**Exhibit 10.2**

 

**MANNATECH, INCORPORATED**

 

**1998 RESTATED AND AMENDED INCENTIVE STOCK OPTION PLAN**

 

**Effective August 7, 2003**

 

1. Purpose of the Plan. The purposes of the 1998 Incentive Stock Option Plan are to attract and retain the best available personnel for positionsof substantial responsibility, to provide additional incentive to the Employees of the Company and to promote the success of the Company’s business. 

 

2. Definitions. As used herein, the following definitions shall apply: 

 

(a) “Board” shall mean the Committee, if one has been appointed, or the Board of Directors of theCompany, if no Committee is appointed. 

 

(b)“Code” shall mean the Internal Revenue Code of 1986. 

 

(c) “Common Stock” shall mean the Common Stock of the Company. 

 

(d) “Company” shall mean Mannatech, Incorporated, a Texas corporation. 

 

(e) “Committee” shall mean the Committee appointedby the Board in accordance with paragraph (a) of Section 4 of the Plan, if one is appointed. 

 

(f) “Continuous Status as an Employee” shall mean the absence of any interruption or termination of service as an Employee.Continuous Status as an Employee shall not be considered interrupted in the case of sick leave, military leave, or any other leave of absence approved by the Board; provided that such leave is for a period of not more than 90 days or reemploymentupon the expiration of such leave is guaranteed by contract or statute. 

 

(g) “Employee” shall mean any person, including officers and directors, employed by the Company or any Parent or Subsidiary of the Company. The payment of a director’s fee by the Company shall not besufficient to constitute “employment” by the Company. 

 

(h) “Incentive Stock Option” shall mean an Option intended to qualify as an incentive stock option within the meaning of Section 422 of the Code. 

 

(i) “Non-Employee Director” shall mean aNon-Employee Director as defined in Rule 16b-3 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), promulgated under SEC Release 34-37260 (May 31, 1996), as such Rule may be amended from time to time. 

 

(j) “Option” shall mean a stock option grantedpursuant to the Plan. 

 

(k) “OptionedStock” shall mean the Common Stock subject to an Option. 

 

(l) “Optionee” shall mean an Employee who receives an Option. 

 

(m) “Parent” shall mean a “parent corporation,” whether now or hereafter existing, as defined in Section 425(e) of theCode. 

 

(n) “Plan” shall mean this1998 Incentive Stock Option Plan, as amended. 

 

(o) “Stock Option Agreement” shall mean an Incentive Stock Option Agreement, pursuant to which Options are granted under the Plan, the form of which is attached hereto as Exhibit A. 

 

(p) “Share” shall mean a share of the CommonStock, as adjusted in accordance with Section 11 of the Plan. 

 

(q) “Subsidiary” shall mean a “subsidiary corporation”, whether now or hereafter existing, as defined in Section 425(f) of the Code. 

 

3. Stock Subject to the Plan. Subject to the provisions of Section 11 of the Plan, the maximum aggregate number ofshares which may be optioned and sold under the Plan is 1,000,000 shares of Common Stock. The Shares may be authorized, but unissued, or reacquired Common Stock. 

 

If an Option should expire or become unexercisable for any reason without having been exercised in full, the unpurchasedShares which were subject thereto shall, unless the Plan shall have been terminated, become available for future grant under the Plan. 

 

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4. Administration of the Plan. 

 

(a) Procedure. The Plan shall be administered by the Board of the Company or the Board may appoint aCommittee consisting of not less than two members of the Board of Directors to administer the Plan on behalf of the Board, subject to such terms and conditions as the Board may prescribe. To the extent that the Board appoints a Committee toadminister the Plan, each member of the Board of Directors who is selected to serve on the Committee shall be a “Non-Employee Director” within the meaning of Rule 16b-3 under the Securities Exchange Act of 1934 and an “outsidedirector” within the meaning of the regulations adopted under Section 162(m) of the Code. Once appointed, the Committee shall continue to serve until otherwise directed by the Board. From time to time, the Board may increase the size of theCommittee and appoint new members in substitution therefore, fill vacancies caused, or remove all members of the Committee and thereafter directly administer the Plan. 

