Exhibit 10.5


 


USANA HEALTH SCIENCES, INC.


 


EMPLOYEE INCENTIVE STOCK OPTION AGREEMENT


 


Optionee:


Date of Grant:


Number of Covered Shares:


Exercise Price Per Share:


Expiration Date:


 


This Incentive Stock Option Agreement (“Agreement”)
is entered into as of the      day of                          ,
between USANA HEALTH SCIENCES, INC., a Utah corporation (the “Company”), and                                
(“Optionee”).


 


WHEREAS, the Company has adopted the 2002
USANA Health Sciences, Inc. Stock Plan (the “Plan”) and has approved the
granting to certain employees of the Company of incentive stock options to
purchase common stock of the Company, par value $.001 per share (“Common Stock”);
and


 


WHEREAS, Optionee is employed by the Company
in a key executive capacity, or is engaged by the Company as an officer and/or
employee, and the Company desires that Optionee remain in such employ and
desires to secure or increase Optionee’s stock ownership of the Company in
order to increase Optionee’s incentive and personal interest in the welfare of
the Company.


 


NOW, THEREFORE, in consideration of the
premises, covenants and agreements hereinafter set forth, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto have agreed and do hereby agree as follows:


 


1.             Grant of Options.  On the terms and conditions set forth in this
Agreement, including but not limited to the substitution provisions of Section
26 below, the Company hereby grants to Optionee incentive stock options as that
term is used in Section 422 of the Code (the “ISOs”) to purchase all or any
part of an aggregate amount of                        
(                )
shares of the Common Stock of the Company at a purchase price of $              
per share.  However, to the extent that
the Fair Market Value of Common Stock with respect to which ISOs are
exercisable for the first time during any calendar year (under the Plan and all
other stock option plans of the Company) exceeds $100,000, such portion in
excess of $100,000 shall be treated as a nonqualified stock option (“NSO”).  The ISOs and the NSOs are collectively
referred to herein as the “Options”.


 


2.             Term of Options; Vesting
Schedule.  Except as otherwise
provided in Sections 4 and 10 below, the Options shall vest and become
exercisable pursuant to the following vesting schedule, and shall remain
exercisable until                
(       ) years and               
(      ) days after the date of this Agreement (       /      /          ,
the “effective term”), at which time the Options shall terminate and not be
exercisable thereafter:


 


a.             Options to purchase                             
(              )
of the total number of shares subject to Options granted shall vest and become
exercisable      /     /     ,
provided Optionee satisfactorily completes                  
(      ) months of service (as determined by the
Company’s Board of Directors).


 


b.             Options to purchase                       
(          ) of the total
number of shares subject to Options granted shall vest and become exercisable      /    /      ,
     /    /      ,
     /    /      ,
and      /    /      ,
provided Optionee satisfactorily completes an additional               
(      )


 


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months
of service each year.


 


3.             Exercise of Options.  The Options or any portion thereof may be
exercised by Optionee paying the purchase price of any shares with respect to
which the Options are being exercised by cash, certified check or cashier’s
check (but no personal checks unless otherwise approved by the Committee).  Except as otherwise provided by the Committee
before the Option is exercised, (i) all or a portion of the Exercise Price may
be paid by Optionee by delivery of shares of Common Stock already owned by
Optionee for at least six (6) months and acceptable to the Committee having an
aggregate Fair Market Value (as of the date of exercise) that is equal to the
amount of cash that would otherwise be required; (ii) Optionee may pay the
Exercise Price by authorizing a third party to sell shares of Stock (or a
sufficient portion of the shares) acquired upon exercise of the Option and
remit to the Company a sufficient portion of the sale proceeds to pay the
entire Exercise Price and any tax withholding resulting from such exercise; or
(iii) Optionee may pay the Exercise Price by a reduction in the amount of any
Company liability to the Optionee.  In
each case Optionee’s payment shall be delivered with a written notice of
exercise which shall:


 


a.             State
the number of shares being exercised, the name, address and social security
number of each person for whom the stock certificate or certificates for such
shares of the Common Stock are to be registered;


 


b.             Contain
any representations and agreements as to Optionee’s investment intent with
respect to the shares exercised as may be satisfactory to the Company’s
counsel; and


 


c.             Be
signed by the person or persons entitled to exercise the Options and, if the
Options are being exercised by any person or persons other than Optionee, be
accompanied by proof satisfactory to counsel for the Company of the right of
such person or persons to exercise the Options.


