Document:

Exhibit 10.2

 

GUARANTY OF PAYMENT

 

GUARANTY OF PAYMENT (this “Guaranty”), made as of August 30,
2005, between EQUITY RESIDENTIAL, a Maryland real estate investment trust,
having an address at Two North Riverside Plaza, Suite 400, Chicago,
Illinois 60606 (“Guarantor”), and BANK OF AMERICA, N.A., having an
office at 231 South LaSalle Street, Chicago, Illinois 60697, as administrative
agent (“Administrative Agent”) for the banks (the “Banks”) party
to the Revolving Credit Agreement (as the same may be amended, modified,
supplemented or restated, the “Credit Agreement”), dated as of the date
hereof, among ERP Operating Limited Partnership (“Borrower”), the Banks,
Administrative Agent, Merrill Lynch, Pierce, Fenner & Smith
Incorporated, as documentation agent, and Deutsche Bank Trust Company Americas,
as syndication agent.

 

W  I  T  N
E  S  S  E  T  H:

 

WHEREAS, the Banks have agreed to make loans (hereinafter collectively
referred to as the “Loans”) and otherwise extend credit to Borrower in
an aggregate principal amount not to exceed $600,000,000;

 

WHEREAS, the Loans will be evidenced by certain promissory notes (the “Notes”)
of Borrower made to each of the Banks in accordance with the terms of the
Credit Agreement;

 

WHEREAS, the Credit Agreement and the Notes and any other documents
executed in connection therewith are hereinafter collectively referred to as
the “Loan Documents”;

 

WHEREAS, capitalized terms used herein and not otherwise defined shall
have the meanings ascribed thereto in the Credit Agreement;

 

WHEREAS, Guarantor is the sole general partner of Borrower; and

 

WHEREAS, in order further to induce the Administrative Agent and the
Banks to enter into the Loan Documents, Guarantor has agreed to enter into this
Guaranty;

 

 

NOW, THEREFORE, in consideration of the premises and the benefits to be
derived from the making of the Loans and the other extensions of credit under
the Credit Agreement by the Banks to Borrower, and in order to induce the
Administrative Agent and the Banks to enter into the Loan Documents, Guarantor
hereby agrees as follows:

 

1.  Guarantor, on behalf of
itself and its successors and assigns, hereby irrevocably, absolutely and
unconditionally guarantees the full and punctual payment when due, whether at
stated maturity or otherwise, of all Obligations of Borrower now or hereafter
existing under the Notes and the Credit Agreement, for principal and/or
interest as well as any and all other amounts due thereunder, including,
without limitation, all indemnity obligations of Borrower thereunder, and any
and all reasonable costs and expenses (including, without limitation,
reasonable attorneys’ fees and disbursements) incurred by the Administrative
Agent or the Banks in enforcing its or their rights under this Guaranty (all of
the foregoing obligations being the “Guaranteed Obligations”).

 

2.  It is agreed that the
Guaranteed Obligations are primary and this Guaranty shall be enforceable
against Guarantor and its successors and assigns without the necessity for any
suit or proceeding of any kind or nature whatsoever brought by the
Administrative Agent or any Bank against Borrower or its respective successors
or assigns or any other party or against any security for the payment and
performance of the Guaranteed Obligations and without the necessity of any
notice of non-payment or non-observance or of any notice of acceptance of this
Guaranty or of any notice or demand to which Guarantor might otherwise be
entitled (including, without limitation, diligence, presentment, notice of
maturity, extension of time, change in nature or form of the Guaranteed
Obligations, acceptance of further security, release of further security,
imposition or agreement arrived at as to the amount of or the terms of the
Guaranteed Obligations, notice of adverse change in Borrower’s financial
condition and any other fact which might materially increase the risk to
Guarantor), all of which Guarantor hereby expressly waives; and Guarantor
hereby expressly agrees that the validity of this Guaranty and the obligations
of Guarantor hereunder shall in no way be terminated,

 

2

 

affected, diminished, modified or impaired by reason of the assertion
of or the failure to assert by the Administrative Agent or any Bank against
Borrower or its respective successors or assigns, any of the rights or remedies
reserved to the Administrative Agent and the Banks pursuant to the provisions
of the Loan Documents.  Guarantor agrees
that any notice or directive given at any time to the Administrative Agent which
is inconsistent with the waiver in the immediately preceding sentence shall be
void and may be ignored by the Administrative Agent and the Banks, and, in
addition, may not be pleaded or introduced as evidence in any litigation
relating to this Guaranty for the reason that such pleading or introduction
would be at variance with the written terms of this Guaranty, unless the
Administrative Agent and the Banks have specifically agreed otherwise in a
writing, signed by a duly authorized officer. 
Guarantor specifically acknowledges and agrees that the foregoing
waivers are of the essence of this transaction and that, but for this Guaranty
and such waivers, the Administrative Agent and the Banks would decline to
execute the Loan Documents.