 

(b) Powers of the Board. Subject to the provisions of the Plan, the Board shall have the authority,in its discretion: (i) to grant Incentive Stock Options, in accordance with Section 422 of the Code; (ii) to determine, upon review of relevant information and in accordance with Section 8(b) of the Plan, the fair market value of the Common Stock;(iii) to determine the exercise price per share of Options to be granted, which exercise price shall be determined in accordance with Section 8(a) of the Plan; (iv) to determine the Employees to whom, and the time or times at which, Options shall begranted and the number of shares to be represented by each Option; (v) to interpret the Plan; (vi) to prescribe, amend and rescind rules and regulations relating to the Plan; (vii) to determine the terms and provisions of each Option granted (whichneed not be identical) and, with the consent of the holder thereof, modify or amend each Option; (viii) to accelerate or defer (with the consent of the Optionee) the exercise date of any Option, consistent with the provisions of Section 5 of thePlan; (ix) to authorize any person to execute on behalf of the Company any instrument required to effectuate the grant of an Option previously granted by the Board; and (x) to administer and interpret the option agreement; (xi) to makedeterminations as to whether a bona fide leave shall be deemed to continue, to the extent that applicable law does not require that it be deemed to continue; and (xii) to make all other determinations deemed necessary or advisable for theadministration of the Plan. 

 

(c) Effect ofBoard’s Decision. All decisions, determinations and interpretations of the Board shall be final and binding on all Optionees and any other holders of any Options granted under the Plan. 

 

5. Eligibility. 

 

(a) Incentive Stock Options may be granted only toEmployees. An Employee who has been granted an Option may, if such Employee is otherwise eligible, be granted an additional Option or Options. 

 

(b) The Plan shall not confer upon any Optionee any right with respect to continuation of employment with the Company nor shall itinterfere in any way with Optionee’s right or the Company’s right to terminate Optionee’s employment at any time. 

 

(c) No individual may receive Options under this Plan during any calendar year for more than 250,000 shares of the Company’s stock.

 

6. Term of Plan. The Plan shall become effective uponthe earlier to occur of its adoption by the Board or its approval by the shareholders of the Company as described in Section 17 of the Plan. It shall continue in effect for a term of ten (10) years unless sooner terminated under Section 13 of thePlan. 

 

7. Term of Option. Each Option shall terminateand is no longer exercisable after 5:00 p.m. on the day immediately preceding the ten (10) year anniversary of the date of its grant, except if terminated earlier as provided in the Stock Option Agreement. However, in the case of an Option grantedto an Optionee who, at the time the Option is granted, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the term of the Option shall be five (5) years fromthe date of grant thereof or such shorter time as may be provided in the Stock Option Agreement. 

 

8. Exercise Price and Consideration. 

 

(a) The per Share exercise price for the Shares to be issued pursuant to exercise of an Option shall be such price as is determined by theBoard, but shall be subject to the following: 

 

(1) In the case of an Incentive Stock Option granted to an Employee who, at the time of the grant of such Incentive Stock Option, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Companyor any Parent or Subsidiary, the per Share exercise price shall be no less than 110% of the fair market value per Share on the date of grant. 

 

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(2) In the case of an Incentive Stock Option granted to any other Employee, the per Shareexercise price shall be no less than 100% of the fair market value per Share on the date of grant. 

 

(b) The fair market value per Share shall be determined as follows: (i) if the Common Stock is listed on a national securities exchange,the closing sale price per share on the principal exchange on which the Common Stock is listed as reported by such exchange, (ii) if the Common Stock is quoted in the National Market System, the closing sale price per share as reported by NASDAQ,(iii) if the Common Stock is traded in the over-the-counter market but not quoted in the National Market System, the average of the closing bid and asked quotations per share as reported by NASDAQ, or any other nationally accepted reporting mediumif NASDAQ quotations shall be unavailable, or (iv) if none of the foregoing applies, the fair market value of the Common Stock will be the fair value of the Common Stock as reasonably determined in the good faith judgment of the Board. 

