NU SKIN ENTERPRISES, INC.
SECOND AMENDED AND RESTATED 1996 STOCK INCENTIVE PLAN
NONQUALIFIED STOCK OPTION AGREEMENT
This Nonqualified Stock Option Agreement (the "Agreement") is made
effective as of September ___, 1999 (the "Effective Date"), to
__________________________ (the "Optionee") under the Nu Skin Enterprises, Inc.
Second Amended and Restated 1996 Stock Incentive Plan (the "Plan") by Nu Skin
Enterprises, Inc., a Delaware corporation ("Nu Skin Enterprises"), under
authority of the Plan Committee (the "Committee"). Capitalized terms used herein
without definition and defined in the Plan have the same meanings as provided in
the Plan. For purposes of this Agreement, the term "Company" shall refer
collectively to Nu Skin Enterprises and all of its Subsidiaries. The term "Key
Employee Covenants" shall mean the Key Employee Covenants executed by the
Optionee as they may be amended or replaced from time to time.
1. GRANT. Pursuant to Section 7 of the Plan, the Committee has granted to
Optionee ___________ (_________) options (the "Options") as of the Effective
Date as an incentive to work to increase the value of the Company for its
stockholders. Each Option shall entitle the Optionee to purchase, on the terms
and conditions of this Agreement and the Plan, one fully paid and non-assessable
share of Class A Common Stock, par value $ .001 per share (the "Class A Common
Stock"), of Nu Skin Enterprises at the option price of $_____ per share. The
Options are subject to all the terms and conditions of the Plan and this
Agreement.
2. NATURE OF OPTION. The Options are intended to constitute Non-qualified
Stock Options and the provisions of the Options shall be interpreted consistent
therewith.
3. TERMS AND EXERCISE PERIOD.
(a) Options awarded under this Agreement may not be exercised at any
time until such Options are vested as provided in Section 4 of this Agreement.
(b) Except as otherwise provided in Section 5 and Section 6 of this
Agreement, the Options granted hereunder shall terminate on the earlier of (i)
the tenth anniversary of the date of this Agreement, or (ii) the date such
Options are fully exercised.
4. VESTING. Options granted hereunder shall vest according to the following
schedule:
ANNUAL ANNIVERSARY
OF EFFECTIVE DATE VESTED PERCENTAGE
------------------ -----------------
1 25%
2 50%
3 75%
4 100%
5. TERMINATION OF SERVICE.
(a) In the event the employment of the Optionee is terminated for any
reason, all Options that are not vested at the time of termination of employment
shall be terminated and forfeited immediately upon termination of employment.
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(b) Subject to Section 6 below, in the event the employment of the
Optionee is terminated for any reason other than the death or disability of the
Optionee, then any Options granted hereunder that are vested but unexercised at
the time of termination of employment shall terminate immediately upon the
earliest to occur of the following: (i) the full exercise of the Options, (ii)
the expiration of the Options by their terms, or (iii) ninety days following the
date of termination of such employment of the Optionee.
(c) Subject to Section 6 below, in the event the of the Optionee is
terminated as a result of death or disability prior to the termination of the
Options, then any Options granted hereunder that are vested but unexercised at
the time of death or disability shall terminate immediately upon the earliest to
occur of the following: (i) the full exercise of the Options, (ii) the
expiration of the Options by their terms, or (iii) one year following the date
of death or disability of Optionee. The Options may be exercised, to the extent
vested and unexercised at the time of death or disability, as the case may be,
by the Optionee, the estate of the Optionee, or the person or persons to whom
the Options may have been transferred by will or by the laws of descent and
distribution for the period set forth in this Section 5(c).
