EMPLOYMENT AGREEMENT
 
THIS EMPLOYMENT AGREEMENT (this "Agreement") is entered into effective as of
August 1, 2012 (the "Effective Date") by and between Nu Skin Enterprises, Inc.,
a Delaware corporation (the "Company") and M. Truman Hunt, an individual (the
"Executive").
WHEREAS, the Executive has been employed by the Company or one of its
affiliates; and
WHEREAS, the Company and the Executive desire to establish the terms and
conditions of the Executive's employment with the Company and designated
affiliates.
NOW, THEREFORE, in consideration of the covenants and agreements hereinafter set
forth, the parties hereto agree as follows:
1.      Duties and Responsibilities.
 
A.      The Executive shall serve as the Company's President and Chief Executive
Officer, reporting directly to the Company's Board. The Executive shall have the
duties and powers at the Company that are customary for an individual holding
such positions.
 
B.      The Executive agrees to use the Executive's best efforts to advance the
business and welfare of the Company, to render the Executive's services under
this Agreement faithfully, diligently and to the best of the Executive's
ability.
 
C.      Except as may otherwise be approved in advance by the Nominating and
Corporate Governance Committee (the "Nominating and Corporate Governance
Committee") of the Company's Board of Directors (the "Board"), and except during
vacation periods and reasonable periods of absence due to sickness, personal
injury or other disability, the Executive shall devote the Executive's full
working time to the services required of him hereunder, and shall use the
Executive's best efforts, judgment and energy to improve and advance the
business and interests of the Company in a manner consistent with the duties of
the Executive's position. The Executive may participate in charitable, civic and
professional activities as long as the activities do not interfere with the
performance of the Executive's duties hereunder. The Executive shall not serve
on the board of directors of any entity, other than an affiliate of the Company,
without the approval of the Nominating and Corporate Governance Committee.
 
2.      Employment Period. The Executive shall be employed by the Company under
the terms of this Agreement for the period commencing on the Effective Date and
ending on December 31, 2015 (the "Employment Period"). Notwithstanding the
foregoing, the Executive and the Company may terminate the Employment Period and
this Agreement prior to December 31, 2015 in accordance with Section 7 hereof.
Notwithstanding the termination of this Agreement, the provisions of Sections 7
and 8 shall survive the termination of this Agreement and shall remain in full
force and effect in accordance with the terms thereof unless otherwise agreed to
by the parties in writing.
 
3.      Cash Compensation.
 
A.      Annual Salary. The Executive's annual base salary (the "Annual Salary")
shall be determined by the Compensation Committee of the Board (the
"Compensation Committee"), and shall be payable in accordance with the Company's
standard payroll schedule for its executive officers (but in no event less
frequent than on a monthly basis). The Compensation Committee shall review the
Executive's Annual Salary at least annually and shall make a determination
regarding any changes to the Annual Salary. Any changed annual salary shall
thereupon be the "Annual Salary" for the purposes hereof.
 
 
 

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B.      Bonus. The Executive shall be eligible to participate in the Company's
cash incentive plan as adopted by the Compensation Committee at levels and upon
attainment of such corporate and/or individual performance targets as shall be
established by the Compensation Committee from time to time. The Executive shall
be entitled to receive bonuses, cash or otherwise, in the discretion of the
Compensation Committee, from time to time.
 
C.      Applicable Withholdings. The Company shall deduct and withhold from the
compensation payable to the Executive under this Agreement any and all
applicable federal, state and local income and employment withholding taxes and
any other amounts required to be deducted or withheld by the Company under
applicable statutes, regulations, ordinances or orders governing or requiring
the withholding or deduction of amounts otherwise payable as compensation or
wages to employees.
 
4.      Equity Compensation. The Executive shall be eligible to participate in
any equity incentive plans of the Company in which other executive officers of
the Company are eligible to participate. All options or other equity awards
granted under the equity incentive plans will be made at the discretion of the
Compensation Committee pursuant and subject to the terms and conditions of the
applicable equity incentive plan. To the extent the Company grants any
time-based equity awards (i.e., equity that vests with the passage of time) to
the Executive during the Employment Period, the grant documentation for such
equity awards shall provide that if a Change in Control (as defined below) is
consummated during the Employment Period, and within six months prior to and in
connection with such Change in Control or within two years following such Change
in Control, the Executive's employment is terminated (i) by the Company without
Cause (as defined in Section 7) or (ii) by the Executive for Good Reason (as
defined in Section 7), then all of such equity awards shall vest in full. The
vesting of any performance-based equity awards shall be determined in accordance
with the applicable equity incentive plan and grant documentation. For purposes
of this Agreement, "Change in Control" shall mean the consummation of any of the
following transactions effecting a change in ownership or control of the
Company:
 
(i)      During any 24 month period, individuals who, as of the beginning of
such period, constitute the Board (the "Incumbent Directors") cease for any
reason to constitute at least a majority of the Board, provided that any person
becoming a director subsequent to the beginning of such period whose election or
nomination for election was approved by a vote of at least a majority of the
Incumbent Directors then on the Board (either by a specific vote or by approval
of the proxy statement of the Company in which such person is named as a nominee
for director, without written objection to such nomination) shall be an
Incumbent Director; provided, however, that no individual initially elected or
nominated as a director of the Company as a result of an actual or threatened
election contest with respect to directors or as a result of any other actual or
threatened solicitation of proxies by or on behalf of any person other than the
Board shall be deemed to be an Incumbent Director;
 
(ii)      Any "person" (as such term is defined in the Exchange Act and as used
in Sections 13(d)(3) and 14(d)(2) of the Exchange Act) is or becomes a
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Company representing 50% or more of the
combined voting power of the Company's then outstanding securities eligible to
vote for the election of the Board ("Company Voting Securities"); provided,
however, that the event described in this paragraph (ii) shall not be deemed to
be a Change in Control by virtue of any of the following acquisitions: (A) by
the Company or any Subsidiary, (B) by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any Subsidiary, (C) by any
underwriter temporarily holding securities pursuant to an offering of such
securities, (D) pursuant to a Non-Qualifying Transaction, as defined in
paragraph (iii), or (E) by any person of Company Voting Securities from the
Company, if a majority of the Incumbent Board approves in advance the
acquisition of beneficial ownership of 50% or more of Company Voting Securities
by such person;
 
 
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(iii)      The consummation of a merger, consolidation, statutory share exchange
or similar form of corporate transaction involving the Company or any of its
Subsidiaries that requires the approval of the Company's stockholders, whether
for such transaction or the issuance of securities in the transaction (a
"Business Combination"), unless immediately following such Business Combination:
(A) more than 50% of the total voting power of (x) the corporation resulting
from such Business Combination (the "Surviving Corporation"), or (y) if
applicable, the ultimate parent corporation that directly or indirectly has
beneficial ownership of at least 90% of the voting securities eligible to elect
directors of the Surviving Corporation (the "Parent Corporation"), is
represented by Company Voting Securities that were outstanding immediately prior
to such Business Combination (or, if applicable, is represented by shares into
which such Company Voting Securities were converted pursuant to such Business
Combination), and such voting power among the holders thereof is in
substantially the same proportion as the voting power of such Company Voting
Securities among the holders thereof immediately prior to the Business
Combination, (B) no person (other than any employee benefit plan (or related
trust) sponsored or maintained by the Surviving Corporation or the Parent
Corporation), is or becomes the beneficial owner, directly or indirectly, of 50%
or more of the total voting power of the outstanding voting securities eligible
to elect directors of the Parent Corporation (or, if there is no Parent
Corporation, the Surviving Corporation) and (C) at least a majority of the
members of the board of directors of the Parent Corporation (or, if there is no
Parent Corporation, the Surviving Corporation) following the consummation of the
Business Combination were Incumbent Directors at the time of the Board's
approval of the execution of the initial agreement providing for such Business
Combination (any Business Combination which satisfies all of the criteria
specified in (A), (B) and (C) above shall be deemed to be a "Non-Qualifying
Transaction"); or
 
(iv)      The stockholders of the Company approve a plan of complete liquidation
or dissolution of the Company or the consummation of a sale of all or
substantially all of the Company's assets.
 