 

(c) An option may be exercised, in whole or in part, tothe extent exercisable, by giving written notice prior to its expiration to the Chief Financial Officer of the Company in the form specified by the Committee, accompanied by payment of the option price. In addition to the option price the Optioneewill be required to include payment of all federal, state, local or other income, excise or employment taxes subject to withholding (if any) by the Company, a parent or subsidiary as a result of the exercise of this option (collectively, the“Exercise Price”) for the total number of shares specified for purchase. The Exercise Price payment shall be payable in full by cash or check. Alternatively, in the sole discretion of the Committee and upon such terms as the Committeeshall approve, the option may provide that the Exercise Price may be paid by: 

 

(1) Cashless Exercise. During any period for which the shares are publicly traded (i.e., the shares are listed on any established stock exchange or a national market system, including without limitation theNASDAQ National Market, or if the shares are quoted on the NASDAQ System (but not on the NASDAQ National Market) or any similar system whereby the stock is regularly quoted by a recognized securities dealer but closing sale prices are not reported),by a copy of instructions to a broker directing such broker to sell the shares for which this option is exercised, and to remit to the Company the aggregate Exercise Price of such option (“Cashless Exercise”); provided, however, a CashlessExercise by a Director or executive officer that involves or may involve a direct or indirect extension of credit or arrangement of an extension of credit by the Company, a parent or subsidiary in violation of section 402(a) of the Sarbanes-OxleyAct (codified as Section 13(k) of the Securities Exchange Act of 1934, 15 U.S.C. § 78m(k)) shall be prohibited; 

 

(2) (unless prohibited by the Committee) certificates representing shares of Common Stock of the Company, which will be valued by theCompany at the closing fair market price per share of the Company’s Common Stock on the date of exercise of such certificates to the Company, accompanied by an assignment of the stock to the Company, provided that such shares have been held andowned by the Optionee for at least six (6) prior months; or 

 

(3) (unless prohibited by the Committee) any combination of cash and Common Stock of the Company valued and subject to the restrictions as provided in clause (2). Any assignment of stock shall be in a form andsubstance satisfactory to the Secretary of the Company, including guarantees of signature(s) and payment of all transfer taxes if the Secretary deems such guarantees necessary or desirable. 

 

(d) Under Section 422(d) of the Code, to the extent that theaggregate fair market value of stock with respect to which incentive stock options are exercisable for the first time by the undersigned during any calendar year (under all incentive stock option plans of the Company, a parent or subsidiaries)exceeds $100,000.00, such options shall be treated as options which are not incentive stock options, but shall be exercisable by their terms. Where more than one option that has been designated as an incentive stock option, the determination ofwhich options are to be treated as incentive stock options shall be based on the order in which such options were granted. If the $100,000 annual limitation is first exceeded as the result of the option covered by this agreement, upon each exerciseof this option, that fraction of shares of Common Stock covered by such exercise, equal to (i) the amount by which the grant of this option causes the $100,000 annual limitation to be exceeded, divided by (ii) the aggregate fair market value of thisoption, determined as provided above, shall be treated as shares acquired upon exercise of options which are not incentive stock options, and the balance shall be treated as shares acquired upon exercise of an incentive stock option. 

 

9. Exercise of Option. 

 

(a) Procedure for Exercise; Rights as a Shareholder.Any Option granted hereunder shall be exercisable at such times and under such conditions as determined by the Board, including performance criteria with respect to the Company and/or the Optionee, and as shall be permissible under the terms of thePlan. 

 

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An Option may not be exercised for a fraction of a Share. 

 

An Option may be exercised in whole or in part prior to itsexpiration at the time or times specified in the vesting schedule contained in the Stock Option Agreement. An Option shall be deemed to be exercised, in whole or in part, when written notice of such exercise has been given to the Chief FinancialOfficer of the Company prior to its expiration, in accordance with the terms of the Option, by the person entitled to exercise the Option, and full payment (including any applicable withholding amounts) for the Shares with respect to which theOption is exercised has been received by the Company. Full payment, as authorized by the Board, may consist of a consideration and method of payment allowable under Section 8(c) of the Plan. Until the issuance (as evidenced by the appropriate entryon the books of the Company or of the duly authorized transfer agent of the Company) of the stock certificate evidencing such Shares, no right to vote or receive dividends or any other rights as a shareholder shall exist with respect to the OptionedStock, notwithstanding the exercise of the Option. No adjustment will be made for a dividend or other right for which the record date is prior to the date the stock certificate is issued, except as provided in Section 11 of the Plan. Prior to thetime of issuance, the Company shall satisfy its employment tax and other tax withholding obligations by requiring the Optionee to pay the amount of withholding tax, if any, that must be paid under federal, state and local law due to the exercise ofthe Option, subject to such restrictions or procedures as the Company deems necessary to satisfy Rule 16b-3 of the Exchange Act. The payment of such withholding tax may be by certified or official bank check or by the delivery of a number of sharesof Common Stock (plus cash if necessary) having a fair market value equal to the amount of such withholding tax. 