6. FORFEITURE. If at anytime during the term of these Options a Forfeiture
Event (as defined below) shall occur or be discovered, then all outstanding
Options shall immediately terminate in full. If at anytime during the Optionee's
employment or at any time following Optionee's termination of employment until
the later of (i) the twelve-month anniversary of the date Optionee's employment
is terminated for any reason, or (ii) the six-month anniversary of the date
Optionee exercises Optionee's last remaining Options, a Forfeiture Event occurs,
then the Optionee shall pay to the Company an amount equal to the "Option Gain"
on any Options exercised during the 12 month period preceding such Forfeiture
Event and any Options exercised following such Forfeiture Event. For purposes
hereof, "Option Gain" shall mean the Fair Market Value of a share of the Class A
Common Stock on the date of exercise over the Option Price, multiplied by the
number of shares purchased upon exercise of the Options. "Forfeiture Event"
means the following: (i) conduct related to the Optionee's employment for which
either criminal or civil penalties may be sought, (ii) the commission of an act
of fraud or intentional misrepresentation, (iii) embezzlement or
misappropriation or conversion of assets or opportunities of the Company, (iv)
any breach of the non-competition or non-solicitation provisions of the Key
Employee Covenants, (v) disclosing or misusing any confidential or proprietary
information of the Company in violation of the Key Employee Covenants, or any
other non-disclosure agreement with the Company or other duty of confidentiality
or the Company's insider trading policy, (vi) any other material breach of the
Key Employee Covenants, or (vii) any other actions of Optionee that the
Committee determines in good faith are harmful to the interests of the Company.
The Committee, in its sole discretion, may waive at any time in writing this
forfeiture provision and release the Optionee from liability hereunder. In
addition, the Committee may, in its sole discretion, elect to purchase any
shares acquired upon exercise of the Option for the exercise price paid by the
Optionee, in lieu of enforcing payment of the Option Gain with respect to any
shares which have not been sold or otherwise transferred by the Optionee.
7. STOCK CERTIFICATES. Within a reasonable time after the exercise of an
Option, and the satisfaction of the Optionee's obligations hereunder, the
Company shall cause to be delivered to the person entitled thereto a certificate
for the shares purchased pursuant to the exercise of such Option.
8. TRANSFERABILITY OF OPTIONS. This Agreement and the Options granted
hereunder shall not be transferable otherwise than by will or by the laws of
descent and distribution, and shall be exercised, during the lifetime of the
Optionee, only by the Optionee.
9. EXERCISE OF OPTIONS. Options shall become exercisable at such time, as
may be provided herein and shall be exercisable by written notice of such
exercise, in the form prescribed by the Committee, to the person designated by
the Committee at the corporate offices of Nu Skin Enterprises. The notice shall
specify the number of Options that are being exercised. The Option Price
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shall be payable on the exercise of the Options and shall be paid in cash, in
shares of Class A Common Stock, including shares of Class A Common Stock
acquired pursuant to the Plan, part in cash and part in shares, or such other
manner as may be approved by the Committee consistent with the terms of the Plan
as it may be amended from time to time. Shares of Class A Common Stock
transferred in payment of the Option Price shall be valued as of the date of
transfer based on the Fair Market Value of the Company's Class A Common Stock
which for purposes hereof, shall be considered to be the average closing price
of the Company's Class A Common Stock as reported on the New York Stock Exchange
for the ten (10) trading days just prior to the date of exercise. Only shares of
the Company's Class A Common Stock which have been held for at least six (6)
months may be used to exercise the Option.
10. NO RIGHTS AS SHAREHOLDER. This Agreement shall not entitle the Optionee
to any rights as a stockholder of the Company until the date of the issuance of
a stock certificate to the Optionee for shares pursuant to the exercise of
Options covered hereby.
11. GOVERNING PLAN DOCUMENT. This Agreement incorporates by reference all
of the terms and conditions of the Plan as presently existing and as hereafter
amended. The Optionee expressly acknowledges and agrees that the terms and
provisions of this Agreement are subject in all respects to the provisions of
the Plan. The Optionee also hereby expressly acknowledges, agrees and represents
as follows:
(a) Acknowledges receipt of a copy of the Plan and represents that the
Optionee is familiar with the provisions of the Plan, and that the Optionee
enters into this Agreement subject to all of the provisions of the Plan.
(b) Recognizes that the Committee has been granted complete authority
to administer the Plan in its sole discretion, and agrees to accept all
decisions related to the Plan and all interpretations of the Plan made by the
Committee as final and conclusive upon the Optionee and upon all persons at any
time claiming any interest through the Optionee in any Option granted hereunder.