 


In addition, unless the shares to be acquired
by Optionee have been registered under the Securities Act of 1933, as amended,
upon and effective as of the date of exercise of the Option under this
Agreement, Optionee agrees, represents and warrants that Optionee (i) is
acquiring the shares of Common Stock for investment with no present intention of
distributing or selling such shares or any interest therein except as permitted
under this Agreement; (ii) is not only an employee but also a director or
executive officer of the Company experienced in making risky investments and
has the capacity to protect his interests in connection with making his
decision to exercise the Option; (iii) is well-informed or capable of asking
questions of the Company’s officials to make himself well-informed concerning
the nature of his investment decision to exercise the Option and of the true
financial status of the Company; and (iv) has obtained, analyzed and retained
(or elected not to retain) copies of the Company’s current financial
statements.  Further, as a condition to
the exercise of the Options, the Company may require the person exercising the
Options to make any representation and warranty to the Company that may be
required by any applicable law or regulation.


 


4.             Termination of Employment or
Death.


 


a.             In
the event Optionee’s employment shall be involuntarily terminated by the
Company without cause, the Options shall only be exercisable for those portions
of the Options which have completely vested as of the date of Involuntary
Termination of Employment, provided such exercise occurs both within the remaining
effective term of the Options and ninety (90) days after the date of
termination by the Company.


 


b.             In
the event Optionee dies while employed by the Company or dies within ninety
(90) days after termination of employment with the Company, whether by reason
of


 


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Retirement or Disability, involuntary
termination without cause, or voluntary termination (but not termination For
Cause), the Options granted hereunder to Optionee shall be exercisable within
three (3) years after the date of Optionee’s death,  but the Options may not be exercised for more
than the number of Shares, if any, as to which the Options were exercisable by
Optionee immediately prior to the date of his death or, if sooner, the date of
termination of employment.  The legal
representative, if any, of Optionee’s estate, or otherwise the appropriate
legatees or distributees of Optionee’s estate, may exercise the Option on
behalf of Optionee.


 


c.             In
the event Optionee’s employment shall terminate on account of Retirement or
Disability, the Options held by Optionee, to the extent exercisable through the
date of such retirement or disability, may be exercised by Optionee, provided
such exercise occurs within both the remaining effective term of the Options
and three (3) years from the date of termination of employment.


 


d.             In
the event of Optionee’s Voluntary Termination of Employment, Optionee may
exercise the Options provided such exercise occurs within both the remaining
effective term of the Options and ninety (90) days from the date of
termination, but the Options may not be exercised for more than the number of
shares, if any, as to which the Options were exercisable by Optionee
immediately prior to such termination of employment.


 


e.             In
the event Optionee shall have an Involuntary Termination of Employment “For
Cause” (as defined in Section 12(d)(ii) of the Plan), no exercise period shall
exist and Optionee shall forfeit the Options as of the date of termination.


 


f.              To
the extent not then exercisable in accordance with this Section, the Options
shall terminate on the date Optionee’s employment terminates with the Company.


 


g.             For
purposes of this Agreement, termination of employment shall be considered to
occur when an employee is no longer an employee of the Company or any
Subsidiary. Whether an authorized leave of absence or absence on military or
government service shall constitute termination of employment for purposes of
this Agreement shall be determined by the Committee.  Retirement shall be considered to mean
retirement as defined in the Plan.


 


5.             Transfer of Options.  Unless the Company, upon advice of its
securities counsel, directs otherwise, the Options may not be assigned or
transferred in any manner except upon the death of Optionee by will or by the
laws of descent and distribution.  During
the lifetime of Optionee, the Options shall be exercisable only by Optionee.


 


6.             Reservation of Shares.  The Company, during the term hereof, will at
all times reserve and keep available, and will seek or obtain from any
regulatory body having jurisdiction any requisite authority in order to issue
and sell such number of shares of its Common Stock as shall be sufficient to
satisfy the requirements hereof.  The
inability of the Company to obtain from any regulatory body having jurisdiction
the authority deemed by the Company’s counsel to be necessary to the lawful
issuance and sale of any shares of stock hereunder shall relieve the Company of
any liability in respect of the nonissuance or sale of such stock as to which
such requisite authority shall not have been obtained.