 

Exercise of an Option in any manner shall result in a decrease in the number of Shares which thereafter may be available, both forpurposes of the Plan and for sale under the Option, by the number of Shares as to which the Option is exercised. 

 

(b) Termination of Status as an Employee. If any Employee ceases to serve as an Employee, such Employee may, but only within thirty(30) days (or such other period of time not exceeding three (3) months as is determined by the Board at the time of grant of the Option) after the date such person ceases to be an Employee, exercise his or her Option to the extent that such personwas entitled to exercise it at the date of such termination. To the extent that such Employee was not entitled to exercise the Option at the date of such termination, or if such Employee does not exercise such Option (which such person was entitledto exercise) within the time specified herein, the Option shall terminate. 

 

An Employee who is employed by an employer that is a subsidiary of the Company, will be considered to have terminated Employee status in the event that the employer ceases to be a subsidiary of the Company.

 

Service shall be deemed to continue whileEmployee is on a bona fide leave of absence, to the extent required by applicable law. To the extent applicable law does not require such a leave to be deemed to continue while on a bona fide leave of absence, such bona fide leave of absence shallbe deemed to continue if, and only if, expressly provided in writing by the Committee or a duly authorized officer of the Company, parent or subsidiary for whom Employee provides services. 

 

Outstanding options that are not exercisable at the time oftermination of service for any reason shall expire at the close of business on the date of such termination. 

 

(c) Disability of Optionee. Notwithstanding the provisions of Section 9(b) above, in the event an Employee is unable to continuehis or her employment relationship with the Company as a result of such Employee’s total and permanent disability (as defined in Section 22(e)(3) of the Code), such Employee may, but only within six (6) months (or such other period of time notexceeding twelve (12) months as is determined by the Board at the time of grant of the Option) from the date of termination, exercise his or her Option to the extent such person was entitled to exercise it at the date of such termination. To theextent that the Employee was not entitled to exercise the Option at the date of termination, or if such Employee does not exercise such Option (which such person was entitled to exercise) within the time specified herein, the Option shall terminate.

 

(d) Death of Optionee. In the event ofthe death of an Optionee: 

 

(1) during the termof the Option who is at the time of his or her death an Employee and who shall have been in Continuous Status as an Employee since the date of grant of the Option, the Option may be exercised, at any time within six (6) months following the date ofdeath, by the Optionee’s estate or by a person who acquired the right to exercise the Option by bequest or inheritance, but only to the extent of the right to exercise that would have accrued had the Optionee continued living and remained inContinuous Status as an Employee six (6) months after the date of death; or 

 

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(2) within thirty (30) days (or such other period of time not exceeding three (3) monthsas is determined by the Board at the time of grant of the Option) after the termination of Continuous Status as an Employee, the Option may be exercised, at any time within six (6) months following the date of death, by the Optionee’s estate orby a person who acquired the right to exercise the Option by bequest or inheritance, but only to the extent of the right to exercise that had accrued at the date of termination. 

 

10. Non-Transferability of Options. The Option may not be sold, pledged, assigned, hypothecated, transferred, ordisposed of in any manner other than by will or by the laws of descent or distribution and may be exercised, during the lifetime of the Optionee, only by the Optionee. 

 

11. Adjustments Upon Changes in Capitalization or Merger. Subject to any required action by the shareholders of theCompany, the number of shares of Common Stock covered by each outstanding Option, and the number of shares of Common Stock which have been authorized for issuance under the Plan but as to which no Options have yet been granted or which have beenreturned to the Plan upon cancellation or expiration of any Option, as well as the price per share of Common Stock covered by each such outstanding Option, shall be proportionately adjusted for any increase or decrease in the number of issued sharesof Common Stock resulting from a stock split, reverse stock split, stock dividend, combination or reclassification of Common Stock, recapitalization, or any other increase or decrease in the number of issued shares of Common Stock effected withoutreceipt of consideration by the Company; provided, however, that conversion of any convertible securities of the Company shall not be deemed to have been “effected without receipt of consideration.” Such adjustment shall be made by theBoard, whose determination in that respect shall be final, binding and conclusive. Except as expressly provided herein, no issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shallaffect, and no adjustment by reason thereof shall be made with respect to, the number or price of shares of Common Stock subject to an Option. 

