Document:

Exhibit 10.1

 

Form of
Agreement for Stock Options granted under the 1998 Stock Incentive Plan and 1998 Non-Employee Director Stock Option Plan

 

Dear_______:

 

I am pleased to inform you
of a grant of options to purchase common stock of Nutraceutical International
Corporation (the “Company”).  This grant
is pursuant to the [insert applicable stock option plan name] (the “Plan”).  The details of your option grant (the “Option”)
are set forth below.  The Option is
subject to the attached Option Terms as well as the Plan, and you should read
and comply with both in connection with any exercise.  

 

	
  Granted To (Optionee):

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Social Security Number:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Grant Date:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Option Shares Granted:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Exercise Price (Per Share):

  	
   

  	
  [close of market on date of grant]

  
	
   

  	
   

  	
   

  
	
  Expiration Date:

  	
   

  	
  [10 years from date of grant]

  
	
   

  	
   

  	
   

  
	
  Vesting Schedule:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Additional Terms:

  	
   

  	
  See attached Option Terms

  

 

If you have any questions
about your Option(s), or if you need a copy of any documents associated with
the Plan, including the Plan Prospectus, you may contact anyone in the Legal
Department.

 

We appreciate your
dedication and the dedication of all our employees.  Please keep up the good work.  

 

Sincerely,

NUTRACEUTICAL
INTERNATIONAL CORPORATION

 

 

	
   

  	
   

  
	
  Frank W. Gay II

  
	
  Chairman and CEO 

  

 

 

OPTION TERMS

(Nonqualified Stock Option)

 

These Option Terms apply to the grant of
stock options by Nutraceutical International Corporation, a Delaware
corporation (the “Company”) to the employee or person identified on the
cover page or cover letter hereto (the “Optionee”)

 

Pursuant to the Company’s 1998 Stock
Incentive Plan (the “Plan”), the Company wishes to grant to the Optionee
an Option (the “Option”), and the Optionee wishes to accept such grant,
to acquire that number of shares of the Company’s common stock, par value $.01
per share (the “Common Stock”) listed on the cover page hereto (the
“Option Shares”), subject in all respects to these Option Terms.

 

The terms and conditions of the grant are as
follows:

 

1.             OPTION.

 

(a)           Term.  Subject to the terms and conditions set forth
herein, the Company hereby grants to the Optionee (or such other persons as
permitted by paragraph 6) an Option to purchase the Option Shares at a
price per share equal to that amount listed on the cover page hereto (the “Exercise
Price”), payable upon exercise as set forth in paragraph 1(b) below.  The Option shall expire at the close of
business on the tenth anniversary of the Grant Date (the “Expiration Date”),
subject to earlier expiration upon the termination of the Optionee’s employment
as provided in paragraph 3(b) below. 
The Exercise Price and the number and kind of shares of Common Stock or
other property for which the Option may be exercised shall be subject to
adjustment as provided in paragraph 11 hereto. 
The Option is not intended to be an “incentive stock option” within the
meaning of Section 422 of the Code. 

 

(b)           Payment
of Option Price.  Subject to
paragraph 2 below, the Option may be exercised in whole or in part upon payment
of an amount (the “Option Price”) equal to the product of (i) the
Exercise Price multiplied by (ii) the number of Option Shares to be
acquired. Payment of the Option Price shall be made to the Company in cash or
by check by the Optionee at the time of the delivery of such Option
Shares.  The Committee, in its
discretion, may elect to accept other forms of payment for the Option Price.

 

2.             EXERCISABILITY/VESTING.

 

(a)           Normal
Vesting.  The Option granted
hereunder may be exercised only to the extent it has become vested.  The Option shall vest and become exercisable
with respect to the number of Option Shares (set forth on a cumulative basis)
indicated on the cover page hereto, if and only if the Optionee is,
and has been, continuously employed by the Company from the Grant Date through
the applicable Vesting Date.  There shall
be no partial vesting or pro-rations between Vesting Dates.

