagraph A to read in its entirety as follows:

The preferences, limitations and relative rights of each class of shares (to the extent established hereby), and the express grant of authority to the Board of Directors to amend these Articles of Incorporation to divide the Preferred Shares into series, to establish and modify the preferences, limitations and relative rights of each Preferred Share, and to otherwise impact the capitalization of the Corporation, subject to certain limitations and procedures and as permitted by Section 602 of the Revised Act, are as follows:

A.     Common Shares.

        1.      Voting Rights.     Except as otherwise expressly provided by law or in this Article IV, each outstanding Common Share shall be entitled to one (1) vote on each matter to be voted on by the shareholders of the Corporation.

        2.      Liquidation Rights.     Subject to any prior or superior rights of liquidation as may be conferred upon any Preferred Shares, and after payment or provision for payment of the debts and other liabilities of the Corporation, upon any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation, the holders of Common Shares then outstanding shall be entitled to receive all of the assets and funds of the Corporation remaining and available for distribution. Such assets and funds shall be divided among and paid to the holders of Common Shares, on a pro rata basis, according to the number of shares of Common Shares held by them.

        3.      Dividends.     Dividends may be paid on the outstanding shares of Common Shares as and when declared by the Board of Directors, out of funds legally available therefor; provided, however, that no dividends shall be made with respect to the Common Shares until any preferential dividends required to be paid or set apart for any shares of Preferred Shares have been paid or set apart.

        4.      Residual Rights.     All rights accruing to the outstanding shares of the Corporation not expressly provided for to the contrary herein or in any amendment hereto or thereto shall be vested in the Common Shares.

Effect of the Proposed Amendment

        The authorization of additional shares of Common Stock will not, by itself, have any effect on the rights of present shareholders. The additional 30,000,000 shares to be authorized will be a part of the existing class of Common Stock and, if and when issued, would have the same rights and preferences as the shares of Common Stock presently issued and outstanding. Shareholders do not have preemptive rights to subscribe for or purchase additional shares of Common Stock. Accordingly, the issuance of additional shares of Common Stock for corporate purposes, other than a stock split or stock dividend, could have a dilutive effect on the ownership and voting rights of shareholders at the time of issuance. However, as noted above, other than the conversion of Preferred Stock and Common Stock issuable upon exercise of equity awards that may be granted under the 2009 Stock Incentive Plan, the Company currently has no arrangements, agreements or understandings for the issuance or use of the additional shares of Common Stock proposed to be authorized.

        As discussed above, authorized but unissued shares of Common Stock may also be used to oppose a hostile takeover attempt or to delay or prevent a change in control of the Company.

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Vote Required

        Approval of Proposal Seven requires the affirmative vote of a majority of the total outstanding shares of Common Stock. Abstentions will count as votes AGAINST the proposal.

Recommendation of the Board of Directors

         The Board of Directors unanimously recommends a vote FOR the proposal to amend the Articles of Incorporation to increase the number of authorized shares of Common Stock from 20,000,000 to 50,000,000 and to clarify certain rights and preferences of Common Stock.

PROPOSAL EIGHT

APPROVAL OF AMENDMENTS TO RESTATED ARTICLES OF INCORPORATION TO CREATE A
NEW CLASS OF STOCK DESIGNATED AS PREFERRED STOCK AND TO AUTHORIZE
THE ISSUANCE OF UP TO 10,000,000 SHARES OF PREFERRED STOCK

        Our Board of Directors is requesting that shareholders approve amendments to our Articles of Incorporation that will create a new class of stock designated as Preferred Stock and authorize the issuance of up to 10,000,000 shares of Preferred Stock.

Purpose of the Proposed Amendment

        The Articles of Incorporation authorize the issuance of only Common Stock and do not authorize the issuance of any class of preferred stock. Many public companies have authorized one or more classes of preferred stock in their articles of incorporation. Preferred stock is generally defined to mean any class of equity securities which has a preference over common stock in terms of dividends or claims on a company's assets on liquidation. Among other advantages, preferred stock can provide companies like Nature's Sunshine with a less expensive source of funding for corporate ventures.

        While the Company at the present time has no plan or intention for the issuance of Preferred Stock, the Board of Directors believes that it is advisable to create a class of preferred stock to provide the flexibility to use our capital stock in the best interests of our shareholders. These preferred shares may be used for various purposes including, without limitation, raising additional capital through the sale of preferred shares, acquiring another company or business or assets in exchange for shares of preferred stock, establishing strategic relationships with corporate partners who are compensated with preferred shares, providing equity incentives to employees, officers or directors or pursing other matters as the Company deems appropriate. The terms of a new series of preferred shares may provide for the conversion of such shares into Common Stock. As the terms of a new series of preferred shares will not be determined until such time as they are issued, if ever, the rate at which such series of preferred shares may convert into Common Stock is unknown. We are asking under Proposal Seven that the shareholders approve an increase in the authorized number of shares of Common Stock from 20,000,000 to 50,000,000 so that there exists a sufficient number of shares of Common Stock into which shares of Preferred Stock could be converted if necessary.

        Should the creation of a class of preferred shares be approved by our shareholders, the Board of Directors does not intend to solicit further shareholder approval prior to the issuance of preferred shares, except as may be required by applicable law or the terms of any series of outstanding preferred shares, and the terms of any such preferred shares will have the rights and preferences determined by

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the Board of Directors. Accordingly, our Board of Directors proposes a modification to the capitalization clause to include a new Subparagraph B to read in its entirety as follows:

B.     Preferred Shares .

The Board of Directors, without shareholder action, may amend the Corporation's Articles of Incorporation, pursuant to the authority granted to the Board of Directors by Subsection 1002(1)(e) and within the limits set forth in Section 16-10a-602 of the Revised Act, to do any of the following:

        1.     designate and determine, in whole or in part, the preferences, limitations and relative rights of the Preferred Shares before the issuance of any shares of Preferred Shares;

        2.     create one or more series of Preferred Shares, fix the number of shares of each such series (within the total number of authorized shares of Preferred Shares available for designation as a part of such series), and designate and determine, in whole or in part, the preferences, limitations and relative rights of each series of Preferred Shares all before the issuance of any shares of such series;

        3.     alter or revoke the preferences, limitations and relative rights granted to or imposed upon the Preferred Shares (before the issuance of any shares of Preferred Shares, or upon any wholly-unissued series of Preferred Shares); or

        4.     increase or decrease the number of shares constituting any series of Preferred Shares, the number of shares of which was originally fixed by the Board of Directors, either before or after the issuance of shares of the series, provided that the number may not be decreased below the number of shares of such series then outstanding, or increased above the total number of authorized shares of Preferred Shares available for designation as a part of such series.

Effect of Proposed Amendment

        The holders of the Company's Common Stock do not have any preemptive or similar rights to purchase any shares of preferred stock. Although the creation of a class of preferred stock will not, in and of itself, have any immediate effect on the rights of holders of the Common Stock, the issuance of shares of one or more series of preferred shares could, depending on the nature of the rights and preferences granted by the Board of Directors to the newly issued series of preferred shares, affect the holders of the Common Stock in a number of respects, including, without limitation the following:

•

if the Board of Directors issues preferred shares with voting rights, such shares would dilute the voting power of holders of the Common Stock;



•

by reducing the amount otherwise available for the payment of dividends on (and or restricting the payment of dividends on) the Common Stock, to the extent dividends are payable on shares of a new series of preferred shares;



•

in the event a new series of preferred shares provided for the conversion of such shares into the Common Stock and the conversion was deemed to be below the fair market value of the Common Stock, such a series of preferred shares could serve to decrease the prospective market price of the Common Stock;



•

by reducing the amount otherwise available for payment upon liquidation of the Company to the holders of the Common Stock, to the extent of any liquidation preference on a new series of preferred stock; and



•

by diluting the earnings per share and book value per share of the outstanding shares of the Common Stock and preferred shares.

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        Similar to the anti-takeover effect of authorized but unissued shares of Common Stock, the availability of additional authorized preferred shares could enable the Board of Directors to make more difficult, discourage or prevent an attempt to obtain control of the Company by merger, tender offer, proxy contest or other reasons. For example, the Board of Directors could issue preferred shares defensively on favorable terms in response to a takeover attempt. Such issuance could deter the types of transactions which may be proposed or could discourage or limit the participation of Common Stock in certain types of transactions that might be proposed (such as a tender offer), whether or not such transactions are favored by the majority of the Company's shareholders, and could enhance the ability of the Company's officers and directors to retain their positions. Similarly, privately placing preferred shares could create voting impediments or frustrate persons seeking to effect a merger or to otherwise gain control of the Company. For example, the Board of Directors in their discretion could issue preferred shares convertible into a greater number of shares of Common Stock than would result from a one-for-one conversion.

