NU SKIN ENTERPRISES, INC.
 
2010 OMNIBUS INCENTIVE PLAN
 
Approved by Stockholders on May 26, 2010
 
Expiration Date: May 26, 2020
 

 
Nu Skin Enterprises, Inc. (the “Company”), a Delaware corporation, hereby
establishes and adopts the following 2010 Omnibus Incentive Plan (the “Plan”).
 

 
1.           PURPOSE OF THE PLAN
 
           The purpose of the Plan is to assist the Company and its Subsidiaries
in attracting and retaining selected individuals to serve as employees,
directors, consultants and/or advisors who are expected to contribute to the
Company's success and to achieve long-term objectives that will benefit
stockholders of the Company through the additional incentives inherent in the
Awards hereunder.
 
2.
DEFINITIONS

 
2.1.           “Award” shall mean any Option, Stock Appreciation Right,
Restricted Stock Award, Restricted Stock Unit Award, Other Share-Based Award,
Performance Award or any other right, interest or option relating to Shares or
other property (including cash) granted pursuant to the provisions of the Plan.
 
2.2.           “Award Agreement” shall mean any agreement, contract or other
instrument or document evidencing any Award hereunder, whether in writing or
through an electronic medium.
 
2.3.           “Board” shall mean the board of directors of the Company.
 
2.4.           “Code” shall mean the Internal Revenue Code of 1986, as amended
from time to time.
 
2.5.           “Committee” shall mean the Compensation Committee of the Board or
a subcommittee thereof formed by the Compensation Committee to act as the
Committee hereunder. The Committee shall consist of no fewer than two Directors,
each of whom is (i) a “Non-Employee Director” within the meaning of Rule 16b-3
of the Exchange Act, (ii) an “outside director” within the meaning of Section
162(m) of the Code, and (iii) an “independent director” for purpose of the rules
of the principal U.S. national securities exchange on which the Shares are
traded, to the extent required by such rules.
 
2.6.           “Consultant” shall mean any consultant or advisor or independent
distributor who is a natural person and who provides services to the Company or
any Subsidiary, so long as such person (i) renders bona fide services that are
not in connection with the offer and sale of the Company's securities in a
capital-raising transaction, (ii) does not directly or indirectly promote or
maintain a market for the Company's securities and (iii) otherwise qualifies as
a consultant under the applicable rules of the Securities and Exchange
Commission for registration of shares of stock on a Form S-8 registration
statement.
 
 
 
1

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

 
 
2.7.           “Covered Employee” shall mean an employee of the Company or its
Subsidiaries who is a “covered employee” within the meaning of Section 162(m) of
the Code.
 
2.8.           “Director” shall mean a non-employee member of the Board.
 
2.9.           “Dividend Equivalents” shall have the meaning set forth in
Section 12.5.
 
2.10.           “Employee” shall mean any employee of the Company or any
Subsidiary and any prospective employee conditioned upon, and effective not
earlier than, such person becoming an employee of the Company or any Subsidiary.
 
2.11.           “Exchange Act” shall mean the Securities Exchange Act of 1934,
as amended.
 
2.12.           “Fair Market Value” shall mean, with respect to Shares as of any
date, (i) the closing price of the Shares as reported on the principal U.S.
national securities exchange on which the Shares are listed and traded on such
date, or, if there is no closing price on that date, then on the last preceding
date on which such a closing price was reported; (ii) if the Shares are not
listed on any U.S. national securities exchange but are quoted in an
inter-dealer quotation system on a last sale basis, the final ask price of the
Shares reported on the inter-dealer quotation system for such date, or, if there
is no such sale on such date, then on the last preceding date on which a sale
was reported; or (iii) if the Shares are neither listed on a U.S. national
securities exchange nor quoted on an inter-dealer quotation system on a last
sale basis, the amount determined by the Committee in its sole discretion to be
the fair market value of the Shares. The Fair Market Value of any property other
than Shares shall mean the market value of such property determined by such
methods or procedures as shall be established from time to time by the
Committee.
 
2.13.           “Incentive Stock Option” shall mean an Option which when granted
is intended to qualify as an incentive stock option for purposes of Section 422
of the Code.
 
2.14.           “Limitations” shall have the meaning set forth in Section 10.5.
 
2.15.           “Option” shall mean any right granted to a Participant under the
Plan allowing such Participant to purchase Shares at such price or prices and
during such period or periods as the Committee shall determine.
 
2.16.           “Other Share-Based Award” shall have the meaning set forth in
Section 8.1.
 
2.17.           “Participant” shall mean an Employee, Director or Consultant who
is selected by the Committee to receive an Award under the Plan.
 
2.18.           “Payee” shall have the meaning set forth in Section 13.2.
 
2.19.           “Performance Award” shall mean any Award of Performance Cash,
Performance Shares or Performance Units granted pursuant to Article 9.
 
2.20.           “Performance Cash” shall mean any cash incentives granted
pursuant to Article 9 payable to the Participant upon the achievement of such
performance goals as the Committee shall establish.
 
2.21.           “Performance Period” shall mean the period established by the
Committee during which any performance goals specified by the Committee with
respect to a Performance Award are to be measured.
 
 
 
 
2

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

 
2.22.           “Performance Share” shall mean any grant pursuant to Article 9
of a unit valued by reference to a designated number of Shares, which value may
be paid to the Participant upon achievement of such performance goals as the
Committee shall establish.
 
2.23.           “Performance Unit” shall mean any grant pursuant to Article 9 of
a unit valued by reference to a designated amount of cash or property other than
Shares, which value may be paid to the Participant upon achievement of such
performance goals during the Performance Period as the Committee shall
establish.
 
2.24.           “Permitted Assignee” shall have the meaning set forth in Section
12.3.
 
2.25.           “Prior Plans” shall mean, collectively, the Company’s 1996 Stock
Incentive Plan and the Company’s 2006 Stock Incentive Plan.
 
2.26.           “Restricted Stock” shall mean any Share issued with the
restriction that the holder may not sell, transfer, pledge or assign such Share
and with such other restrictions as the Committee, in its sole discretion, may
impose, which restrictions may lapse separately or in combination at such time
or times, in installments or otherwise, as the Committee may deem appropriate.
 
2.27.           “Restricted Stock Award” shall have the meaning set forth in
Section 7.1.
 
2.28           “Restricted Stock Unit” means an Award that is valued by
reference to a Share, which value may be paid to the Participant in Shares or
cash as determined by the Committee in its sole discretion upon the satisfaction
of vesting restrictions as the Committee may establish, which restrictions may
lapse separately or in combination at such time or times, in installments or
otherwise, as the Committee may deem appropriate.

            
    2.29
“Restricted Stock Unit Award” shall have the meaning set forth in Section 7.1

2.30.           “Shares” shall mean the shares of common stock of the Company,
par value $0.001 per share.
 
2.31.           “Stock Appreciation Right” shall mean the right granted to a
Participant pursuant to Article 6.
 
2.32.           “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.
 
2.33.           Substitute Awards” shall mean Awards granted or Shares issued by
the Company in assumption of, or in substitution or exchange for, awards
previously granted, or the right or obligation to make future awards, in each
case by a company acquired by the Company or any Subsidiary or with which the
Company or any Subsidiary combines.
 
                2.34.           “Vesting Period” shall mean the period of time
specified by the Committee during which vesting restrictions for an Award are
applicable.
 