 

3.  Guarantor waives, and
covenants and agrees that it will not at any time insist upon, plead or in any
manner whatsoever claim or take the benefit or advantage of, any and all
appraisal, valuation, stay, extension, marshalling-of-assets or redemption
laws, or right of homestead or exemption, whether now or at any time hereafter
in force, which may delay, prevent or otherwise affect the performance by
Guarantor of its obligations under, or the enforcement by the Administrative
Agent of, this Guaranty. Guarantor further covenants and agrees not to set up
or claim any defense, counterclaim, offset, set-off or other objection of any
kind to any action, suit or proceeding at law, in equity or otherwise, or to
any demand or claim that may be instituted or made by the Administrative Agent
other than the defense of the actual timely payment and performance by Borrower
of the Guaranteed Obligations; provided, however, that the foregoing shall not
be deemed a waiver of Guarantor’s right to assert any compulsory counterclaim,
if such counterclaim is compelled under local law or rule of procedure,
nor shall the foregoing be deemed a waiver of Guarantor’s right to assert any
claim which would constitute a defense, setoff, counterclaim or crossclaim of
any nature whatsoever against Administrative Agent or any Bank in

 

3

 

any separate action or proceeding.  Guarantor represents,
warrants and agrees that, as of the date hereof, its obligations under this
Guaranty are not subject to any counterclaims, offsets or defenses against the
Administrative Agent or any Bank of any kind.

 

4.  The provisions of this
Guaranty are for the benefit of the Administrative Agent and the Banks and
their successors and permitted assigns, and nothing herein contained shall
impair as between Borrower and the Administrative Agent and the Banks the
obligations of Borrower under the Loan Documents.

 

5.  This Guaranty shall be a
continuing, irrevocable, unconditional and absolute guaranty and the liability
of Guarantor hereunder shall in no way be terminated, affected, modified,
impaired or diminished by reason of the happening, from time to time, of any of
the following, although without notice or the further consent of Guarantor:

 

(a)           any
assignment, amendment, modification or waiver of or change in any of the terms,
covenants, conditions or provisions of any of the Guaranteed Obligations or the
Loan Documents or the invalidity or unenforceability of any of the foregoing;
or

 

(b)           any
extension of time that may be granted by the Administrative Agent or any Bank
to Borrower, any guarantor, or their respective successors or assigns, heirs,
executors, administrators or personal representatives; or

 

(c)           any
action which the Administrative Agent or any Bank may take or fail to take
under or in respect of any of the Loan Documents or by reason of any waiver or,
or failure to enforce any of the rights, remedies, powers or privileges
available to the Administrative Agent and the Banks under this Guaranty or
available to the Administrative Agent and the Banks at law, in equity or
otherwise, or any action on the part of the Administrative Agent or any Bank
granting indulgence or extension in any form whatsoever; or

 

(d)           any sale, exchange, release, or other disposition of any
property pledged, mortgaged or

 

4

 

conveyed, or any property in which the Administrative Agent and/or the
Banks have been granted a lien or security interest to secure any indebtedness
of Borrower to the Administrative Agent and/or the Banks or any impairment of
or failure to perfect any security interests therein; or

 

(e)           any release of any person or entity who may be liable in any
manner for the payment and collection of any amounts owed by Borrower to the
Administrative Agent and/or the Banks; or

 

(f)            the
application of any sums by whomsoever paid or however realized to any amounts
owing by Borrower to the Administrative Agent and/or the Banks under the Loan
Documents in such manner as the Administrative Agent shall determine in its
sole discretion; or

 

(g)           Borrower’s
or any guarantor’s voluntary or involuntary liquidation, dissolution, sale of
all or substantially all of their respective assets and liabilities,
appointment of a trustee, receiver, liquidator, sequestrator or conservator for
all or any part of Borrower’s or any guarantor’s assets, insolvency,
bankruptcy, assignment for the benefit of creditors, reorganization,
arrangement, composition or readjustment, or the commencement of other similar
proceedings affecting Borrower or any guarantor or any of the assets of any of
them, including, without limitation, (i) the release or discharge of
Borrower or any guarantor from the payment and performance of their respective
obligations under any of the Loan Documents by operation of law, or (ii) the
impairment, limitation or modification of the liability of Borrower or any
guarantor in bankruptcy, or of any remedy for the enforcement of the Guaranteed
Obligations under any of the Loan Documents, or Guarantor’s liability under
this Guaranty, resulting from the operation of any present or future provisions
of the Bankruptcy Code or other present or future federal, state or applicable
statute or law or from the decision in any court; or

 

(h)           any improper disposition by Borrower of the proceeds of the
Loans, it being acknowledged by Guarantor that the Administrative Agent or any
Bank

 

5

 

shall be entitled
to honor any request made by Borrower for a disbursement of such proceeds and
that neither the Administrative Agent nor any Bank shall have any obligation to
see to the proper disposition by Borrower of such proceeds.

