2006 Stock Incentive Plan





NU SKIN ENTERPRISES,
INC. 



2006 STOCK INCENTIVE PLAN 



Approved by
Stockholders on May 25, 2006 



Termination Date: April
27, 2016 



I.        PURPOSES 



        1.1                 Eligible Stock Award
Recipients.  The persons eligible to receive Stock Awards are the Employees, Directors,
and Consultants of the Company and its Affiliates. 



        1.2         Available Stock Awards.
The purpose of the Plan is to provide a means by which eligible recipients of Stock Awards
may be given an opportunity to benefit from increases in value of the Common Stock through
the granting of Stock Awards including, but not limited to: (i) Incentive Stock
Options, (ii) Nonstatutory Stock Options, (iii) Restricted Stock Bonuses, (iv) Stock
Appreciation Rights, (v) Phantom Stock Units, (vi) Restricted Stock Units, (vii)
Performance Share Bonuses, and (viii) Performance Share Units. 



        1.3         General Purpose. The
Company, by means of this new Plan, which will serve as the successor to the
Company’s Second Amended and Restated 1996 Stock Incentive Plan (the “1996
Plan”), seeks to create incentives for eligible Employees (including Officers),
Directors, and Consultants of the Company to maximize the long-term value of the Company
by receiving Stock Awards to acquire Common Stock of the Company or Stock Awards for which
the value is measured with reference to Common Stock of the Company. 



II.         DEFINITIONS 



        2.1         “Affiliate” means a
parent or subsidiary of the Company, with “parent” meaning an entity that
controls the Company directly or indirectly, through one or more intermediaries, and
“subsidiary” meaning an entity that is controlled by the Company directly or
indirectly, through one or more intermediaries. Solely with respect to the granting of any
Incentive Stock Options, Affiliate means any parent corporation or subsidiary corporation
of the Company, whether now or hereafter existing, as those terms are defined in Sections
424(e) and (f), respectively, of the Code. 



        2.2         “Beneficial Owner”
shall have the meaning ascribed to such term in Rule 13d-3 promulgated under the Exchange
Act. 



        2.3                 "Board" means the board
of directors of the Company. 



        2.4         “Cause” means any of
the following: (1) the Participant’s theft, dishonesty, misappropriation or
conversion of assets or opportunities belonging to the Company or falsification of any
documents or records related to the Company or any of its Affiliates; (2) the
Participant’s improper use or disclosure of the Company’s or any of its
Affiliate’s confidential or proprietary information; (3) any action by the
Participant which has a material detrimental effect on the reputation or business of the
Company or any of its Affiliates including the commission of an act of fraud or
intentional misrepresentation; (4) the Participant’s failure or inability to
perform any reasonable assigned duties, if such failure or inability is reasonably capable
of cure, after being provided with a reasonable opportunity  





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 to cure, such failure or
inability; (5) any material breach by the Participant of any employment or service
agreement between the Participant and the Company or any of its Affiliates or applicable
policy of the Company or any of its Affiliates, including any non-disclosure agreement or
other duty of confidentiality or insider trading policy, unless such breach can be cured
and is cured pursuant to the terms of such agreement; (6) breach of any applicable
restrictive covenant evidenced by an agreement between the Participant and the Company or
any Affiliate, including breach of any applicable non-competition or non-solicitation
provision and/or improper disclosure or misuse of any confidential or proprietary
information, or (7) the Participant’s conviction (including any plea of guilty
or nolo contendere) of any criminal act which impairs the Participant’s
ability to perform his or her duties with the Company or any of its Affiliates or conduct
related to the Participant’s Service for which either criminal or civil penalties may
be sought. Notwithstanding the foregoing, the definition of “Cause” in an
individual written agreement between the Company or any of its Affiliates and the
Participant shall supersede the foregoing definition with respect to Stock Awards subject
to such individual agreement (it being understood, however, that if no definition of the
term Cause is set forth in such an individual written agreement, the foregoing definition
shall apply). 







        2.5                 "Change of Control"
means the occurrence of any of the following events: 



               	(i) 	  	
                    The sale, exchange, lease or other disposition, in one or a series of related
                    transactions, of all or substantially all of the assets of the Company to a
                    “person” or “group” (as such terms are defined or described
                    in Sections 3(a)(9), 13(d)(3) or 14(d)(2) of the Exchange Act); 



                    



               	(ii) 	  	
                    Any person or group is or becomes the Beneficial Owner, directly or indirectly,
                    of more than 50% of the total voting power of the voting stock of the Company
                    (or any successor to all or substantially all of the assets of the Company or
                    any entity which controls the Company), including by way of merger,
                    consolidation or otherwise; 



                    



               	(iii) 	  	
                    Either a merger or consolidation of the Company with or into another person (as
                    defined by Section 13(d) or 14(d) of the Exchange Act) if the shareholders of
                    the Common Stock of the Company immediately prior to such transaction are not
                    the Beneficial Owners of a majority of the outstanding common stock of the
                    surviving company or its parent immediately after the transaction; 



                    



               	(iv) 	  	
                    During any period of two (2) consecutive years, individuals who at the beginning
                    of such period constituted the Board (together with any new Directors whose
                    election by such Board or whose nomination for election by the shareholders of
                    the Company was approved by a vote of a majority of the Directors of the Company
                    then still in office, who were either Directors at the beginning of such period
                    or whose election or nomination for election was previously so approved) cease
                    for any reason to constitute a majority of the Board then in office; or 



                    



               	(v) 	  	
                    A dissolution or liquidation of the Company. 



                    



        2.6                 "Code" means the
Internal Revenue Code of 1986, as amended. 



        2.7         “Committee” means a
committee of one or more members of the Board (or other individuals who are not members of
the Board to the extent allowed by law) appointed by the Board in accordance with Section
3.3 of the Plan. 



        2.8                 "Common Stock" means the
Class A common shares of the Company, par value $0.01 per share. 








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        2.9                 "Company" means Nu Skin
Enterprises, Inc., a Delaware corporation. 



        2.10         “Consultant” means any
person, including an advisor, (i) engaged by the Company or an Affiliate to render
consulting or advisory services and who is compensated for such services or (ii) who
is a member of the board of directors of an Affiliate. However, the term
“Consultant” shall not include either Directors who are not compensated by the
Company for their services as a Director or Directors who are compensated by the Company
solely for their services as a Director. 



        2.11         “Continuous Service”
means that the Participant’s service with the Company or an Affiliate, whether as an
Employee, Director, or Consultant, is not interrupted or terminated. The
Participant’s Continuous Service shall not be deemed to have terminated merely
because of a change in the capacity in which the Participant renders service to the
Company or an Affiliate as an Employee, Consultant, or Director, or a change in the entity
for which the Participant renders such service, provided that there is no interruption or
termination of the Participant’s Continuous Service. For example, a change in status
from an Employee of the Company to a Consultant of an Affiliate or a Director will not
constitute an interruption of Continuous Service. Subject to the requirements of
applicable law, the Board or the chief executive officer of the Company, in that
party’s sole discretion, may determine whether Continuous Service shall be considered
interrupted in the case of any leave of absence approved by the Company or an Affiliate,
including sick leave, military leave or any other personal leave. 



        2.12         “Covered Employee”
means the chief executive officer and the four (4) other highest compensated officers of
the Company for whom total compensation is required to be reported to stockholders under
the Exchange Act, as determined for purposes of Section 162(m) of the Code, as such
determination may be amended from time to time. 



        2.13                "Director" means a
member of the Board of Directors of the Company. 



        2.14        “Disability” means the
permanent and total disability of a person within the meaning of Section 22(e)(3) of the
Code for all Incentive Stock Options. For all other Stock Awards, “Disability”
means the Participant (a) is unable to engage in any substantial gainful activity by
reason of any medically determinable physical or mental impairment which can be expected
to result in death or can be expected to last for a continuous period of not less than
twelve (12) months or (b) is, by reason of any medically determinable physical or mental
impairment which can be expected to result in death, or can be expected to last for a
continuous period of not less than 12 months, receiving income replacement benefits for a
period of not less than three (3) months under an accident and health plan covering
employees of the Participant’s employer. Any question as to the existence of that
person’s physical or mental impairment as to which the person or person’s
representative and the Company cannot agree shall be determined in writing by a qualified
independent physician mutually acceptable to the person and the Company (or its Affiliate,
as applicable). If the person and the Company (or its Affiliate, as applicable) cannot
agree as to a qualified independent physician, each shall appoint such a physician and
those two (2) physicians shall select a third (3rd)who shall make such determination in
writing. The determination of Disability made in writing to the Company or an Affiliate
and the person shall be final and conclusive for all purposes of the Stock Awards. 



        2.15                "Eligible Director"
means any Director who is not employed by the Company or an Affiliate. 



        2.16         “Employee” means any
person employed by the Company or an Affiliate. Service as a Director or compensation by
the Company or an Affiliate solely for services as a Director shall not be sufficient to
constitute “employment” by the Company or an Affiliate. 