 
3

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

 
3.            SHARES SUBJECT TO THE PLAN
 
3.1           Number of Shares. (a) Subject to adjustment as provided in
Section 12.2, a total of 7 million Shares shall be authorized for grant under
the Plan less one (1) Share for every one (1) Share that was subject to an
option or stock appreciation right granted under Prior Plans after December 31,
2009 and two and four-tenths (2.4) Shares for every one (1) Share that was
subject to an award other than an option or stock appreciation right granted
after December 31, 2009 under the Prior Plans. Any Shares that are subject to
Options or Stock Appreciation Rights shall be counted against this limit as one
(1) Share for every one (1) Share granted, and any Shares that are subject to
Awards other than Options or Stock Appreciation Rights shall be counted against
this limit as two and four-tenths (2.4) Shares for every one (1) Share granted.
After the effective date of the Plan (as provided in Section 13.13), no awards
may be granted under any Prior Plan.
 
(b)           If (i) any Shares subject to an Award are forfeited, an Award
expires or an Award is settled for cash (in whole or in part), or (ii) after
December 31, 2009 any Shares subject to an award under the Prior Plans are
forfeited, or an award under the Prior Plans expires or is settled for cash (in
whole or in part), the Shares subject to such Award or award under the Prior
Plans shall, to the extent of such forfeiture, expiration or cash settlement,
again be available for Awards under the Plan, in accordance with Section 3.1(d)
below. Notwithstanding anything to the contrary contained herein, the following
Shares shall not be added to the Shares authorized for grant under paragraph (a)
of this Section: (i) Shares tendered by the Participant or withheld by the
Company in payment of the purchase price of an Option or an option granted under
the Prior Plans, or to satisfy any tax withholding obligation with respect to an
Award or an award granted under the Prior Plans, and (ii) Shares subject to a
Stock Appreciation Right or a stock appreciation right granted under the Prior
Plans that are not issued in connection with its stock settlement on exercise
thereof and (iii) Shares reacquired by the Company on the open market or
otherwise using cash proceeds from the exercise of Options or options granted
under the Prior Plans.
 
(c)           Substitute Awards shall not reduce the Shares authorized for grant
under the Plan or the applicable Limitations applicable to a Participant under
Section 10.5, nor shall Shares subject to a Substitute Award again be available
for Awards under the Plan to the extent of any forfeiture, expiration or cash
settlement as provided in paragraph (b) above. Additionally, in the event that a
company acquired by the Company or any Subsidiary or with which the Company or
any Subsidiary combines has shares available under a pre-existing plan approved
by stockholders and not adopted in contemplation of such acquisition or
combination, the shares available for grant pursuant to the terms of such
pre-existing plan (as adjusted, to the extent appropriate, using the exchange
ratio or other adjustment or valuation ratio or formula used in such acquisition
or combination to determine the consideration payable to the holders of common
stock of the entities party to such acquisition or combination) may be used for
Awards under the Plan and shall not reduce the Shares authorized for grant under
the Plan; provided that Awards using such available shares shall not be made
after the date awards or grants could have been made under the terms of the
pre-existing plan, absent the acquisition or combination, and shall only be made
to individuals who were not Employees or Directors prior to such acquisition or
combination.
 
(d)           Any Shares that again become available for grant pursuant to this
Section shall be added back as (i) one (1) Share if such Shares were subject to
Options or Stock Appreciation Rights granted under the Plan or options or stock
appreciation rights granted under the Prior Plans, and (ii) as two and
four-tenths (2.4) Shares if such Shares were subject to Awards other than
Options or Stock Appreciation Rights granted under the Plan or awards other than
options or stock appreciation rights granted under the Prior Plans.
 
3.2.           Character of Shares. Any Shares issued hereunder may consist, in
whole or in part, of authorized and unissued shares, treasury shares or shares
purchased in the open market or otherwise.
 
 
4

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

 
4.        ELIGIBILITY AND ADMINISTRATION
 
4.1.           Eligibility. Any Employee, Director or Consultant shall be
eligible to be selected as a Participant.
 
4.2.           Administration. (a) The Plan shall be administered by the
Committee. The Committee shall have full power and authority, subject to the
provisions of the Plan and subject to such orders or resolutions not
inconsistent with the provisions of the Plan as may from time to time be adopted
by the Board, to: (i) select the Employees, Directors and Consultants to whom
Awards may from time to time be granted hereunder; (ii) determine the type or
types of Awards to be granted to each Participant hereunder; (iii) determine the
number of Shares (or dollar value) to be covered by each Award granted
hereunder; (iv) determine the terms and conditions, not inconsistent with the
provisions of the Plan, of any Award granted hereunder; (v) determine whether,
to what extent and under what circumstances Awards may be settled in cash,
Shares or other property; (vi) determine whether, to what extent, and under what
circumstances cash, Shares, other property and other amounts payable with
respect to an Award made under the Plan shall be deferred either automatically
or at the election of the Participant; (vii) determine whether, to what extent
and under what circumstances any Award shall be canceled or suspended;
(viii) interpret and administer the Plan and any instrument or agreement entered
into under or in connection with the Plan, including any Award Agreement; (ix)
correct any defect, supply any omission or reconcile any inconsistency in the
Plan or any Award in the manner and to the extent that the Committee shall deem
desirable to carry it into effect; (x) establish such rules and regulations and
appoint such agents as it shall deem appropriate for the proper administration
of the Plan; (xi) make any adjustments or modifications to Awards granted to
Participants who are working outside the United States and adopt any sub-plans
as may be deemed necessary or advisable for participation of such Participants,
to fulfill the purposes of the Plan and/or to comply with applicable local laws;
(xii)determine whether any Award, other than an Option or Stock Appreciation
Right, will have Dividend Equivalents; and (xiii) make any other determination
and take any other action that the Committee deems necessary or desirable for
the administration of the Plan.
 
(b)           Decisions of the Committee shall be final, conclusive and binding
on all persons or entities, including the Company, any Participant, and any
Subsidiary. A majority of the members of the Committee may determine its
actions, including fixing the time and place of its meetings. Notwithstanding
the foregoing, any action or determination by the Committee specifically
affecting or relating to an Award to a Director shall require the prior approval
of the Board.
 
(c)           To the extent not inconsistent with applicable law, including
Section 162(m) of the Code, or the rules and regulations of the principal U.S.
national securities exchange on which the Shares are traded), the Committee may
delegate to (i) a committee of one or more directors of the Company any of the
authority of the Committee under the Plan, including the right to grant, cancel
or suspend Awards and (ii) to the extent permitted by law, to one or more
executive officers or a committee of executive officers the right to grant
Awards to Employees who are not directors or executive officers of the Company
and the authority to take action on behalf of the Committee pursuant to the Plan
to cancel or suspend Awards to Employees who are not directors or executive
officers of the Company.
 
5.       OPTIONS
 
           5.1.           Grant of Options. Options may be granted hereunder to
Participants either alone or in addition to other Awards granted under the Plan.
Any Option shall be subject to the terms and conditions of this Article and to
such additional terms and conditions, not inconsistent with the provisions of
the Plan, as the Committee shall deem desirable. In no event may Dividend
Equivalents be granted with respect to Options.
 
 
5

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

 
            5.2.           Award Agreements. All Options shall be evidenced by a
written Award Agreement in such form and containing such terms and conditions as
the Committee shall determine which are not inconsistent with the provisions of
the Plan. The terms and conditions of Options need not be the same with respect
to each Participant. Granting an Option pursuant to the Plan shall impose no
obligation on the recipient to exercise such Option. Any individual who is
granted an Option pursuant to this Article may hold more than one Option granted
pursuant to the Plan at the same time.
 