Vote Required

        Approval of Proposal Eight requires the affirmative vote of a majority of the total outstanding shares of Common Stock. Abstentions will count as votes AGAINST the proposal. Since a proposal concerning the authorization of preferred stock is a matter on which brokers are not empowered to vote without instructions, there may be broker non-votes on Proposal Eight.

Recommendation of the Board of Directors

         The Board of Directors unanimously recommends a vote FOR the proposal to amend the Articles of Incorporation to create a new class of designated as preferred stock and authorize the issuance of up to 10,000,000 shares of Preferred Stock.

PROPOSAL NINE:

APPROVAL OF AMENDMENT TO RESTATED ARTICLES OF INCORPORATION
TO REQUIRE A SHOWING OF CAUSE FOR SHAREHOLDERS TO REMOVE DIRECTORS

        Our Board of Directors is requesting that shareholders approve an amendment to our Articles of Incorporation that will require a showing of cause for shareholders to remove directors.

Purpose and Effect of the Proposed Amendment

        Section 16-10a-808 of the Revised Act provides that shareholders may remove one or more directors with or without cause, unless the articles of incorporation provide that directors may be removed only for cause. Although Article IX of the Articles of Incorporation provides that a director may be removed upon the vote of at least three-fourths (75%) of the then issued and outstanding capital shares of the Company, it currently does not prohibit shareholders from removing directors without cause. As a result, our Board of Directors proposes to remove in its entirety the following provision from the Articles of Incorporation:

Directors shall only be subject to removal before their term has expired upon the vote of at least three-fourths (75%) of the then issued and outstanding capital shares of the Corporation.

        If approved, the proposed amendment will amend the Articles of Incorporation to replace the foregoing provision with following text:

The shareholders may remove one or more directors at a meeting called for that purpose if notice has been given that a purpose of the meeting is such removal. Notwithstanding the preceding sentence, directors may only be removed for cause and upon the affirmative vote of at least three-fourths (75%) of the shares then entitled to vote at an election of directors.

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        One effect of the proposed amendment is to make it more difficult for holders of three-fourths (75%) of the then issued and outstanding capital shares of the Company to remove Directors, even if they deem it to be in their best interest to do so. Our Board of Directors believes that eliminating the ability of shareholders to remove directors without cause will promote the stability and continuity of leadership and maintain the integrity of a classified board. In addition, we are asking shareholders to authorize the Board of Directors to fix the number of Board members and to fill vacancies on the Board under Proposal Twelve. If Proposal Twelve is adopted, the Board will be entitled to expand the size of the Board of Directors and fill any resulting vacancies, and the shareholders will not be entitled to remove such newly appointed directors without cause until the new directors next stand for election.

        The proposed amendment should also render more difficult, and may discourage, an attempt to acquire control of the Company without the approval of the Board and the Company's management. For example, the proposed amendment will impede someone who acquires voting control of the Company immediately to remove the incumbent directors who may oppose such person and to replace them with directors supporting their agenda, and will instead require such person to demonstrate cause for removal of an incumbent director or replace incumbent directors as their terms expire over a period of up to three years.

        It should be noted that, pursuant to Proposals Ten and Thirteen, future amendments of this section of the Restated Articles of Incorporation would require the approval of at least three-fourths (75%) of the outstanding shares of the Company voting in person or by proxy at a meeting of the shareholders.

Vote Required

        Approval of Proposal Nine requires the affirmative vote of three-fourths (75%) of the total outstanding shares of Common Stock. Abstentions will count as votes AGAINST the proposal. Since a proposal concerning the shareholder voting requirements is a matter on which brokers are not empowered to vote without instructions, there may be broker non-votes on Proposal Nine.

Recommendation of the Board of Directors

         The Board of Directors unanimously recommends a vote FOR the proposal to amend the Articles of Incorporation to prohibit shareholder removal of directors without cause.

PROPOSAL TEN:

APPROVAL OF AMENDMENT TO RESTATED ARTICLES OF INCORPORATION TO REQUIRE
SHAREHOLDERS TO ACT BY SHAREHOLDER MEETING AND NOT BY WRITTEN CONSENT

        Our Board of Directors is requesting that shareholders approve an amendment to our Articles of Incorporation that will require shareholders to act by shareholder meeting and not by written consent.

Purpose and Effect of the Proposed Amendment

        Under Section 16-10a-704 of the Revised Act, unless otherwise provided in a company's articles of incorporation, any action required or permitted to be taken by shareholders at a meeting may be taken without notice, without a meeting and without a shareholder vote if a written consent setting forth the action to be taken is signed by holders of outstanding shares having not less than the minimum number of votes that would be necessary to authorize or take the action at a meeting at which all shares entitled to vote were present and voted. Our Restated Charter does not currently address shareholder action by written consent. Consequently, we propose a modification to the Articles of Incorporation to

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include a new Article to read in its entirety as follows, which will eliminate the ability of shareholders to act by written consent:

The shareholders of the Corporation are not permitted to take action without a meeting of shareholders held and noticed in accordance with the bylaws of the Corporation. Any action taken by shareholders by written consent without a meeting shall be null and void. Nothing in this Article VII shall affect the validity of any shareholder action taken prior to the adoption of these Restated Articles.

        The proposed amendment is intended to give all shareholders of the Company the opportunity to participate in determining any proposed action of shareholders and to allow the Board the opportunity to give advance consideration to, and to give the shareholders its recommendation with respect to, any such proposed action. The Board believes that it is appropriate to prevent the holders of a majority of outstanding voting securities from taking unannounced action and from using the written consent procedure to take action affecting the rights of all of shareholders without such action being fully considered by all of shareholders at a formal meeting of shareholders. The proposed amendment will therefore prevent shareholders from taking action other than at an annual or special meeting of shareholders.

        The proposed amendment is also intended to protect the Company and its shareholders from unfair or coercive takeover tactics. As part of a hostile takeover attempt, hostile bidders often attempt to force a response by the target company through threats or attempts to secure shareholder action without a meeting, which may not provide the board of directors of the target company with a reasonable opportunity to consider whether such hostile bid or shareholder proposal is in the best interests of the shareholders of the target company. The proposed amendment is intended to eliminate the Company's vulnerability to such tactics and to ensure that appropriate takeover bids for the Company can be considered in a deliberate, proper and fully informed manner. The proposal, if approved, may be disadvantageous to shareholders to the extent that it has the effect of delaying or discouraging a future takeover attempt that is not approved by the Board, but which a majority of shareholders may deem to be in their best interests.

        In addition to the proposed amendment, we are asking the shareholders to approve Proposal Eleven, which would require approval of the holders of at least a majority of the total outstanding shares of the Company to adopt, amend or repeal the Bylaws, and Proposal Thirteen, which would require the holders of at least a majority or three-fourths (75%) of the total outstanding shares of the Company to adopt, amend or repeal certain provisions of the Restated Articles of Incorporation. If the Charter Amendments are approved, the Bylaws and the provisions of the Restated Articles of Incorporation identified in Proposal Thirteen could not be adopted, amended or repealed without convening a shareholder meeting. Requiring the shareholders to be represented in person or by proxy at a meeting of the shareholders in order to effect such changes to the Bylaws and Restated Articles of Incorporation, rather than allowing the shareholders to take the same actions by written consent, may make altering the Bylaws or Restated Articles of Incorporation more difficult.

        It should also be noted that, pursuant to this Proposal Ten and Proposal Thirteen, future amendments of this section of the Restated Articles of Incorporation would require the approval of at least a majority of the outstanding shares of the Company voting in person or by proxy at a meeting of the shareholders.

Vote Required

        Approval of Proposal Ten requires the affirmative vote of a majority of the total outstanding shares of Common Stock. Abstentions will count as votes AGAINST the proposal. Since a proposal concerning the shareholder voting requirements is a matter on which brokers are not empowered to vote without instructions, there may be broker non-votes on Proposal Ten.

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Recommendation of the Board of Directors

         The Board of Directors unanimously recommends a vote FOR the proposal to amend the Articles of Incorporation to eliminate the ability of shareholders to act by written consent.