"Subsidiary" shall mean any corporation (other than the Company) in an unbroken
chain of corporations beginning with the Company if, at the relevant time each
of the corporations other than the last corporation in the unbroken chain owns
stock possessing 50% or more of the total combined voting power of all classes
of stock in one of the other corporations in the chain.
5.      Expense Reimbursement. In addition to the compensation specified in
Section 3, the Executive shall be entitled to receive reimbursement from the
Company for all reasonable business expenses incurred by the Executive in the
performance of the Executive's duties hereunder, provided that the Executive
furnishes the Company with vouchers, receipts and other details of such expenses
in the form reasonably required by the Company to substantiate a deduction for
such business expenses under all applicable rules and regulations of federal and
state taxing authorities.
 
6.      Employee Benefits. The Executive shall, throughout the Employment
Period, be eligible to participate in all of the life insurance plans, health
plans, accidental death and dismemberment plans, short-term disability programs,
retirement plans, profit sharing plans or other employee benefit plans that are
available to the executive officers of the Company, for which the Executive
qualifies as provided under the terms of such plans.
 
 
 
 
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7.      Termination of Employment. During the Employment Period, the Executive's
employment with the Company may be terminated by either the Company or the
Executive at any time, and for any reason. Upon such termination, the Executive
(or, in the case of the Executive's death, the Executive's estate and
beneficiaries) shall have no further rights to any other compensation or
benefits from the Company on or after the termination of employment except as
follows:
 
A.      Termination For Cause. If, during the Employment Period, the Company
terminates the Executive's employment with the Company for Cause (as defined
below), or the Executive resigns after engaging in conduct that constitutes
Cause, the Company shall pay to the Executive the following: (i) the Executive's
unpaid Annual Salary that has been earned through the termination date of the
Executive's employment; (ii) any accrued expenses pursuant to Section 5 above,
(iii) the employee benefits, if any, to which the Executive may be entitled
under the terms of the Company's employee benefit plans and (iv) any other
payments as may be required under applicable law (collectively the "Accrued
Obligations"). For purposes of this Agreement, "Cause" shall mean that the
Executive has engaged in any one of the following: (a) a material breach of this
Agreement or the Company's Key Employee Covenants attached hereto as Exhibit A,
which breach is not cured within any applicable cure period set forth in this
Agreement or the Key Employee Covenants; and (b) any willful violation by the
Executive of any material law or regulation applicable to the business of the
Company or any of its Subsidiaries; (c) the Executive's conviction of, or a plea
of guilty or nolo contendere to, a felony or any willful perpetration of common
law fraud; or (d) any other willful misconduct by the Executive that is
materially injurious to the financial condition or business reputation of, or is
otherwise materially injurious to, the Company or any of its Subsidiaries. For
purposes of the foregoing, in determining whether a "material breach" has
occurred, or whether there has been a willful violation of a "material" law or
regulation, the standard shall be a breach or violation that is, or will
reasonably likely be, materially injurious to the financial condition or
business reputation of, or is, or will reasonably likely be, otherwise
materially injurious to, the Company or any of its Subsidiaries.
 
B.      Termination Upon Death or Disability. If the Executive dies during the
Employment Period, the Executive's employment with the Company shall be deemed
terminated as of the date of death, and the obligations of the Company to or
with respect to the Executive shall terminate in their entirety upon such date
except as otherwise provided under this Section 7B. If the Executive becomes
subject to a Disability (as defined below), then the Company shall have the
right, to the extent permitted by law, to terminate the employment of the
Executive upon 30 days prior written notice to the Executive. Upon termination
of employment due to death or Disability, the Executive (or the Executive's
estate or beneficiaries in the case of the death of the Executive) shall be
entitled to receive: (i) the Accrued Obligations; (ii) a lump sum amount equal
to the pro-rata portion of Executive's target bonus for each outstanding bonus
cycle as of the date on which termination of employment occurs (determined by
multiplying the amount of the target bonus for the bonus cycle by a fraction,
the numerator of which is the number of days during the bonus cycle that
Executive is employed by the Company and the denominator of which is the full
number of days in the bonus cycle) (the "Pro-Rata Target Bonus") ; and (iii) in
the case of Executive's Disability, continuation of the Executive's Annual
Salary (which shall be payable in accordance with the Company's standard pay
policies) until the Executive is eligible for short-term disability payments
under the Company's group disability policies; provided however, that in no
event shall such period of continued Annual Salary exceed 90 days following the
Executive's termination of employment. For the purposes of this Agreement,
"Disability" shall mean a physical or mental impairment which, the Compensation
Committee determines, after consideration and implementation of reasonable
accommodations, precludes the Executive from performing the Executive's
essential job functions for a period longer than three consecutive months or a
total of 120 days in any twelve month period. The definition of Disability in
this agreement shall not apply to, alter, or amend the definition of disability
in any of the Executive's equity award grant documentation.
 
 
 
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C.      Resignation for Good Reason; Other Termination. If, during the
Employment Period, (i) the Executive resigns from the Company for Good Reason
(as defined in Section 7D below), or (ii) the Company terminates the Executive's
employment for any reason other than for Cause, as a result of the Executive's
Death or Disability or in connection with a Change in Control (as provided in
Section 7D below), then, subject to Sections 7F and 7G below, the Company shall
pay to the Executive: (a) the Accrued Obligations; (b) a lump sum amount equal
to the cost of twelve months of health care continuation coverage; (c) a lump
sum amount equal to the pro-rata portion of the Executive's earned bonus, if
any, for each outstanding bonus cycle as of the date on which termination of
employment occurs, based upon attainment of such corporate targets, and
disregarding any individual performance targets, as shall be established by the
Compensation Committee for such bonus cycle (determined by multiplying the
amount of the actual bonus that would be payable for the bonus cycle by a
fraction, the numerator of which is the number of days during the bonus cycle
that the Executive is employed by the Company and the denominator of which is
the full number of days in the bonus cycle) (the "Pro-Rata Earned Bonus") ,
which shall be paid at the same time as bonuses are paid to other executive
officers of the Company; and (d) continuation of the Executive's Annual Salary
(disregarding any reduction that would constitute Good Reason) for a period of
24 months, which shall be payable in accordance with the Company's standard pay
policies.
 