 

6.  Guarantor agrees that if at
any time all or any part of any payment at any time received by the Administrative
Agent or any Bank from Borrower or Guarantor or any other Person obligated in
respect of the Guaranteed Obligations under or with respect to this Guaranty is
or must be rescinded or returned by the Administrative Agent or any Bank for
any reason whatsoever (including, without limitation, the insolvency,
bankruptcy or reorganization of Borrower or Guarantor or such other Person),
then Guarantor’s obligations hereunder shall, to the extent of the payment
rescinded or returned, be deemed to have continued in existence notwithstanding
such previous receipt by such party, and Guarantor’s obligations hereunder
shall continue to be effective or be reinstated, as the case may be, as to such
payment, as though such previous payment had never been made.

 

7.  Until this Guaranty is
terminated pursuant to the terms hereof, Guarantor (i) shall have no right
of subrogation against Borrower or any entity comprising same by reason of any
payments or acts of performance by Guarantor in compliance with the obligations
of Guarantor hereunder; (ii) waives any right to enforce any remedy which
Guarantor now or hereafter shall have against Borrower or any entity comprising
same by reason of any one or more payment or acts of performance in compliance
with the obligations of Guarantor hereunder and (iii) from and after an
Event of Default, subordinates any liability or indebtedness of Borrower or any
entity comprising same now or hereafter held by Guarantor or any affiliate of
Guarantor to the obligations of Borrower under the Loan Documents. The
foregoing, however, shall not be deemed in any way to limit any rights that
Guarantor may have pursuant to the Agreement of Limited Partnership of Borrower
or which it may have at law or in equity with respect to any other partners of
Borrower.

 

8.  Guarantor represents and
warrants to the Administrative Agent and the Banks with the knowledge

 

6

 

that the Administrative Agent and the Banks
are relying upon the same, as follows:

 

(a)           as of the date hereof, Guarantor is the sole general partner
of Borrower;

 

(b)           based upon such relationship, Guarantor has determined that
it is in its best interests to enter into this Guaranty;

 

(c)           this Guaranty is necessary and convenient to the conduct,
promotion and attainment of Guarantor’s business, and is in furtherance of
Guarantor’s business purposes;

 

(d)           the benefits to be derived by Guarantor from Borrower’s
access to funds and other credit made possible by the Loan Documents are at
least equal to the obligations undertaken pursuant to this Guaranty;

 

(e)           Guarantor
is solvent and has full power and legal right to enter into this Guaranty and
to perform its obligations under the terms hereof and (i) Guarantor is
organized and validly existing under the laws of the State of Maryland, (ii) Guarantor
has complied with all provisions of applicable law in connection with all
aspects of this Guaranty, and (iii) the person executing this Guaranty has
all the requisite power and authority to execute and deliver this Guaranty;

 

(f)            to
the best of Guarantor’s knowledge, there is no action, suit, proceeding, or
investigation pending or threatened against or affecting Guarantor at law, in
equity, in admiralty or before any arbitrator or any governmental department,
commission, board, bureau, agency or instrumentality (domestic or foreign)
which is likely to materially and adversely affect the property, assets or
condition (financial or otherwise) of Guarantor or which is likely to
materially and adversely impair the ability of Guarantor to perform its
obligations under this Guaranty;

 

(g)           the execution and delivery of and the performance by
Guarantor of its obligations under

 

7

 

this Guaranty have been duly authorized by all necessary action on the
part of Guarantor and do not (i) violate any provision of any law, rule,
regulation (including, without limitation, Regulation U or X of the Federal
Reserve Board of the United States), order, writ, judgment, decree,
determination or award presently in effect having applicability to Guarantor or
the organizational documents of Guarantor, the consequences of which violation
would materially and adversely affect the property, assets or condition
(financial or otherwise) of Guarantor or which is likely to materially and
adversely impair the ability of Guarantor to perform its obligations under this
Guaranty or (ii) violate or conflict with, result in a breach of or
constitute (with due notice or lapse of time or both) a default under any
indenture, agreement or other instrument to which Guarantor is a party, or by
which Guarantor or any of its property is bound, the consequences of which
violation, conflict, breach or default would materially and adversely affect
the property, assets or condition (financial or otherwise) of Guarantor or
which is likely to materially and adversely impair the ability of Guarantor to
perform its obligations under this Guaranty;