 

(b)           Effect
on Vesting in Case of Employment Termination.  Notwithstanding paragraph 2(a) above,
the following special vesting rules shall apply if the Optionee’s
employment with the Company terminates prior to the Option becoming fully
vested:

 

(i)            Death
or Permanent Disability.  If the
Optionee dies or becomes subject to a Permanent Disability while an employee of
the Company, then the Option shall be vested and become fully exercisable as to
all of the Option Shares. 

 

(ii)           Other
Termination of Employment.  Unless
otherwise determined by the Committee, if the Optionee’s employment terminates
other than by death, Permanent Disability or discharge for Cause, the Option
shall be vested and fully exercisable with respect to that portion of the
Option that was vested and exercisable on the date such employment with the
Company ceased and any portion of the Option that was not vested and
exercisable on such date shall expire and be forfeited.

 

(c)           Change
in Control.  In the event of a Change
in Control, the Option shall be vested and become fully exercisable as to all
of the Option Shares.  The Committee may
in its sole discretion direct the Company to cash out the Option on the basis
of the Change in Control Price as of the date the Change of Control occurs or
such other date the Committee may determine prior to the Change in Control.

 

3.             EXPIRATION
OF OPTION.

 

(a)           Normal
Expiration.  In no event shall any
part of the Option be exercisable after the Expiration Date set forth in
paragraph 1(a) above.

 

(b)           Early
Expiration Upon Termination of Employment. Any portion of the Option that
was not vested and

 

 

exercisable on the date the Optionee’s employment with the Company
terminated shall expire and be forfeited on such date (after giving effect to
the vesting provisions of paragraphs 2(b) and 2(c) above), and
any portion of the Option that was vested and exercisable on the date such
employment with the Company terminated shall also expire and be forfeited;
provided that if the Optionee dies or becomes subject to a Permanent
Disability, or ceases employment for any reason other than discharge for Cause,
the portion of the Option that was vested and exercisable on the date such
employment with the Company terminated shall expire 180 days from the date of
such death or Permanent Disability or cessation or employment, but in no event
after the Expiration Date. If the Optionee is discharged for Cause, all of the Option
not previously exercised shall expire and be forfeited whether exercisable or
not.

 

4.             PROCEDURE
FOR EXERCISE.  The Optionee may
exercise all or any portion of the Option, to the extent it has vested and is
outstanding, at any time and from time to time prior to the Expiration Date, by
delivering written notice to the Company (to the attention of the Company’s
Chief Financial Officer) and the written acknowledgment that the Optionee has
read and has been afforded an opportunity to ask questions of management of the
Company regarding all financial and other information provided to the Optionee
regarding the Company, together with payment of the Option Price in accordance
with the provisions of paragraph 1(b) above.  As a condition to any exercise of the Option,
the Optionee shall permit the Company to deliver to the Optionee all financial
and other information regarding the Company it believes necessary to enable
such Optionee to make an informed investment decision, and the Optionee shall
make all customary investment representations which the Company requires.

 

5.             SECURITIES
LAWS RESTRICTIONS AND OTHER RESTRICTIONS ON TRANSFER OF OPTION SHARES.  By exercising the Option, the Optionee:  (i) represents that the Optionee shall
be purchasing Option Shares for the Optionee’s own account and not on behalf of
others, and (ii) acknowledges that the Optionee understands and
acknowledges that federal and state securities laws govern and restrict his or
her right to offer, sell or otherwise dispose of any Option Shares unless the
offer, sale or other disposition thereof is registered under the Securities Act
and state securities laws, or in the opinion of the Company’s counsel, such
offer, sale or other disposition is exempt from registration or qualification
thereunder.  By accepting the grant of
the Option, the Optionee agrees that he or she will not offer, sell or
otherwise dispose of any Option Shares in any manner which would: (i) require
the Company to file any registration statement with the Securities and Exchange
Commission (or any similar filing under state law) or to amend or supplement
any such filing or (ii) violate or cause the Company to violate the
Securities Act, the rules and regulations promulgated thereunder or any
other state or federal law.  The
certificates for any Option Shares purchased shall bear such legends as the
Company deems necessary or desirable in connection with the Securities Act or
other rules, regulations or laws. 