 

In the event of the proposed dissolution or liquidation of the Company, the Option will terminate immediately prior to the consummation of such proposedaction, unless otherwise provided by the Board. The Board may, in the exercise of its sole discretion in such instances, declare that any Option shall terminate as of a date fixed by the Board and give each Optionee the right to exercise his or herOption as to all or any part of the Optioned Stock, including Shares as to which the Option would not otherwise be exercisable. In the event of the proposed sale of all or substantially all of the assets of the Company, or the merger of the Companywith or into another corporation, the Option shall be assumed or an equivalent option shall be substituted by such successor corporation or a parent or subsidiary of such successor corporation, unless the Board determines, in the exercise of itssole discretion and in lieu of such assumption or substitution, that the Optionee shall have the right to exercise the Option as to all of the Optioned Stock, including Shares as to which the Option would not otherwise be exercisable. In the eventof any recapitalization, merger, consolidation, transfer of assets, reorganization, conversion or what the Committee deems in its sole discretion to be a similar transaction or circumstance, where the Company is not the surviving entity, if thisoption is cancelled without substitution of a successor option or payment of alternative consideration that the Committee determines in good faith to be equitable under the circumstances, Optionee shall have the right, exercisable during the laterof the ten-day period ending on the fifth day prior to such transaction or ten days after the Committee provides Optionee with a notice of cancellation, to exercise this option in whole or in part without regard to any installment exerciseprovisions in the Stock Option Agreement. 

 

12. Time ofGranting Options. The date of grant of an Option shall, for all purposes, be the date on which the Board makes the determination granting such Option. Notice of the determination shall be given to each Employee to whom an Option is so grantedwithin a reasonable time after the date of such grant. 

 

13.Amendment and Termination of the Plan. 

 

(a) Amendment and Termination. The Board may amend or terminate the Plan from time to time in such respects as the Board may deem advisable; provided that, the following revisions or amendments shall require approval of theshareholders of the Company in the manner described in Section 17 of the Plan: 

 

(1) an increase in the number of Shares subject to the Plan above 1,000,000 Shares, other than in connection with an adjustment underSection 11 of the Plan; 

 

(2) any change in thedesignation of the class of employees eligible to be granted options; or 

 

(3) if the Company has a class of equity security registered under Section 12 of the Exchange Act at the time of such revision or amendment, any material amendment under the Plan. 

 

(b) Shareholder Approval. If any amendment requiringshareholder approval under Section 13(a) of the Plan is made subsequent to the first registration of any class of equity security by the Company under Section 12 of the Exchange Act, such shareholder approval shall be solicited as described inSection 17 of the Plan. 

 

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(c) Effect of Amendment or Termination. Any such amendment or termination of thePlan shall not affect Options already granted and such Options shall remain in full force and effect as if the Plan had not been amended or terminated, unless mutually agreed otherwise between the Optionee and the Board, which agreement must be inwriting and signed by the Optionee and the Company. 

 

14.Conditions Upon Issuance of Shares. Shares shall not be issued pursuant to the exercise of an Option unless the exercise of such Option and the issuance and delivery of such Shares pursuant thereto shall comply with all relevant provisions oflaw, including, without limitation, the Securities Act of 1933, as amended, the Exchange Act, the rules and regulations promulgated thereunder, applicable state securities laws, and the requirements of any stock exchange upon which the Shares maythen be listed, and shall be further subject to the approval of counsel for the Company with respect to such compliance. 

 

As a condition to the exercise of an Option, the Company may require the person exercising such Option to represent and warrant at the time of any suchexercise that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a representation is required by any of the aforementionedrelevant provisions of law. 

 

The Company may, but shall not beobligated to, register or qualify the sale of shares under the Securities Act of 1933 or any other applicable law. The Company shall not be obligated to take any affirmative action in order to cause the sale of shares under this agreement to complywith any law. 

 

15. Reservation of Shares. The Company,during the term of this Plan, will at all times reserve and keep available such number of Shares as shall be sufficient to satisfy the requirements of the Plan. 

 

Inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company’s counsel tobe necessary to the lawful issuance and sale of any Shares hereunder, shall relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority shall not have been obtained. 

