PROMISSORY NOTE
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$500,000 February 23, 2000
FOR VALUE RECEIVED, the undersigned, Grant F. Pace and Susan W. Pace,
jointly and severally agree to pay to the order of NU SKIN ENTERPRISES, INC., a
Delaware corporation, at 75 West Center Street, Provo, Utah 84601, or at such
other place as the holder (the "Holder") of this Note may from time to time
designate in writing, without setoff, in lawful money of the United States of
America, the principal sum of FIVE HUNDRED THOUSAND DOLLARS ($500,000) together
with interest on such principal sum and any other amounts due under this Note.
1. Interest. Commencing on the date of this Note and continuing until all
principal and interest due under this Note are paid in full, the outstanding
principal balance of this Note shall bear interest at the rate of 5.8% percent
per annum. Interest shall accrue daily and be calculated on the basis of a three
hundred sixty (360) day year and the actual number of days elapsed in any
partial calendar month.
2. Payment. Accrued interest shall be due and payable in semi-annual
installments due on the 15th day of April and October each year, commencing on
October 15, 2000. The entire principal balance of this Note, together with any
accrued and unpaid interest thereon and any other fees, costs or expenses
payable hereunder, shall be due and payable on the earlier to occur of the
following: (i) March 1, 2005, (ii) the 180th day following the date of the
undersigned's voluntary termination of employment with the Holder or any
affiliate thereof, (iii) the one year anniversary of the date of the termination
of the employment of the undersigned by Holder if Holder terminates such
employment other than for "cause" (as defined in the undersigned's employment
agreement), and (iv) the 30th day following the date of the termination of the
employment of the undersigned by Holder if Holder terminates such employment for
"cause" (as defined in the undersigned's employment agreement); provided, in the
event of a "change in control" (as defined in Schedule A), this Note shall in no
event become due and payable prior to the third annual anniversary of the date
of such change in control. Unless the Holder shall otherwise elect, each payment
made under this Note shall be applied first to costs and expenses incurred in
connection with the enforcement of this Note and interest due under this Note,
and any balance shall be applied to reduce the principal balance of this Note.
3. Late or Partial Payments. Any payment required under this Note or under
any other agreement entered into in connection with this Note that is not made
when due, shall bear interest payable on demand, both before and after judgment,
at the rate of fifteen percent (15.0%) per annum (the "Default Rate"). The
acceptance by the Holder of any payment that is less than the entire amount then
due under this Note shall be on account only and shall not constitute a waiver
of the obligation of the undersigned to pay such entire amount. The failure of
the undersigned to pay the entire amount then due under this Note shall be and
continue to be an event of default under this Note, notwithstanding the
acceptance by the Holder of less than such entire amount on account, and the
Holder shall thereafter, until such entire amount is paid (and notwithstanding
acceptance by the Holder thereafter of further sums on account or otherwise), be
entitled to exercise all rights and remedies provided for in this Note and under
any other agreement entered into in connection with this Note. The acceptance by
the Holder of any amount due under this Note after the same is due shall not
constitute a waiver of the right to require prompt payment, when due, of all
other amounts due under this Note or to declare that an event of default has
occurred under this Note with respect to any other amount not paid when due.
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4. Default. If any payment required under this Note is not made when due or
if the undersigned fails to promptly grant a valid mortgage or trust deed on the
residential property to be purchased by the undersigned, if it is purchased by
the undersigned, or a material breach under any other agreement entered into in
connection with this Note occurs, the entire unpaid principal balance of this
Note, together with all accrued but unpaid interest and any late charges due
under this Note, shall, at the option of the Holder, become due and payable
without presentment, demand, protest or notice of any kind, all of which are
expressly waived by the undersigned and all endorsers, guarantors, sureties,
accommodation parties and other persons at any time liable for all or any
portion of the indebtedness evidenced by this Note, and shall thereafter earn
interest, both before and after judgment, at the Default Rate. Any forbearance,
failure or delay by the Holder in exercising any right or remedy under this Note
or otherwise available to the Holder shall not be deemed to be a waiver of such
right or remedy, nor shall any single or partial exercise of any right or remedy
preclude the further exercise of such right or remedy. The undersigned shall pay
all reasonable costs and expenses incurred by the Holder in connection with the
enforcement of this Note (regardless of the particular nature of such costs and
expenses and whether incurred before or after the initiation of suit or before
or after judgment), including, without limitation, court costs and attorneys'
fees and costs.
5. Security. This Note is secured as provided by a mortgage or trust deed
(the "Mortgage") on the undersigned's primary residential property owned by the
undersigned or hereafter acquired in Provo, Utah, and the undersigned agrees to
execute a trust deed or mortgage on such property in a form acceptable to the
Holder. The Holder agrees that the Mortgage shall be subordinate to the trust
deed or mortgage securing the primary loan used to finance the purchase of such
residential property.