D.      Termination in Connection with Change in Control. If a Change in Control
is consummated during the Employment Period, and within six months prior to and
in connection with such Change in Control or within two years following such
Change in Control, the Executive's employment is terminated (i) by the Company
without Cause or (ii) by the Executive for Good Reason, then, subject to
Sections 7F and 7G below, the Company shall pay the Executive the following: (i)
the Accrued Obligations; (ii) a lump sum amount equal to the cost of twelve
months of health care continuation coverage; (iii) a lump sum amount equal to
the Pro-Rata Target Bonus; and (iv) a lump sum amount equal to two times (a) the
Executive's Annual Salary (disregarding any reduction that would constitute Good
Reason) and (b) the Executive's target bonus for the fiscal year in which
termination of employment occurs. The amounts provided in clauses (i), (ii),
(iii) and (iv) of the preceding sentence shall be paid within 10 business days
following the Executive's termination date. For the purposes of this Agreement,
"Good Reason" shall mean the Executive's voluntary resignation for any of the
following events that result in a material negative change to the Executive: (i)
without the Executive's consent, a material reduction in the scope of the
Executive's duties and responsibilities or the level of management to which he
reports, other than the removal of the Executive as Chairman of the Board if he
continues to serve as Chief Executive Officer; (ii) without the Executive's
consent, a reduction in Annual Salary (other than an across-the-board reduction
of not more than 10% applicable to all senior executive officers); (iii) without
the Executive's consent, a material reduction in the Executive's benefits in the
aggregate (in terms of benefit levels) from those provided to the Executive
under any employee benefit plan, program and practice in which the Executive
participates; (iv) without the Executive's consent, a relocation of the
Executive's principal place of employment of more than 50 miles from the
Executive's primary residence, (v) a material breach of any provision of this
Agreement by the Company, or (vi) the failure of the Company to have a successor
entity specifically assume this Agreement within 10 business days after the
Change in Control. Notwithstanding the foregoing, Good Reason shall only be
found to exist if the Executive, not later than 90 days after the initial
occurrence of an event deemed to give rise to a right to terminate for Good
Reason, has provided 30 days written notice to the Company prior to the
Executive's resignation indicating and describing the event resulting in such
Good Reason, and the Company does not cure such event (other than the event in
clause vi), which shall not be subject to cure) within 90 days following the
receipt of such notice from the Executive.
 
E.      Other Resignation. If, during the Employment Period, the Executive
resigns from the Company, except where the Executive has engaged in conduct that
constitutes Cause, for any reason other than Good Reason (as defined in Section
7D above), then, subject to Sections 7F and 7G below, the Company shall pay to
the Executive: (i) the Accrued Obligations; and (ii) continuation of 100% of the
Executive's Annual Salary during the Restricted Period, which shall be payable
in accordance with the Company's standard pay policies.
 
 
 
 
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F.      Section 409A Limitations. Notwithstanding the provisions of Section 7B,
7C, 7D or 7E to the contrary, the following provisions shall apply to the extent
that payments under such provisions are subject to Section 409A of the Internal
Revenue Code (the "Code"):
 
(i)      The aggregate amount of continuation payments of Annual Salary under
Section 7B(iii), 7C(d) or 7E(ii) made during the first six months following the
Executive's termination of employment (other than a termination due to the death
of the Executive) shall not exceed the applicable dollar limit provided under
Treasury Regulations section 1.409A-1(b)(9)(iii)(A). The amount, if any, that
exceeds the applicable dollar limit shall be paid with the first installment of
Annual Salary continuation that occurs on or after the first day of the seventh
month following the Executive's termination.
 
(ii)      Section 7D is intended to qualify as an involuntary separation pay
arrangement that is exempt from application of Section 409A of the Code because
all severance payments are treated as paid on account of an involuntary
separation (including a separation for Good Reason) and paid in a lump sum
within the "short-term deferral" period following the time the Executive obtains
a vested right to such payments. Accordingly, and without limiting the
generality of the foregoing, and notwithstanding any provision of this Agreement
to the contrary, with respect to any payments and benefits under this Agreement
to which Code Section 409A applies or to which it may apply, all references in
this Agreement to the termination of the Executive's employment are intended to
mean the Executive's "separation from service," within the meaning of Code
Section 409A(a)(2)(A)(i). If any portion of the severance payments in Section 7D
represents an equivalent amount of severance that replaces (as opposed to
supplements) salary continuation or similar severance benefit available to the
Executive under Sections 7C and 7E and that is subject to Section 409A of the
Code, notwithstanding anything to the contrary in this Agreement, such
equivalent amount (and only that equivalent amount) shall be delayed until the
first day of the seventh month following the Executive's termination, but only
to the extent that such equivalent amount exceeds the applicable dollar limit
provided under Treasury Regulations section 1.409A-1(b)(9)(iii)(A). The portion
of the lump sum under this Section 7F that supplements the benefits under
Section 7C and 7E shall not be subject to or affected by such limitation.
Furthermore, notwithstanding the provisions of Sections 7F(i) and 7F(ii), to the
extent allowed under Section 409A and the Treasury Regulations promulgated
thereunder, if the Executive dies following the Executive's separation from
service, but prior to the seventh month anniversary of the Executive's
termination of service, then any payments delayed in accordance with this
Section 7F will be payable in a lump sum as soon as administratively practicable
after the date of the Executive's death.
 
(iii)      If required by Section 409A of the Code, notwithstanding anything to
the contrary in this Agreement, the payments to be made to the Executive (except
for: (i) the Executive's unpaid Annual Salary that has been earned through the
termination date of the Executive's employment; and (ii) reimbursement for any
accrued expenses) shall be paid no sooner than the first day of the month that
is six months after the Executive's termination date.
 
(iv)      The parties intend that this Agreement be deemed to be amended to the
extent necessary to comply with the requirements of Code Section 409A and to
avoid or mitigate the imposition of additional taxes under Code Section 409A,
while preserving to the maximum extent possible the essential economics of the
Executive's rights under this Agreement.
 
G.      Conditions to Additional Severance Payments. If the Executive's
employment terminates pursuant to Section 7C, 7D or 7E, then in consideration
for the severance payments to be made by the Company to the Executive pursuant
to Sections 7C(b), (c) and (d); 7D(ii), (iii) and (iv); and 7E(ii) of this
Agreement (the "Additional Severance Payments"), the Executive agrees to execute
and deliver to the Company within 21 days after the Executive's employment
termination date, the separation and release agreement, in substantially the
form attached hereto as Exhibit B (collectively, the "Separation Agreement").
Notwithstanding anything to the contrary in this Agreement, the Company shall
have no obligation to make any Additional Severance Payments to the Executive
until the date that is 10 business days after the date that the Executive
executes and delivers the Separation Agreement. The failure of the Executive to
execute and deliver the Separation Agreement within 21 days after the
Executive's employment termination date shall result in a forfeiture of all
Additional Severance Payments, and permanently release the Company from its
obligation to make any and all Additional Severance Payments to the Executive.
The Executive acknowledges that the Additional Severance Payments are
consideration for the restrictive covenants set forth in Section 8 and that the
Executive is bound by Section 8 of this Agreement. The Executive's rights to
receive any Additional Severance Payments are expressly subject to the
Executive's compliance with Section 8.
 
 
 
 
 
 
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H.      Reduction in Change in Control Severance Payments. Notwithstanding the
provisions of Section 7D to the contrary, the payments to the Executive under
Section 7D are subject to reduction, if applicable under Exhibit C.
 