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        2.17                "Exchange Act" means the
Securities Exchange Act of 1934, as amended. 



        2.18                "Fair Market Value"
means, as of any date, the value of the Common Stock determined as follows: 



               	(i) 	  	
                    If the Common Stock is listed on any established stock exchange or traded on the
                    Nasdaq National Market or the Nasdaq SmallCap Market, the Fair Market Value of a
                    share of Common Stock shall be the closing sales price for such stock (or the
                    closing bid, if no such sales were reported) as quoted on such exchange or
                    market (or the exchange or market with the greatest volume of trading in the
                    Common Stock) on the date of determination, as reported in The Wall Street
                    Journal or such other source as the Board deems reliable; 



                    



               	(ii) 	  	
                    If the Common Stock is regularly quoted by a recognized securities dealer but
                    selling prices are not reported, the Fair Market Value of a share of Common
                    Stock shall be the mean between the high bid and low asked prices for the Common
                    Stock on the day of determination, as reported in The Wall Street Journal
                    or such other source as the Board deems reliable; or 



                    



               	(iii) 	  	
                    In the absence of such markets for the Common Stock, the Fair Market Value shall
                    be determined in good faith by the Board. 



                    



	   	  	Notwithstanding the
foregoing, the value of the Common Stock shall at all times be determined in a manner
consistent with the regulations under Section 409A of the Code, as they may be amended
from time to time, with respect to Stock Awards issued to Participants subject to Section 409A
of the Code.  







        2.19         “Forfeiture Event”
means a Participant engaging in conduct that results in the Participant’s termination
for Cause or engaging in conduct that would constitute sufficient grounds for termination
for Cause (including where the Participant’s Continuous Service has terminated at the
time the Forfeiture Event occurs). 



        2.20         “Full-Value Stock
Award” shall mean any of a Restricted Stock Bonus award, Restricted Stock Unit award,
Phantom Stock Unit award, Performance Share Bonus award, or Performance Share Unit award. 



        2.21         “Incentive Stock
Option” means an Option intended to qualify as an incentive stock option within the
meaning of Section 422 of the Code and the regulations promulgated thereunder. 



        2.22         “Non-Employee
Director” means a Director who either (i) is not a current Employee or Officer
of the Company or its parent or a subsidiary, does not receive compensation (directly or
indirectly) from the Company or its parent or a subsidiary for services rendered as a
consultant or in any capacity other than as a Director (except for an amount as to which
disclosure would not be required under Item 404 of Regulation S-K promulgated pursuant to
the Securities Act (“Regulation S-K”)), does not possess an interest in any
other transaction as to which disclosure would be required under Item 404 of Regulation
S-K and is not engaged in a business relationship as to which disclosure would be required
under Item 404 of Regulation S-K; or (ii) is otherwise considered a
“non-employee director” for purposes of Rule 16b-3. 



        2.23                "Nonstatutory Stock
Option" means an Option not intended to qualify as an Incentive Stock Option. 









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        2.24         “Officer” means a
person who is an officer of the Company within the meaning of Section 16 of the Exchange
Act and the rules and regulations promulgated thereunder. 



        2.25                "Option" means an
Incentive Stock Option or a Nonstatutory Stock Option granted pursuant to the Plan. 



        2.26         “Option Agreement”
means a written agreement between the Company and an Optionholder evidencing the terms and
conditions of an individual Option grant. Each Option Agreement shall be subject to the
terms and conditions of the Plan. 



        2.27         “Optionholder” means a
person to whom an Option is granted pursuant to the Plan or, if applicable, such other
person who holds an outstanding Option. 



        2.28         “Outside Director”
means a Director who either (i) is not a current employee of the Company or an
“affiliated corporation” (within the meaning of Treasury Regulations promulgated
under Section 162(m) of the Code), is not a former employee of the Company or an
“affiliated corporation” receiving compensation for prior services (other than
benefits under a tax qualified pension plan), was not an officer of the Company or an
“affiliated corporation” at any time and is not currently receiving direct or
indirect remuneration from the Company or an “affiliated corporation” for
services in any capacity other than as a Director; or (ii) is otherwise considered an
“outside director” for purposes of Section 162(m) of the Code. 



        2.29         “Participant” means a
person to whom a Stock Award is granted pursuant to the Plan or, if applicable, such other
person who holds an outstanding Stock Award. 



        2.30         “Performance Share
Bonus” means a grant of shares of the Company’s Common Stock not requiring a
Participant to pay any amount of monetary consideration, and subject to the provisions of
Section 8.5 of the Plan. 



        2.31         “Performance Share
Unit” means the right to receive one (1) share of the Company’s Common Stock at
the time the Performance Share Unit vests, subject to the provisions of Section 8.6 of the
Plan. 



        2.32         “Phantom Stock Unit”
means the right to receive the value of one (1) share of the Company’s Common Stock,
subject to the provisions of Section 8.3 of the Plan. 



        2.33                "Plan" means this Nu
Skin Enterprises, Inc. 2006 Stock Incentive Plan. 



        2.34         “Restricted Stock
Bonus” means a grant of shares of the Company’s Common Stock not requiring a
Participant to pay any amount of monetary consideration, subject to the provisions of
Section 8.1 of the Plan. 



        2.35         “Restricted Stock
Unit” means the right to receive one (1) share of the Company’s Common Stock at
the time the Restricted Stock Unit vests, subject to the provisions of Section 8.4 of the
Plan. 



        2.36         “Rule 16b-3” means
Rule 16b-3 promulgated under the Exchange Act or any successor to Rule l6b-3, as in effect
from time to time. 



        2.37                "Securities Act" means
the Securities Act of 1933, as amended. 2.38 “Stock Appreciation Right” means
the right to receive an amount equal to the Fair Market Value of one (1) share of the
Company’s Common Stock on the day the Stock Appreciation Right is exercised and
redeemed, reduced by the deemed exercise price or base price of such right, subject to
the provisions of Section 8.2 of the Plan.  








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        2.39         “Stock Award” means
any Option award, Restricted Stock Bonus award, Stock Appreciation Right award, Phantom
Stock Unit award, Restricted Stock Unit award, Performance Share Bonus award, Performance
Share Unit award, or other stock-based award. These awards may include, but are not
limited to those listed in Section 1.2. 



        2.40         “Stock Award
Agreement” means a written agreement between the Company and a holder of a Stock
Award setting forth the terms and conditions of an individual Stock Award grant. Each
Stock Award Agreement shall be subject to the terms and conditions of the Plan. 



        2.41         “Ten Percent
Shareholder” means a person who owns (or is deemed to own pursuant to Section 424(d)
of the Code) stock possessing more than ten percent (10%) of the total combined voting
power of all classes of stock of the Company or of any of its Affiliates. 



III.         ADMINISTRATION 



        3.1         Administration by Board.
The Board shall administer the Plan unless and until the Board delegates administration to
a Committee, as provided in Section 3.3. 



        3.2                Powers of Board.  The
Board shall have the power, subject to, and within the limitations of, the express
provisions of the Plan: 



	  	  	(i)  	  	          To
determine from time to time which of the persons eligible under the Plan
                    shall be granted Stock Awards; when and how each Stock Award shall be
granted;                     what type or combination of types of Stock Awards shall be
granted; the                     provisions of each Stock Award granted (which need not
be identical), including                     the time or times when a person shall be
permitted to receive cash and/or Common                     Stock pursuant to a Stock
Award; and the number of shares of Common Stock with                     respect to which
a Stock Award shall be granted to each such person.  






	  	  	(ii)  	  	   To
construe and interpret the Plan and Stock Awards granted under it, and to
                    establish, amend and revoke rules and regulations for its
administration. The                     Board, in the exercise of this power, may correct
any defect, omission or                     inconsistency in the Plan or in any Stock
Award Agreement, in a manner and to                     the extent it shall deem
necessary or expedient to make the Plan fully                     effective.  






	  	  	(iii)  	  	      To
amend the Plan or a Stock Award as provided in Section 14 of the Plan.  






	  	  	(iv)  	  	 Generally,
to exercise such powers and to perform such acts as the Board deems
                    necessary, desirable, convenient or expedient to promote the best
interests of                     the Company that are not in conflict with the provisions
of the Plan.  






	  	  	(v)  	  	To
adopt sub-plans and/or special provisions applicable to Stock Awards
                    regulated by the laws of a jurisdiction other than and outside of the
United                     States, including without limitation determining: (A)  the
exercise or                     redemption price of Stock Awards, (B) the definition
of “Fair Market                     Value” for purposes of the Plan, (C) the
applicable vesting schedule,                     (D) the permissible methods of
exercise, (E) the procedure for                     designating a beneficiary in the
 











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	  	  	 	  	event of a Participant’s death, if such                     designation is to be
permitted, (F) the term of a Stock Award, and                     (G) the terms
and conditions of the applicable Stock Award Agreement. Such
                    sub-plans and/or special provisions may take precedence over other
provisions of                     the Plan, with the exception of Section 4 and Section
11 of the Plan; however,                     unless otherwise superseded by the terms of
such sub-plans and/or special                     provisions, the provisions of the Plan
shall govern.  