 


7.             Application of Section 16(b).  The parties acknowledge that, if the Company
has a class of securities required to be registered pursuant to the Securities
Exchange Act of 1934, and if Optionee is an officer, director or ten percent
(10%) shareholder of the Company, the grant to Optionee of Options hereunder,
or the Optionee’s sale of shares underlying the Options, may, unless the Plan
is qualified under Rule 16b-3 of the SEC, subject Optionee to liability under
the insider trading prohibitions of Section 16(b) of the Securities Exchange
Act of 1934, if Optionee purchases or sells Common Stock of


 


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the
Company within six months before or after the grant of the Options, or within
six months before or after the sale of the shares underlying the Options.  This acknowledgment is for informational
purposes only and is not to be construed as increasing, limiting or describing
the rights and obligations of the parties hereunder.


 


8.             Restriction on Option Exercise.  Notwithstanding any contrary provision
hereof, the Options may not be exercised by Optionee unless the shares to be
acquired by Optionee have been registered under the Securities Act of 1933 (the
“Act”), and any other applicable securities laws of any other state, or the
Company receives an opinion of counsel (which may be counsel for the Company)
reasonably acceptable to the Company stating that the exercise of the Options
and the issuance of shares pursuant to the exercise is registered or exempt
from such registration requirements. 
Optionee shall represent that unless and until the shares have been
registered under the Act and applicable state securities laws:  (1) Optionee is acquiring the shares for
investment purposes only and without the intent of making any sale or
disposition thereof; (2) Optionee has been advised and understands that
the shares have not been registered for sale pursuant to federal and state
securities laws and are “restricted securities” under such laws; and
(3) Optionee acknowledges that the shares will be subject to stop transfer
instructions and bear the following legend:


 


THE SHARES REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER
ANY OTHER STATE SECURITIES LAWS AND MAY NOT BE OFFERED, SOLD OR TRANSFERRED IN
THE ABSENCE OF REGISTRATION OR THE AVAILABILITY OF AN EXEMPTION FROM SUCH
REGISTRATION.  NO OFFER, SALE OR TRANSFER
MAY TAKE PLACE WITHOUT PRIOR WRITTEN APPROVAL OF THE COMPANY BEING AFFIXED
HERETO.  IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT, SUCH APPROVAL SHALL BE GRANTED ONLY IF THE COMPANY HAS
RECEIVED AN OPINION OF SHAREHOLDER’S COUNSEL AT SHAREHOLDER’S EXPENSE
SATISFACTORY TO THE COMPANY TO THE EFFECT THAT THIS CERTIFICATE MAY BE LAWFULLY
TRANSFERRED PURSUANT TO AN EXEMPTION FROM REGISTRATION.


 


9.             Withholding of Taxes.  The Options may not be exercised unless
Optionee has paid or has made provision satisfactory to the Company for payment
of, federal, state and local income taxes, or any other taxes (other than stock
transfer taxes) which the Company may be obligated to collect as a result of
the issue or transfer of Common Stock upon such exercise of the Options.  In its sole discretion, and at the request of
Optionee, the Company may permit Optionee (other than an Optionee who would be
subject to Section 16(b) of the Exchange Act) to satisfy the obligation imposed
by this Section, in whole or in part, by instructing the Company to withhold up
to that number of shares otherwise issuable to Optionee with a fair market
value equal to the amount of tax to be withheld.


 


10.           Mergers, Reorganizations, and
Certain Other Changes.  In the event
of the Company’s liquidation, reorganization, separation, merger or
consolidation into, or acquisition of property or stock by another corporation,
or sale of substantially all assets to another corporation, the rights of
Optionee with respect to the Options granted hereunder shall be governed by the
Committee, as provided in the Plan.


 


11.           Antidilution.  The aggregate number of shares of Common
Stock available for issuance under the Options, and the price per share, shall
all be proportionately adjusted for any increase


 


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or
decrease in the number of issued shares of Common Stock subsequent to the date
of this Agreement resulting from a recapitalization, reorganization, merger,
consolidation or similar transaction as provided in the Plan.