 

6.             TRANSFERABILITY
OF OPTION.  The Option granted
hereunder may be transferred by the Optionee (i) by will or the laws of
descent and distribution, (ii)  to any member of the Optionee’s Family
Group, or (iii) with the prior written approval of the Committee, to or
for the benefit of a tax-exempt charitable organization, a nonprofit
corporation, or a split interest trust, all of the income and remainder
interests of which are payable to or for the benefit of one or more member’s of
the Optionee’s Family Group and a tax-exempt charitable organization; provided,
that any such transferees who receive an Option under 6(ii) or (iii) shall
have agreed in writing to be bound by these Option Terms.  Unless the context otherwise requires,
references herein to the Optionee are deemed to include any permitted
transferee under this paragraph 6. 
During the Optionee’s lifetime, only the Optionee (or his or her
guardian or legal representative) or his or her permitted transferee may
exercise the Option.  In the event of the
Optionee’s death, the Option (to the extent still held by the Optionee at such
time) may be exercised only (i) by the executor or administrator of the
Optionee’s estate or the person or persons to whom his or her rights under the
Option shall pass by will or the laws of descent and distribution and (ii) to
the extent that the Optionee was entitled hereunder at the date of the Optionee’s
death. 

 

7.             CONFORMITY
WITH PLAN.  The Option is intended to
conform in all respects with, and is subject to all applicable provisions of,
the Plan (which is incorporated herein by reference).  Inconsistencies between these Option Terms
and the Plan shall be resolved in accordance with the terms of the Plan.  By accepting the grant of this Option, the
Optionee acknowledges his or her receipt of these Option Terms and agrees to be
bound by all of the terms of these Option Terms. 

 

8.             RIGHTS
OF PARTICIPANTS.  Nothing in this
Agreement shall interfere with or limit in any way the right of the Company to
terminate the Optionee’s employment at any time (with or without Cause), nor
confer upon the Optionee any right to continue in the employ of the Company for
any period of time or to continue his or her present (or any other) rate of
compensation, and in the event of termination of employment (including, but not
limited to, termination by the Company without Cause) any portion of the Option
that was not previously vested and exercisable shall expire and be forfeited
(other than termination due to death or Permanent Disability).  Nothing in this Agreement shall confer upon
the Optionee any right to be selected again as a Plan participant, and nothing
in the Plan or this Agreement shall provide for any adjustment to the number of
Option Shares subject to the Option upon the occurrence of subsequent events
except as provided in paragraph 11 below.

 

 

9.             WITHHOLDING
OF TAXES.  The Company shall be
entitled, if necessary or desirable, to withhold from the Optionee from any
amounts due and payable by the Company to the Optionee (or secure payment from
him or her in lieu of withholding) the amount of any withholding or other tax
due from the Company with respect to any Option Shares issuable hereunder, and
the Company may defer such issuance unless indemnified by the Optionee to its
satisfaction.

 

10.           CERTAIN
DEFINITIONS.  For the purposes of
this Agreement, the following terms shall have the meanings set forth below:

 

“Board” means the Board of Directors
of the Company.

 

“Cause” shall mean (i) the
willful commission of a felony or a fraud involving the Company or its
subsidiaries or affiliates by the Optionee or (ii) any act or acts of
gross negligence or willful misconduct by the Optionee in the performance of
his or her duties which results in or causes material economic harm to the
Company or its subsidiaries or affiliates. The determination as to whether the
Optionee was terminated for Cause shall be made by the Board in its sole
discretion.