	  	  	(vi)  	  	  To
authorize any person to execute on behalf of the Company any instrument
                    required to effectuate the grant of a Stock Award previously granted
by the                     Board.  






	  	  	(vii)  	  	 To
determine whether Stock Awards will be settled in shares of Common Stock,
                    cash or in any combination thereof.  






	  	  	(viii)  	  	 To
determine whether Full Value Stock Awards, but not Options or Stock
                    Appreciation Rights, will be adjusted for Dividend Equivalents, with
                    “Dividend Equivalents” meaning a credit, made at the
discretion of the                     Board, to the account of a Participant in an amount
equal to the cash dividends                     paid on one share of Common Stock for
each share of Common Stock represented by                     a Full Value Stock Award
held by such Participant.  






	  	  	(ix)  	  	  To
impose such restrictions, conditions or limitations as it determines
                    appropriate as to the timing and manner of any resales by a
Participant or other                     subsequent transfers by the Participant of any
shares of Common Stock issued as                     a result of or under a Stock Award,
including, without limitation, (A)                     restrictions under an insider
trading policy and (B) restrictions as to the use                     of a specified
brokerage firm for such resales or other transfers.  






	  	  	(x)  	  	   To
provide, either at the time a Stock Award is granted or by subsequent action,
                    that a Stock Award shall contain as a term thereof, a right, either
in tandem                     with the other rights under the Stock Award or as an
alternative thereto, of the                     Participant to receive, without payment
to the Company, a number of shares of                     Common Stock, cash or a
combination thereof, the amount of which is determined                     by reference
to the value of the Stock Award.  






        3.3                 Delegation to Committee. 



	  	  	(i)  	  	General.
The Board may delegate administration of the Plan to a Committee                     or
Committees of one or more individuals, to the extent permissible under the
                    state corporate law which governs the Company, and the term
                    “Committee” shall apply to any person or persons to whom
such                     authority has been delegated. If administration is delegated to
a Committee, the                     Committee also may exercise, in connection with the
administration of the Plan,                     any of the powers and authority granted
to the Board under the Plan. The                     Committee may delegate to a
subcommittee any of the administrative powers the                     Committee is
authorized to exercise (and references in this Plan to the Board
                    shall thereafter be to the Committee or subcommittee, as applicable),
subject,                     however, to such resolutions, not inconsistent with the
provisions of the Plan,                     as may be adopted from time to time by the
Board. The Board may abolish the                     Committee at any time and revest in
the Board the administration of the Plan.  






	  	  	(ii)  	  	Committee
Composition when Common Stock is Publicly Traded. So long as                     the
Common Stock is publicly traded, in the discretion of the Board, a Committee
                    may consist solely of two or more Outside Directors, in accordance
with Section                     162(m) of the Code, and/or solely of two or more
Non-Employee Directors, in                     accordance with Rule 16b-3. Within the
scope of such authority, the Board or the                     Committee may (1) delegate
to a committee of one or more individuals who                     are not Outside
Directors the authority to grant Stock Awards to eligible                     persons who
are either (a) not then Covered Employees and are not expected to be
                    Covered Employees at 










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	  	  	 	  	 the time of recognition of income resulting from
such Stock                     Award or (b) not persons with respect to whom the Company
wishes to comply with                     Section 162(m) of the Code and/or (2) delegate
to a committee of one or more                     individuals who are not Non-Employee
Directors the authority to grant Stock                     Awards to eligible persons who
are either (a) not then subject to Section 16 of                     the Exchange Act or
(b) receiving a Stock Award as to which the Board or                     Committee elects
not to comply with Rule 16b-3 by having two or more                     Non-Employee
Directors grant such Stock Award. To the extent permissible under
                    applicable state corporate law, the Board or Committee may delegate
to one or                     more Officers of the Company the authority to grant Stock
Awards under this Plan                     to Participants who are not Officers under
applicable law.  








        3.4         Effect of Board’s
Decision. All determinations, interpretations and constructions made in good faith by
the Board, including any Committee thereof, and by any persons to whom authority has been
appropriately delegated hereunder shall not be subject to review by any person and shall
be final, binding and conclusive on all persons. 



IV.         SHARES SUBJECT TO
THE PLAN 



        4.1         Share Reserve. Subject to
the provisions of Section 13 of the Plan relating to adjustments upon changes in Common
Stock, the maximum aggregate number of shares of Common Stock that may be issued pursuant
to Stock Awards shall not exceed 6 million shares of Common Stock (“Share
Reserve”), provided that each share of Common Stock issued pursuant to an Option
shall reduce the Share Reserve by one (1) share and each share of Common Stock subject to
the exercised or redeemed portion of a Stock Appreciation Right (whether the distribution
upon redemption is made in cash, stock or a combination of the two) shall reduce the Share
Reserve by 1 share. Each share of Common Stock issued pursuant to a Full-Value Stock Award
shall reduce the Share Reserve by one and one-half (11⁄2) shares. To the extent that
a distribution pursuant to a Stock Award is made in cash, the Share Reserve shall be
reduced by the number of shares of Common Stock that would otherwise have been issued
pursuant to such Stock Award in the ratio set forth in this Section 4.1 applicable to
such Stock Award. Notwithstanding any other provision of the Plan to the contrary, the
maximum aggregate number of shares of Common Stock that may be issued under the Plan
pursuant to Incentive Stock Options is 6 million shares of Common Stock (“ISO
Limit”), subject to the adjustments provided for in Section 13 of the Plan. 



        4.2         Reversion of Shares to the
Share Reserve. If any Stock Award granted under this Plan shall for any reason (i)
expire, be cancelled or otherwise terminate, in whole or in part, without having been
exercised or redeemed in full, (ii) be reacquired by the Company prior to vesting, or
(iii) be repurchased at cost by the Company prior to vesting, the shares of Common Stock
not acquired under such Stock Award shall revert or be added to the Share Reserve in the
same number as they had initially reduced the Share Reserve, and thereafter, become
available for issuance under the Plan. Notwithstanding the foregoing, shares of Common
Stock shall not revert nor be added back to the Share Reserve, and such shares shall not
thereafter become available for issuance under the Plan upon or in respect of: (a) the
expiration, cancellation or termination of shares of Common Stock that may be issued
pursuant to Incentive Stock Options, (b) shares tendered in payment, in whole or in
part, of the exercise price of Options awarded hereunder, (c) shares withheld by the
Company to satisfy any tax withholding obligation, (d) shares repurchased by the Company
on the open market using option exercise proceeds, and (e) all shares covered by a
Stock Appreciation Right, to the extent such right is exercised or redeemed, whether or
not shares of Common Stock are actually issued. 



        4.3         Source of Shares. The
shares of Common Stock subject to the Plan may be unissued shares or reacquired shares,
bought on the market or otherwise. 








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V.         ELIGIBILITY 



        5.1                 Eligibility for Specific
Stock Awards.  Incentive Stock Options may be granted only to Employees.  Stock Awards
other than Incentive Stock Options may be granted to Employees, Directors, and
Consultants. 



        5.2         Ten Percent Shareholders.
A Ten Percent Shareholder shall not be granted an Incentive Stock Option unless the
exercise price of such Option is at least one hundred ten percent (110%) of the Fair
Market Value of the Common Stock at the date of grant and the Option is not exercisable
after the expiration of five (5) years from the date of grant. 



        5.3         Annual Section 162(m)
Limitation. Subject to the provisions of Section 13 of the Plan relating to
adjustments upon changes in the shares of Common Stock, no Participant shall be eligible
to be granted Incentive Stock Options, Nonstatutory Stock Options or Stock Appreciation
Rights covering more than 1 million shares of Common Stock during any fiscal year, and no
Participant shall be eligible to receive Restricted Stock Bonus awards, Restricted Stock
Unit awards, Phantom Stock Unit awards, Performance Share Bonus awards or Performance
Share Unit awards covering more than 500,000 shares of Common Stock during any fiscal
year; provided that in connection with his or her initial service, a Participant may be
granted Options or Stock Appreciation Rights covering not more than an additional 1
million shares of Common Stock, which shall not count against the limit set forth in the
preceding sentence. 



        5.4                 Consultants. 



	  	  	(i)  	  	A
Consultant shall not be eligible for the grant of a Stock Award if, at the
                    time of grant, a Form S-8 Registration Statement under the Securities
Act                     (“Form S-8”) is not available to register either the
offer or the sale                     of the Company’s securities to such Consultant
because of the nature of the                     services that the Consultant is
providing to the Company, or because the                     Consultant is not a natural
person, or as otherwise provided by the rules                     governing the use of
Form S-8, unless the Company determines both (1) that                     such grant
(A) shall be registered in another manner under the Securities Act
                    (e.g., on a Form S-3 Registration Statement) or (B) does not require
                    registration under the Securities Act in order to comply with the
requirements                     of the Securities Act, if applicable, and (2) that
such grant complies with                     the securities laws of all other relevant
jurisdictions.  