            5.3.           Option Price. Other than in connection with
Substitute Awards, the option price per each Share purchasable under any Option
granted pursuant to this Article shall not be less than 100% of the Fair Market
Value of one Share on the date of grant of such Option; provided, however, that
in the case of an Incentive Stock Option granted to a Participant who, at the
time of the grant, owns stock representing more than 10% of the voting power of
all classes of stock of the Company or any Subsidiary, the option price per
share shall be no less than 110% of the Fair Market Value of one Share on the
date of grant. Other than pursuant to Section 12.2, the Committee shall not
without the approval of the Company’s stockholders (a) lower the option price
per Share of an Option after it is granted, (b) cancel an Option in exchange for
cash or another Award (other than in connection with a Change in Control as
defined in Section 11.3), or (c) take any other action with respect to an Option
that would be treated as a repricing under the rules and regulations of the
principal U.S. national securities exchange on which the Shares are traded.
 
    5.4.           Option Term. The term of each Option shall be fixed by the
Committee in its sole discretion; provided that no Option shall be exercisable
after the expiration of seven (7) years from the date the Option is granted,
except in the event of death or disability; provided, however, that the term of
the Option shall not exceed five (5) years from the date the Option is granted
in the case of an Incentive Stock Option granted to a Participant who, at the
time of the grant, owns stock representing more than 10% of the voting power of
all classes of stock of the Company or any Subsidiary.
 
    5.5.           Exercise of Options. (a) Vested Options granted under the
Plan shall be exercised by the Participant or by a Permitted Assignee thereof
(or by the Participant’s executors, administrators, guardian or legal
representative, as may be provided in an Award Agreement) as to all or part of
the Shares covered thereby, by giving notice of exercise to the Company or its
designated agent, specifying the number of Shares to be purchased. The notice of
exercise shall be in such form, made in such manner, and shall comply with such
other requirements consistent with the provisions of the Plan as the Committee
may prescribe from time to time
 
(b)           Unless otherwise provided in an Award Agreement, full payment of
the Option price shall be made at the time of exercise and shall be made (i) in
cash or cash equivalents (including certified check or bank check or wire
transfer of immediately available funds), (ii) by tendering previously acquired
Shares (either actually or by attestation) valued at their then Fair Market
Value, (iii) with the consent of the Committee, by delivery of other
consideration having a Fair Market Value on the exercise date equal to the total
purchase price, (iv) with the consent of the Committee, by withholding Shares
otherwise issuable in connection with the exercise of the Option, (v) through
any other method specified in an Award Agreement (including same-day sales
through a broker), or (vi) any combination of any of the foregoing. The notice
of exercise, accompanied by such payment, shall be delivered to the Company at
its principal business office or such other office as the Committee may from
time to time direct (including to a third-party brokerage firm if designated by
the Company as its agent), and shall be in such form, containing such further
provisions consistent with the provisions of the Plan, as the Committee may from
time to time prescribe. In no event may any Option granted hereunder be
exercised for a fraction of a Share.
 
 
6

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

 
(c) Notwithstanding the foregoing, an Award Agreement may provide that if on the
last day of the term of an Option the Fair Market Value of one Share exceeds the
option price per Share, the Participant has not exercised the Option (or a
tandem Stock Appreciation Right, if applicable) and the Option has not expired,
the Option shall be deemed to have been exercised by the Participant on such day
with payment made by withholding Shares otherwise issuable in connection with
the exercise of the Option. In such event, the Company shall deliver to the
Participant the number of Shares for which the Option was deemed exercised, less
the number of Shares required to be withheld for the payment of the total
purchase price and required withholding taxes; provided, however, any fractional
Share shall be settled in cash.
 
    5.6.           Form of Settlement. In its sole discretion, the Committee may
provide that the Shares to be issued upon an Option's exercise shall be in the
form of Restricted Stock or other similar securities.
 
    5.7.           Incentive Stock Options. The Committee may grant Incentive
Stock Options to any employee of the Company or any Subsidiary, subject to the
requirements of Section 422 of the Code. Solely for purposes of determining
whether Shares are available for the grant of Incentive Stock Options under the
Plan, the maximum aggregate number of Shares that may be issued pursuant to
Incentive Stock Options granted under the Plan shall be 7 million Shares,
subject to adjustment as provided in Section 12.2.
 
6.       STOCK APPRECIATION RIGHTS
 
           6.1.           Grant and Exercise. The Committee may provide Stock
Appreciation Rights (a) in tandem with all or part of any Option granted under
the Plan or at any subsequent time during the term of such Option, (b) in tandem
with all or part of any Award (other than an Option) granted under the Plan or
at any subsequent time during the term of such Award, or (c) without regard to
any Option or other Award in each case upon such terms and conditions as the
Committee may establish in its sole discretion.
 
           6.2.           Terms and Conditions. Stock Appreciation Rights shall
be subject to such terms and conditions, not inconsistent with the provisions of
the Plan, as shall be determined from time to time by the Committee (provided
that in no event may Dividend Equivalent Rights be granted with respect to Stock
Appreciation Rights), including the following:
 
(i) Upon the exercise of a Stock Appreciation Right, the holder shall have the
right to receive the excess of (i) the Fair Market Value of one Share on the
date of exercise (or such amount less than such Fair Market Value as the
Committee shall so determine at any time during a specified period before the
date of exercise) over (ii) the grant price of the Stock Appreciation Right.
 
(ii) The Committee shall determine in its sole discretion whether payment on
exercise of a Stock Appreciation Right shall be made in cash, in whole Shares or
other property, or any combination thereof.
 
(iii) The terms and conditions of Stock Appreciation Rights need not be the same
with respect to each recipient.
 
(iv) The Committee may impose such other terms and conditions on the exercise of
any Stock Appreciation Right, as it shall deem appropriate. A Stock Appreciation
Right shall (i) have a grant price per Share of not less than the Fair Market
Value of one Share on the date of grant or, if applicable, on the date of grant
of an Option with respect to a Stock Appreciation Right granted in exchange for
or in tandem with, but subsequent to, the Option (subject to the requirements of
Section 409A of the Code) except in the case of Substitute Awards or in
connection with an adjustment provided in Section 12.2, and (ii) have a term not
greater than seven (7) years.
 
 
7

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

 
(v) An Award Agreement may provide that if on the last day of the term of a
Stock Appreciation Right the Fair Market Value of one Share exceeds the grant
price per Share of the Stock Appreciation Right, the Participant has not
exercised the Stock Appreciation Right or the tandem Option (if applicable), and
the Stock Appreciation Right has not expired, the Stock Appreciation Right shall
be deemed to have been exercised by the Participant on such day. In such event,
the Company shall make payment to the Participant in accordance with this
Section, reduced by the number of Shares (or cash) required for withholding
taxes; any fractional Share shall be settled in cash.
 
(vi) Without the approval of the Company’s stockholders, other than pursuant to
Section 12.2, the Committee shall not (i) reduce the grant price of any Stock
Appreciation Right after the date of grant (ii) cancel any Stock Appreciation
Right in exchange for cash or another Award (other than in connection with a
Change in Control as defined in Section 11.3), or (iii) take any other action
with respect to a Stock Appreciation Right that would be treated as a repricing
under the rules and regulations of the principal U.S. national securities
exchange on which the Shares are traded.
 