 

“Change in Control” means the
occurrence of any of the following:

 

(i)            When
any “person” as defined in Section 3(a)(9) of the Exchange Act and as
used in Sections 13(d) and 14(d) thereof, including a “group” as
defined in Section 13(d) of the Exchange Act but excluding the
Company and any Subsidiary, any existing stockholders of the Company on the
effective date of the Plan and any employee benefit plan sponsored or
maintained by the Company or any Subsidiary (including any trustee of such plan
acting as trustee), directly or indirectly, becomes the “beneficial owner” (as
defined in Rule 13d-3 under the Exchange Act), after the effective date of
the Plan, of securities of the Company representing 20 percent or more of the
combined voting power of the Company’s then outstanding securities;

 

(ii)           When,
during any period of 24 consecutive months during the existence of the Plan,
the individuals who, at the beginning of such period, constitute the Board (the
“Incumbent Directors”) cease for any reason other than death to
constitute at least a majority thereof, provided, however, that a director who
was not a director at the beginning of such 24-month period shall be deemed to
have satisfied such 24-month requirement (and be an Incumbent Director) if such
director was elected by, or on the recommendation of or with the approval of,
at least two-thirds of the directors who then qualified as Incumbent Directors
either actually (because they were directors at the beginning of such 24 month
period) or by prior operation of this provision; or

 

(iii)          The
approval by the stockholders of the Company of a transaction involving the
acquisition of the Company by an entity other than the Company or a subsidiary
through purchase of assets, by merger, or otherwise.

 

“Change in Control Price” means the
highest price per share of Common Stock paid in any transaction reported on the
Nasdaq National Market or paid or offered in any bona fide transaction related
to a Change in Control at any time during the 60-day period immediately
preceding the occurrence of the Change in Control, in each case as determined
by the Committee.

 

“Code” shall mean the Internal Revenue
Code of 1986, as amended, and any successor statute.

 

“Committee” shall mean the
Compensation Committee of the Board of Directors, or such other committee of
the Board which may be designated by the Board to administer the Plan.  Any reference herein to the Committee shall
be deemed to refer to the Board in the event that the Board has not delegated
the administration of the Plan to the Committee.

 

“Common Stock” shall mean the Company’s
Common Stock, par value $.01 per share, or, in the event that the outstanding
Common Stock is hereafter changed into or exchanged for different stock or
securities of the Company, such other stock or securities.

 

“Company” shall mean Nutraceutical
International Corporation, a Delaware corporation, and (except to the extent
the context requires otherwise) any subsidiary corporation of the Company as
such term is defined in Section 425(f) of the Code.

 

“Exchange Act” shall mean the
Securities Exchange Act of 1934, as amended, and any successor statute.

 

“Family Group” means an Optionee’s
spouse and children (whether natural or adopted) and any trust established
solely for the benefit of the Optionee and/or the Optionee’s spouse and/or
children.

 

“Grant Date” shall mean the date on
which the Option was granted, as indicated on the cover page hereof.

 

“Option Shares” shall mean (i) all
shares of Common Stock issued or issuable upon the exercise of the Option and (ii) all
shares of Common Stock issued with respect to the Common Stock referred to in
clause (i) above by way of stock dividend or stock split or in connection
with any conversion, merger, consolidation or recapitalization or other
reorganization affecting the Common Stock.

 

“Permanent Disability” shall mean the
Optionee’s permanent inability, due to illness, accident, injury, physical or
mental incapacity or other disability, to carry out effectively his or her
duties and obligations to the Company or to participate effectively and
actively in the management of the Company, as determined in the reasonable
judgment of the Board.

 

“Securities Act” shall mean the
Securities Act of 1933, as amended, and any successor statute.

 

 

11.           ADJUSTMENTS.  In the event of a reorganization,
recapitalization, stock dividend or stock split, or combination or other change
in the shares of Common Stock, the Board or the Committee shall, in order to
prevent the dilution or enlargement of rights under the Option, make such
adjustments in the number and type of shares authorized by the Plan, the number
and type of shares covered by the Option and the Exercise Price specified herein
as may be determined to be appropriate and equitable.