	  	  	(ii)  	  	Form
S-8 generally is available to consultants and advisors only if                     (A) they
are natural persons; (B) they provide bona fide services to                     the
issuer, its parent or its majority owned subsidiaries; and (C) the
                    services are not in connection with the offer or sale of securities
in a                     capital-raising transaction, and do not directly or indirectly
promote or                     maintain a market for the issuer’s securities.  








VI.        OPTION
PROVISIONS 



        Each
Option shall be in such form and shall contain such terms and conditions as the Board
shall deem appropriate. All Options shall be separately designated Incentive Stock Options
or Nonstatutory Stock Options at the time of grant, and, if certificates are issued, a
separate certificate or certificates will be issued for shares of Common Stock purchased
on exercise of each type of Option. The provisions of separate Options need not be
identical, but each Option shall include (through incorporation of provisions hereof by
reference in the Option or otherwise) the substance of each of the following provisions: 









A-9









        6.1         Term. Subject to the
provisions of Section 5.2 of the Plan regarding grants of Incentive Stock Options to Ten
Percent Shareholders, no Option shall be exercisable after the expiration of ten (10)
years from the date it was granted. In the absence of a provision to the contrary in the
individual Optionholder’s Option Agreement, the term of the Option shall be seven (7)
years from the date it was granted. 



        6.2         Exercise Price of an
Option. Subject to the provisions of Section 5.2 of the Plan regarding Ten Percent
Shareholders and the provisions of Section 3.2(v) of the Plan regarding terms applicable
to non-U.S. Participants, the exercise price of each Option shall be not less than one
hundred percent (100%) of the Fair Market Value of the Common Stock subject to the Option
on the date the Option is granted. Notwithstanding the foregoing, an Option may be granted
with an exercise price lower than that set forth in the preceding sentence if such Option
is granted pursuant to an assumption or substitution for another option or otherwise in a
manner satisfying the provisions of Section 424 and Section 409A of the Code, as
applicable. 



        6.3         Consideration. The
purchase price of Common Stock acquired pursuant to an Option shall be payable, to the
extent permitted by applicable statutes and regulations, by any of the following methods,
as determined at the discretion of the Board and set forth in an Option Agreement:
(1) in cash or by check at the time the Option is exercised, (2) by delivery to
the Company of other Common Stock, (3) pursuant to a “same day sale”
program to the extent permitted by law, (4) by any other form of consideration
permitted by law (but in no event shall a promissory note or other form of deferred
payment constitute a permissible form of consideration for an Option granted under the
Plan), or (5) by some combination of the foregoing. 



        6.4         Transferability of an
Incentive Stock Option. An Incentive Stock Option shall not be transferable except by
will or by the laws of descent and distribution and shall be exercisable during the
lifetime of the Optionholder only by the Optionholder. If not prohibited by the terms of
the applicable Option Agreement, the Optionholder may, by delivering written notice to the
Company, in a form satisfactory to the Company, designate a third party who, in the event
of the death of the Optionholder, shall thereafter be entitled to exercise the Option. 



        6.5         Transferability of a
Nonstatutory Stock Option. A Nonstatutory Stock Option issued under this Plan shall be
transferable only to the extent the Board, in its sole discretion, permits such
Nonstatutory Stock Option to be assigned or transferred for estate planning purposes,
subject to the applicable limitations set forth in the General Instructions to
Form S-8 Registration Statement under the Securities Act and any other requirements
of applicable law. Any such permitted transfers shall require the transferee to become
subject to all of the terms and conditions applicable to the Optionee, including, but not
limited to, the terms and conditions set forth in this Plan and the applicable Option
Agreement. If the Nonstatutory Stock Option does not provide for transferability, then the
Nonstatutory Stock Option shall not be transferable except by will or by the laws of
descent and distribution and shall be exercisable during the lifetime of the Optionholder
only by the Optionholder. If not prohibited by the terms of any applicable Option
Agreement, the Optionholder may, by delivering written notice to the Company, in a form
satisfactory to the Company, designate a third party who, in the event of the death of the
Optionholder, shall thereafter be entitled to exercise the Option. 



        6.6         Vesting Generally. Options
granted under the Plan shall be exercisable at such time and upon such terms and
conditions as may be determined by the Board. The vesting provisions of individual Options
may vary. The provisions of this Section 6.6 are subject to any Option provisions
governing the minimum number of shares of Common Stock as to which an Option may be
exercised. 









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        6.7         Termination of Continuous
Service. In the event an Optionholder’s Continuous Service terminates (other than
upon the Optionholder’s death or Disability), the Optionholder may exercise his or
her Option (to the extent that the Optionholder was entitled to exercise such Option as of
the date of termination) but only within such period of time as is specified in the Option
Agreement (and in no event later than the expiration of the term of such Option as set
forth in the Option Agreement). If, after termination, the Optionholder does not exercise
his or her Option within the time specified in the Option Agreement, the Option shall
terminate. In the absence of a provision to the contrary in the individual
Optionholder’s Option Agreement, the Option shall remain exercisable for three (3)
months following the termination of the Optionholder’s Continuous Service. 



        6.8         Extension of Termination
Date. An Optionholder’s Option Agreement may also provide that if the exercise of
the Option following the termination of the Optionholder’s Continuous Service (other
than upon the Optionholder’s death or Disability) would be prohibited at any time
solely because the issuance of shares of Common Stock would violate the registration
requirements under the Securities Act or other applicable securities laws, then the Option
shall terminate on the earlier of (i) the expiration of the term of the Option set
forth in the Option Agreement and (ii) the expiration of a period of three (3) months
after the termination of the Optionholder’s Continuous Service during which the
exercise of the Option would not be in violation of such registration requirements or
other applicable securities law. The provisions of this Section 6.8 notwithstanding,
in the event that a sale of the shares of Common Stock received upon exercise of his or
her Option would subject the Optionholder to liability under Section 16(b) or Rule 10b-5
of the Exchange Act, then the Option will terminate on the earlier of (1) the fifteenth
(15th) day after the last date upon which such sale would result in liability,
or (2) two hundred ten (210) days following the date of termination of the
Optionholder’s Continuous Service (and in no event later than the expiration of the
term of the Option). 



        6.9         Disability of
Optionholder. In the event that an Optionholder’s Continuous Service terminates
as a result of the Optionholder’s Disability, the Optionholder may exercise his or
her Option to the extent that the Optionholder was entitled to exercise such Option as of
the date of termination, but only within such period of time as is specified in the Option
Agreement (and in no event later than the expiration of the term of such Option as set
forth in the Option Agreement). If, after termination, the Optionholder does not exercise
his or her Option within the time specified in the Option Agreement, the Option shall
terminate. In the absence of a provision to the contrary in the individual
Optionholder’s Option Agreement, the Option shall remain exercisable for twelve (12)
months following such termination. 



        6.10         Death of Optionholder. In
the event (i) an Optionholder’s Continuous Service terminates as a result of the
Optionholder’s death or (ii) the Optionholder dies within the post-termination
exercise period (if any) specified in the Option Agreement after the termination of the
Optionholder’s Continuous Service for a reason other than death, then, subject to the
terms of the applicable Option Agreement, the Option may be exercised (to the extent the
Optionholder was entitled to exercise such Option as of the date of death) by the
Optionholder’s estate, by a person who acquired the right to exercise the Option by
bequest or inheritance or by a person designated to exercise the Option upon the
Optionholder’s death pursuant to Section 6.4 or 6.5 of the Plan, but only within such
period of time as is specified in the Option Agreement (and in no event later than the
expiration of the term of such Option as set forth in the Option Agreement). If, after
death, the Option is not exercised within the time specified in the Option Agreement, the
Option shall terminate. In the absence of a provision to the contrary in the individual
Optionholder’s Option Agreement, the Option shall remain exercisable for twelve (12)
months following the Optionholder’s death. 









A-11








        6.11         Termination of Unvested
Options. Unless otherwise specified in the applicable Option Agreement, any Option or
portion thereof that is not vested at the time of termination of Continuous Service shall
lapse and terminate, and shall not be exercisable by the Optionee or any other person. 



        6.12         Early Exercise Generally Not
Permitted. The Company’s general policy is not to allow the Optionholder to
exercise the Option as to any part or all of the shares of Common Stock subject to the
Option prior to the vesting of the Option. If, however, an Option Agreement does permit
such early exercise, any unvested shares of Common Stock so purchased may be subject to a
repurchase option in favor of the Company or to any other restriction the Board determines
to be appropriate. 