PROPOSAL ELEVEN:

APPROVAL OF AMENDMENT TO RESTATED ARTICLES OF INCORPORATION TO ENHANCE
SHAREHOLDER VOTING REQUIREMENTS TO ADOPT, AMEND OR REPEAL
THE COMPANY'S BYLAWS

        Our Board of Directors is requesting that shareholders approve an amendment to our Articles of Incorporation that will require approval of at least a majority of the total outstanding capital shares of the Company to adopt, amend or repeal our Bylaws.

Purpose and Effect of the Proposed Amendment

        Section 16-10a-1020 of the Revised Act provides that a company's shareholders may amend its bylaws at any time, even though the bylaws may also be amended at any time by the board of directors. Our Restated Charter does not currently address shareholder actions to adopt, amend or repeal our Bylaws. As a result, changes to our Bylaws may be implemented by our shareholders at a meeting of shareholders in which a quorum is present and the votes cast in favor of a proposed amendment to the Bylaws exceeds the votes cast against such proposal. Our Board of Directors believes that it is advisable to enhance the shareholder approval requirements to adopt, amend or repeal our Bylaws by requiring the approval of at least a majority of the outstanding capital shares of the Company.

        If approved, the proposed amendment will amend the Articles of Incorporation to add a new Article to read, in pertinent part, as follows:

The shareholders of the Corporation may only adopt, amend or repeal bylaws with the affirmative vote of the holders of at least a majority of the Corporation's shares then outstanding and entitled to vote on the amendment, or such greater percentage as may otherwise be set forth in the bylaws.

        The proposed amendment is intended to protect the Company and its shareholders from unfair or coercive takeover tactics. As part of a hostile takeover attempt, hostile bidders may acquire equity securities of a company and attempt to change provisions in the bylaws with respect to shareholder proposals and shareholder nominations to the board of directors in order to facilitate a takeover. The proposed amendment is intended to reduce the Company's vulnerability to such tactics. The proposal, if approved, may be disadvantageous to shareholders to the extent that it has the effect of impeding corporate governance changes that may be beneficial to all shareholders.

        As stated above, we are also asking the shareholders to approve Proposal Ten, which would require the Company to hold a shareholder meeting in order for any action by shareholders to be properly approved. If the Charter Amendments are approved, the Bylaws could not be adopted, amended or repealed by the shareholders without convening a meeting at which the holders of at least a majority of the outstanding shares are represented in person or by proxy. Requiring shareholders representing at least a majority of the outstanding shares to be represented in person or by proxy at a meeting of the shareholders in order to effect changes to the Bylaws, rather than allowing the holders of at least a majority of the outstanding shares to change the Bylaws by written consent, may make altering the Bylaws by the shareholders more difficult.

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        The Company is asking for shareholder approval of Proposal Fourteen, which amends and restates the Company's Bylaws. It should be noted that if Proposal Ten is adopted, future amendments of the Bylaws by the shareholders would require the approval of at least a majority of the outstanding shares of the Company voting in person or by proxy at a meeting of the shareholders, and, if Proposal Four is adopted, the Board of Directors will be authorized to approve future amendments of the Company's Bylaws without the approval of shareholders. In addition, and in accordance with Proposal Thirteen, if also adopted, future amendments to this section of the Restated Articles of Incorporation will require the approval of at least a majority of the outstanding shares of the Company voting in person or by proxy at a meeting of the shareholders.

Vote Required

        Approval of Proposal Eleven requires the affirmative vote of a majority of the total outstanding shares of Common Stock. Abstentions will count as votes AGAINST the proposal. Since a proposal concerning the shareholder voting requirements is a matter on which brokers are not empowered to vote without instructions, there may be broker non-votes on Proposal Eleven.

Recommendation of the Board of Directors

         The Board of Directors unanimously recommends a vote FOR the proposal to require approval of a majority of the total outstanding shares of capital stock to adopt, amend or repeal our Bylaws.

PROPOSAL TWELVE:

APPROVAL OF AMENDMENTS TO RESTATED ARTICLES OF INCORPORATION TO
AUTHORIZE THE BOARD TO FIX THE NUMBER OF BOARD MEMBERS AND TO FILL
VACANCIES ON THE BOARD

        Our Board of Directors is requesting that shareholders approve amendments to our Articles of Incorporation that will exclusively authorize the Board of Directors to fix the number of Board members from time to time and to fill vacancies on the Board.

Purpose and Effect of the Proposed Amendments

        Article IX of the Articles of Incorporation provides that the number of directors constituting the entire Board shall be not less than three nor more than nine directors, as fixed from time to time by the Board of Directors of the Company. The proposed amendments would change this provision to provide that the number of directors constituting the Board of Directors shall be fixed from time to time exclusively by a vote of a majority of the Board of Directors. In addition, the proposed amendments will provide the Board with the exclusive power to fill any vacancies on the Board by a vote of the majority of the remaining directors, although less than a quorum, or by a sole remaining director.

        If approved, the proposed amendments will amend Article IX of the Articles of Incorporation to remove the first sentence in its entirety and replace it with the following text:

The number of directors to constitute the whole Board of Directors shall be such number as shall be fixed from time to time exclusively by a resolution adopted by a majority of the Board of Directors. Any vacancy in the Board of Directors, whether because of death, resignation, disqualification, an increase in the authorized number of directors, removal, or any other cause, may be filled exclusively by a vote of the majority of the remaining directors, although less than a quorum, or by a sole remaining director.

        The proposed amendments are intended to provide the Board with greater flexibility to manage the Company. For example, should we identify an exceptional person for the Board of Directors, this

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would enable our Board to respond efficiently by expanding the Board and filling the resulting vacancy with such person, without having to incur the expense and delay of holding a meeting of shareholders for the election of such person. In addition, because the Board would have the sole power and authority to increase or decrease the number of directors and fill any vacancies resulting from an increase, these changes together would allow the Board to fill vacancies with directors who support the agenda of the incumbent directors in the face of a takeover threat. We are also asking shareholders to approve Proposal Nine, which would prevent the shareholders from removing a director from the Board without cause. If the Charter Amendments are approved, the Board will be able to appoint a new director to fill a vacancy, which may have been created by the Board, and the shareholders will not be able to remove the director from the Board prior to the normally-scheduled election for such director unless cause for such removal exists.

        It should be noted that, pursuant to Proposals Ten and Thirteen, future amendments of this section of the Restated Articles of Incorporation would require the approval of at least three-fourths (75%) of the outstanding shares of the Company voting in person or by proxy at a meeting of the shareholders.

Vote Required

        Approval of Proposal Twelve requires the affirmative vote of three-fourths (75%) of the total outstanding shares of Common Stock. Abstentions will count as votes AGAINST the proposal. Since a proposal concerning changes to the board of directors is a matter on which brokers are not empowered to vote without instructions, there may be broker non-votes on Proposal Twelve.

Recommendation of the Board of Directors

         The Board of Directors unanimously recommends a vote FOR the proposal to exclusively authorize the Board of Directors to fix the number of Board members from time to time and to fill vacancies on the Board.

PROPOSAL THIRTEEN:

APPROVAL OF AMENDMENTS TO RESTATED ARTICLES OF INCORPORATION AND BYLAWS
TO ENHANCE SHAREHOLDER VOTING REQUIREMENTS TO ALTER, AMEND OR
REPEAL CERTAIN PROVISIONS

        Our Board of Directors is requesting that shareholders approve amendments to the Articles of Incorporation and the Bylaws that will enhance the shareholder voting requirements to alter, amend or repeal certain provisions of the Articles of Incorporation and the Bylaws.

Purpose and Effect of the Proposed Amendments

        Section 16-10a-1003 of the Revised Act permits a company's board of directors to propose amendments to its articles of incorporation, subject to shareholder approval. Other than amendments to create dissenters' rights and amendments that materially and adversely affect rights of existing shares, Section 16-10a-1003 requires that, if a quorum is present, the shareholder votes cast in favor of a proposed amendment must exceed the votes cast against the proposal, unless the articles of incorporation or the Revised Act requires a greater number of affirmative votes. Our Board of Directors believes that the Restated Charter does not adequately address amendments to the Articles of Incorporation, especially in light of the changes contemplated by the other Charter Amendments.