 

16. Option Agreement. Options shall be evidenced by written optionagreements in such form as the Board shall approve. 

 

17.Shareholder Approval. Continuance of the Plan shall be subject to approval by the shareholders of the Company within twelve months before or after the date the Plan is adopted. If such shareholder approval is obtained at a duly heldshareholders meeting, it may be obtained by the affirmative vote of the holders of a majority of the outstanding shares of the Company, such holders being present or represented and entitled to vote thereon. 

 

18. Information to Optionees. The Company shall provide to each Optionee, during theperiod for which such Optionee has one or more Options outstanding, copies of all annual reports and other information which are provided to all shareholders of the Company. The Company shall not be required to provide such information if theissuance of Options under the Plan is limited to key employees whose duties in connection with the Company assure their access to equivalent information. 

 

**19. CHOICE OF LAW. THE CORPORATE LAW OF THE STATE OF TEXAS WILL GOVERN ALL QUESTIONS CONCERNING THE RELATIVE RIGHTS OF THE COMPANY AND ITSSHAREHOLDERS. ALL OTHER QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY AND INTERPRETATION OF THIS PLAN AND THE INSTRUMENTS EVIDENCING OPTIONS WILL BE GOVERNED BY THE INTERNAL LAW, AND NOT THE LAW OF CONFLICTS, OF THE STATE OF TEXAS.**

 

IN WITNESS WHEREOF, the Company has caused its duly authorized officer toexecute this Plan effective as of the 7th day of August, 2003. 

 

MANNATECH, INCORPORATED

By:
 
**/s/    *****Sam Caster*******
  
Name:
 
Sam Caster

Title:
 
Chairman and CEO

 

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**EXHIBIT A**

 

Incentive Stock Option Agreement 

 

MANNATECH, INCORPORATED 

 

INCENTIVE STOCK OPTION AGREEMENT 

 

Mannatech, Incorporated, a Texas corporation (the “Company”) has granted to (1) (the “Optionee”), an option to purchase a total of (2)shares of Common Stock (the “Option”), at the price determined as provided herein, and in all respects subject to the terms, definitions and provisions of the Mannatech, Incorporated 1998 Restated and Amended Incentive Stock Option Plan,as such may be amended from time to time (the “Plan”) adopted by the Company which is incorporated herein by reference. Capitalized terms used herein and not otherwise defined shall have the meanings assigned to them in the Plan.

 

1. Nature of the Option. This Option is intended toqualify as an Incentive Stock Option as defined in Section 422 of the Code. 

 

2. Exercise Price. The exercise price is $ (3) for each share of Common Stock, which price is not less than the fair market value per share of the Common Stock on the Date of Grant (the “ExercisePrice”). 

 

3. Exercise of Option. This Option shallbe exercisable during its term in accordance with the provisions of Section 9 of the Plan as follows: 

 

(a) Right to Exercise. 

 

(1) The Option granted hereunder shall not be exercisable in any part until the first anniversary of the Date of Grant (as hereinafter setforth). The Option shall be exercisable as to (4) (        ) of the total shares covered by such Option as of the first anniversary of the Date of Grant. The right to exercise with respect to anadditional (4) (        ) of the total shares subject to the Option shall accrue on each of the (5), (5), (5) and (5) anniversaries of the Date of Grant and shall be cumulative. Notwithstanding theforegoing, in the event of (A) a proposed sale of substantially all of the Common Stock of the Company, (B) a proposed sale of substantially all of the assets of the Company, (C) a proposed merger in which the Company is not to be the survivingcorporation (other than with a subsidiary of the Company) or (D) any other proposed extraordinary corporate transaction which, in the judgment of the Board, might deprive the Optionee of the full value of the Option granted hereunder, the Companyshall forward written notification of such transaction to the Optionee, and the Optionee shall have thirty (30) days in which to exercise all or any portion of the Option herein granted, including any portion of the Option which has not yet vestedas of such date (to the extent such Option has not been previously exercised), pursuant to the procedure set forth below. Upon the conclusion of such thirty-day period, unless otherwise determined by the Board, all rights of the Optionee hereundershall terminate. Any exercise of the Option by the Optionee shall be effective immediately prior to the occurrence of the transaction giving rise to the right to exercise the Option and, to the extent such transaction does not occur, the exerciseshall be deemed rescinded and the Optionee shall again only be entitled to exercise the Option according to the vesting schedule set forth above. 

 

(2) This Option may not be exercised for a fraction of a share. 