8.      Key-Employee Covenants. The Executive agrees to perform the Executive's
obligations and duties and to be bound by the terms of the Key-Employee
Covenants attached hereto as Exhibit A which are incorporated into this Section
8 by reference, and which may be modified from time to time. Paragraphs 7, 9,
10, 11 and 13 of the Key Employee Covenants, are hereby replaced and superseded
in their entirety by the following restrictive covenants set forth in this
Section 8 and the remedies and dispute resolution provisions in Sections 13 and
14.
 
A.      Definitions. For purposes of this Agreement, the following defined terms
shall have the meaning indicated:
 
(i)      "Restricted Period" shall be the period commencing on the date of this
Agreement and continuing until two years following the termination of the
Executive's employment. Provided, however, that the Restricted Period may be
terminated (a) at any time within 15 days following the termination of the
Executive's employment at the election of the Company; or (b) at any other time
as agreed by both the Executive and the Company.
 
(ii)      "Competitive Business" shall mean Direct Selling.
 
(iii)      "Competing Entity" shall mean any entity or person that is engaged,
directly or indirectly, in a Competitive Business.
 
(iv)      "Direct Selling" means (i) the multi-level marketing channel through
which products and services are marketed directly to consumers through a sales
force of independent contractors (including, without limitation, through person
to person contact, via the telephone or through the Internet) who receive
rewards or commissions based upon a compensation plan which contemplates a
genealogical sales force of multiple levels, with such commissions paid for by
(A) sales of products and services by such contractor, and/or (B) sales of
products and services by other independent contractors in such contractor's
genealogical downline, and (ii) a home-based business opportunity focused on
selling products directly to the consumers.
 
(v)      "Territory" shall mean those countries where the Company, or any of its
affiliates, engages in business or sells products or plans to conduct business
at the time of the termination of the Executive's employment or consulting
arrangement, as the case may be. This definition is intended to reflect the
Executive's knowledge about and influence over the operations and activities of
the Company as a whole.
 
 
 
 
 
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B.      Non-Solicitation. During the longer of (i) any period for which the
Executive is receiving Additional Severance Payments from the Company or (ii)
the Restricted P
eriod, the Executive agrees that during such period of time the Executive shall
not, directly or indirectly, solicit any employee, independent contractor,
consultant or other person or entity in the employment or service of the Company
or any of its respective subsidiaries or affiliates (each of the preceding, a
"Group Company"), at the time of such solicitation, in any case to (i) terminate
such employment or service, and/or (ii) accept employment, or enter into any
consulting or other service arrangement, with any person or entity other than a
Group Company.
 
C.      Non-Competition. In consideration for the compensation payable
hereunder, the Executive agrees that, during the Restricted Period, the
Executive shall not, directly or indirectly, in the Territory: (i) engage in any
Competitive Business; (ii) undertake to plan or organize any Competing Entity;
(iii) become associated or connected in any way with, participate in, be
employed by, render services to, or consult with, any Competing Entity (nor
shall the Executive discuss the possibility of employment or other relationship
with any Competing Entity); or (iv) own any direct or indirect interest in any
other Competing Entity; provided, however, this limitation shall not be
interpreted as prohibiting the Executive from investing in a Competing Entity
that is a public company so long as such investment does not exceed 1% of the
outstanding securities of such public company and the Employee discloses in
writing to the Company (a) the name of the public company and the number of
shares which he owns, and (b) any material change in the Executive's ownership.
Notwithstanding the foregoing, at the discretion of the Nominating and Corporate
Governance Committee, after one year following the termination of the
Executive's employment, the Executive may serve on the board of directors of a
Competitive Business that pays 20% or less of its revenue in commissions. This
Section 8C shall not restrict the right of the Employee to practice law in
violation of any applicable rules of professional conduct.
 
D.      Non-Endorsement. The Executive shall not in any way, directly or
indirectly, at any time during the Restricted Period endorse any Competitive
Business or competing product, promote or speak on behalf of any Competitive
Business or competing product, or allow the Executive's name or likeness to be
used in any way to promote any Competitive Business or competing product.
 
E.      Cooperation. The Executive agrees that, upon the Company's reasonable
request, the Executive in good faith and using diligent efforts shall cooperate
and assist the Company in any dispute, controversy or litigation in which the
Company may be involved including, without limitation, the Executive's
participation in any court or arbitration proceedings, the giving of testimony,
the signing of affidavits or such other personal cooperation as counsel for the
Company may reasonably request. Such cooperation shall not be unreasonably
burdensome without reasonable compensation.
 
F.      Reformation. The Company intends to restrict the activities of the
Executive under this Section 8 only to the extent necessary for the protection
of the legitimate business interests of the Company. It is the intention and
agreement of the parties that all of the terms and conditions hereof be enforced
to the fullest extent permitted by law. If the provisions of this Section 8
should ever be deemed or adjudged by a court of competent jurisdiction to exceed
the time or geographical limitations permitted by applicable law, then such
provisions shall nevertheless be valid and enforceable to the extent necessary
for such protection as determined by such court, and such provisions will be
reformed to the maximum time or geographic limitations as determined by such
court.
 
 
 
 
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G.      Acknowledgement. The Executive acknowledges that the Executive's
position and work activities with the Company are critical and vital to the
on-going success of the Company's operation in each product category and in each
geographic location in which the Company operates. In addition, the Executive
acknowledges that the Executive's involvement in, experience with, and influence
over the Company's operations as a whole constitute skills and knowledge which
are special, unique and extraordinary with respect to the Executive's service
for the Company. Therefore, the Executive acknowledges that the
non-solicitation, non-endorsement, and non-competition covenants hereunder are
fair, reasonable and necessary to protect the legitimate business interests of
the Company. These covenants, and each of them, should be construed to apply to
the fullest extent possible by applicable laws. The Executive has carefully read
this Agreement, has consulted with independent legal counsel to the extent the
Executive deems appropriate, and has given careful consideration to the
restraints imposed by this Agreement. The Executive acknowledges that the terms
of this Agreement are enforceable regardless of the manner in which the
Executive's employment is terminated, whether voluntary or involuntary.
 
9.      Successors and Assigns. This Agreement is personal in its nature and the
Executive shall not assign or transfer the Executive's rights under this
Agreement. The provisions of this Agreement shall inure to the benefit of, and
shall be binding on, each successor of the Company whether by merger,
consolidation, transfer of all or substantially all assets, or otherwise, and
the heirs and legal representatives of the Executive.
 
10.      Notices. Any notices, demands or other communications required or
desired to be given by any party shall be in writing and shall be validly given
to another party if served either personally or via an overnight delivery
service such as Federal Express, postage prepaid, return receipt requested. If
such notice, demand or other communication shall be served personally, service
shall be conclusively deemed made at the time of such personal service. If such
notice, demand or other communication is given by overnight delivery, such
notice shall be conclusively deemed given two business days after the deposit
thereof with such service, properly addressed to the party to whom such notice,
demand or other communication is to be given as hereinafter set forth:
 
 
To the Company:
 
Nu Skin Enterprises, Inc.
75 West Center Street
Provo, Utah 84601
Attn: General Counsel
To the Executive:
 
At the Executive's last residence as provided by the Executive to the Company
for payroll records.
 