 

12.           ADDITIONAL
RESTRICTIONS ON TRANSFER.

 

(a)           Restrictive
Legend.  Unless the Option Shares are
covered by an effective registration statement under the Securities Act, the
certificates representing the Option Shares shall bear the following legend:

 

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”),
OR UNDER ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD OR TRANSFERRED IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND APPLICABLE
STATE SECURITIES LAWS OR AN EXEMPTION FROM REGISTRATION THEREUNDER.”

 

(b)           Opinion
of Counsel.  The Optionee may not
sell, transfer or dispose of any Option Shares (except pursuant to an effective
registration statement under the Securities Act) without first delivering to
the Company an opinion of counsel reasonably acceptable in form and substance
to the Company that registration under the Securities Act or any applicable state
securities law is not required in connection with such transfer.

 

13.           REMEDIES.  The parties hereto shall be entitled to
enforce their rights under this Agreement specifically, to recover damages by
reason of any breach of any provision of these Option Terms and to exercise all
other rights existing in their favor. 
Any party hereto may, in its sole discretion, apply to any court of law
or equity of competent jurisdiction for specific performance and/or injunctive
relief (without posting bond or other security) in order to enforce or prevent
any violation of the provisions of this Agreement.

 

14.           AMENDMENT.  Except as otherwise provided herein, any
provision of these Option Terms may be amended or waived only with the prior
written consent of the Optionee and the Company.

 

15.           SUCCESSORS
AND ASSIGNS.  Except as otherwise
expressly provided herein, all covenants and agreements contained in these
Option Terms by or on behalf of any of the parties hereto shall bind and inure
to the benefit of the respective successors and permitted assigns of the
parties hereto whether so expressed or not.

 

16.           SEVERABILITY.  Whenever possible, each provision of these
Option Terms shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of these Option Terms is held to be
prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of these Option Terms.

 

17.           DESCRIPTIVE
HEADINGS.  The descriptive headings
of these Option Terms are inserted for convenience only and do not constitute a
part of this Agreement.

 

18.           GOVERNING
LAW.  The corporate law of the State
of Delaware shall govern all questions concerning the relative rights of the
Company and its stockholders.  All other
questions concerning the construction, validity and interpretation of these
Option Terms shall be governed by the internal law, and not the law of
conflicts, of the State of Utah.

 

19.           NOTICES.  All notices, demands or other communications
to be given or delivered under or by reason of the provisions of these Option
Terms shall be in writing and shall be deemed to have been given when delivered
personally or mailed by certified or registered mail, return receipt requested
and postage prepaid, to the recipient. 
Such notices, demands and other communications shall be sent to the
Optionee at the address appearing on the cover page to this Agreement and
to the Company at Nutraceutical International Corporation, 1400 Kearns
Boulevard, 2nd Floor, Park City, Utah 84060, Attn:  Chief Financial Officer, or to such other
address or to the attention of such other person as the recipient party has
specified by prior written notice to the sending party.

 

20.           ENTIRE AGREEMENT.  These Option Terms, the cover page hereto,
and the terms of the Plan constitute the entire understanding between the
Optionee and the Company, and supersede all other agreements, whether written
or oral, with respect to the acquisition by the Optionee of the Option Shares.Exhibit 10.2

 

ACCELERATION OF UNVESTED STOCK OPTIONS

 

[Nutraceutical Stationery]

 

September 30, 2005

 

[Insert Name and Address]

 

Re:
Acceleration of Unvested Stock Options

 

Dear [insert first name]:

 

I am pleased to advise you that, on September 30, 2005, the
Compensation Committee of Nutraceutical International Corporation’s Board of
Directors accelerated the vesting for unvested stock options previously granted
to you under Nutraceutical’s 1998 [insert applicable stock option plan name]
(the “Plan”).  Accordingly, any and all
grants of stock options given to you under the Plan, which have not been
previously exercised or canceled, are now vested.

 

Please call me if you have any questions.

 

Sincerely,

NUTRACEUTICAL INTERNATIONAL CORPORATION

 

 

Frank W. Gay II

Chairman and CEO

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