 

(3) In the event of the Optionee’s death, disability or other termination of employment, theexercisability of the Option is governed by Sections 7, 8 and 9 below. 

 

(b) Method of Exercise. This Option shall be exercisable by written notice to the Company which shall state the election to exercise the Option, the number of Shares in respect of which the Option is beingexercised, and such other representations and agreements as to the holder’s investment intent with respect to such shares of Common Stock as may be required by the Company pursuant to the provisions of the Plan. Such written notice shall besigned by the Optionee and shall be delivered in person or by mail to the Chief Financial Officer of the Company. The written notice shall be accompanied by payment of the Exercise Price. This Option shall be deemed to be exercised upon receipt bythe Company of such written notice accompanied by the Exercise Price. 

 

No Shares will be issued pursuant to the exercise of an Option unless such issuance and such exercise shall comply with all relevant provisions of law and the requirements of any stock exchange upon which the Shares may then be listed andthe payment of withholding tax, if any, has been made in compliance with the terms of the Plan. Assuming such compliance, the Shares shall be considered transferred to the Optionee on the date determined pursuant to the provisions of the Plan.

4. Optionee’s Representations. In the event the Shares purchasable pursuant to the exerciseof this Option have not been registered under the Securities Act of 1933, as amended, at the time this Option is exercised, Optionee shall, concurrently with the exercise of all or any portion of this Option, deliver to the Company a LetterAgreement in the form attached hereto as Exhibit A and such Optionee’s spouse shall execute the consent at the end of such Letter Agreement. 

 

5. Method of Payment. Payment of the exercise price shall be by: 

 

(a) cash; 

 

(b) certified or official bank check; or 

 

(c) surrender of other Shares of Common Stock of the Company of a value equal to the exercise price of the Shares as to which the Optionis being exercised. 

 

6. Restrictions on Exercise. ThisOption may not be exercised until such time as the Plan has been approved by the shareholders of the Company, or if the issuance of such Shares upon such exercise or the method of payment of consideration for such shares would constitute violationof any applicable federal or state securities or other law or regulation, including any rule under Part 207 of Title 12 of the Code of Federal Regulations (“Regulation G”) as promulgated by the Federal Reserve Board. As a condition to theexercise of this Option, the Company may require Optionee to make any representation and warranty to the Company as may be required by any applicable law or regulation. 

 

7. Termination of Status as an Employee. If Optionee ceases to serve as an Employee, Optionee may, but only within(6) days after the date Optionee ceases to be an employee of the Company, exercise this Option to the extent that Optionee was entitled to exercise it at the date of such termination. To the extent that Optionee was not entitled to exercise thisOption at the date of such termination, or if Optionee does not exercise this Option within the time specified herein, the Option shall terminate. 

 

8. Disability of Optionee. Notwithstanding the provisions of Section? above, if Optionee is unable to continue his or her employment with theCompany as a result of his or her total and permanent disability (as defined in Section 22(e) (3) of the Code), Optionee may, within (7) months from the date of termination of employment, exercise his or her Option to the extent Optionee wasentitled to exercise it at the date of such termination. To the extent that Optionee was not entitled to exercise the Option at the date of termination, or if Optionee does not exercise such Option (which Optionee was entitled to exercise) withinthe time specified herein, the Option shall terminate. 

 

9.Death of Optionee. In the event of the death of Optionee: 

 

(a) During the term of this Option and while an Employee of the Company and having been in Continuous Status as an Employee since the Date of Grant of the Option, the Option may be exercised, at any time within six(6) months following the date of death, by Optionee’s estate or by a person who acquired the right to exercise the Option by bequest or inheritance, but only to the extent of the right to exercise that would have accrued had the Optioneecontinued living and remained in Continuous Status as an Employee six (6) months after the date of death; or 

 

(b) within (8) days after the termination of Optionee’s Continuous Status as an employee, the Option may be exercised, at any timewithin six (6) months following the date of death, by Optionee’s estate or by a person who acquired the right to exercise the Option by bequest or inheritance, but only to the extent of the right to exercise that had accrued at the date oftermination. 

 

10. Non-Transferability of Option. ThisOption may not be transferred in any manner otherwise than by will or by the laws of descent or distribution and may be exercised during the lifetime of Optionee only by such Optionee. The terms of this Option shall be binding upon the executors,administrators, heirs, successors and assigns of the Optionee. 