Any party may change such party's address for the purpose of receiving notices,
demands and other communications by providing written notice to the other party
in the manner described in this Section 10.
11.      Governing Documents. This Agreement, along with the documents expressly
referenced in this Agreement, including the Key Employee Covenants and equity
incentive plans and grant documents, constitute the entire agreement and
understanding of the Company and the Executive with respect to the terms and
conditions of the Executive's employment with the Company and the payment of
severance benefits, and supersedes all prior and contemporaneous written or
verbal agreements and understandings (including any offer letter and any other
existing employment agreements or arrangements, and any amendments thereto)
between the Executive and the Company relating to such subject matter. Any and
all other prior agreements, understandings or representations relating to the
Executive's employment with the Company are terminated and cancelled in their
entirety and are of no further force or effect. This Agreement may only be
amended by written instrument signed by the Executive and an authorized officer
of the Company.
 
 
 
 
9

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12.      Governing Law. The provisions of this Agreement will be construed and
interpreted under the laws of the State of Utah, without regard to principles of
conflict of laws. If any provision of this Agreement as applied to any party or
to any circumstance should be adjudged by a court of competent jurisdiction to
be void or unenforceable for any reason, the invalidity of that provision shall
in no way affect (to the maximum extent permissible by law) the application of
such provision under circumstances different from those adjudicated by the
court, the application of any other provision of this Agreement, or the
enforceability or invalidity of this Agreement as a whole. Should any provision
of this Agreement become or be deemed invalid, illegal or unenforceable in any
jurisdiction by reason of the scope, extent or duration of its coverage, then
such provision shall be deemed amended to the extent necessary to conform to
applicable law so as to be valid and enforceable or, if such provision cannot be
so amended without materially altering the intention of the parties, then such
provision will be stricken and the remainder of this Agreement shall continue in
full force and effect.
 
13.      Remedies. The parties to this Agreement agree that: (i) the Executive's
services are unique because of the particular skill, knowledge, experience and
reputation of the Executive; (ii) if the Executive breaches this Agreement, the
damage to the Company will be substantial and difficult to ascertain, and
further, that money damages will not afford the Company an adequate remedy.
Consequently, if the Executive is in breach of any provision of this Agreement,
or threatens a breach of this Agreement, the Company shall be entitled, in
addition to all other rights and remedies as may be provided by law, to seek
specific performance and injunctive and other equitable relief to prevent or
restrain a breach of any provision of this Agreement notwithstanding Section 14
hereof. All rights and remedies provided pursuant to this Agreement or by law
shall be cumulative, and no such right or remedy shall be exclusive of any
other. All claims for damages for a breach of this Agreement shall be submitted
to mediation and arbitration in accordance with Section 14 of this Agreement.
 
14.      Dispute Resolution. Except for the right of the Company to seek
specific performance and injunctive and other equitable relief in court as set
forth in Section 13 hereof, any controversy, claim or dispute of any type
arising out of, in connection with, or in relation to the interpretation,
performance or breach of this Agreement shall be resolved in accordance with
this Section 14 of this Agreement, regarding resolution of disputes. This
Agreement shall be enforced in accordance with the Federal Arbitration Act, the
enforcement provisions of which are incorporated by this reference.
 
A.      Mediation. The Company and the Executive will make a good faith attempt
to resolve any and all claims and disputes under this Agreement through good
faith negotiations. If such claims and disputes cannot be settled through
negotiation, the Company and the Executive agree to submit them to mediation in
Salt Lake City, Utah before resorting to arbitration or any other dispute
resolution procedure. The mediation of any such claim or dispute must be
conducted in accordance with the then-current American Arbitration Association
("AAA") procedures for the resolution of disputes by mediation, by a mediator
("Mediator") who has had both training and experience as a mediator of general
non-competition and commercial matters. If the parties to this Agreement cannot
agree on a Mediator, then the Mediator will be selected by AAA in accordance
with AAA's strike list method. Within 30 days after the selection of the
Mediator, the Company and the Executive and their respective attorneys will meet
with the Mediator for one mediation session of at least four (4) hours. If the
claim or dispute cannot be settled during such mediation session or mutually
agreed continuation of the session, either the Company or the Executive may give
the Mediator and the other party to the claim or dispute written notice
declaring the end of the mediation process. All discussions connected with this
mediation provision will be confidential and treated as compromise and
settlement discussions. Nothing disclosed in such discussions, which is not
independently discoverable, may be used for any purpose in any later proceeding.
If the mediation process is ended without resolution, the Mediator's fees will
be paid in equal portions by the Company and the Executive.
 
 
 
 
10

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B.      Arbitration. If a claim or dispute under this Agreement has not been
resolved in accordance with Section 14A above, then the claim or dispute will be
determined by arbitration in accordance with the then-current AAA comprehensive
arbitration rules and procedures, except as modified herein. The arbitration
will be conducted in Salt Lake City, Utah by a sole neutral arbitrator
("Arbitrator") who has had both training and experience as an arbitrator of
general non-competition and commercial matters and who is, and for at least 10
years has been, a partner, a shareholder, or a member in a law firm. If the
Company and the Executive cannot agree on an Arbitrator, then the Arbitrator
will be selected by AAA in accordance with AAA's comprehensive arbitration rules
and procedures. No person who has served as a Mediator under the mediation
provision, however, may be selected as the Arbitrator for the same claim or
dispute. Reasonable discovery will be permitted and the Arbitrator may decide
any issue as to discovery. The Arbitrator may decide any issue as to whether or
as to the extent to which a dispute is subject to the dispute resolution
provisions in this Section 14 and the Arbitrator may award any relief permitted
by law. The Arbitrator must base the arbitration award on the provisions of this
Section 14B and applicable law and must render the award in writing, including
an explanation of the reasons for the award. Judgment upon the award may be
entered by any court having jurisdiction of the matter. The statute of
limitations applicable to the commencement of a lawsuit will apply to the
commencement of an arbitration under this Section 14B. At the request of any
party, the Arbitrator, attorneys, parties to the arbitration, witnesses,
experts, court reporters or other persons present at the arbitration shall agree
in writing to maintain the strict confidentiality of the arbitration
proceedings. The Arbitrator's fee will be paid in full by the Company, unless
the Executive agrees in writing to pay some or all of the fee.
 
C.      Interim Actions. Notwithstanding the foregoing, a party may apply to a
court of competent jurisdiction within the State of Utah for relief in the form
of a temporary restraining order or preliminary injunction, pending appointment
of an Arbitrator or pending determination of a claim through arbitration in
accordance with this Section 14. If a dispute is submitted to arbitration
hereunder during the term of this Agreement, the parties shall continue to
perform their respective obligations hereunder, subject to any interim relief
that may be ordered by the Arbitrator or by a court of competent jurisdiction
pursuant to the previous sentence.
 
D.      Fees. Unless otherwise agreed, the prevailing party (if a prevailing
party is determined to exist by the Arbitrator or judge) will be entitled to its
costs and attorneys' fees incurred in any arbitration or other proceeding under
this Section 14 relating to the interpretation or enforcement of this Agreement.
 