 


12.           No Rights as a Stockholder.  Optionee or a permitted transferee of the
Options shall have no rights as a stockholder with respect to any shares
covered by the Options until the date as of which stock is issued following
exercise of such Options.  Except as provided
in this Agreement, no adjustment shall be made for dividends (ordinary or
extraordinary, whether in cash, securities or other property) or any other
distributions for which the record date is prior to the date as of which such
stock is issued.


 


13.           No Employment Rights.  This Agreement is not an employment agreement
or contract and does not grant any employment rights to Optionee.


 


14.           Other Provisions.  The Company may, as a condition precedent to
the exercise of the Options, require Optionee (including, in the event of
Optionee’s death, his legal representatives, legatees or distributees) to enter
into such agreements or to make such representations as may be required to make
lawful the exercise of the Options and the ultimate disposition of the shares
acquired by such exercise.


 


15.           Notices.  Any notice which either of the parties hereto
is required or permitted to give to the other must be in writing and may be
given by personal delivery, electronic or facsimile transmission,  or by mailing the same by registered or
certified mail, return receipt requested, to the party to which or to whom the
notice is directed, at the address each party designates in writing.  Any notice mailed to such address shall be
effective when deposited in the mail, duly addressed and postage prepaid,
notwithstanding failure by the addressee thereof to receive the mailed notice.


 


16.           Governing Law.  All transactions contemplated hereunder and
all rights of the parties hereto shall be governed as to validity,
construction, enforcement and in all other respects by the laws and decisions
of the State of Utah.


 


17.           Titles.  The titles of the sections of this Agreement
are inserted only as a matter of convenience and for reference, and in no way
define, limit or describe the scope of this Agreement or the intent of any
provisions hereof.


 


18.           Amendment.  This Agreement shall not be modified or
amended except by written agreement signed by all of the parties hereto.


 


19.           Attorney’s Fees and Costs of
Enforcement.  If any party to this
Agreement shall incur any costs resulting from enforcement of this Agreement,
the defaulting party shall be liable to the prevailing party for such
costs.  Costs, as used herein, shall
include costs of enforcement, interpretation, or collection, including without
limitation, reasonable attorney’s fees, court costs, collection charges, travel
and other related or similar expenses.


 


20.           Severability of Provisions.  Any provision of this Agreement that is
invalid, prohibited, or unenforceable in any jurisdiction, shall not invalidate
the remainder of the provision or the remaining provisions of the Agreement.


 


21.           Entire Agreement.  Subject to the Plan, a copy of which in its
present form is available from the Secretary of the Company, this Agreement
contains all of the representations, declarations and statements from either
party to the other and expresses the entire understanding between


 


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the
parties with respect to the transactions provided for herein. All prior
memoranda, letters, statements and agreements concerning this subject matter,
if any, are merged in and replaced by this Agreement.


 


22.           Pronouns, Number and Gender.  Wherever necessary to implement the intent of
the parties hereto, references herein to the singular shall be interpreted as
the plural, and vice versa, and the feminine, masculine or neuter gender shall
be treated as one of the other genders.


 


23.           Binding Effect.  This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective legal
representatives, successors and assigns.


 


24.           Defined Terms.  The capitalized terms contained in this
Agreement but not otherwise defined herein shall have the same meanings given
to them in the Plan.


 


25.           Counterparts.  This Agreement may be executed in one or more
counterparts, each of which may be deemed an original, but all of which
together shall constitute one and the same instrument.


26.           Company Right to Substitute Award.  Notwithstanding anything to the contrary
herein, the Company, in its sole discretion, shall have the right to cancel in
whole or in part the Options granted to Optionee hereunder, provided that the
Company shall substitute therefore and grant to Optionee, alternative options,
or other equity or cash compensation or award, as may be permitted under the
Company’s then current omnibus equity incentive compensation plan, as may be
substantially equal in value to the Options (or cancelled portion thereof)
originally granted to Optionee hereunder.


 


IN WITNESS WHEREOF, the parties hereto have
caused this Agreement to be executed the day and year first above written.


 


	
   

  	
  COMPANY:

  	
  USANA
  HEALTH SCIENCES, INC.,

  
	
   

  	
  a Utah
  corporation

  
	
   

  	
   

  
	
   

  	
  By:

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  OPTIONEE:

  	
   

  	
   

  
	
   

  	
  (Signature)

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (Printed
  Name)

  



 


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