VII.         NON-DISCRETIONARY
STOCK AWARDS FOR ELIGIBLE DIRECTORS 



        In
addition to any other Stock Awards that Eligible Directors may be granted on a
discretionary basis under the Plan, each Eligible Director of the Company shall be
automatically granted without the necessity of action by the Board, the following grants: 



        7.1         Initial Award Grant. On
the first day following the date that a Director commences service on the Board and
satisfies the definition of an Eligible Director, an initial grant of Nonstatutory Stock
Options and Restricted Stock Units shall automatically be made to that Eligible Director.
The number of shares subject to this Initial Grant and other terms governing this Initial
Grant shall be as determined by the Board in its sole discretion. If the Board does not
establish the number of shares subject to the initial Nonstatutory Stock Options and
Restricted Stock Units for a given newly-elected Eligible Director prior to the date of
grant for such Initial Grant, then the number shall be the same as the number of shares of
Common Stock subject to the Initial Grant provided to the immediately preceding
newly-elected Eligible Director. If at the time a Director commences service on the Board,
the Director does not satisfy the definition of an Eligible Director, such Director shall
not be entitled to an Initial Grant at any time, even if such Director subsequently
becomes an Eligible Director. 



        7.2 Annual Stock Option Grant.
An annual grant of Nonstatutory Stock Options shall automatically be made to each Eligible
Director who (1) is re-elected to the Board, (2) is an Eligible Director on the relevant
grant date, and (3) has served as a Director for a period of at least six (6) months. The
number of shares subject to this Annual Grant and other terms governing this Annual Grant
shall be as determined by the Board in its sole discretion. If the Board does not
establish the number of shares subject to the Annual Grant prior to the date of grant for
such Annual Grant, then the number shall be the same as the number of shares of Common
Stock subject to the Annual Grant for the immediately preceding year. The date of grant of
an Annual Grant is the date on which the Eligible Director is re-elected to serve on the
Board. Annual Grants made in connection with the Company’s 2006 Annual Meeting of
Stockholders shall be made pursuant to the terms of this Section 7.2. 



VIII.         PROVISIONS OF
STOCK AWARDS OTHER THAN OPTIONS 



        8.1         Restricted Stock Bonus
Awards. Each Restricted Stock Bonus agreement shall be in such form and shall contain
such terms and conditions as the Board shall deem appropriate. Restricted Stock Bonuses
shall be paid by the Company in shares of the Common Stock of the Company. The terms and
conditions of Restricted Stock Bonus agreements may change from time to time, and the
terms and conditions of separate Restricted Stock Bonus agreements need not be identical,
but each Restricted Stock Bonus agreement shall include (through incorporation of
provisions hereof by reference in the agreement or otherwise) the substance of each of the
following provisions: 



               	(i) 	  	
                    Consideration. At the discretion of the Board, a Restricted Stock Bonus
                    may be awarded in consideration for past services actually rendered to the
                    Company or an Affiliate for its  



                    










A-12











               	 	  	
                     benefit; provided, however, that in the case of
                    a Restricted Stock Bonus to be made to a new Employee, Director, or Consultant
                    who has not performed prior services for the Company, the Company will require
                    payment of the par value of the Common Stock by cash or check to the extent
                    required by Delaware General Corporation Law. 



                    





	  	  	(ii)  	  	Vesting.
Vesting shall generally be based on the Participant’s                     Continuous
Service. The Board shall determine the vesting schedule applicable to
                    any Restricted Stock Bonus award. Shares of Common Stock awarded
under the                     Restricted Stock Bonus agreement shall be subject to a
share reacquisition right                     in favor of the Company in accordance with
a vesting schedule to be determined                     by the Board.  






	  	  	(iii)  	  	Termination
of Participant’s Continuous Service. In the event a
                    Participant’s Continuous Service terminates, the Company shall
                    automatically reacquire without cost any or all of the shares of
Common Stock                     held by the Participant that have not vested as of the
date of termination under                     the terms of the Restricted Stock Bonus
agreement.  






	  	  	(iv)  	  	Transferability.
Rights to acquire shares of Common Stock under the                     Restricted Stock
Bonus agreement shall be transferable by the Participant only                     upon
such terms and conditions as are set forth in the Restricted Stock Bonus
                    agreement, as the Board shall determine in its discretion, so long as
Common                     Stock awarded under the Restricted Stock Bonus agreement
remains subject to the                     terms of the Restricted Stock Bonus agreement.  






        8.2                 Stock Appreciation
Rights.  Two types of Stock Appreciation Rights ("SARs") shall be authorized for issuance
under the Plan:  (1) stand-alone SARs and (2) stapled SARs. 



	  	  	(i)  	  	Stand-Alone
SARs. The following terms and conditions shall govern the                grant and
redeemability of stand-alone SARs:  






	  	  	  	(A)  	  	 The
stand-alone SAR shall cover a specified number of underlying shares of
               Common Stock and shall be exercisable and redeemable upon such terms and
               conditions as the Board may establish. Upon the exercise and redemption of
the                stand-alone SAR, the holder shall be entitled to receive a
distribution from the                Company in an amount equal to the excess of (i) the
aggregate Fair Market Value                (on the exercise and redemption date) of the
shares of Common Stock underlying                the redeemed right over (ii) the
aggregate exercise price in effect for those                shares.  






	  	  	  	(B)  	  	  The
number of shares of Common Stock underlying each stand-alone SAR and the
               exercise price in effect for those shares shall be determined by the Board
in                its sole discretion at the time the stand-alone SAR is granted. In no
event,                however, may the exercise price per share be less than one hundred
percent                (100%) of the Fair Market Value per underlying share of Common
Stock on the                grant date.  






	  	  	  	(C)  	  	 No
SAR shall be exerciseable or redeemable after the expiration of ten (10)
               years after the date it was granted. In the absence of a provision to the
               contrary in the individual’s Stock Award Agreement, the term of the
SAR                shall be seven (7) years from the date of grant.  






	  	  	  	(D)  	  	 The
distribution with respect to any exercised and redeemed stand-alone SAR may
               be made in shares of Common Stock valued at Fair Market Value on the
exercise                and redemption date, in cash, or partly in shares and partly in
cash, as the                Board shall in its sole discretion deem appropriate.  











A-13








	  	  	(ii)  	  	Stapled
SARs. The following terms and conditions shall govern the grant                and
redemption of stapled SARs:  






	  	  	  	(A)  	  	Stapled
SARs may only be granted concurrently with an Option to acquire the same
               number of shares of Common Stock as the number of such shares underlying
the                stapled SARs.  






	  	  	  	(B)  	  	Stapled
SARs shall be exercisable and redeemable upon such terms and conditions                as
the Board may establish and shall grant a holder the right to elect among (i)
               the exercise of the concurrently granted Option for shares of Common
Stock,                whereupon the number of shares of Common Stock subject to the
stapled SARs shall                be reduced by an equivalent number, (ii) the exercise
and redemption of such                stapled SARs in exchange for a distribution from
the Company in an amount equal                to the excess of the Fair Market Value (on
the exercise and redemption date) of                the number of vested shares which the
holder redeems over the aggregate exercise                price for such vested shares,
whereupon the number of shares of Common Stock                subject to the concurrently
granted Option shall be reduced by any equivalent                number, or (iii) a
combination of (i) and (ii).  






	  	  	  	(C)  	  	 The
distribution to which the holder of stapled SARs shall become entitled under
               this Section 8 upon the redemption of stapled SARs as described in Section
               8.3(ii)(B) above may be made in shares of Common Stock valued at Fair
Market                Value on the exercise and redemption date, in cash, or partly in
shares and                partly in cash, as the Board shall in its sole discretion deem
appropriate.  






        8.3                 Phantom Stock Units.
 The following terms and conditions shall govern the grant and redeemability of Phantom
Stock Units: 



	  	  	(i)  	  	Phantom
Stock Unit awards shall be exercisable and redeemable by the Participant
                    to the Company upon such terms and conditions as the Board may
establish. The                     value of a single Phantom Stock Unit shall be equal to
the Fair Market Value of                     a share of Common Stock, unless the Board
otherwise provides in the terms of the                     Stock Award Agreement.  






	  	  	(ii)  	  	The
distribution with respect to any exercised Phantom Stock Unit award may be
                    made in shares of Common Stock valued at Fair Market Value on the
exercise and                     redemption date, in cash, or partly in shares and partly
in cash, as the Board                     shall in its sole discretion deem appropriate.  






        8.4                 Restricted Stock Units.
 The following terms and conditions shall govern the grant and redeemability of
Restricted Stock Units: 



        A
Restricted Stock Unit is the right to receive one (1) share of the Company’s Common
Stock at the time the Restricted Stock Unit vests. Restricted Stock Units shall be settled
as soon as administratively practicable following the vesting of the Restricted Stock
Unit. 



        Each
Restricted Stock Unit agreement shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate. The terms and conditions of Restricted
Stock Unit agreements may change from time to time, and the terms and conditions of
separate Restricted Stock Unit agreements need not be identical, but each Restricted Stock
Unit agreement shall include (through incorporation of provisions hereof by reference in
the agreement or otherwise) the substance of each of the following provisions: 










A-14








	  	  	(i)  	  	Vesting.
Vesting shall generally be based on the Participant’s                     Continuous
Service. The Board shall determine the vesting schedule applicable to
                    any such Restricted Stock Unit award. Shares of Common Stock awarded
under the                     Restricted Stock Unit agreement may be subject to a share
reacquisition right in                     favor of the Company in accordance with a
vesting schedule to be determined by                     the Board.  