E.      Acknowledgement. EXECUTIVE HAS READ AND UNDERSTANDS THIS SECTION 14,
WHICH DISCUSSES MEDIATION AND ARBITRATION. EXECUTIVE UNDERSTANDS THAT BY SIGNING
THIS AGREEMENT, EXECUTIVE AGREES TO SUBMIT ANY CLAIMS ARISING OUT OF, RELATING
TO, OR IN CONNECTION WITH THIS AGREEMENT, OR THE INTERPRETATION, VALIDITY,
CONSTRUCTION, PERFORMANCE, BREACH OR TERMINATION THEREOF TO MEDIATION AND
ARBITRATION, AND THAT THE DISPUTE RESOLUTION PROVISIONS SET FORTH IN THIS
AGREEMENT CONSTITUTE A WAIVER OF EXECUTIVE'S RIGHT TO A JURY TRIAL.
 
15.      No Waiver. The waiver by either party of a breach of any provision of
this Agreement shall not operate as, or be construed as, a waiver of any later
breach of that provision.
 
16.      Taxes. Except as otherwise provided under Section 3C, each party agrees
to be responsible for its own taxes and penalties.
 
 
 
 
11

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17.      Counterparts. This Agreement may be executed in more than one
counterpart, each of which shall be deemed an original, but all of which
together shall constitute but one and the same instrument.
 
18.      Representation of the Executive; Interpretation of this Agreement. The
Executive represents and warrants to the Company that the Executive has read and
understands this Agreement, has consulted with independent counsel of the
Executive's choice prior to agreeing to the terms of this Agreement and is
entering into this Agreement, knowingly, willingly and voluntarily. The parties
agree that this Agreement shall not be construed for or against either party in
any interpretation thereof.
 
 
 
 
 
 

[Signature Page Follows]
 
 
 
 
 

12

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.

 
 
NU SKIN ENTERPRISES, INC.
 
 
/s/ D. Matthew Dorny
 
 
D. Matthew Dorny
 
 
 
Vice President and General Counsel
 

 
 
EXECUTIVE
 
 
 
/s/ M. Truman Hunt
 
 
 
M. Truman Hunt
 

 
 
 
 
 
 
 
[Signature Page to Employment Agreement]
13

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EXHIBIT A
KEY EMPLOYEE COVENANTS
 
 
 
 
 
 
 
Exh A-1
 

--------------------------------------------------------------------------------

KEY-EMPLOYEE COVENANTS
("AGREEMENT")

__________________________________ ("Employee")
(PRINT NAME)

Nu Skin Enterprises, Inc. and its affiliated companies ("Company") operate in a
highly competitive direct sales, multilevel marketplace competing for product
market share as well as recruitment and retention of independent distributors.
The success of Company depends on maintaining a competitive edge in this
industry through the introduction of innovative products and attracting and
retaining distributors. Accordingly, as a condition of and in consideration of
employment or continued employment with Company, the parties hereby acknowledge
and agree as follows:

1.
Confidential Information: Employee acknowledges that during the term of
employment with Company he / she may develop, learn and be exposed to
information about Company and its business, including but not limited to
formulas, business plans, financial data, vendor lists, product and marketing
plans, distributor lists and training in Company's manner of doing business in
both product categories and direct selling and multi-level marketing strategies,
and other trade secrets which information is secret, confidential and vital to
the continued success of Company ("Confidential Information"). Employee agrees
that he / she will not at any Time (whether during employment or after
termination of employment with Company), without the express written consent of
Company, disclose, copy, retain, remove from Company's premises or make any use
of such Confidential Information except as may be required in the course of his
/ her employment with Company.

2.
Conflict of Interest: During employment with Company, Employee shall not have
any personal interest that is incompatible with the loyalty and responsibility
owed to Company. Employee must discharge his / her responsibility solely on the
basis of what is in the best interest of Company and independent of personal
considerations or relationships. Although it is difficult to identify every
activity that might give rise to a conflict of interest, and not by way of
making an all inclusive list, some of the more common circumstances and
practices that might result in such conflicts are set forth below. Should
Employee have any questions regarding this matter, Employee should consult with
and receive written permission from his / her director or supervisor.

a.
Employee shall maintain impartial relationships with vendors, suppliers and
distributors.

b.
Employee shall not have a direct or indirect ownership interest in vendors of
Company nor any company doing or seeking to do business with Company.

c.
Employee shall not have a direct or indirect ownership in any company which
competes with Company in any product category or any direct selling or
multi-level marketing company, unless such company's securities are publicly
traded on either the NYSE, American or NASDAQ stock exchanges and the Employee's
ownership interest is less than 1% of the total outstanding securities of such
company.

d.
Employee shall not perform services of any kind for any entity doing or seeking
to do business with Company. As to employment with or service to another
company, Employee shall not allow any such activity to detract from his / her
job performance, use Company's time, resources, or personnel, or require such
long hours to affect his / her physical or mental effectiveness.

e.
While employed and for a period of three (3) months after termination of an
employment relationship with Company, Employee shall not directly or indirectly
own any interest in a Company distributorship. Additionally, during the course
of employment, neither the Employee, nor the Employee's spouse or an immediate
family member living in the same household shall own any interest in a Company
distributorship or any other multi-level distributorship. Employee's spouse or
immediate family member living in the same household will not, without the prior
written consent of the Company, own any interest in another direct sales
distributorship or be employed by another direct sales or multi-level marketing
company. Any pre-existing ownership interests or employment covered in this
paragraph must be disclosed to the Company at the time of the execution of this
Agreement.

f.
Employee shall disclose to his/her immediate director or supervisor any and all
areas posing a potential or actual conflict of interest. Said disclosure shall
be made as promptly as possible after such conflict arises.

 
 
 

 
Exh A-2

--------------------------------------------------------------------------------

 
3.
Work Product: Company shall have the sole proprietary interest in the work
product of Employee during his / her employment with Company ("Work Product"),
and Employee expressly assigns to Company or its designee all rights, title and
interest in and to all copyrights, patents, trade secrets, improvements,
inventions, sketches, models and all documents related thereto, manufacturing
processes and innovations, special calibration techniques, software, service
code, systems designs and any other Work Product developed by Employee, either
solely or jointly with others, where said Work Product relates to any business
activity or research and development activity in which Company is involved or
plans to be involved at the time of or prior to Employee's creating such Work
Product, or where such Work Product is developed with the use of Company's time,
material, or facilities; and Employee further agrees to disclose any and all
such Work Product to Company without delay.

4.
Ethical Standards: Employee agrees to maintain the highest ethical and legal
standards in his / her conduct, to be scrupulously honest and straight-forward
in all of his / her dealings and to avoid all situations which might project the
appearance of being unethical or illegal.

5.
Product Resale: As an employee of Company, Employee may receive Company products
and materials either at no charge or at a discount as specified from time to
time by Company in its sole discretion. Employee agrees that the products
received from Company are strictly limited to Employee's personal use and that
of Employee's immediate family and may not be resold, given or disposed of to
any other person or entity in a manner inconsistent with the personal use herein
described.

6.
Gratuities: Employee shall neither seek nor retain gifts, gratuities,
entertainment or other forms of compensation, benefit, or persuasion from
suppliers, distributors, vendors or their representatives without the consent of
a Company Vice President with the exception of meals provided in the ordinary
course of business on an infrequent basis.

7.
Non-Solicitation: Employee shall not in any way, directly or indirectly, at any
time during employment or within two (2) years after either a voluntary or
involuntary employment termination: (a) solicit, divert, or take away Company's
distributors; (b) solicit in any manner Company's employees, or vendors; or (c)
assist any other person in any manner or persons in an attempt to do any of the
foregoing.