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Accordingly, we propose to amend the Articles of Incorporation to add a new Article to read in its entirety as follows:

The Corporation reserves the right to amend these Restated Articles in any manner provided herein or permitted by the Revised Act, and all rights and powers, if any, conferred herein on shareholders, directors and officers are subject to the reserved power. Notwithstanding the foregoing, without the affirmative vote of the holders of record of a majority of the Corporation's shares then outstanding and entitled to vote on the amendment, the Corporation shall not alter, amend or repeal Article VII, Article VIII or Article IX. Notwithstanding anything to the contrary in these Restated Articles, Article VI shall not be subject to amendment or repeal, either directly or through or by amendment of this Article IX, without the affirmative vote of the holders of record of at least three-fourths (75%) of the Corporation's shares then issued and outstanding and entitled to vote on the amendment.

        If approved, the proposed amendments to the Articles of Incorporation will expressly reserve the Company's right to further amend the Articles of Incorporation, subject to shareholder approval as prescribed in the Articles of Incorporation or permitted by the Revised Act. The articles of incorporation of public companies commonly include similar reservation of such rights. The proposed amendments will also increase shareholder approval requirements by requiring approval of at least a majority of the total outstanding capital shares of the Company to alter, amend or repeal the provisions that we are asking shareholders to approve under Proposals Ten, Eleven and Thirteen, while requiring the approval of at least three-fourths (75%) of the total outstanding capital shares to alter, amend or repeal the provisions that we are asking shareholders to approve under Proposals Five, Nine and Twelve. Our Board of Directors believes that these Articles are particularly important to the Company's ability to maintain the continuity of the Board and as a result warrant the enhanced shareholder voting requirements.

        In order to prevent any potential conflict with the proposed amendments to the Articles of Incorporation, our Board of Directors proposes to amend the Bylaws to mirror the same enhanced shareholder voting requirements ( i.e.,  approval of at least three-fourths (75%) of the total outstanding capital shares) to alter, amend or repeal the corresponding provisions in the Bylaws that relate to Proposals Five, Nine and Twelve. If the enhanced shareholder voting requirements are approved, the Bylaws of the Company will also be amended to comport with the Articles of Incorporation.

        The proposed amendments to the Articles of Incorporation and the Bylaws are intended to render more difficult an attempt to acquire control of the Company without the approval of the Company's Board and management. Generally, the proposed amendments would make it more difficult, by raising the vote required, for someone who acquires voting control of the Company to remove immediately one or more of the incumbent directors who may oppose such person and to replace them with more friendly directors or modify the provisions of the Articles of Incorporation or the Bylaws regarding the number, term and classification of the Board.

        We are also asking the shareholders to approve Proposal Ten, which would require the Company to hold a shareholder meeting in order for any action by shareholders to be properly approved. If the Charter Amendments are approved, provisions of the Restated Articles of Incorporation related to Proposals Ten, Eleven and Thirteen could not be adopted, amended or repealed without convening a shareholder meeting at which the holders of at least a majority of the outstanding shares are represented in person or by proxy, and provisions of the Restated Articles of Incorporation related to Proposals Five, Nine and Twelve could not be adopted, amended or repealed without convening a shareholder meeting at which the holders of at least three-fourths (75%) of the outstanding shares are represented in person or by proxy. Requiring shareholders representing at least a majority or three-fourths (75%) of the outstanding shares to be represented in person or by proxy at a meeting of the

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shareholders in order to effect certain changes to the Restated Articles of Incorporation, rather than allowing the holders of at least a majority of the outstanding stock to alter the Restated Articles of Incorporation by written consent, may make amending the Restated Articles of Incorporation by the shareholders more difficult.

Vote Required

        Approval of Proposal Thirteen requires the affirmative vote of three-fourths (75%) of the total outstanding shares of Common Stock. Abstentions will count as votes AGAINST the proposed amendments in Proposal Thirteen. Since a proposal concerning the shareholder voting requirements is a matter on which brokers are not empowered to vote without instructions, there may be broker non-votes on Proposal Thirteen.

Recommendation of the Board of Directors

         The Board of Directors unanimously recommends a vote FOR the proposal to amend the Articles of Incorporation and the Bylaws to enhance shareholder voting requirements.

PROPOSAL FOURTEEN:

APPROVAL OF AMENDMENT AND RESTATEMENT OF BYLAWS

        Our Board of Directors is requesting that shareholders approve an amendment and restatement of the Company's Bylaws in order to (i) add advance notice requirements and procedures governing how shareholders can bring a shareholder proposal before an annual meeting and nominate persons for election as directors, (ii) harmonize the Bylaws with the changes proposed to be made to the Articles of Incorporation in order to prevent any potential conflict with the Articles of Incorporation and (iii) make other changes to update the Bylaws to current Utah law and make other minor clarifying and stylistic revisions to various provisions of the Bylaws, including those relating to special meetings, authority of director committees and indemnification procedures. The complete text of the Amended and Restated Bylaws is contained in Appendix B in this proxy statement. You are urged to read Appendix B in its entirety, as the discussion in the summary of the proposed amendments is qualified in its entirety by reference to Appendix B.

Purpose and Effect of the Proposed Amendments

        Under Section 16-10a-1020 of the Revised Act and Article 10 of the Bylaws, the Board of Directors may amend the Bylaws, without shareholder approval. However, given that several of the changes proposed to the Bylaws relate to the anti-takeover provisions in the Charter Amendments, our Board of Directors determined that it was advisable to submit for shareholder approval the amendment and restatement of the Bylaws together with the Charter Amendments. The effectiveness of Proposal Fourteen is therefore contingent on the approval of the Charter Amendments by our shareholders.

        Our Board of Directors believes that it is in the Company's best interest to implement bylaw provisions to require that shareholders give advance notice of an intention to nominate persons for election as directors or to submit proposals at a shareholder meeting. If approved, the proposed amendments to the Bylaws will generally require, among other things, that:

•

Nominations to our Board of Directors must be made by timely notice in writing to our Corporate Secretary. To be timely, a shareholder's notice must be received at our principal executive offices no later than the close of business on the sixtieth (60th) day, nor earlier than the close of business on the ninetieth (90th) day, prior the anniversary date of the immediately preceding annual meeting. If no annual meeting was held in the previous year or the annual meeting is called for a date that is more than thirty (30) days before or after the such

37

anniversary date, then notice must be received no earlier than the close of business on the ninetieth (90th) day prior to such annual meeting and not later than the close of business on the later of (i) the sixtieth (60th) day prior to such annual meeting and (ii) the tenth (10th) day following the day on which public disclosure of the date of the meeting was made by the Company. In the event of a special meeting of shareholders for the purpose of electing directors, to be timely, a shareholder's notice must be received at our principal executive offices no earlier than one hundred twentieth (120th) day prior to such special meeting and not later than the ninetieth (90th) day prior to such special meeting, or if later, the tenth (10th) day following the day on which public disclosure of the date of such special meeting was first made.

•

Shareholder proposals to be brought before an annual meeting must be made by timely notice in writing to our Corporate Secretary. To be timely, a shareholder's notice must be received at our principal executive offices no later than the close of business on the sixtieth (60th) day, nor earlier than the close of business on the ninetieth (90th) day, prior to the anniversary date of the immediately preceding annual meeting. If no annual meeting was held in the previous year or the annual meeting is called for a date that is more than thirty (30) days before or after such anniversary date, then notice must be received no earlier than the close of business on the ninetieth (90th) day prior to such annual meeting and not later than the close of business on the later of (i) the sixtieth (60th) day prior to such annual meeting and (ii) the tenth (10th) day following the day on which public disclosure of the date of the meeting was made by the Company.



•

The advance notice requirements are separate from and in addition to the SEC's own requirements that a shareholder must meet in order for the Company to be required to include a shareholder's proposal in the proxy statement.



•

A shareholder demand to call a special meeting of shareholders must be made by timely notice in writing to our Corporate Secretary. To be timely, such demand must be delivered to, or mailed and received at, our principal executive offices not later than the sixtieth (60th) day following the record date.

        Our Board of Directors believes that the procedures for the proposal of business at meetings of shareholders will enable the presiding officer to run an orderly meeting, notwithstanding the presentation of contested business. In addition, the requirement of advance notice and information, both for business to be presented at the meeting and for the nomination of candidates for election as directors, will give the Board the time and information needed to consider the proposed business or candidates, to inform our shareholders, and, if appropriate, to give shareholders the benefits of the Board's recommendations. However, shareholders should be aware that the proposed advance notice requirements will preclude a nomination for the election of directors or the conduct of business at a particular annual meeting if the procedures are not followed correctly.