	  	  	(ii)  	  	Termination
of Participant’s Continuous Service. In the event a
                    Participant’s Continuous Service terminates, the Participant
shall                     automatically forfeit any or all of the shares of Common Stock
that have not                     vested as of the date of termination under the terms of
the Restricted Stock                     Unit agreement.  






	  	  	(iii)  	  	Transferability.
Rights to acquire the shares of Common Stock under the                     Restricted
Stock Unit agreement shall be transferable by the Participant only
                    upon such terms and conditions as are set forth in the Restricted
Stock Unit                     agreement, as the Board shall determine in its discretion,
so long as any Common                     Stock awarded under the Restricted Stock Unit
agreement remains subject to the                     terms of the Restricted Stock Unit
agreement.  






        8.5         Performance Share Bonus
Awards. Each Performance Share Bonus agreement shall be in such form and shall contain
such terms and conditions as the Board shall deem appropriate. Performance Share Bonuses
shall be paid by the Company in shares of the Common Stock of the Company. The terms and
conditions of Performance Share Bonus agreements may change from time to time, and the
terms and conditions of separate Performance Share Bonus agreements need not be identical,
but each Performance Share Bonus agreement shall include (through incorporation of
provisions hereof by reference in the agreement or otherwise) the substance of each of the
following provisions: 



	  	  	(i)  	  	Consideration.
At the discretion of the Board, a Performance Share Bonus                    may be
awarded in consideration for past services actually rendered to the
                    Company or an Affiliate for its benefit. In the event that a
Performance Share                     Bonus is granted to a new Employee, Director, or
Consultant who has not                     performed prior services for the Company, the
Company will require payment of                     the par value of the Common Stock by
cash or check to the extent required by                     Delaware General Corporation
Law.  






	  	  	(ii)  	  	Vesting.
Vesting shall be based on the achievement of certain performance
                    criteria, whether financial, transactional or otherwise, as
determined by the                     Board. Vesting shall be subject to the terms and
conditions of the Performance                     Share Bonus agreement. Upon failure to
meet performance criteria, shares of                     Common Stock awarded under the
Performance Share Bonus agreement shall be                     subject to a share
reacquisition right in favor of the Company in accordance                     with a
vesting schedule to be determined by the Board.  






	  	  	(iii)  	  	Termination
of Participant’s Continuous Service. In the event a
                    Participant’s Continuous Service terminates, the Company shall
reacquire                     any or all of the shares of Common Stock held by the
Participant that have not                     vested as of the date of termination under
the terms of the Performance Share                     Bonus agreement.  






	  	  	(iv)  	  	Transferability.
Rights to acquire shares of Common Stock under the                     Performance Share
Bonus agreement shall be transferable by the Participant only                     upon
such terms and conditions as are set forth in the Performance Share Bonus
                    agreement, as the Board shall determine in its discretion, so long as
Common                     Stock awarded under the Performance Share Bonus agreement
remains subject to the                     terms of the Performance Share Bonus
agreement.  












A-15









        8.6                 Performance Share Units.
 The following terms and conditions shall govern the grant and redeemability of
Performance Share Units: 



        A
Performance Share Unit is the right to receive one (1) share of the Company’s Common
Stock at the time the Performance Share Unit vests. Performance Share Units shall be
settled as soon as administratively practicable following the vesting of the Performance
Share Unit. 



        Each
Performance Share Unit agreement shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate. The terms and conditions of Performance
Share Unit agreements may change from time to time, and the terms and conditions of
separate Performance Share Unit agreements need not be identical, but each Performance
Share Unit agreement shall include (through incorporation of provisions hereof by
reference in the agreement or otherwise) the substance of each of the following
provisions: 



	  	  	(i)  	  	Vesting.
Vesting shall be based on the achievement of certain performance
                    criteria, whether financial, transactional or otherwise, as
determined by the                     Board. Vesting shall be subject to the terms and
conditions of the Performance                     Share Unit agreement. Upon failure to
meet performance criteria, shares of                     Common Stock awarded under the
Performance Share Unit agreement may be subject                     to a share
reacquisition right in favor of the Company in accordance with a
                    vesting schedule to be determined by the Board.  






	  	  	(ii)  	  	Termination
of Participant’s Continuous Service. In the event a
                    Participant’s Continuous Service terminates, the Participant
shall                     automatically forfeit any or all of the shares of Common Stock
that have not                     vested as of the date of termination under the terms of
the Performance Share                     Unit agreement.  






	  	  	(iii)  	  	Transferability.
Rights to acquire the shares of Common Stock under the                     Performance
Share Unit agreement shall be transferable by the Participant only
                    upon such terms and conditions as are set forth in the Performance
Share Unit                     agreement, as the Board shall determine in its discretion,
so long as Common                     Stock awarded under the Performance Share Unit
agreement remains subject to the                     terms of the Performance Share Unit
agreement.  






        8.7         Performance-Based Awards.
Notwithstanding anything to the contrary herein, any Stock Awards granted under this Plan
may be granted in a manner which may be deductible by the Company under
Section 162(m) of the Code (or any successor section thereto) and/or compliant with
the requirements of Section 409A of the Code for performance-based compensation
(“Performance-Based Awards”). To the extent required by Section 162(m) of the
Code, a Participant’s Performance-Based Award shall be determined based on the
attainment of written performance goals approved by the Board for a performance period
established by the Board (i) while the outcome for that performance period is
substantially uncertain and (ii) no more than ninety (90) days after the
commencement of the performance period to which the performance goal relates or, if less,
the number of days which is equal to twenty-five percent (25%) of the relevant performance
period. 



	  	  	(i)  	  	Performance
Goals. The performance goals for any performance period shall                     be
based on the following objective business criteria and measured against past
                    Company performance, as the Committee determines: (a) pre-tax
income;                     (b) revenue or sales; (c) operating income; (d) operating
profit;                     (e) net earnings; (f) net income; (g) cash
flow;                     (h) earnings per share or book value per share; (i) return
on equity;                     (j) return on invested capital or assets; (k) cost
reductions or                     savings or expense management; (l) funds from
operations;                     (m) improvements in capital structure; (n) maintenance
or improvement                     of profit margins; (o) market share; (p) working
capital;                     (q) stock price; (r) consolidated earnings before
any one or more of                     the  












A-16









	  	  	  	  	 following items: interest, taxes, depreciation
or amortization;                     (s) implementation of the Company’s
targets, critical processes and/or                     projects; (t) gross margins, (u)
specified product sales, (v) inventory turns;                     (w) distributor,
executive distributor, and/or preferred customer numbers, (x)                     product
subscription numbers; or (y) distributor and customer retention rates.  









	  	The
foregoing criteria may relate to the Company, one or more of its Affiliates, or one or
more of its markets, divisions, units or product lines, or any combination of the
foregoing, and may be applied on an absolute basis and/or be relative to one or more peer
group companies or indices, or any combination thereof, all as the Committee shall
determine. In addition, to the degree consistent with Section 162(m) of the Code and/or
Section 409A of the Code, the performance goals may be calculated without regard to
extraordinary items. Without limiting the generality of the foregoing, the Committee may
appropriately adjust any evaluation of performance under a performance target to exclude
any of the following events that occurs during an Incentive Period: (A) the effects of
currency fluctuations, (B) any or all items that are excluded from the calculation of
non-GAAP earnings, (C) asset write-downs, (D) litigation or claim judgments or
settlements, (D) the effect of changes in tax law, accounting principles or other such
laws or provisions affecting reported results, (F) accruals for recapitalization,
reorganization and restructuring programs, (G) the discontinuation, disposal or
acquisition of a business or division, and (H) any other extraordinary, infrequent or
non-operational items or events thereof, all as the Board shall determine. 







	  	  	(ii)  	  	Award
Limits and Requirements for Performance-Based Awards. The maximum
                    amount of a Performance-Based Award payable during a fiscal year to
any                     Participant is set forth in Section 5.3 of the Plan. To the
extent required by                     Section 162(m) of the Code, the Board shall
determine whether, with respect to a                     performance period, the
applicable performance goals have been met with respect                     to a given
Participant and, if they have, to so certify and ascertain the amount
                    of the applicable Performance-Based Award. No Performance-Based
Awards will be                     paid for such performance period until such
certification is made by the Board.                     The amount of the
Performance-Based Award actually paid to a given Participant                     may be
less than the amount determined by the applicable performance goal
                    formula, at the discretion of the Board. The amount of the
Performance-Based                     Award determined by the Board for a performance
period shall be paid to the                     Participant at such time as determined by
the Board in its sole discretion after                     the end of such performance
period; provided, however, that such payment or                     delivery shall be
made in compliance with Section 409A of the Code and the                     regulations
thereunder.  






	  	  	(iii)  	  	Other.
The grant of a Performance-Based Award may be made solely under                     this
Plan or may be made pursuant to such other plan or program as the Committee
                    shall determine in its sole discretion, including the Company’s
2006 Senior                     Executive Incentive Plan.  