 

11. Term of Option. This Option may not be exercised more than ten (10) years (five years if Optionee owns, immediately before this Option is granted, stock representing more than 10 percent of the total combined voting power of allclasses of stock of the Company or of any Parent or Subsidiary) from the date of grant of this Option, and may be exercised during such term only in accordance with the Plan and the terms of this Option. 

12. Notices. All notices and other communications hereunder shall be in writing and shall bedeemed to have been duly given if delivered personally, mailed by certified mail (return receipt requested) or sent by overnight delivery service, cable, telegram, facsimile transmission or telex to the parties at the following addresses or at suchother addresses as shall be specified by the parties by like notice: 

 
 (a)If to the Company: 
600 S. Royal Lane 

Suite 200 

Coppell, TX 75019 

Attn: Chief Financial Officer 

 
 (b)if to the Optionee: 
 

At the Optionee’s last known address as listed with the Company 

 

Notice so given shall, in the case of notice so given by mail, be deemed to be given and received on the fourth calendar day after posting,in the case of notice so given by overnight delivery service, on the date of actual delivery and, in the case of notice so given by cable, telegram, facsimile transmission, telex or personal delivery, on the date of actual transmission or, as thecase may be, personal delivery. 

 

13. Severability. Ifany provision of this Agreement shall be held to be illegal, invalid or unenforceable under any applicable law, then such contravention or invalidity shall not invalidate the entire Agreement. Such provision shall be deemed to be modified to theextent necessary to render it legal, valid and enforceable, and if no such modification shall render it legal, valid and enforceable, then this Agreement shall be construed as if not containing the provision held to be invalid, and the rights andobligations of the parties shall be construed and enforced accordingly. 

 

14. Complete Agreement. This Agreement and the Plan embody the complete agreement and understanding between the parties and supersede and preempt any prior understandings, agreements or representations by or among the parties,written or oral, which may have related to the subject matter hereof in any way. 

 

15. Counterparts. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, with the same effect as if all parties had signed the same document. Allsuch counterparts shall be deemed an original, shall be construed together and shall constitute one and the same instrument. 

 

16. **CHOICE OF LAW.****THE CORPORATE LAW OF THE STATE OF TEXAS WILL GOVERN ALL QUESTIONS CONCERNING THE RELATIVE RIGHTS OF THE COMPANY ANDITS SHAREHOLDERS. ALL OTHER QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY AND INTERPRETATION OF THIS AGREEMENT WILL BE GOVERNED BY THE INTERNAL LAW, AND NOT THE LAW OF CONFLICTS, OF THE STATE OF TEXAS.**

 

DATE OF GRANT: (9) 

 

MANNATECH, INCORPORATED,

a TexasCorporation
By:    
Name:
    
Title:
    
 

Optionee acknowledges receipt ofa copy of the Plan, a copy of which is annexed hereto, and represents that Optionee is familiar with the terms and provisions thereof, and hereby accepts this Option subject to all of the terms and provisions set forth in the Plan and in thisIncentive Stock Option Agreement. Optionee hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Board upon any questions arising under the Plan. 

 

Dated:                            

 
 Optionee

**KEY FOR NUMBERED**

 

**BLANKS IN INCENTIVE STOCK OPTION AGREEMENT**

 

**OF MANNATECH, INCORPORATED**

 
1.Name of person to whom Option is granted. 
 
2.Number of shares of Common Stock for which Option is granted. 
 
3.Per share exercise price for the shares to be issued pursuant to exercise of an option, determined by the Board of Directors or an option plan committee in accordance with Section 8of the Plan. 
 
4.Vesting period for option: Three years: one-third ( 1/3); Four years: one-fourth ( 1/4); Five years: one-fifth ( 1/5). 
 
5.Three year vesting: second and third Four year vesting: second, third and fourth Five year vesting: second, third, fourth and fifth 
 
6.30 days unless the Board designates a greater amount of time (not to exceed 3 months) at the time of grant of the Option (Section 9(b) of the Plan). 
 
7.Six months unless the Board designates a greater amount of time (not to exceed 12 months) at the time of grant of the Option (Section 9(c) of the Plan). 
 
8.30 days unless the Board designates a greater amount of time (not to exceed 3 months) at the time of grant of the Option (Section 9(d)(ii) of the Plan). 
 
9.Date on which the Board authorized the grant of the Option.