        The proposed advance notice requirements may also serve to protect against unsolicited takeover proposals or attempts to gain control of our Board of Directors, and will also ensure that the Company has adequate time to prepare for any contested election of directors. In addition to the proposed advanced notice requirements, other proposed amendments to the Bylaws may have similar anti-takeover effects as the Charter Amendments. For example, the proposed amendments to the Bylaws generally provide, among other things, that:

•

Shareholders will not be permitted to take action without a meeting of shareholders, and any action taken by shareholders by written consent shall be null and void. See also Proposal Ten.



•

Amendments to the Bylaws shall be governed by the Articles of Incorporation. See also Proposal Eleven.

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•

Vacancies on the Board may be filled only by the affirmative vote of a majority of the remaining directors. See also Proposal Twelve.

Effectiveness of Amended and Restated Bylaws

        If approved, the amendment and restatement of the Company's Bylaws will become effective upon the effectiveness of the Company's Amended and Restated Articles of Incorporation. We are also asking shareholders to approve Proposal Ten, which would require future amendments of the Bylaws by the shareholders to be approved by at least a majority of the outstanding shares of the Company voting in person or by proxy at a meeting of the shareholders, and Proposal Four, which would allow the Board of Directors to approve future amendments of the Company's Bylaws without the approval of shareholders.

Vote Required

        Approval of Proposal Fourteen requires the votes cast in favor of the proposal to exceed the votes cast against the proposal. For purposes of the proposal, abstentions and broker non-votes will not affect the outcome, which recognizes only actual votes cast.

Recommendation of the Board of Directors

         The Board of Directors unanimously recommends a vote FOR the proposal to amend and restate the Company's Bylaws.

PROPOSAL FIFTEEN:

ADOPTION OF NATURE'S SUNSHINE PRODUCTS, INC. 2009 STOCK INCENTIVE PLAN

        Our Board of Directors is requesting that shareholders approve the implementation of the Nature's Sunshine Products, Inc. 2009 Stock Incentive Plan, under which 750,000 shares of Common Stock will be reserved for issuance. The 2009 Stock Incentive Plan was adopted by our Board of Directors on September 24, 2009, subject to shareholder approval at the Annual Meeting.

        Our 1995 Stock Option Plan expired in 2005, and no options have been granted under this plan since its termination. Our Board of Directors approved non-plan option grants to certain executive officers and director level employees on March 15, 2007. We have not granted any equity awards to any of our employees or other service providers since March 15, 2007. However, we strongly believe that incentive compensation programs play a pivotal role in our efforts to attract and retain key personnel essential to our long-term growth and financial success. For that reason, we are proposing the implementation of the 2009 Stock Incentive Plan. We have structured the 2009 Stock Incentive Plan to provide us with more flexibility in designing equity incentive programs in an environment where a number of companies have moved from traditional option grants to other stock or stock-based awards such as restricted stock, restricted stock units and performance awards. Accordingly, with the 2009 Stock Incentive Plan, we will have a broader array of equity incentives to utilize for purposes of attracting and retaining the services of key individuals.

Summary Description of 2009 Stock Incentive Plan

        The following is a summary of the principal features of the 2009 Stock Incentive Plan. This description is intended to be a summary of the material provisions of the 2009 Stock Incentive Plan. It does not purport to be a complete description of all the provisions of the 2009 Stock Incentive Plan and is qualified in its entirety by reference to the complete text of the 2009 Stock Incentive Plan, which is contained in Appendix C in this proxy statement.

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        Administration.     The Compensation Committee of our Board of Directors will have the exclusive authority to administer the 2009 Stock Incentive Plan. The term "plan administrator," as used in this summary, will mean such committee. The plan administrator will have complete discretion to determine which eligible individuals are to receive awards, the types of awards to be granted to each participant, the number of shares to be covered (or the method by which payments or other rights to be calculated in connection with) each award and the terms and conditions of any award, including the vesting provisions of an award. The plan administrator may grant awards under the 2009 Stock Incentive Plan for no cash consideration or for any cash or other consideration as may be determined by the plan administrator or required by applicable law. Awards may be granted either alone or in addition to, in tandem with or in substitution for any other award granted under the 2009 Stock Incentive Plan or any other of our plans or the plans of an affiliate in the plan administrator's discretion. Awards granted under the 2009 Stock Incentive Plan may be settled in such form or forms as the plan administrator determines appropriate, including cash, shares of our common stock promissory notes, other securities or awards under the 2009 Stock Incentive Plan, other property or a combination of the foregoing methods, and may be made in a single payment or transfer, in installments or on a deferred basis as determined by the plan administrator.

        Eligibility.     Employees, officers, consultants, independent contractors and non-employee members of our Board of Directors in our employ or service or in the employ or service of our affiliates (whether now existing or hereafter established) will be eligible to participate in the 2009 Stock Incentive Plan. As of October 2, 2009, approximately 1,300 persons (including 6 executive officers and 7 non-employee members of the Board) were eligible to participate in the 2009 Stock Incentive Plan.

        Securities Subject to 2009 Stock Incentive Plan.     750,000 shares of our common stock will be reserved for issuance over the term of the 2009 Stock Incentive Plan. The number of shares of Common Stock available for granting incentive stock options, restricted stock and restricted stock units under the 2009 Stock Incentive Plan will not exceed 750,000, subject to adjustments for stock splits, stock dividends and similar transactions.

        Awards made under the 2009 Stock Incentive Plan will be subject to the following per-participant limitations in order to provide the plan administrator with the opportunity to structure one or more of those awards as performance-based compensation under Section 162(m) ("Section 162(m)") of the Internal Revenue Code of 1986, as amended (the "Code"):

•

No participant in the 2009 Stock Incentive Plan may receive options, stock appreciation rights or any other awards the value of which is based solely on an increase in the value of the shares after the grant date of the awards for more than 200,000 shares of our common stock in any single taxable year. No participant in the 2009 Stock Incentive Plan may receive any award that is denominated in shares and that vests based on one or more of the performance goals described below (including, without limitation, restricted stock or restricted stock units) for more than 200,000 shares of our common stock in any single taxable year. Such 200,000-share limitations are subject to adjustment for subsequent stock splits, stock dividends and similar transactions. Shareholder approval of this proposal will also constitute approval of each of the 200,000-share limitations for purposes Section 162(m). Such limitations are intended to assure that any deductions to which we would otherwise be entitled upon the exercise of stock options or stock appreciation rights or vesting of performance awards granted under the 2009 Stock Incentive Plan will not be subject to the $1 million limitation on the income tax deductibility of compensation paid per executive officer imposed under Section 162(m).



•

For awards denominated in cash (whether paid in cash, shares or other property and that vest based on one or more of the performance goals described below) no participant in the 2009 Stock Incentive Plan may receive awards with an aggregate dollar value in excess of one million dollars in any one taxable year, with such limitation to be measured at the time the award is

40

made. Shareholder approval of this proposal will also constitute approval of that one million-dollar limitation for purposes of Section 162(m). Such limitation is intended to assure that any deductions to which we would otherwise be entitled upon the settlement of such awards will not be subject to the $1 million limitation on the income tax deductibility of compensation paid per executive officer imposed under Section 162(m).

        The shares of Common Stock issuable under the 2009 Stock Incentive Plan may be drawn from shares of authorized but unissued Common Stock, treasury shares or from shares of Common Stock that we acquire, including shares purchased on the open market.

        Shares subject to outstanding awards under the 2009 Stock Incentive Plan that expire or otherwise terminate prior to the issuance of the shares subject to those awards will be available for subsequent issuance under the 2009 Stock Incentive Plan. Any unvested shares issued under the 2009 Stock Incentive Plan that are subsequently forfeited or are otherwise reacquired by us will be added back to the number of shares reserved for issuance under the 2009 Stock Incentive Plan and will accordingly be available for subsequent issuance. If an award entitles a participant to receive or purchase shares, the number of shares covered by the award or to which the award relates will be counted on the grant date of such award against the aggregate number of shares of Common Stock available for issuance under the 2009 Stock Incentive Plan. For stock appreciation rights settled in shares of Common Stock, the aggregate number of shares for which the stock appreciation right is exercised, rather than the number of shares actually issued upon exercise, will be counted against the aggregate number of shares available for issuance under the 2009 Stock Incentive Plan. If an award does not entitle a participant to receive or purchase shares, or if an award is settled in cash, such awards will not reduce the number of shares of common stock available for issuance under the 2009 Stock Incentive Plan. Should shares of Common Stock otherwise issuable under the 2009 Stock Incentive Plan be withheld in satisfaction of the purchase or exercise price of an award or applicable withholding taxes incurred in connection with the award under the 2009 Stock Incentive Plan, then the number of shares of Common Stock available for issuance under the 2009 Stock Incentive Plan will be reduced by the gross number of shares issuable at that time under such award, calculated in each instance prior to any such share withholding.