8.
Non-Disparagement: Employee shall not in any way, directly or indirectly at any
time during employment or after either voluntary or involuntary employment
termination, commercially disparage Company, Company products or Company
Distributors.

 
 
 

 
 
Exh A-3

--------------------------------------------------------------------------------

 
 
 
9.
Non-Endorsement: Employee shall not in any way, directly or indirectly, at any
time during employment or within one (1) year after either a voluntary or
involuntary employment termination endorse any product that competes with
products of Company, promote or speak on behalf of any company whose products
compete with those of Company, allow Employee's name or likeness to be used in
any way to promote any company or product that competes with Company or any
products of Company.

10.
Non-Competition: In exchange for the benefits of continued employment by
Company, Employee shall not accept employment with, engage in or participate,
directly or indirectly, individually or as an officer, director, employee,
shareholder, consultant, partner, joint venturer, agent, equity owner,
distributor or in any other capacity whatsoever, with any direct sales or
multi-level marketing company including any direct or indirect affiliate or
subsidiary of such company that competes with the business of Company whether
for market share of products or for independent distributors in a territory in
which Company is doing business. The restrictions set forth in this paragraph
shall remain in effect during the Employee's employment with Company and during
a period of six months following the Employee's termination of employment.
Within fifteen days of termination of Employee's employment, Company shall
notify Employee whether it elects to enforce Employee's obligation set forth in
this paragraph. In the event Company decides to enforce employees
non-competition obligation set forth herein, Company shall pay Employee a sum
equal to seventy-five percent of the Employee's base salary at termination of
employment, less applicable withholding taxes and excluding all incentive
compensation and other benefit payments, for the period following the
termination of employment during which the restrictive covenants in this
paragraph remain in effect. Payment may be made in periodic installments in
accordance with Company's regular payroll practices.

11.
Acknowledgement: Employee acknowledges that his / her position and work
activities with Company are "key" and vital to the on-going success of Company's
operation in each product category and in each geographic location in which
Company operates. In addition, Employee acknowledges that his / her employment
or involvement with any other direct selling or multi-level marketing company in
particular would create the impression that Employee has left Company for a
"better opportunity," which could damage Company by this perception in the minds
of Company's employees or independent distributors. Therefore, Employee
acknowledges that his / her confidentiality, non-solicitation,
non-disparagement, non-endorsement, and non-competition covenants hereunder are
fair and reasonable and should be construed to apply to the fullest extent
possible by applicable laws. Employee has carefully read this Agreement, has
consulted with independent legal counsel to the extent Employee deems
appropriate, and has given careful consideration to the restraints imposed by
the Agreement. Employee acknowledges that the terms of this Agreement are
enforceable regardless of the manner in which Employee's employment is
terminated, whether voluntary or involuntary. In the event that Employee is to
be employed as an attorney for a competitive business, Company and Employee
acknowledge that paragraph 10 is not intended to restrict the right of the
Employee to practice law in violation of any applicable rules of professional
conduct.

12.
Terminations: Upon termination of employment, Employee shall return to Company
all assets and equipment of Company along with any Confidential Information and
Work Product including any distributor and vendor contact information and notes
or summaries of all of the above.

 
 
 
 
 
 
Exh A-4

--------------------------------------------------------------------------------

 
 
 

 
13.
Remedies: The Employee acknowledges: (a) that compliance with the restrictive
covenants contained in this Agreement are necessary to protect the business and
goodwill of Company and (b) that a breach will result in irreparable and
continuing damage to Company, for which money damages may not provide adequate
relief. Consequently, Employee agrees that, in the event that he/she breaches or
threatens to breach these restrictive covenants, Company shall be entitled to
both: (1) a preliminary or permanent injunction to prevent the continuation of
harm and (2) money damages insofar as they can be determined. Nothing in this
Agreement shall be construed to prohibit Company from also pursuing any other
remedy, the parties having agreed that all remedies are cumulative. It is
further recognized and agreed that the covenants set forth herein are for the
purpose of restricting Employee's activities to the extent necessary for the
protection of the legitimate business interests of Company and that Employee
agrees that said covenants do not and will not preclude him / her from engaging
in activities sufficient for the purposes of earning a living.

14.
Attorney's Fees: If any party to this Agreement breaches any of the terms of
this Agreement, then that party shall pay to the non-defaulting party all of the
non-defaulting party's costs and expenses, including reasonable attorney's fees,
incurred by that party in enforcing the terms of this Agreement.

15.
Court's Right to Modify Restriction: The parties have attempted to limit
Employee's right to compete only to the extent necessary to protect Company from
unfair competition. The parties recognize, however, that reasonable people may
differ in making such a determination. Consequently, the parties agree that, if
the scope or enforceability of the restrictive covenants contained in this
Agreement are in any way disputed at any time, a court or other trier of fact
may modify and enforce the covenants to the extent that it believes to be
reasonable under the circumstances existing at that time.

16.
Severability: If any provision, paragraph, or subparagraph of this Agreement is
adjudged by any court or administrative agency to be void or unenforceable in
whole or in part, this adjudication shall not affect the validity of the
remainder of the Agreement, including any other provision, paragraph, or
subparagraph. Each provision, paragraph, and subparagraph of this Agreement is
severable from every other provision, paragraph, and subparagraph and
constitutes a separate and distinct covenant.

17.
Governing Law and Forum: This Agreement shall be governed and enforced in
accordance with the laws of the State of Utah, and any litigation between the
parties relating to this Agreement shall be conducted in the courts of Utah
County or Salt Lake City where necessary for federal court matters.

18.
Employment at Will: Employee understands that employment with Company is at
will, meaning that employment with Company is completely voluntary and for an
indefinite term and that either Employee or Company is free to terminate the
employment relationship at any time, with or without cause or advance notice,
provided that termination is not done for an unlawful or discriminatory purpose.

19.
Entire Agreement: Company and Employee understand and agree that this Agreement
shall constitute the entire agreement between them regarding the subject matter
contained herein, and that all prior understandings or agreements regarding
these matters are hereby superseded and replaced, including, without limitation,
the Key-Employee Covenants Agreement previously signed by the parties. Any
amendment to or modification of this Agreement must be in writing signed by the
parties hereto and stating the intent of the parties to amend or modify this
Agreement.