IX.        COVENANTS
OF THE COMPANY 



        9.1         Availability of Shares.
During the terms of the Stock Awards, the Company shall keep available at all times the
number of shares of Common Stock required to satisfy such Stock Awards. 



        9.2         Securities Law Compliance.
The Company shall seek to obtain from each regulatory commission or agency having
jurisdiction over the Plan such authority as may be required to grant Stock Awards and to
issue and sell shares of Common Stock upon exercise, redemption or satisfaction of the
Stock Awards; provided, however, that this undertaking shall not require the Company to
register under the Securities Act, or under any foreign law of similar effect, the Plan,
any Stock Award or any Common Stock issued or issuable pursuant to any such Stock Award
nor shall it require the Company to comply with any applicable securities laws or
regulations if such compliance would be unduly burdensome 








A-17











 or costly, as determined by the
Board in its sole discretion. If, after reasonable efforts, the Company is unable to
obtain from any such regulatory commission or agency the authority which counsel for the
Company deems necessary for the lawful issuance and sale of Common Stock under the Plan,
the Company shall be relieved from any liability for failure to issue and sell Common
Stock related to such Stock Awards unless and until such authority is obtained. 






X.         USE OF PROCEEDS FROM
STOCK 



        Proceeds
from the sale of Common Stock pursuant to Stock Awards shall constitute general funds of
the Company. 



XI.          CANCELLATION AND
RE-GRANT OF OPTIONS AND SARS 



        The
Board shall not have the authority to effect, at any time, (i) the repricing of any
outstanding Options or SARs under the Plan, which includes reduction in exercise price,
base price, or replacement of underwater options with any other form of equity award or
with cash, (ii) the cancellation of any outstanding Options or SARs under the Plan
that are underwater and the grant in substitution therefor of new Options or SARs under
the Plan covering the same or different number of shares of Common Stock, and/or (iii)
cancellation of underwater Options or SARs and replacement with Full Value Awards or cash.
Notwithstanding the foregoing, the Board may grant an Option or SARs with an exercise or
redemption price lower than that set forth above if such Option or SARs is granted as part
of a transaction to which Section 424 or Section 409A of the Code applies. 



XII.          MISCELLANEOUS 



        12.1         Acceleration of
Exercisability and Vesting. The Board (or Committee, if so authorized by the Board)
shall have the power to accelerate exercisability and/or vesting when it deems fit, such
as upon a Change of Control. The Board or Committee shall have the power to accelerate the
time at which a Stock Award may first be exercised or the time during which a Stock Award
or any part thereof will vest in accordance with the Plan, notwithstanding the provisions
in the Stock Award stating the time at which it may first be exercised or the time during
which it will vest. 



        12.2         Shareholder Rights. No
Participant shall be deemed to be the holder of, or to have any of the rights of a holder
with respect to, any shares of Common Stock subject to a Stock Award except to the extent
that the Company has issued the shares of Common Stock relating to such Stock Award. 



        12.3         No Employment or Other
Service Rights. Nothing in the Plan or any instrument executed or Stock Award granted
pursuant thereto shall confer upon any Participant any right to continue to serve the
Company or an Affiliate in the capacity in effect at the time the Stock Award was granted
or shall affect the right of the Company or an Affiliate to terminate (i) the
employment of an Employee with or without notice and with or without cause, (ii) the
service of a Consultant pursuant to the terms of such Consultant’s agreement with the
Company or an Affiliate; or (iii) the service of a Director pursuant to the Bylaws of
the Company, and any applicable provisions of the corporate law of the state or other
jurisdiction in which the Company is domiciled, as the case may be. 



        12.4         Incentive Stock Option
$100,000 Limitation. To the extent that the aggregate Fair Market Value (determined at
the time of grant) of Common Stock with respect to which Incentive Stock Options are
exercisable for the first time by any Optionholder during any calendar year (under all
plans of the Company and its Affiliates) exceeds one hundred thousand dollars ($100,000),
or such other limit as may be set by law, the Options or portions thereof which exceed
such limit (according to the order in which they were granted) shall be treated as
Nonstatutory Stock Options. 









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        12.5         Investment Assurances.
The Company may require a Participant, as a condition of exercising or redeeming a Stock
Award or acquiring Common Stock under any Stock Award, (i) to give written assurances
satisfactory to the Company as to the Participant’s knowledge and experience in
financial and business matters and/or to employ a purchaser representative reasonably
satisfactory to the Company who is knowledgeable and experienced in financial and business
matters and that he or she is capable of evaluating, alone or together with the purchaser
representative, the merits and risks of acquiring the Common Stock; (ii) to give
written assurances satisfactory to the Company stating that the Participant is acquiring
Common Stock subject to the Stock Award for the Participant’s own account and not
with any present intention of selling or otherwise distributing the Common Stock; and
(iii) to give such other written assurances as the Company may determine are reasonable in
order to comply with applicable law. The foregoing requirements, and any assurances given
pursuant to such requirements, shall be inoperative if (1) the issuance of the shares of
Common Stock under the Stock Award has been registered under a then currently effective
registration statement under the Securities Act or (2) as to any particular requirement, a
determination is made by counsel for the Company that such requirement need not be met in
the circumstances under the then applicable securities laws, and in either case otherwise
complies with applicable law. The Company may, upon advice of counsel to the Company,
place legends on stock certificates issued under the Plan as such counsel deems necessary
or appropriate in order to comply with applicable laws, including, but not limited to,
legends restricting the transfer of the Common Stock. 



        12.6         Withholding Obligations.
To the extent provided by the terms of a Stock Award Agreement, the Participant may
satisfy any federal, state, local, or foreign tax withholding obligation relating to the
exercise or redemption of a Stock Award or the acquisition, vesting, distribution or
transfer of Common Stock under a Stock Award by any of the following means (in addition to
the Company’s right to withhold from any compensation paid to the Participant by the
Company) or by a combination of such means: (i) tendering a cash payment;
(ii) authorizing the Company to withhold shares of Common Stock from the shares of
Common Stock otherwise issuable to the Participant, provided, however, that no shares of
Common Stock are withheld with a value exceeding the minimum amount of tax required to be
withheld by law; or (iii) delivering to the Company owned and unencumbered shares of
Common Stock, provided, however, that in the case of the tender of shares, any such shares
have been held by the Participant for not less than six (6) months (or such other period
as established by the Board to avoid a supplemental change to earnings for financial
accounting purposes). 



        12.7         Section 409A.
Notwithstanding anything in the Plan to the contrary, it is the intent of the Company that
the administration of the Plan, and the granting of all Stock Awards under this Plan,
shall be done in accordance with Section 409A of the Code and the Department of Treasury
regulations and other interpretive guidance issued thereunder, including any guidance or
regulations that may be issued after the effective date of this Plan, and shall not cause
the acceleration of, or the imposition of the additional, taxes provided for in Section
409A of the Code. Any Stock Award shall be granted, deferred, paid out or modified under
this Plan in a manner that shall be intended to avoid resulting in the acceleration of
taxation, or the imposition of penalty taxation, under Section 409A upon a Participant. In
the event that it is reasonably determined by the Board that any amounts payable in
respect of any Stock Award under the Plan will be taxable to a Participant under Section
409A of the Code prior to the payment and/or delivery to such Participant of such amounts
or will be subject to the acceleration of taxation or the imposition of penalty taxation
under Section 409A of the Code, the Company may either (i) adopt such amendments to the
Plan and related Stock Award, and appropriate policies and procedures, including
amendments and policies with retroactive effect, that the Board determines necessary or
appropriate to preserve the intended tax treatment of the benefits provided by the Plan
and Stock Awards hereunder, and/or (ii) take such other actions as the Board determines
necessary or appropriate to comply with the requirements of Section 409A of the Code. 









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        12.8         Forfeiture of Stock
Awards. To the extent set forth in a Stock Award Agreement, if at any time during the
Participant’s Continuous Service or at any time following the termination of
Continuous Service until the later of: (i) the twelve (12) month anniversary of the
Participant’s termination of Continuous Service for any reason, and (ii) the six (6)
month anniversary of the date the Participant exercises or redeems any outstanding
Options, Stock Appreciation Rights or Phantom Stock Units and/or vests in any Stock Award
(other than an Option, Stock Appreciation Right or Phantom Stock Unit), a Forfeiture Event
occurs, then the Committee may, in its sole discretion, direct that: 



          	(A) 	  	
               all outstanding Stock Awards shall terminate in full; 



               



          	(B) 	  	
               the Participant shall pay to the Company an amount equal to the gain realized
               upon the exercise or redemption of any Options, Stock Appreciation Rights and
               Phantom Stock Units or any sale of the underlying shares obtained during the
               twelve (12) month period immediately preceding the Forfeiture Event and/or any
               gain realized upon any exercise, redemption or sale of the underlying shares of
               Common Stock upon or after the occurrence of any Forfeiture Event; and 



               



          	(C) 	  	
               the Participant shall forfeit and return to the Company, as applicable, any
               unvested shares pursuant to all outstanding Stock Awards (other than Options,
               Stock Appreciation Rights and Phantom Stock Units) and/or pay to the Company the
               gain realized from the grant, vesting or sale of any shares obtained pursuant to
               such Stock Award during the twelve (12) month period immediately preceding the
               Forfeiture Event or at any time on the date of or after the occurrence of such
               Forfeiture Event. 