        Valuation.     The fair market value per share of our Common Stock on any relevant date under the 2009 Stock Incentive Plan will be the closing sale price of our Common Stock on the consolidated transaction reporting system on such date or, if such exchange is not open for trading on such date, on the most recent preceding date that such exchange is open for trading. On October 2, 2009, the fair market value determined on such basis was $1.67 per share.

        Awards.     The 2009 Stock Incentive Plan provides for the following types of awards: incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock, restricted stock units, dividend equivalent rights, performance awards, stock awards and other stock-based awards.

        Stock options.     Eligible persons may be granted stock options to purchase shares of Common Stock. Each granted option will have an exercise price per share determined by the plan administrator, but the exercise price will not be less than 100 percent of the fair market value of the option shares on the grant date, provided that the plan administrator may designate an exercise price below fair market value on the grant date (i) to the extent necessary or appropriate, as determined by the plan administrator, to satisfy applicable legal or regulatory requirements of a foreign jurisdiction or (ii) if the option is granted in substitution for a stock option previously granted by an entity that is acquired by or merged with us or an affiliate. No granted option will have a term in excess of ten years. Payment of the exercise price of a stock option may be made in cash, shares of Common Stock or other securities owned by the participant, other awards granted under the 2009 Stock Incentive Plan or other property owned by the participant, delivery of a promissory note or a combination of the foregoing methods in the plan administrator's discretion. Alternatively, the plan administrator may permit a

41

participant to exercise a stock option pursuant to a broker-assisted cashless exercise procedure or, with respect to the exercise of a non-statutory option, pursuant to a net exercise procedure.

        Stock appreciation rights.     A stock appreciation right granted under the 2009 Stock Incentive Plan allows the holder to exercise that right as to a specific number of shares of Common Stock and receive upon such exercise the excess of (i) the fair market value of the shares of Common Stock as to which that right is exercised over (ii) the aggregate grant price in effect for those shares. The grant price per share will not be less than 100 percent of the fair market value of the underlying shares on the grant date, provided that the plan administrator may designate a grant price below fair market value on the grant date (A) to the extent necessary or appropriate, as determined by the plan administrator, to satisfy applicable legal or regulatory requirements of a foreign jurisdiction or (B) if the stock appreciation right is granted in substitution for a stock appreciation right previously granted by an entity that is acquired by or merged with us or an affiliate. No granted stock appreciation right will have a term in excess of ten years. The plan administrator will determine the remaining terms and conditions of a stock appreciation right granted under the 2009 Stock Incentive Plan in its discretion, including the methods of exercise, dates of exercise and methods of settlement.

        Repricing Prohibition.     Without shareholder consent, the plan administrator may not reprice, adjust or amend the exercise price of stock options or grant price of stock appreciation rights previously awarded to any participant (except for adjustments for stock splits, stock dividends and similar transactions), whether through amendment, cancellation or any other means.

        Restricted Stock.     Shares of restricted stock may be awarded under the 2009 Stock Incentive Plan. The plan administrator will determine at the time of grant the restrictions to which shares of restricted stock will be subject, including the vesting schedule, any limitation on the right to vote the shares of restricted stock or the right to receive dividends or other property with respect to the shares of restricted stock. Shares of restricted stock will be issued when the awards are granted and will be evidenced in the manner determined by the plan administrator, including by book entry registration or issuance of a stock certificate. Unless otherwise determined by the plan administrator in its discretion, unvested shares of restricted stock will generally be forfeited upon termination of a participant's service.

        Restricted Stock Units.     Restricted stock units granted under the 2009 Stock Incentive Plan entitle the holder to receive shares of Common Stock underlying those units upon the lapse or waiver of restrictions specified by the plan administrator at the time the restricted stock units are granted. Upon termination of a participant's service, any unvested restricted stock units will be canceled, and the participant will have no further rights with respect to the canceled units or the underlying shares of Common Stock unless otherwise determined by the plan administrator in its discretion.

        Performance Awards.     Performance awards granted under the 2009 Stock Incentive Plan may be denominated or payable in cash, shares of Common Stock (including restricted stock and restricted stock units), other securities, other awards granted under the 2009 Stock Incentive Plan and will confer on the holder the right to receive payments upon the achievement of one or more objective performance goals over a specified performance period established by the plan administrator at the time of the grant of the award. Such goals may be based on one or more of the following criteria applied on a corporate, subsidiary, division, business unit or line of business basis: sales, revenue, costs, expenses, earnings (including one or more of net profit after tax, gross profit, operating profit, earnings before interest and taxes, earnings before interest, taxes, depreciation and amortization and net earnings), earnings per share, earnings per share from continuing operations, operating income, pre-tax income, operating income margin, net income, margins (including one or more of gross, operating and net income margins), returns (including one or more of return on actual or pro forma assets, net assets, equity, investment, capital and net capital employed), shareholder return (including total shareholder return relative to an index or peer group), stock price, economic value added, cash generation, cash

42

flow, unit volume, working capital, market share, cost reductions, number of customers, workforce satisfaction and diversity goals, environmental health and safety goals, employee retention, customer satisfaction, completion of key projects and strategic plan development and implementation. Each such performance goal may be based (i) solely by reference to absolute results of individual performance or organizational performance at various levels (e.g., our performance or the performance of a subsidiary, division, business segment or business unit) or (ii) upon organizational performance relative to the comparable performance of other companies selected by the plan administrator. To the extent consistent with Section 162(m), the plan administrator may also exclude charges related to an event or occurrence which the plan administrator determines should appropriately be excluded, including (X) restructurings, discontinued operations, extraordinary items, and other unusual or non-recurring charges, (Y) an event either not directly related to the our operations or not within the reasonable control of our management, or (Z) the cumulative effects of tax or accounting changes in accordance with U.S. generally accepted accounting principles (or other accounting principles which may then be in effect).

        Subject to the terms of the 2009 Stock Incentive Plan, the performance goals to be achieved during any performance period, the length of any performance period, the amount of any performance award granted, the amount of any payment or transfer to be made pursuant to any performance award and any other terms and conditions of any performance award will be determined by the plan administrator.

        Performance awards granted to covered executive officers under Section 162(m) that are intended to be "qualified performance based compensation" will be conditioned solely on the achievement of one or more of the performance goals described above and will comply with the requirements of Section 162(m). Any such performance awards that vest will be paid no later than two and one-half months following the end of the performance period, unless the plan administrator permits such payments to be deferred in accordance with the applicable requirements of Code Section 409A. The plan administrator may, in its discretion, reduce the amount of a payout achieved and otherwise to be paid in connection with a performance award to a covered executive officer but may not exercise discretion to increase such amount. Upon termination of a covered executive's service due to death or permanent disability before the end of a performance period or after the performance period ends and before a performance award is paid, the plan administrator may, in its discretion, determine that the participant be paid a pro rata portion of the performance award.

        Dividend Equivalents.     Dividend equivalents may be issued under the 2009 Stock Incentive Plan and entitle the holder to receive payments (in cash, shares of our common stock, other securities, other awards granted under the 2009 Stock Incentive Plan or other property as determined in the discretion of the plan administrator) equivalent to the amount of cash dividends paid to the holders of our Common Stock with respect to a specified number of shares determined by the plan administrator. Subject to the terms of the 2009 Stock Incentive Plan and the applicable award agreement governing the dividend equivalents, such awards may have the terms and conditions determined by the plan administrator in its discretion.

        Stock Awards.     Shares of our Common Stock containing no restrictions may be granted under the 2009 Stock Incentive Plan as determined by the plan administrator to be consistent with the purpose of the 2009 Stock Incentive Plan.

        Other stock-based awards.     The plan administrator is authorized to award participants other awards that are denominated or payable in, valued in whole or in part by reference to, or otherwise based on or related to, shares of our Common Stock, including securities convertible into shares of our Common Stock, as deemed by the plan administrator to be consistent with the purpose of the 2009 Stock Incentive Plan, subject to the terms and conditions determined by the plan administrator at the time of the award. In the event shares of Common Stock are delivered pursuant to a purchase right, such shares will be purchased for consideration having a value equal to at least 100 percent of the fair

43

market value of such shares on the grant date. Payment of such consideration may be made in cash, shares of Common Stock or other securities owned by the participant, other awards granted under the 2009 Stock Incentive Plan or other property owned by the participant, delivery of a promissory note or a combination of the foregoing methods in the plan administrator's discretion.