(c) Acknowledges and understands that the establishment of the Plan
and the existence of this Agreement are not sufficient, in and of themselves, to
exempt the Optionee from the requirements of Section 16(b) of the Exchange Act
and any rules or regulations promulgated thereunder, and that the Optionee (to
the extent Section 16(b) applies to Optionee) shall not be exempt from such
requirements pursuant to Rule 16b-3 unless and until the Optionee shall comply
with all applicable requirements of Rule 16b-3, including without limitation,
the possible requirement that the Optionee must not sell or otherwise dispose of
any share of Class A Common Stock acquired upon exercise of an Option unless and
until a period of at least six months shall have elapsed between the date upon
which such Option was granted to the Optionee and the date upon which the
Optionee desires to sell or otherwise dispose of any share of Class A Common
Stock acquired upon exercise of such Option.
(d) Acknowledges and understands that the Optionee's use of Class A
Common Stock owned by the Optionee to pay the Option Price of an Option could
have substantial adverse tax consequences to the Optionee, and that the Company
recommends that the Optionee consult with a knowledgeable tax advisor before
paying the Option Price of any Option with Class A Common Stock.
(e) Represents that Optionee has received and carefully read a copy of
the Prospectus (as defined below) together with the Company's most recent Annual
Report to Stockholders. Optionee hereby acknowledges that he or she is aware of
the risks associated with the Options and that there can be no assurance the
price of the Class A Common Stock will not decrease in the future or that the
Options will ever have any value. Optionee hereby acknowledges no
representations or statements have been made to Optionee concerning the value or
potential value of the Class A Common Stock. Optionee acknowledges that Optionee
has relied only on information contained in the Prospectus and that Optionee has
received no representations, written or oral, from the Company or its employees,
attorneys
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or agents, other than those contained in the Prospectus or this Agreement. The
Prospectus means those materials bearing a legend that such materials constitute
a prospectus under the Securities Act of 1933, and the documents incorporated by
reference therein. Optionee acknowledges that the Company has made no
representations concerning the tax and other effects of this Option and the
exercise thereof, and Optionee represents that Optionee has consulted with
Optionee's own tax and other advisors concerning the tax and other effects of
the Option and the exercise thereof.
12. REPRESENTATIONS AND WARRANTIES. As a condition to the exercise of any
Option granted pursuant to the Plan, the Company may require the person
exercising such Option to make any representations and warranties to the Company
that legal counsel to the Company may determine to be required or advisable
under any applicable law or regulation, including without limitation,
representations and warranties that the shares of Class A Common Stock being
acquired through the exercise of such Option are being acquired only for
investment and without any present intention or view to sell or distribute any
such shares.
13. NO EMPLOYMENT OR SERVICE CONTRACT. Nothing in this Agreement or in the
Plan shall confer upon Optionee any right to continue in the employment or
service of the Company for any period of specific duration or interfere with or
otherwise restrict in any way the rights of the Company, which rights are hereby
expressly reserved, to terminate Optionee's employment or service at any time
for any reason, with or without cause except as may otherwise be provided
pursuant to a separate written employment agreement.
14. WITHHOLDING OF TAXES. The Optionee authorizes the Company to withhold,
in accordance with applicable laws and regulations, from any compensation or
other payment payable to the Optionee, all federal, state and other taxes
attributable to taxable income realized by the Optionee as a result of the grant
or exercise of any Options. As a condition to the exercise of any Option,
Optionee shall remit to the Company the amount of cash necessary to pay any
withholding taxes associated therewith or make other arrangements acceptable to
the Company, in the Company's sole discretion, for the payment of any
withholding taxes.
15. EFFECTIVE DATE OF GRANT. Each Option granted pursuant to this Agreement
shall be effective as of the date first written above.
16. COMPLIANCE WITH LAW AND REGULATIONS. The obligations of the Company
hereunder are subject to all applicable federal and state laws and to the rules,
regulations and other requirements of the Securities and Exchange Commission,
any stock exchange upon which the Class A Common Stock is then listed and any
other government or regulatory agency.
17. SECTION REFERENCES. The references to Plan sections shall be to the
sections as in existence on the date hereof unless an amendment to the Plan
specifically provides otherwise.
18. QUESTIONS. All questions regarding this Agreement shall be addressed to
M. Truman Hunt.
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IN WITNESS WHEREOF, these parties hereby execute this Agreement to be
effective as of the Effective Date.
NU SKIN ENTERPRISES, INC., a Delaware corporation
By: ______________________________
Its: Steven J. Lund, President and CEO
_____________________________________
Optionee
_____________________________________
_____________________________________
Optionee's Address
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