7.
RESTRICTED STOCK AND RESTRICTED STOCK UNITS

 
7.1.           Grants. Awards of Restricted Stock and of Restricted Stock Units
may be issued hereunder to Participants either alone or in addition to other
Awards granted under the Plan (a “Restricted Stock Award” or “Restricted Stock
Unit Award” respectively), and such Restricted Stock Awards and Restricted Stock
Unit Awards shall also be available as a form of payment of Performance Awards
and other earned cash-based incentive compensation. The Committee has absolute
discretion to determine whether any consideration (other than services) is to be
received by the Company or any Subsidiary as a condition precedent to the
issuance of Restricted Stock or Restricted Stock Units.
 
7.2.           Award Agreements. The terms of any Restricted Stock Award or
Restricted Stock Unit Award granted under the Plan shall be set forth in an
Award Agreement which shall contain provisions determined by the Committee and
not inconsistent with the Plan. The terms of Restricted Stock Awards and
Restricted Stock Unit Awards need not be the same with respect to each
Participant
 
7.3.           Rights of Holders of Restricted Stock and Restricted Stock Units.
Unless otherwise provided in the Award Agreement, beginning on the date of grant
of the Restricted Stock Award and subject to execution of the Award Agreement,
the Participant shall become a stockholder of the Company with respect to all
Shares subject to the Award Agreement and shall have all of the rights of a
stockholder, including the right to vote such Shares and the right to receive
distributions made with respect to such Shares. A Participant receiving a
Restricted Stock Unit Award shall not possess voting rights with respect to such
Award and shall not have any other rights of stockholder (other than the right
to receive Dividend Equivalents, as set forth in Section 12.5, if so provided in
the Award Agreement). Except as otherwise provided in an Award Agreement, any
Shares or any other property (other than cash) distributed as a dividend or
otherwise with respect to any Restricted Stock Award or the number of Shares
covered by a Restricted Stock Unit Award as to which the restrictions have not
yet lapsed shall be subject to the same restrictions as such Restricted Stock
Award or Restricted Stock Unit Award. Notwithstanding the provisions of this
Section, cash dividends with respect to any Restricted Stock Award and any other
property (other than cash) distributed as a dividend or otherwise with respect
to any Restricted Stock Award or the number of Shares covered by a Restricted
Stock Unit Award that vests based on achievement of performance goals shall be
accumulated, shall be subject to restrictions and risk of forfeiture to the same
extent as the Restricted Stock or Restricted Stock Units with respect to which
such cash, Shares or other property has been distributed and shall be paid at
the time such restrictions and risk of forfeiture lapse.
 
 
8

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

 
7.4.           Minimum Vesting Period. Except for Substitute Awards, the death,
disability or retirement of the Participant, or other circumstances determined
by the Committee, Restricted Stock Awards and Restricted Stock Unit Awards
subject only to continued employment with the Company or a Subsidiary shall have
a Vesting Period of not less than (i) three (3) years from date of grant (but
permitting pro rata vesting over such time) if subject only to continued service
with the Company or a Subsidiary and (ii) one (1) year) from date of grant if
subject to the achievement of performance objectives, subject in either case to
accelerated vesting in the Committee’s discretion in the event of a Change in
Control (as defined in Section 11.3) or other appropriate circumstances.
Notwithstanding the foregoing, the restrictions in the preceding sentence shall
not be applicable to (i) grants to new hires to replace forfeited awards from a
prior employer or (ii) grants of Restricted Stock or Restricted Stock Units in
payment of Performance Awards and other earned cash-based incentive
compensation. The Committee may, in its sole discretion waive the vesting
restrictions and any other conditions set forth in any Award Agreement under
such terms and conditions as the Committee shall deem appropriate, subject to
(i) the minimum Vesting Period requirements in the prior sentence and (ii) the
limitations imposed under Section 162(m) of the Code and the regulations
thereunder in the case of a Restricted Stock Award or Restricted Stock Unit
Award intended to comply with the performance-based exception under Code Section
162(m) except as otherwise determined by the Committee to be appropriate under
the circumstances. The minimum Vesting Period requirements of this Section shall
not apply to Restricted Stock Awards or Restricted Stock Unit Awards granted to
Directors or Consultants.
 
7.5           Issuance of Shares. Any Restricted Stock granted under the Plan
may be evidenced in such manner as the Board may deem appropriate, including
book-entry registration or issuance of a stock certificate or certificates,
which certificate or certificates shall be held by the Company. Such certificate
or certificates shall be registered in the name of the Participant and shall
bear an appropriate legend referring to the restrictions applicable to such
Restricted Stock.
 
8.
OTHER SHARE-BASED AWARDS

 
8.1.           Grants. Other Awards of Shares and other Awards that are valued
in whole or in part by reference to, or are otherwise based on, Shares or other
property (“Other Share-Based Awards”), including deferred stock units, may be
granted hereunder to Participants either alone or in addition to other Awards
granted under the Plan. Other Share-Based Awards shall also be available as a
form of payment of other Awards granted under the Plan and other cash-based
compensation.
 
8.2.           Award Agreements. The terms of Other Share-Based Awards granted
under the Plan shall be set forth in an Award Agreement which shall contain
provisions determined by the Committee and not inconsistent with the Plan. The
terms of such Awards need not be the same with respect to each Participant.
Notwithstanding the provisions of this Section, any dividend equivalents and
property (other than cash) distributed as a dividend or otherwise with respect
to the number of Shares covered by all Other Share-Based Award that vests based
on achievement of performance goals shall be subject to restrictions and risk of
forfeiture to the same extent as the Shares covered by an Other Share-Based
Award with respect to which such cash, Shares or other property has been
distributed.
 
8.3.           Minimum Vesting Period. Except for Substitute Awards, the death,
disability or retirement of the Participant, or other circumstances determined
by the Committee, Other Share-Based Awards subject only to continued service
with the Company or a Subsidiary shall have a Vesting Period of not less than
(i) three (3) years from date of grant (but permitting pro rata vesting over
such time) if subject only to continued service with the Company or a Subsidiary
and (ii) one (1) year) from date of grant if subject to the achievement of
performance objectives, subject in either case to accelerated vesting in the
Committee’s discretion in the event of a Change in Control (as defined in
Section 11.3) or other appropriate circumstances. Notwithstanding the
foregoing, the restrictions in the preceding sentence shall not be applicable to
(i) grants to new hires to replace forfeited awards from a prior employer or
(ii) grants of Other Share-Based Awards under Section 8.5 or in payment of
Performance Awards and other cash-based compensation. The Committee may, in its
sole discretion waive the vesting restrictions and any other conditions set
forth in any Award Agreement under such terms and conditions as the Committee
shall deem appropriate, subject to (i) the minimum Vesting Period requirements
in the prior sentence and (ii) the limitations imposed under Section 162(m) of
the Code and the regulations thereunder in the case of an Other Share-Based
Award intended to comply with the performance-based exception under Code Section
162(m) except as otherwise determined by the Committee to be appropriate under
the circumstances. The minimum Vesting Period requirements of this Section shall
not apply to Other Share-Based Awards granted to Directors or Consultants.
 
 
9

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

 
8.4.           Payment. Except as may be provided in an Award Agreement, Other
Share-Based Awards may be paid in cash, Shares, other property, or any
combination thereof, in the sole discretion of the Committee. Other Share-Based
Awards may be paid in a lump sum or in installments or, in accordance with
procedures established by the Committee, on a deferred basis subject to the
requirements of Section 409A of the Code.
 