New Plan Benefits

        On September 24, 2009, the Board approved option grants to purchase up to an aggregate of 230,650 shares of our Common Stock subject to shareholder approval of the 2009 Stock Incentive Plan at the Annual Meeting to 5 of our named executive officers, 1 other executive officer, 5 non-employee directors and 14 employees as detailed in the table below. The options will have a maximum term of 10 years and an exercise price of $5.35, the closing price of the common stock on September 24, 2009. Each of the options granted to our non-employee directors will vest and become exercisable in full upon shareholder approval of the 2009 Stock Incentive Plan at the Annual Meeting. Each of the options granted to our named executive officers, other executive officers and non-executive employees will vest in full on September 1, 2012, provided the optionee continues in the Company's service through such date. In the event shareholder approval of the 2009 Stock Incentive Plan is not obtained at the Annual Meeting, the option grants detailed below will terminate immediately and cease to be outstanding.

Options Granted under the 2009 Stock Incentive Plan and Subject to Shareholder Approval

General Provisions

        Transferability.     Generally, awards granted under the 2009 Stock Incentive Plan (other than stock awards containing no restrictions) may not be transferred, pledged, alienated, attached or otherwise encumbered in any manner other than by will or the laws of descent or distribution. However, the plan administrator may allow a participant to designate a beneficiary to receive the vested portion of an award in the event of the participant's death, and the plan administrator has the authority to allow the transfer of a non-statutory option to a family member of the grantee.

        Change in control.     The plan administrator will have the discretion to determine the treatment of awards granted under the 2009 Stock Incentive Plan in the event we should experience a change in control.

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        Changes in Capitalization.     In the event of any dividend or other distribution (whether in the form of cash, shares of our common stock, other securities or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase or exchange of shares of our Common Stock or other securities, issuance of warrants or other rights to purchase shares of our Common Stock or other securities or other similar corporate transaction or event affecting the shares of our common stock, then the plan administrator will make equitable adjustments to (i) the number and type of shares of Common Stock (or other securities or other property) that may thereafter be made the subject of awards under the 2009 Stock Incentive Plan, (ii) the number and type of shares of Common Stock (or other securities or other property) subject to outstanding awards under the 2009 Stock Incentive Plan, (iii) the purchase price or exercise price with respect to any award under the Plan, (iv) the maximum number of shares for which any one person may be granted stock options, stock appreciation rights or any other award under the 2009 Stock Incentive Plan, the value of which is based solely on an increase in the value of the shares after the date of grant of such award, per taxable year, and (v) the maximum number of shares for which any one person may be granted performance awards denominated in shares of Common Stock (including restricted stock or restricted stock units), and which are intended to represent "qualified performance-based compensation" under Section 162(m) under the 2009 Stock Incentive Plan per taxable year. Such adjustments will be made in such manner as the plan administrator deems appropriate in order to preclude any dilution or enlargement of benefits under the 2009 Stock Incentive Plan or the outstanding awards thereunder and will be final, binding and conclusive.

        Shareholder Rights.     Except with respect to shares of restricted stock and stock awards granted under the 2009 Stock Incentive Plan, a participant will not have any of the rights and privileges of a shareholder with respect to the shares of Common Stock underlying any award until the shares subject to that award have been issued.

        Special Tax Election.     The plan administrator may provide one or more holders of awards under the 2009 Stock Incentive Plan with the right to have us withhold a portion of the shares otherwise issuable to such individuals in satisfaction of the withholding taxes to which they become subject in connection with the issuance, exercise or settlement of those awards. Alternatively, the plan administrator may allow such individuals to deliver previously acquired shares of our Common Stock in payment of such withholding tax liability.

        Amendment and Termination.     Our Board of Directors may amend, alter, suspend, discontinue or terminate the 2009 Stock Incentive Plan at any time; provided, however, that shareholder approval will be required for any amendment which increases the number of shares of Common Stock authorized for issuance under the 2009 Stock Incentive Plan (other than in connection with certain changes to our capital structure as explained above), increases the limitation on the maximum number of shares for which any one person may be granted stock options, stock appreciation rights or any other award under the 2009 Stock Incentive Plan, the value of which is based solely on an increase in the value of the shares after the date of grant of such award, under the 2009 Stock Incentive Plan per taxable year, increases the limitation on the maximum number of shares for which any one person may be granted performance-based awards denominated in shares of Common Stock under the 2009 Stock Incentive Plan per taxable year, increases the maximum aggregate dollar amount for which any one participant may be granted performance-based awards denominated in cash under the 2009 Stock Incentive Plan per taxable year, would cause Section 162(m) to become unavailable with respect to the 2009 Stock Incentive Plan or permits a repricing that is prohibited as described in the "Repricing Prohibition" section above, permits the award of stock options or stock appreciation rights at an exercise price less than 100 percent of the fair market value of the underlying shares of Common Stock on the grant date (other than as described above) or to the extent such shareholder approval may otherwise required under applicable law or regulation or pursuant to the listing standards of the stock exchange on which our Common Stock is at the time primarily traded.

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Summary of Federal Income Tax Consequences

        The following is a summary of the Federal income taxation treatment applicable to us and the participants who receive awards under the 2009 Stock Incentive Plan.

        Option Grants.     Options granted under the discretionary grant program may be either incentive stock options which satisfy the requirements of Code Section 422 or non-statutory options which are not intended to meet such requirements. The Federal income tax treatment for the two types of options differs as follows:

        Incentive Options.     No taxable income is recognized by the optionee at the time of the option grant, and no taxable income is recognized for regular tax purposes at the time the option is exercised, although taxable income may arise at that time for alternative minimum tax purposes. The optionee will recognize taxable income in the year in which the purchased shares are sold or otherwise made the subject of certain other dispositions. For Federal tax purposes, dispositions are divided into two categories: (i) qualifying, and (ii) disqualifying. A qualifying disposition occurs if the sale or other disposition is made more than two years after the date the option for the shares involved in such sale or disposition is granted and more than one year after the date the option is exercised for those shares. If the sale or disposition occurs before these two periods are satisfied, then a disqualifying disposition will result.

        Upon a qualifying disposition, the optionee will recognize long-term capital gain in an amount equal to the excess of (i) the amount realized upon the sale or other disposition of the purchased shares over (ii) the exercise price paid for the shares. If there is a disqualifying disposition of the shares, then the excess of (i) the fair market value of those shares on the exercise date or (if less) the amount realized upon such sale or disposition over (ii) the exercise price paid for the shares will be taxable as ordinary income to the optionee. Any additional gain recognized upon the disposition will be a capital gain.

        If the optionee makes a disqualifying disposition of the purchased shares, then we will be entitled to an income tax deduction, for the taxable year in which such disposition occurs, equal to the amount of ordinary income recognized by the optionee as a result of the disposition. We will not be entitled to any income tax deduction if the optionee makes a qualifying disposition of the shares.

        Non-statutory Options.     No taxable income is recognized by an optionee upon the grant of a non-statutory option. The optionee will in general recognize ordinary income, in the year in which the option is exercised, equal to the excess of the fair market value of the purchased shares on the exercise date over the exercise price paid for the shares, and the optionee will be required to satisfy the tax withholding requirements applicable to such income. We will be entitled to an income tax deduction equal to the amount of ordinary income recognized by the optionee with respect to the exercised non-statutory option. The deduction will in general be allowed for our taxable year in which such ordinary income is recognized by the optionee.

        Stock Appreciation Rights.     No taxable income is recognized upon receipt of a stock appreciation right. The holder will recognize ordinary income in the year in which the stock appreciation right is exercised, in an amount equal to the excess of the fair market value of the underlying shares of common stock on the exercise date over the base price in effect for the exercised right, and the holder will be required to satisfy the tax withholding requirements applicable to such income. We will be entitled to an income tax deduction equal to the amount of ordinary income recognized by the holder in connection with the exercise of the stock appreciation right. The deduction will be allowed for the taxable year in which such ordinary income is recognized.