               



	  	  	The Board
shall determine the manner of the recovery of any such amounts which may be due to the
Company and which may include, without limitation, set-off against any amounts which may
be owed by the Company to the Participant subject, in all cases, to applicable law and
the terms and conditions of the applicable plan, arrangement or agreement.  







        If
any provision contained in this Article shall for any reason, whether by application of
existing law or law which may develop after the Participant’s acceptance of the grant
of Stock Awards hereunder be determined by a court of competent jurisdiction to be overly
broad, the Participant agrees to join the Company or any of its Affiliates in requesting
such court to construe such provision by limiting or reducing it so as to be enforceable
to the extent compatible with then applicable law. 



        12.9         Extension of Stock Award.
A Participant’s Stock Award Agreement may provide that if the issuance of shares of
Common Stock would be prohibited at any time solely because such issuance would violate
the registration requirements under the Securities Act or other applicable securities
laws, then the Participant shall be entitled to exercise, redeem or receive the shares of
Common Stock underlying such Stock Award, as applicable, on the date that is the earlier
of (i) the expiration of the term of the Stock Award, if applicable, and (ii) a period of
three (3) months after the date on which such exercise, redemption or delivery of shares
of Common Stock would not be in violation of such registration requirement or other
applicable securities laws. The provisions of this Section 12.9 notwithstanding, in the
event that a sale of the shares of Common Stock received pursuant to the Stock Award would
subject the Participant to liability under Section 16(b) or Rule 10b-5 of the Exchange
Act, then, if applicable, the Stock Award will terminate on the fifteenth
(15th) day after the last date upon which such sale would result in liability,
but in no event later than the expiration of the term of the Stock Award. 








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XIII.         ADJUSTMENTS UPON
CHANGES IN STOCK 



        13.1         Capitalization
Adjustments. In the event of any change in the Common Stock subject to the Plan or
subject to any Stock Award by reason of merger, consolidation, reorganization,
recapitalization, reincorporation, stock dividend, spinoff, dividend in property other
than cash, stock split, liquidating dividend, extraordinary dividends or distributions,
combination of shares, exchange of shares, change in corporate structure or other similar
transaction, the Plan may be appropriately adjusted in the class(es) and maximum number of
securities or other property subject to the Plan pursuant to Section 4.1 above, the ISO
Limit, the maximum number of securities subject to award to any person pursuant to Section
5.3 above, and the number of securities subject to the option grants to Eligible Directors
under Section 7 of the Plan, and the outstanding Stock Awards may be appropriately
adjusted in the class(es) and number of securities or other property, the price per share
of the securities or other property subject to such outstanding Stock Awards, or any other
affected terms of Stock Awards. The Board may make such adjustments in its sole
discretion, and its determination shall be final, binding and conclusive. 



        13.2         Adjustments Upon a
Change of Control. 



	  	  	(i)  	  	 In
the event of a Change of Control as defined in Section 2.5(i) through
                    2.5(iv), such as an asset sale, merger, or change in Board
composition, then the                     Board or the board of directors of any
surviving entity or acquiring entity may                     provide or require that the
surviving or acquiring entity shall: (1) assume or                     continue all or
any part of the Stock Awards outstanding under the Plan; (2)
                    substitute substantially equivalent stock awards (including an award
to acquire                     substantially the same consideration paid to the
shareholders in the transaction                     by which the Change of Control
occurs) for those outstanding under the Plan; (3)                     redeem or purchase
such Stock Awards for consideration determined in a manner                     consistent
with the per share consideration being paid to the other stockholders
                    of the Company; or (4) any combination of the foregoing. In the event
any                     surviving entity or acquiring entity refuses to take such
actions, then with                     respect to Stock Awards held by Participants whose
Continuous Service has not                     terminated, the Board in its sole
discretion and without liability to any person                     may: (1) provide for
the payment of a cash amount in exchange for the                     cancellation of a
Stock Award equal to the product of (x) the excess, if any, of                     the
Fair Market Value per share of Common Stock at such time over the exercise,
                    redemption or purchase price, if any, times (y) the total
number of                     shares then subject to such Stock Award; (2) continue the
Stock Awards upon such                     terms as the Board determines in its sole
discretion; (3) provide for                     issuance of substitute awards that
will substantially preserve the otherwise                     applicable terms of any
affected Stock Awards (including any unrealized value                     immediately
prior to the Change of Control) previously granted hereunder, as
                    determined by the Board in its sole discretion; (4) notify
Participants                     holding an Option, Stock Appreciation Right, Phantom
Stock Unit, Restricted                     Stock Unit, or Performance Share Unit that
they must exercise or redeem any                     portion of such Stock Award
(including, at the discretion of the Board, any                     unvested portion of
such Stock Award) at or prior to the closing of the                     transaction by
which the Change of Control occurs and that the Stock Awards                     shall
terminate if not so exercised or redeemed at or prior to the closing of
                    the transaction by which the Change of Control occurs. With respect
to any other                     Stock Awards outstanding under the Plan, such Stock
Awards shall terminate if                     not exercised or redeemed prior to the
closing of the transaction by which the                     Change of Control occurs. The
Board shall not be obligated to treat all Stock                     Awards, even those
that are of the same type, in the same manner.  






	  	  	(ii)  	  	 In
the event of a Change of Control as defined in Section 2.5(v), such as a
                    dissolution of the Company, all outstanding Stock Awards shall
terminate                     immediately prior to such event.  











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XIV.        AMENDMENT
OF THE PLAN AND STOCK AWARDS 



        14.1         Amendment of Plan. The
Board at any time, and from time to time, may amend the Plan. However, except as provided
in Section 13 of the Plan relating to adjustments upon changes in Common Stock, no
amendment shall be effective unless approved by the shareholders of the Company:
(i) to the extent shareholder approval is necessary to satisfy the requirements of
Section 422 of the Code, any New York Stock Exchange, Nasdaq or other securities exchange
listing requirements, or other applicable law or regulation; (ii) in respect of any
proposed amendment to Sections 6.4 or 6.5 hereof; or (iii) in respect of any
proposed amendment to Section 11 hereof that would permit the repricing or cancellation
and regrant of Options or Stock Appreciation Rights. 



        14.2         Shareholder Approval. The
Board may, in its sole discretion, submit any other amendment to the Plan for shareholder
approval or may resubmit the Plan for reapproval by shareholders, including, but not
limited to, amendments to or reapproval of the Plan intended to satisfy the requirements
of Section 162(m) of the Code and the regulations thereunder regarding the exclusion of
performance-based compensation from the limit on corporate deductibility of compensation
paid to certain executive officers. 



        14.3         Contemplated Amendments.
It is expressly contemplated that the Board may amend the Plan in any respect the Board
deems necessary or advisable to provide eligible Employees with the maximum benefits
provided or to be provided under the provisions of the Code and the regulations
promulgated thereunder relating to Incentive Stock Options and/or to bring the Plan and/or
Incentive Stock Options granted under it into compliance therewith. 



        14.4         No Material Impairment of
Rights. Rights under any Stock Award granted before amendment of the Plan shall not be
materially impaired by any amendment of the Plan unless (i) the Company requests the
consent of the Participant and (ii) the Participant consents in writing. 



        14.5         Amendment of Stock
Awards. The Board at any time, and from time to time, may amend the terms of any one
or more Stock Awards; provided, however, that the rights under any Stock Award shall not
be materially impaired by any such amendment unless: (i) the Company requests the
consent of the Participant and the Participant consents in writing, or (ii) such amendment
is necessary pursuant to Section 12.7 hereof or otherwise to meet the minimum requirements
of the Code or applicable law. 



XV.         TERMINATION OR
SUSPENSION OF THE PLAN 



        15.1         Plan Term. The Board may
suspend or terminate the Plan at any time. Unless sooner terminated, the Plan shall
terminate on the day before the tenth (10th) anniversary of the earlier of the
date that the Plan is approved by the shareholders of the Company or the date the Plan is
adopted by the Board. No Stock Awards may be granted under the Plan while the Plan is
suspended or after it is terminated. 



        15.2         No Material Impairment of
Rights. Suspension or termination of the Plan shall not materially impair rights and
obligations under any Stock Award granted while the Plan is in effect except with the
written consent of the Participant. 



XVI.         EFFECTIVE DATE OF
PLAN 



        The
Plan shall become effective immediately upon its adoption by the Board, but no Stock
Awards may be granted unless and until the Plan has been approved by the stockholders of
the Company,  








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 which approval shall be within twelve (12) months before or after the date
the Plan is adopted by the Board. 




XVII.         CHOICE OF LAW 



        The
law of the State of Utah shall govern all questions concerning the construction, validity
and interpretation of this Plan, without regard to such state’s conflict of laws
rules. 







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