                8.5.           Deferral of Director Fees. Directors shall, if
determined by the Board, receive Other Share-Based Awards in the form of
deferred stock units in lieu of all or a portion of their annual retainer. In
addition Directors may elect to receive Other Share-Based Awards in the form of
deferred stock units in lieu of all or a portion of their annual and committee
retainers and annual meeting fees, provided that such election is made in
accordance with the requirements of Section 409A of the Code. The Committee
shall, in its absolute discretion, establish such rules and procedures as it
deems appropriate for such elections and for the payment of the deferred stock
units.
 
9.            PERFORMANCE AWARDS
 
9.1.           Grants. Performance Awards in the form of Performance Cash,
Performance Shares or Performance Units, as determined by the Committee in its
sole discretion, may be granted hereunder to Participants, for no consideration
or for such minimum consideration as may be required by applicable law, either
alone or in addition to other Awards granted under the Plan. The performance
goals to be achieved for each Performance Period shall be conclusively
determined by the Committee and may be based upon the criteria set forth in
Section 10.2.
 
9.2.           Award Agreements. The terms of any Performance Award granted
under the Plan shall be set forth in an Award Agreement (or, if applicable, in a
resolution duly adopted by the Committee) which shall contain provisions
determined by the Committee and not inconsistent with the Plan, including
whether such Awards shall have Dividend Equivalents. The terms of Performance
Awards need not be the same with respect to each Participant.
 
9.3.           Terms and Conditions. The performance criteria to be achieved
during any Performance Period and the length of the Performance Period shall be
determined by the Committee upon the grant of each Performance Award. The amount
of the Award to be distributed shall be conclusively determined by the
Committee.
 
 
 
 
10

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

 
9.4.           Payment. Except as provided in Article 11 or as may be provided
in an Award Agreement, Performance Awards will be distributed only after the end
of the relevant Performance Period. Performance Awards may be paid in cash,
Shares, other property, or any combination thereof, in the sole discretion of
the Committee. Performance Awards may be paid in a lump sum or in installments
following the close of the Performance Period or, in accordance with procedures
established by the Committee, on a deferred basis subject to the requirements of
Section 409A of the Code.
 
10.          CODE SECTION 162(m) PROVISIONS

10.1.           Covered Employees. Notwithstanding any other provision of the
Plan, if the Committee determines at the time a Restricted Stock Award, a
Restricted Stock Unit Award, a Performance Award or an Other Share-Based Award
is granted to a Participant who is, or is likely to be, as of the end of the tax
year in which the Company would claim a tax deduction in connection with such
Award, a Covered Employee, then the Committee may provide that this Article 10
is applicable to such Award.
 
10.2.           Performance Criteria. If the Committee determines that a
Restricted Stock Award, a Restricted Stock Unit, a Performance Award or an Other
Share-Based Award is intended to be subject to this Article 10, the lapsing of
restrictions thereon and the distribution of cash, Shares or other property
pursuant thereto, as applicable, shall be subject to the achievement of one or
more objective performance goals established by the Committee, which shall be
based on the attainment of specified levels of one or any combination of the
following: net sales; revenue; revenue growth or product revenue growth;
operating income (before or after taxes); pre- or after-tax income or loss
(before or after allocation of corporate overhead and bonus); earnings or loss
per share; net income or loss (before or after taxes); return on equity; total
stockholder return; return on assets or net assets; appreciation in and/or
maintenance of the price of the Shares or any other publicly-traded securities
of the Company; market share; gross profits; earnings or losses (including
earnings or losses before taxes, before interest and taxes, or before interest,
taxes, depreciation and amortization); economic value-added models or equivalent
metrics; comparisons with various stock market indices; reductions in costs;
cash flow or cash flow per share (before or after dividends); return on capital
(including return on total capital or return on invested capital); cash flow
return on investment; improvement in or attainment of expense levels or working
capital levels, including cash, inventory and accounts receivable; operating
margin; gross margin; year-end cash; cash margin; debt reduction; stockholders
equity; operating efficiencies; market share; customer satisfaction; customer
growth; employee satisfaction; regulatory achievements (including submitting or
filing applications or other documents with regulatory authorities or receiving
approval of any such applications or other documents and passing pre-approval
inspections (whether of the Company or the Company’s third-party manufacturer)
and validation of manufacturing processes (whether the Company’s or the
Company’s third-party manufacturer’s)); strategic partnerships or transactions
(including in-licensing and out-licensing of intellectual property; establishing
relationships with commercial entities with respect to the marketing,
distribution and sale of the Company’s products (including with group purchasing
organizations, distributors and other vendors); supply chain achievements
(including establishing relationships with manufacturers or suppliers of
component materials and manufacturers of the Company’s products);
co-development, co-marketing, profit sharing, joint venture or other similar
arrangements); financial ratios, including those measuring liquidity, activity,
profitability or leverage; cost of capital or assets under management; financing
and other capital raising transactions (including sales of the Company’s equity
or debt securities; factoring transactions; sales or licenses of the Company’s
assets, including its intellectual property, whether in a particular
jurisdiction or territory or globally; or through partnering transactions);
implementation, completion or attainment of measurable objectives with respect
to research, development, manufacturing, commercialization, products or
projects, production volume levels, acquisitions and divestitures; factoring
transactions; recruiting and maintaining personnel; distributor, executive
distributor, or preferred customer metrics; product subscription orders;
distributor and customer retention rates. Such performance goals also may be
based solely by reference to the Company’s performance or the performance of a
Subsidiary, division, business segment or business unit of the Company, or based
upon the relative performance of other companies or upon comparisons of any of
the indicators of performance relative to other companies. The Committee may
also exclude charges related to an event or occurrence which the Committee
determines should appropriately be excluded, including (a) the effects of
currency fluctuations; (b) restructurings, discontinued operations,
extraordinary items, and other unusual, infrequent, non-recurring, or
non-operational charges or events, (c) litigation, claim judgments, or
settlements; (d) the discontinuation, disposal, or acquisition of a business or
division; (e) asset write-downs; (f) an event either not directly related to the
operations of the Company or not within the reasonable control of the Company’s
management, (g) any or all items that are excluded from the calculation of
non-GAAP earnings, or (h) the cumulative effects of tax or accounting changes in
accordance with U.S. generally accepted accounting principles. Such performance
goals shall be set by the Committee within the time period prescribed by, and
shall otherwise comply with the requirements of, Section 162(m) of the Code, and
the regulations thereunder.
 
 
 
 
11

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

 
10.3.           Adjustments. Notwithstanding any provision of the Plan (other
than Article 11), with respect to any Restricted Stock Award, Restricted Stock
Unit Award, Performance Award or Other Share-Based Award that is subject to this
Section 10, the Committee may adjust downwards, but not upwards, the amount
payable pursuant to such Award, and the Committee may not waive the achievement
of the applicable performance goals except in the case of the death or
disability of the Participant or as otherwise determined by the Committee in
special circumstances.
 
10.4.           Restrictions. The Committee shall have the power to impose such
other restrictions on Awards subject to this Article as it may deem necessary or
appropriate to ensure that such Awards satisfy all requirements for
“performance-based compensation” within the meaning of Section 162(m) of the
Code.
 
10.5.           Limitations on Grants to Individual Participants. Subject to
adjustment as provided in Section 12.2, no Participant may (i) be granted
Options or Stock Appreciation Rights during any 24-month period with respect to
more than 3,000,000 Shares and (ii) earn more than 1,000,000 Shares with respect
to Restricted Stock Awards, Restricted Stock Unit Awards, Performance Awards
and/or Other Share-Based Awards in any 12-month period that are intended to
comply with the performance-based exception under Code Section 162(m) and are
denominated in Shares (collectively, the “Limitations”). In addition to the
foregoing, the maximum dollar value that may be earned by any Participant for
each 12 months in a Performance Period with respect to Performance Awards that
are intended to comply with the performance-based exception under Code Section
162(m) and are denominated in cash is $3,000,000. If an Award is cancelled, the
cancelled Award shall continue to be counted toward the applicable Limitation
(or, if denominated in cash, toward the dollar amount in the preceding
sentence).
 