        Restricted Stock Awards.     The recipient of unvested shares of Common Stock issued under the 2009 Stock Incentive Plan will not recognize any taxable income at the time those shares are issued but

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will have to report as ordinary income, as and when those shares subsequently vest, an amount equal to the excess of (i) the fair market value of the shares on the vesting date over (ii) the cash consideration (if any) paid for the shares. The recipient may, however, elect under Code Section 83(b) to include as ordinary income in the year the unvested shares are issued an amount equal to the excess of (i) the fair market value of those shares on the issue date over (ii) the cash consideration (if any) paid for such shares. If the Section 83(b) election is made, the recipient will not recognize any additional income as and when the shares subsequently vest. We will be entitled to an income tax deduction equal to the amount of ordinary income recognized by the recipient with respect to the unvested shares. The deduction will in general be allowed for our taxable year in which such ordinary income is recognized by the recipient.

        Restricted Stock Units.     No taxable income is recognized upon receipt of restricted stock units. The holder will recognize ordinary income in the year in which the shares subject to the units are actually issued to the holder. The amount of that income will be equal to the fair market value of the shares on the date of issuance, and the holder will be required to satisfy the tax withholding requirements applicable to such income. We will be entitled to an income tax deduction equal to the amount of ordinary income recognized by the holder at the time the shares are issued. The deduction will be allowed for the taxable year in which such ordinary income is recognized.

        Performance Awards.     No taxable income is recognized upon receipt of performance awards. The holder will recognize ordinary income in the year in which the performance awards are settled. The amount of that income will be equal to the fair market value of the shares of Common Stock or cash received in settlement of the performance awards, and the holder will be required to satisfy the tax withholding requirements applicable to such income. We will be entitled to an income tax deduction equal to the amount of the ordinary income recognized by the holder of the performance awards at the time those awards are settled. That deduction will be allowed for the taxable year in which such ordinary income is recognized.

        Stock Awards.     The recipient of a stock award will recognize ordinary income in the year in which the shares subject to a stock award are issued to the holder. The amount of that income will be equal to the fair market value of the shares on the date of issuance, and the holder will be required to satisfy the tax withholding requirements applicable to such income. We will be entitled to an income tax deduction equal to the amount of ordinary income recognized by the holder at the time the shares are issued. The deduction will be allowed for the taxable year in which such ordinary income is recognized.

        Dividend Equivalent Rights.     No taxable income is recognized upon receipt of a dividend equivalent right award. The holder will recognize ordinary income in the year in which a dividend or distribution, whether in cash, securities or other property, is paid to the holder. The amount of that income will be equal to the fair market value of the cash, securities or other property received, and the holder will be required to satisfy the tax withholding requirements applicable to such income. We will be entitled to an income tax deduction equal to the amount of the ordinary income recognized by the holder of the dividend equivalent right award at the time the dividend or distribution is paid to such holder. That deduction will be allowed for the taxable year in which such ordinary income is recognized.

        Deductibility of Executive Compensation.     We anticipate that any compensation deemed paid by us in connection with the exercise of non-statutory options or stock appreciation rights will qualify as performance-based compensation for purposes of Section 162(m) and will not have to be taken into account for purposes of the $1 million limitation per covered individual on the deductibility of the compensation paid to certain of our executive officers. Accordingly, the compensation deemed paid with respect to options and stock appreciation rights granted under the 2009 Stock Incentive Plan will remain deductible by us without limitation under Section 162(m). However, any compensation deemed paid by us in connection with shares or cash issued under restricted stock or restricted stock unit

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awards will be subject to the $1 million limitation, unless the issuance of the shares or cash is tied to one or more of the performance milestones described above.

Accounting Treatment

        The accounting principles applicable to awards made under the 2009 Stock Incentive Plan may be summarized in general terms as follows:

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Pursuant to the accounting standards established by Statement of Financial Accounting Standards No. 123R, Share-Based Payment , or SFAS 123R, we will be required to expense all share-based payments, including grants of stock options, stock appreciation rights, stock, restricted stock, restricted stock units and all other stock-based awards under the 2009 Stock Incentive Plan. Accordingly, stock options and stock appreciation rights which are granted to our employees and non-employee Board members and payable in shares of our Common Stock will have to be valued at fair value as of the grant date under an appropriate valuation formula, and that value will then have to be charged as a direct compensation expense against our reported earnings over the designated vesting period of the award. For shares issuable upon the vesting of restricted stock units awarded under the 2009 Stock Incentive Plan, we will be required to amortize over the vesting period a compensation cost equal to the fair market value of the underlying shares on the date of the award. If any other shares are unvested at the time of their direct issuance, then the fair market value of those shares at that time will be charged to our reported earnings ratably over the vesting period. Such accounting treatment for restricted stock units and direct stock issuances will be applicable whether vesting is tied to service periods or performance goals. The issuance of a fully-vested stock awards will result in an immediate charge to our earnings equal to the fair market value of the bonus shares on the issuance date.



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For performance awards awarded under the 2009 Stock Incentive Plan and payable in stock, we will be required to amortize, over the applicable performance period and any subsequent service vesting period, a compensation cost equal to the fair market value of the underlying shares on the date of the award. For performance awards awarded under the 2009 Stock Incentive Plan and payable in cash, we will amortize the potential cash expense over the applicable performance period and any subsequent service vesting period. Dividends or dividend equivalents paid on the portion of an award that vests will be recognized by us as additional compensation cost. If the award holder is not required to return the dividends or dividend equivalents if they forfeit their awards, dividends or dividend equivalents paid on instruments that do not vest will be recognized by us as additional compensation cost.

Vote Required

        Approval of Proposal Fifteen requires the votes cast in favor of the proposal to exceed the votes cast against the proposal. For purposes of the proposal, abstentions and broker non-votes will not affect the outcome, which recognizes only actual votes cast. Since proposals concerning adoption of stock incentive plans are non-routine matters on which brokers are not empowered to vote without instructions, there may be broker non-votes on Proposal Fifteen.

        Should shareholder approval not be obtained, then the 2009 Stock Incentive Plan will not be implemented and we will not be able to grant awards to attract or retain employees or other service providers necessary for our business. In addition, if shareholder approval is not obtained, the option grants approved by the Board on September 24, 2009 and detailed in the section above entitled "New Plan Benefits" will terminate immediately and cease to be outstanding.

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Recommendation of the Board of Directors

         The Board of Directors unanimously recommends a vote FOR the proposal to adopt the 2009 Stock Incentive Plan.

PROPOSAL SIXTEEN:

RATIFICATION OF APPOINTMENT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM

        Our Board of Directors has, subject to shareholder approval, retained Deloitte & Touche LLP as our independent registered public accounting for the fiscal year ending December 31, 2009. Deloitte & Touche LLP also served as our independent registered public accounting firm for fiscal year 2008. A representative of Deloitte & Touche LLP is expected to be present at the Annual Meeting. He or she will have an opportunity to make a statement at the Annual Meeting and will be available to respond to appropriate questions.

(1)

Reflects aggregate fees billed by Deloitte & Touche LLP for professional services rendered for the audit of the Company's consolidated financial statements for the fiscal years ended December 31, 2008 and 2007.



(2)

During the fiscal years ended December 31, 2008 and 2007, there were no fees billed by Deloitte & Touche LLP for audit-related services, except as already describe above.



(3)

Reflects aggregate fees billed by Deloitte & Touche LLP for tax services for the fiscal years ended December 31, 2008 and 2007.



(4)

During the fiscal years ended December 31, 2008 and 2007, there were no fees billed by Deloitte & Touche LLP for services, except as already described above.

Pre-Approval Policies and Procedures

        The Company pre-approves a schedule of audit and non-audit services expected to be performed by the Company's independent registered public accounting firm in a given fiscal year. In addition, the Audit Committee delegates authority to its Chairperson to pre-approve certain additional audit and non-audit services rendered by Company's independent registered public accounting firm (other than services that have been generally pre-approved by the Audit Committee) during the period between meetings of the Audit Committee. The Chairperson must report any such pre-approval decisions to the

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Audit Committee at its next scheduled meeting. During the year ended December 31, 2008, 100 percent of the aggregate amounts set forth above under the captions "Audit-Related Fees," "Tax Fees," and "All Other Fees" were pre-approved by the Chairperson of the Audit Committee and subsequently reported to the Audit Committee in accordance with the procedures set forth above.

Vote Required

        Approval of Proposal Sixteen requires the votes cast in favor of the proposal to exceed the votes cast against the proposal. For purposes of the proposal, abstentions and broker non-votes will not affect the outcome, which recognizes only actual votes cast.

Recommendation of the Board of Directors

         The Board of Directors unanimously recommends a vote FOR the ratification of Deloitte & Touche LLP