6. Miscellaneous. The undersigned and all endorsers, guarantors, sureties,
accommodation parties and other persons at any time liable for all or any
portion of the indebtedness evidenced by this Note consent to all extensions of
time, renewals, waivers or modifications that may be granted by the Holder with
respect to the payment or other provisions of this Note, the release of all or
any portion of any security given in connection with this Note, with or without
substitution, and the release of any party liable under this Note. If this Note
is executed by more than one person, each of such persons shall be jointly and
severally liable for all of the obligations evidenced by this Note. Time is of
the essence with respect to all obligations of the undersigned under this Note.
The unenforceability or invalidity of any provision of this Note shall not
affect the enforceability or validity of any other provision of this Note. The
terms of this Note shall bind the undersigned and inure to the benefit of the
Holder and its respective heirs, successors, assigns and legal representatives.
The Holder may, in its sole discretion, assign part or all of its interest under
this Note at any time or from time to time. This Note shall be governed by Utah
law. This Note, the Pledge Agreement and any other written agreement entered
into in connection with this Note are a final expression of the agreement
between the Holder and the undersigned and may not be contradicted by evidence
of any alleged oral agreement.
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THE UNDERSIGNED has executed and delivered this Note on the date set forth
below, to be effective as of the date first set forth above.
GRANT F. PACE
/s/Grant F. Pace
Date: February 23, 2000 Grant F. Pace
SUSAN W. PACE
/s/ Susan W. Pace
Date: February 23, 2000 Susan W. Pace
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<PAGE>
Schedule A
For purposes of this Note, a change in control shall mean any of the following
events that occur during the term of this Note:
(1) An acquisition (other than directly from Nu Skin Enterprises, Inc.
(hereinafter the "Company") ) of any voting securities of the Company (the
"Voting Securities") by any "Person" (as the term person is used for purposes of
Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) immediately after which such Person has 'Beneficial Ownership'
(within the meaning of Rule 13d-3 promulgated under the Exchange Act) of more
than 50% of the combined voting power of the Company's then outstanding Voting
Securities; provided, however, in determining whether a Change in Control has
occurred, Voting Securities which are acquired in a "Non-Control Acquisition"
(as defined below) shall not constitute an acquisition which would cause a
Change in Control. A "Non-Control Acquisition" shall mean an acquisition by (A)
an employee benefit plan (or a trust forming a part thereof) maintained by (i)
the Company or (ii) any corporation or other Person of which a majority of its
voting power or its equity securities or equity interest is owned directly or
indirectly by the Company (a "Company Subsidiary"), (B) the Company or any
Company Subsidiary, (C) any Person in connection with a "Non-Control
Transaction" (as defined below), or (D) any holder of the Class B Common Stock
of the Company;
(2) Approval by stockholders of the Company of:
(A) A merger, consolidation or reorganization involving the Company,
unless
(i) the stockholders of the Company immediately before such
merger, consolidation or reorganization own, directly or indirectly,
immediately following such merger, consolidation or reorganization, at
least fifty percent (50%) of the combined voting power of the
outstanding voting securities of the corporation resulting from merger
or consolidation or reorganization (the "Surviving Corporation") in
substantially the same proportion as their ownership of the Voting
Securities immediately before such merger, consolidation or
reorganization; or
(ii) the individuals who were members of the Incumbent Board
immediately prior to the execution of the agreement providing for such
merger, consolidation or reorganization constitute at least two-thirds
of the members of the board of directors of the Surviving Corporation;
or
(iii) one or more holders of the Class B Common Stock own in the
aggregate at least 50% of the combined voting power of the outstanding
voting securities of the Surviving Corporation.
A transaction described in clauses (i), (ii) or (iii) shall herein be
referred to as a "Non-Control Transaction;"
(B) A complete liquidation or dissolution of the Company; or
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(C) An agreement for the sale or other disposition of all or
substantially all of the assets of the Company to any Person (other than a
transfer to a Company Subsidiary) or to a Company controlled by one or more
holders of the Class B Common Stock.
Notwithstanding the foregoing, a Change of Control shall not be deemed to
occur solely because any person (the "Subject Person") acquired Beneficial
Ownership of more than the permitted amount of the outstanding voting securities
as a result of the acquisition of voting securities by the Company which, by
reducing the number of voting securities outstanding, increases the proportional
number of shares beneficially owned by the Subject Person; provided, however,
that if a Change in Control would occur (but for the operation of this sentence)
as a result of the acquisition of voting securities by the Company, and after
such share acquisition by the Company, the Subject Person becomes the Beneficial
Owner of any additional voting securities which increases the percentage of the
then outstanding voting securities beneficially owned by the Subject Person,
then a Change in Control shall occur.
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