11.          CHANGE IN CONTROL PROVISIONS
 
11.1.           Impact on Certain Awards. Award Agreements may provide that in
the event of a Change in Control of the Company (as defined in Section 11.3):
(i) Options and Stock Appreciation Rights outstanding as of the date of the
Change in Control shall be cancelled and terminated without payment therefor if
the Fair Market Value of one Share as of the date of the Change in Control is
less than the per Share Option exercise price or Stock Appreciation Right grant
price, and (ii) all Performance Awards shall be considered to be earned and
payable (either in full or pro rata based on the portion of Performance Period
completed as of the date of the Change in Control), and any limitations or other
restrictions shall lapse and such Performance Awards shall be immediately
settled or distributed.
 
 
12

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

 
11.2.           Assumption or Substitution of Certain Awards. (a) To the extent
provided in an Award Agreement, in the event of a Change in Control of the
Company in which the successor company assumes or substitutes for an Option,
Stock Appreciation Right, Restricted Stock Award, Restricted Stock Unit Award or
Other Share-Based Award (or in which the Company is the ultimate parent
corporation and continues the Award), if a Participant’s employment with such
successor company (or the Company) or a subsidiary thereof terminates within 24
months following such Change in Control (or such other period set forth in the
Award Agreement, including prior thereto if applicable) and under the
circumstances specified in the Award Agreement: (i) Options and Stock
Appreciation Rights outstanding as of the date of such termination of employment
will immediately vest, become fully exercisable, and may thereafter be exercised
for 24 months (or the period of time set forth in the Award Agreement), (ii) the
restrictions, limitations and other conditions applicable to Restricted Stock
and Restricted Stock Units outstanding as of the date of such termination of
employment shall lapse and the Restricted Stock and Restricted Stock Units shall
become free of all restrictions, limitations and conditions and become fully
vested, and (iii) the restrictions, limitations and other conditions applicable
to any Other Share-Based Awards or any other Awards shall lapse, and such Other
Share-Based Awards or such other Awards shall become free of all restrictions,
limitations and conditions and become fully vested and transferable to the full
extent of the original grant. For the purposes of this Section 11.2, an Option,
Stock Appreciation Right, Restricted Stock Award, Restricted Stock Unit Award or
Other Share-Based Award shall be considered assumed or substituted for if
following the Change in Control the Award confers the right to purchase or
receive, for each Share subject to the Option, Stock Appreciation Right,
Restricted Stock Award, Restricted Stock Unit Award or Other Share-Based Award
immediately prior to the Change in Control, the consideration (whether stock,
cash or other securities or property) received in the transaction constituting a
Change in Control by holders of Shares for each Share held on the effective date
of such transaction (and if holders were offered a choice of consideration, the
type of consideration chosen by the holders of a majority of the outstanding
Shares); provided, however, that if such consideration received in the
transaction constituting a Change in Control is not solely common stock of the
successor company, the Committee may, with the consent of the successor company,
provide that the consideration to be received upon the exercise or vesting of an
Option, Stock Appreciation Right, Restricted Stock Award, Restricted Stock Unit
Award or Other Share-Based Award, for each Share subject thereto, will be solely
common stock of the successor company substantially equal in fair market value
to the per Share consideration received by holders of Shares in the transaction
constituting a Change in Control. The determination of such substantial equality
of value of consideration shall be made by the Committee in its sole discretion
and its determination shall be conclusive and binding.
 
(b)           Unless otherwise provided in an Award Agreement, in the event of a
Change in Control of the Company to the extent the successor company does not
assume or substitute for an Option, Stock Appreciation Right, Restricted Stock
Award, Restricted Stock Unit Award or Other Share-Based Award (or in which the
Company is the ultimate parent corporation and does not continue the Award),
then immediately prior to the Change in Control: (i) those Options and Stock
Appreciation Rights outstanding as of the date of the Change in Control that are
not assumed or substituted for (or continued) shall immediately vest and become
fully exercisable, (ii) restrictions, limitations and other conditions
applicable to Restricted Stock and Restricted Stock Units that are not assumed
or substituted for (or continued) shall lapse and the Restricted Stock and
Restricted Stock Units shall become free of all restrictions, limitations and
conditions and become fully vested, and (iii) the restrictions, other
limitations and other conditions applicable to any Other Share-Based Awards or
any other Awards that are not assumed or substituted for (or continued) shall
lapse, and such Other Share-Based Awards or such other Awards shall become free
of all restrictions, limitations and conditions and become fully vested and
transferable to the full extent of the original grant.
 
(c)           The Committee, in its discretion, may determine that, upon the
occurrence of a Change in Control of the Company, each Option and Stock
Appreciation Right outstanding shall terminate within a specified number of days
after notice to the Participant, and/or that each Participant shall receive,
with respect to each Share subject to such Option or Stock Appreciation Right,
an amount equal to the excess of the Fair Market Value of such Share immediately
prior to the occurrence of such Change in Control over the exercise price per
Share of such Option and/or Stock Appreciation Right; such amount to be payable
in cash, in one or more kinds of stock or property (including the stock or
property, if any, payable in the transaction) or in a combination thereof, as
the Committee, in its discretion, shall determine.
 
 
13

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

 
11.3.           Change in Control. For purposes of the Plan, unless otherwise
provided in an Award Agreement, Change in Control means the occurrence of any
one of the following events:
 
(a)           During any twenty-four (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;
 
(b)           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 (the “Company Voting Securities”); provided,
however, that the event described in this paragraph (b) shall not be deemed to
be a Change in Control by virtue of any of the following acquisitions: (i) by
the Company or any Subsidiary, (ii) by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any Subsidiary, (iii) by any
underwriter temporarily holding securities pursuant to an offering of such
securities, (iv) pursuant to a Non-Qualifying Transaction, as defined in
paragraph (c), or (v) by any person of 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;
 
(c)           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:
(i) more than 50% of the total voting power of (A) the corporation resulting
from such Business Combination (the “Surviving Corporation”), or (B) if
applicable, the ultimate parent corporation that directly or indirectly has
beneficial ownership of 100% 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, (ii) 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 (iii) 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 (i), (ii) and (iii) above shall be deemed to be a
“Non-Qualifying Transaction”); or
 
 
 
14

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

 
(d)           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.
 
12.     GENERALLY APPLICABLE PROVISIONS
 
           12.1.           Amendment and Termination of the Plan. The Board may,
from time to time, alter, amend, suspend or terminate the Plan as it shall deem
advisable, subject to any requirement for stockholder approval imposed by
applicable law, including the rules and regulations of the principal U.S.
national securities exchange on which the Shares are traded; provided that the
Board may not amend the Plan in any manner that would result in noncompliance
with Rule 16b-3 of the Exchange Act; and further provided that the Board may
not, without the approval of the Company's stockholders, amend the Plan to (a)
increase the number of Shares that may be the subject of Awards under the Plan
(except for adjustments pursuant to Section 12.2), (b) expand the types of
awards available under the Plan, (c) materially expand the class of persons
eligible to participate in the Plan, (d) amend Section 5.3 or Section 6.2(f) to
eliminate the requirements relating to minimum exercise price, minimum grant
price and stockholder approval, (e) increase the maximum permissible term of any
Option specified by Section 5.4 or the maximum permissible term of a Stock
Appreciation Right specified by Section 6.2(d), or (f) increase the Limitations.
The Board may not, without the approval of the Company’s stockholders, cancel an
Option or Stock Appreciation Right in exchange for cash or take any action with
respect to an Option or Stock Appreciation Right that would be treated as a
repricing under the rules and regulations of the principal securities exchange
on which the Shares are traded, including a reduction of the exercise price of
an Option or the grant price of a Stock Appreciation Right or the exchange of an
Option or Stock Appreciation Right for cash or another Award. In addition, no
amendments to, or termination of, the Plan shall impair the rights of a
Participant in any material respect under any Award previously granted without
such Participant's consent.
 