 
 
 

 
Exh A-5

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THIS AGREEMENT HAS BEEN READ, UNDERSTOOD AND FREELY ACCEPTED BY:

 _________________________________                                                               Dated:
__________________
 "Employee"
 
 
 
 

 
Exh A-6

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EXHIBIT B
SEPARATION AND RELEASE AGREEMENT
 
 
 
 
 
 
 
 
 
 
Exh B-1

--------------------------------------------------------------------------------

EXHIBIT C
BEST NET PROVISION
(a)      Anything in this Agreement to the contrary notwithstanding, if it shall
be determined that (i) any payment, award, benefit or distribution (or any
acceleration of any payment, award, benefit or distribution) by the Company (or
any of its affiliates) or any entity which effectuates a Change in Control (or
any of its affiliates) to or for the benefit of the Executive (whether pursuant
to the terms of this Agreement or otherwise) (the "Payments") would be subject
to the excise tax imposed by Section 4999 of the Code, together with any state
and local income or excise taxes imposed thereby, (the "Excise Tax"), and (ii)
the reduction of the amounts payable to the Executive under this Agreement to
the maximum amount that could be paid to the Executive without giving rise to
the Excise Tax (the "Safe Harbor Cap") would provide the Executive with a
greater after-tax amount than if such amounts were not reduced, then the amounts
payable to the Executive under this Agreement shall be reduced (but not below
zero) to the Safe Harbor Cap. The reduction of the amounts payable hereunder, if
applicable, shall be made to the extent necessary in the following order: the
acceleration of vesting of stock options and other equity awards with an
exercise price that exceeds the then fair market value of the stock subject to
the award, the payments under Section 7D (iii) and (iv), and the acceleration of
vesting of all other stock options and equity awards. For purposes of reducing
the Payments to the Safe Harbor Cap, only amounts payable under this Agreement
(and no other Payments) shall be reduced. If the reduction of the amounts
payable hereunder would not result in a greater after-tax result to the
Executive, no amounts payable under this Agreement shall be reduced pursuant to
this provision.
 
(b)      All determinations required to be made under this Exhibit C shall be
made by the public accounting firm that is retained by the Company as of the
date immediately prior to the Change in Control (the "Accounting Firm") which
shall provide detailed supporting calculations both to the Company and the
Executive within 15 business days of the receipt of notice from the Company or
the Executive that there has been a Payment, or such earlier time as is
requested by the Company. Notwithstanding the foregoing, if (i) the Audit
Committee of the Board (the "Audit Committee") shall determine prior to the
Change in Control that the Accounting Firm is precluded from performing such
services under applicable auditor independence rules or (ii) the Audit Committee
of the Board determines that it does not want the Accounting Firm to perform
such services because of auditor independence concerns or (iii) the Accounting
Firm is serving as accountant or auditor for the person(s) effecting the Change
in Control, the Audit Committee shall appoint another nationally recognized
public accounting firm to make the determinations required hereunder (which
accounting firm shall then be referred to as the Accounting Firm hereunder). All
fees, costs and expenses (including, but not limited to, the costs of retaining
experts) of the Accounting Firm shall be borne by the Company. If payments are
reduced to the Safe Harbor Cap or the Accounting Firm determines that no Excise
Tax is payable by the Executive without a reduction in payments, the Accounting
Firm shall provide a written opinion to the Executive to such effect, that the
Executive is not required to report any Excise Tax on the Executive's federal
income tax return, and that the failure to report the Excise Tax, if any, on the
Executive's applicable federal income tax return will not result in the
imposition of a negligence or similar penalty. For purposes of making the
calculations and determinations under this Exhibit C, after taking into account
the information provided by the Company and the Executive, the Accounting Firm
may make reasonable, good faith assumptions and approximations concerning the
application of Code Sections 280G and 4999. The Company and the Executive shall
furnish the Accounting Firm with such information and documents as said
Accounting Firm may reasonably request to assist the Accounting Firm in making
calculations and determinations under this Exhibit C. The determination by the
Accounting Firm shall be binding upon the Company and the Executive (except as
provided in paragraph (c) below).
 
 
 
 
 
 
Exh C-1

--------------------------------------------------------------------------------

 
 
 
 
(c)      If it is established pursuant to a final determination of a court or an
Internal Revenue Service (the "IRS") proceeding which has been finally and
conclusively resolved, that Payments have been made to, or provided for the
benefit of, the Executive by the Company, which are in excess of the limitations
provided in this Section (referred to hereinafter as an "Excess Payment"), the
Executive shall repay the Excess Payment to the Company on demand, together with
interest on the Excess Payment at the applicable federal rate (as defined in
Section 1274(d) of the Code) from the date of the Executive's receipt of such
Excess Payment until the date of such repayment. As a result of the uncertainty
in the application of Section 4999 of the Code at the time of the determination,
it is possible that Payments which will not have been made by the Company should
have been made (an "Underpayment"), consistent with the calculations required to
be made under this Section. If it is determined (i) by the Accounting Firm, the
Company (which shall include the position taken by the Company, or together with
its consolidated group, on its federal income tax return) or the IRS or (ii)
pursuant to a determination by a court, that an Underpayment has occurred, the
Company shall pay an amount equal to such Underpayment to the Executive within
10 business days of such determination together with interest on such amount at
the applicable federal rate from the date such amount would have been paid to
the Executive until the date of payment. The Executive shall cooperate, to the
extent the Executive's expenses are reimbursed by the Company, with any
reasonable requests by the Company in connection with any contests or disputes
with the IRS in connection with the Excise Tax or the determination of the
Excess Payment. Notwithstanding the foregoing, if amounts payable under this
Agreement were reduced pursuant to paragraph (a) and the value of stock options
is subsequently re-determined by the Accounting Firm within the context of
Treasury Regulation §1.280G-1 Q/A 33 that reduces the value of the Payments
attributable to such options, the Company shall promptly pay to the Executive
any amounts payable under this Agreement that were not previously paid solely as
a result of paragraph (a), subject to the Safe Harbor Cap.

 
 
 
 
 

Exh C-2

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APPENDIX A
PRO-RATA BONUS CALCULATION EXAMPLES
Pro-Rata Earned Bonus
Assumptions:
1.
Executive's total fiscal year target bonus is $1,000,000.

(a) $125,000 (12.5%) is allocated to each quarter and is earned based on that
quarter's performance.

(b) $500,000 (50%) is allocated to the fiscal year and is earned based on fiscal
year performance.

2.
Executive's employment is terminated on 5/15/12.

3.
Based on actual performance, second quarter bonus was 125% of target bonus and
annual bonus was 150% of target bonus.

Calculations:
1.
Second quarter:

(a)      The second quarter bonus based on actual performance was 125% of
target:
$125,000 x 125% = $156,250
(b)      Days in quarter = 91; days worked in quarter = 45
45/91 = 0.4945
(c)      Second quarter bonus = $156,250 x 0.4945 = $77,266
2.
Fiscal year:

(a)      The fiscal year bonus based on actual performance was 150% of target:
$500,000 x 150% = $750,000
(b)      Days in fiscal year = 366; days worked in year = 136
136/366 = 0.3716
(c)      Annual bonus = $750,000 x 0.3716 = $278,700
3.
Total Pro-Rata Earned Bonus: $77,266 + $278,700 = $355,966

Pro-Rata Target Bonus
Assumptions:
1.
Executive's total fiscal year target bonus is $1,000,000.

(a) $125,000 (12.5%) is allocated to each quarter and is earned based on that
quarter's performance.

(b)      $500,000 (50%) is allocated to the fiscal year and is earned based on
fiscal year performance.
2.
Executive's employment is terminated on 7/31/12.

Pro Rata Target Bonus:
1.
Third quarter:

(a)      Days in quarter = 92; days worked in quarter = 31
31/92 = 0.3370
(b)      Third quarter bonus = $125,000 x 0.3370 = $42,125
2.
Fiscal year:

(a)      Day in fiscal year = 366; days worked in year = 213
213/366 = 0.5820
(b)      Annual bonus = $500,000 x 0.5820 = $291,000
3.
Total Pro-Rata Target Bonus: $42,125 + 291,000 = $333,125

Appendix A-1