           12.2.           Adjustments. In the event of any merger,
reorganization, consolidation, recapitalization, dividend or distribution
(whether in cash, shares or other property, other than a regular cash dividend),
stock split, reverse stock split, spin-off or similar transaction or other
change in corporate structure affecting the Shares or the value thereof, such
adjustments and other substitutions shall be made to the Plan and to Awards as
the Committee deems equitable or appropriate taking into consideration the
accounting and tax consequences, including such adjustments in the aggregate
number, class and kind of securities that may be delivered under the Plan, the
Limitations, the maximum number of Shares that may be issued pursuant to
Incentive Stock Options and, in the aggregate or to any Participant, in the
number, class, kind and option or exercise price of securities subject to
outstanding Awards granted under the Plan (including, if the Committee deems
appropriate, the substitution of similar options to purchase the shares of, or
other awards denominated in the shares of, another company) as the Committee may
determine to be appropriate; provided, however, that the number of Shares
subject to any Award shall always be a whole number.
 
           12.3.           Transferability of Awards. Except as provided below,
no Award and no Shares that have not been issued or as to which any applicable
restriction, performance or deferral period has not lapsed, may be sold,
assigned, transferred, pledged or otherwise encumbered, other than by will or
the laws of descent and distribution, and such Award may be exercised during the
life of the Participant only by the Participant or the Participant’s guardian or
legal representative. To the extent and under such terms and conditions as
determined by the Committee, a Participant may assign or transfer an Award (each
transferee thereof, a “Permitted Assignee”) to (i) the Participant’s spouse,
children or grandchildren (including any adopted and step children or
grandchildren), parents, grandparents or siblings, (ii) to a trust for the
benefit of one or more of the Participant or the persons referred to in clause
(i), (iii) to a partnership, limited liability company or corporation in which
the Participant or the persons referred to in clause (i) are the only partners,
members or shareholders or (iv) for charitable donations; provided that such
Permitted Assignee shall be bound by and subject to all of the terms and
conditions of the Plan and the Award Agreement relating to the transferred Award
and shall execute an agreement satisfactory to the Company evidencing such
obligations; and provided further that such Participant shall remain bound by
the terms and conditions of the Plan. The Company shall cooperate with any
Permitted Assignee and the Company’s transfer agent in effectuating any transfer
permitted under this Section.
 
 
15

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

 
           12.4.           Termination of Employment or Services. The Committee
shall determine and set forth in each Award Agreement whether any Awards granted
in such Award Agreement will continue to be exercisable, continue to vest or be
earned and the terms of such exercise, vesting or earning, on and after the date
that a Participant ceases to be employed by or to provide services to the
Company or any Subsidiary (including as a Director), whether by reason of death,
disability, voluntary or involuntary termination of employment or services, or
otherwise. The date of termination of a Participant’s employment or services
will be determined by the Committee, which determination will be final.
 
   12.5.           Deferral; Dividend Equivalents. The Committee shall be
authorized to establish procedures pursuant to which the payment of any Award
may be deferred. Subject to the provisions of the Plan and any Award Agreement,
the recipient of an Award other than an Option or Stock Appreciation Right may,
if so determined by the Committee, be entitled to receive, currently or on a
deferred basis, amounts equivalent to cash, stock or other property dividends on
Shares (“Dividend Equivalents”) with respect to the number of Shares covered by
the Award, as determined by the Committee, in its sole discretion. The Committee
may provide that the Dividend Equivalents (if any) shall be deemed to have been
reinvested in additional Shares or otherwise reinvested and may provide that the
Dividend Equivalents are subject to the same vesting or performance conditions
as the underlying Award. Notwithstanding the foregoing, Dividend Equivalents
distributed in connection with an Award that vests based on the achievement of
performance goals shall be subject to restrictions and risk of forfeiture to the
same extent as the Award with respect to which such cash, stock or other
property has been distributed.
 
13.     MISCELLANEOUS
 
           13.1.           Award Agreements. Each Award Agreement shall either
be (a) in writing in a form approved by the Committee and executed by the
Company by an officer duly authorized to act on its behalf, or (b) an electronic
notice in a form approved by the Committee and recorded by the Company (or its
designee) in an electronic recordkeeping system used for the purpose of tracking
one or more types of Awards as the Committee may provide; in each case and if
required by the Committee, the Award Agreement shall be executed or otherwise
electronically accepted by the recipient of the Award in such form and manner as
the Committee may require. The Committee may authorize any officer of the
Company to execute any or all Award Agreements on behalf of the Company. The
Award Agreement shall set forth the material terms and conditions of the Award
as established by the Committee consistent with the provisions of the Plan.
 
           13.2.           Tax Withholding. The Company shall have the right to
make all payments or distributions pursuant to the Plan to a Participant (or a
Permitted Assignee thereof) (any such person, a “Payee”) net of any applicable
federal, state and local taxes required to be paid or withheld as a result of
(a) the grant of any Award, (b) the exercise of an Option or Stock Appreciation
Right, (c) the delivery of Shares or cash, (d) the lapse of any restrictions in
connection with any Award or (e) any other event occurring pursuant to the Plan.
The Company or any Subsidiary shall have the right to withhold from wages or
other amounts otherwise payable to such Payee such withholding taxes as may be
required by law, or to otherwise require the Payee to pay such withholding
taxes. If the Payee shall fail to make such tax payments as are required, the
Company or its Subsidiaries shall, to the extent permitted by law, have the
right to deduct any such taxes from any payment of any kind otherwise due to
such Payee or to take such other action as may be necessary to satisfy such
withholding obligations. The Committee shall be authorized to establish
procedures for election by Participants to satisfy such obligation for the
payment of such taxes by tendering previously acquired Shares (either actually
or by attestation, valued at their then Fair Market Value), or by directing the
Company to retain Shares (up to the Participant’s minimum required tax
withholding rate or such other rate that will not cause an adverse accounting
consequence or cost) otherwise deliverable in connection with the Award.
 
 
 
16

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

 
           13.3.           Right of Discharge Reserved; Claims to Awards.
Nothing in the Plan nor the grant of an Award hereunder shall confer upon any
Employee, Director or Consultant the right to continue in the employment or
service of the Company or any Subsidiary or affect any right that the Company or
any Subsidiary may have to terminate the employment or service of (or to demote
or to exclude from future Awards under the Plan) any such Employee, Director or
Consultant at any time for any reason. Except as specifically provided by the
Committee, the Company shall not be liable for the loss of existing or potential
profit from an Award granted in the event of termination of an employment or
other relationship. No Employee, Director or Consultant shall have any claim to
be granted any Award under the Plan, and there is no obligation for uniformity
of treatment of Employees, Directors or Consultants under the Plan.
 
    13.4.           Substitute Awards. Notwithstanding any other provision of
the Plan, the terms of Substitute Awards may vary from the terms set forth in
the Plan to the extent the Committee deems appropriate to conform, in whole or
in part, to the provisions of the awards in substitution for which they are
granted.
 
    13.5.           Cancellation of Award; Forfeiture of Gain. Notwithstanding
anything to the contrary contained herein, an Award Agreement may provide that
the Award shall be canceled if the Participant, without the consent of the
Company, while employed by or providing services to the Company or any
Subsidiary or after termination of such employment or service, violates a
non-competition, non-solicitation or non-disclosure covenant or agreement or
otherwise engages in activity that is in conflict with or adverse to the
interest of the Company or any Subsidiary (including conduct contributing to any
financial restatements or financial irregularities), as determined by the
Committee in its sole discretion. The Committee may provide in an Award
Agreement that if within the time period specified in the Agreement the
Participant establishes a relationship with a competitor or engages in an
activity referred to in the preceding sentence, the Participant will forfeit any
gain realized on the vesting or exercise of the Award and must repay such gain
to the Company.
 
    13.6.           Stop Transfer Orders. All certificates for Shares delivered
under the Plan pursuant to any Award shall be subject to such stop-transfer
orders and other restrictions as the Committee may deem advisable under the
rules, regulations and other requirements of the Securities and Exchange
Commission (“SEC”), any stock exchange upon which the Shares are then listed,
and any applicable federal or state securities law, and the Committee may cause
a legend or legends to be put on any such certificates to make appropriate
reference to such restrictions.
 
    13.7.           Nature of Payments. All Awards made pursuant to the Plan are
in consideration of services performed or to be performed for the Company or any
Subsidiary, division or business unit of the Company. Any income or gain
realized pursuant to Awards under the Plan constitutes a special incentive
payment to the Participant and shall not be taken into account, to the extent
permissible under applicable law, as compensation for purposes of any of the
employee benefit plans of the Company or any Subsidiary except as may be
determined by the Committee or by the Board or board of directors of the
applicable Subsidiary.
 
 
 
17

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

 
    13.8.           Other Plans. Nothing contained in the Plan shall prevent the
Board from adopting other or additional compensation arrangements, subject to
stockholder approval if such approval is required; and such arrangements may be
either generally applicable or applicable only in specific cases.
 
    13.9.           Severability. The provisions of the Plan shall be deemed
severable. If any provision of the Plan shall be held unlawful or otherwise
invalid or unenforceable in whole or in part by a court of competent
jurisdiction or by reason of change in a law or regulation, such provision shall
(a) be deemed limited to the extent that such court of competent jurisdiction
deems it lawful, valid and/or enforceable and as so limited shall remain in full
force and effect, and (b) not affect any other provision of the Plan or part
thereof, each of which shall remain in full force and effect. If the making of
any payment or the provision of any other benefit required under the Plan shall
be held unlawful or otherwise invalid or unenforceable by a court of competent
jurisdiction, such unlawfulness, invalidity or unenforceability shall not
prevent any other payment or benefit from being made or provided under the Plan,
and if the making of any payment in full or the provision of any other benefit
required under the Plan in full would be unlawful or otherwise invalid or
unenforceable, then such unlawfulness, invalidity or unenforceability shall not
prevent such payment or benefit from being made or provided in part, to the
extent that it would not be unlawful, invalid or unenforceable, and the maximum
payment or benefit that would not be unlawful, invalid or unenforceable shall be
made or provided under the Plan.
 
    13.10.           Construction. As used in the Plan, the words “include” and
“including,” and variations thereof, shall not be deemed to be terms of
limitation, but rather shall be deemed to be followed by the words “without
limitation.”
 
    13.11.           Unfunded Status of the Plan. The Plan is intended to
constitute an “unfunded” plan for incentive compensation. With respect to any
payments not yet made to a Participant by the Company, nothing contained herein
shall give any such Participant any rights that are greater than those of a
general creditor of the Company. In its sole discretion, the Committee may
authorize the creation of trusts or other arrangements to meet the obligations
created under the Plan to deliver the Shares or payments in lieu of or with
respect to Awards hereunder; provided, however, that the existence of such
trusts or other arrangements is consistent with the unfunded status of the Plan.
 
    13.12.           Governing Law. The Plan and all determinations made and
actions taken thereunder, to the extent not otherwise governed by the Code or
the laws of the United States, shall be governed by the laws of the State of
Utah, without reference to principles of conflict of laws, and construed
accordingly.
 
         13.13.           Effective Date of Plan; Termination of Plan. The Plan
shall be effective on the date of the approval of the Plan by the holders of the
shares entitled to vote at a duly constituted meeting of the stockholders of the
Company. The Plan shall be null and void and of no effect if the foregoing
condition is not fulfilled and in such event each Award shall, notwithstanding
any of the preceding provisions of the Plan, be null and void and of no effect.
Awards may be granted under the Plan at any time and from time to time on or
prior to the tenth anniversary of the effective date of the Plan, on which date
the Plan will expire except as to Awards then outstanding under the Plan. Such
outstanding Awards shall remain in effect until they have been exercised or
terminated, or have expired.
 
 
 
 
18

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

 
    13.14.           Foreign Employees and Consultants. Awards may be granted to
Participants who are foreign nationals or employed or providing services outside
the United States, or both, on such terms and conditions different from those
applicable to Awards to Employees or Consultants providing services in the
United States as may, in the judgment of the Committee, be necessary or
desirable in order to recognize differences in local law or tax policy. The
Committee also may impose conditions on the exercise or vesting of Awards in
order to minimize the Company's obligation with respect to tax equalization for
Employees or Consultants on assignments outside their home country.
 
    13.15.           Compliance with Section 409A of the Code. This Plan is
intended to comply and shall be administered in a manner that is intended to
comply with Section 409A of the Code and shall be construed and interpreted in
accordance with such intent. To the extent that an Award or the payment,
settlement or deferral thereof is subject to Section 409A of the Code, the Award
shall be granted, paid, settled or deferred in a manner that will comply with
Section 409A of the Code, including regulations or other guidance issued with
respect thereto, except as otherwise determined by the Committee. Any provision
of this Plan that would cause the grant of an Award or the payment, settlement
or deferral thereof to fail to satisfy Section 409A of the Code shall be amended
to comply with Section 409A of the Code on a timely basis, which may be made on
a retroactive basis, in accordance with regulations and other guidance issued
under Section 409A of the Code.
 
    13.16           No Registration Rights; No Right to Settle in Cash. The
Company has no obligation to register with any governmental body or organization
(including, without limitation, the SEC) any of (a) the offer or issuance of any
Award, (b) any Shares issuable upon the exercise of any Award, or (c) the sale
of any Shares issued upon exercise of any Award, or to take any actions to
comply with applicable laws and regulations regardless of whether the Company in
fact undertakes to register any of the foregoing or comply with such laws or
regulations. In particular, in the event that any of (x) any offer or issuance
of any Award, (y) any Shares issuable upon exercise of any Award, or (z) the
sale of any Shares issued upon exercise of any Award are not registered with any
governmental body or organization (including, without limitation, the SEC), or
if the Company is otherwise not able to issue Shares in compliance with
applicable laws and regulations, then the Company shall be relieved from any
liability for failure to issue or transfer Shares and the Company will not under
any circumstance be required to settle its obligations, if any, under this Plan
in cash.
 
    13.17.           Captions. The captions in the Plan are for convenience of
reference only, and are not intended to narrow, limit or affect the substance or
interpretation of the provisions contained herein.
 

 

 

 

 
19

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