 

(h)           this
Guaranty has been duly executed by Guarantor and constitutes the legal, valid
and binding obligation of Guarantor, enforceable against it in accordance with
its terms except as enforceability may be limited by applicable insolvency,
bankruptcy or other laws affecting creditors’ rights generally or general
principles of equity, whether such enforceability is considered in a proceeding
in equity or at law;

 

(i)            no
authorization, consent, approval, license or formal exemption from, nor any
filing, declaration or registration with, any Federal, state, local or foreign
court, governmental agency or regulatory authority is required in connection
with the making and performance by Guarantor of this Guaranty, except those
which have already been obtained;

 

(j)            Guarantor
is not an “investment company” as that term is defined in, nor is it otherwise
subject

 

8

 

to regulation
under, the Investment Company Act of 1940, as amended;

 

(k)           Guarantor
is not engaged principally, or as one of its important activities, in the
business of purchasing, carrying, or extending credit for the purpose of
purchasing or carrying any margin stock (within the meaning of Regulation U of
the Board of Governors of the Federal Reserve System of the United States); and

 

(l)            All
of the representations and warranties in the Credit Agreement concerning
Guarantor are true and correct.

 

Guarantor covenants that it will comply or cause compliance with all
covenants in the Credit Agreement which are applicable to it.

 

9.  Guarantor and the
Administrative Agent each acknowledge and agree that this Guaranty is a
guarantee of payment and performance and not of collection and enforcement in
respect of any obligations which may accrue to the Administrative Agent and/or
the Banks from Borrower under the provisions of any Loan Document.

 

10.  Subject to the terms and
conditions of the Credit Agreement, and in conjunction therewith, the
Administrative Agent or any Bank may assign any or all of its rights under this
Guaranty.  In the event of any such
assignment, the Administrative Agent shall give Guarantor prompt notice of
same.  If the Administrative Agent or any
Bank elects to sell all the Loans or participations in the Loans and the Loan
Documents, including this Guaranty, the Administrative Agent or any Bank may
forward to each purchaser and prospective purchaser all documents and
information relating to this Guaranty or to Guarantor, whether furnished by
Borrower or Guarantor or otherwise, subject to the terms and conditions of the
Credit Agreement.

 

11.  Guarantor agrees, upon the
written request of the Administrative Agent, to execute and deliver to the
Administrative Agent, from time to time, any modification or amendment hereto
or any additional instruments or documents reasonably considered necessary by
the Administrative Agent or its counsel to cause this Guaranty

 

9

 

to be, become or remain valid and effective
in accordance with its terms, provided, that any such modification, amendment,
additional instrument or document shall not increase Guarantor’s obligations or
diminish its rights hereunder and shall be reasonably satisfactory as to form
to Guarantor and to Guarantor’s counsel.

 

12.  The representations and
warranties of Guarantor set forth in this Guaranty shall survive until this
Guaranty shall terminate in accordance with the terms hereof.

 

13.  This Guaranty contains the
entire agreement among the parties with respect to the subject matter hereof
and supersedes all prior agreements relating to such subject matter and may not
be modified, amended, supplemented or discharged except by a written agreement
signed by Guarantor and the Administrative Agent (acting with the requisite
consent of the Banks as provided in the Credit Agreement).

 

14.  If all or any portion of any
provision contained in this Guaranty shall be determined to be invalid, illegal
or unenforceable in any respect for any reason, such provision or portion
thereof shall be deemed stricken and severed from this Guaranty and the
remaining provisions and portions thereof shall continue in full force and
effect.

 

15.  This Guaranty may be
executed in counterparts which together shall
constitute the same instrument.

 

16.   All notices, requests and
other communications to any party hereunder shall be in writing (including bank
wire, facsimile transmission followed by telephonic confirmation or similar
writing) and shall be addressed to such party at the address set forth below or
to such other address as may be identified by any party in a written notice to
the others:

 

10

 

	
  If to Guarantor:

  	
  Equity Residential

  
	
   

  	
  Two North Riverside Plaza

  
	
   

  	
  Suite 400

  
	
   

  	
  Chicago, Illinois 60606

  
	
   

  	
  Attn: Chief Financial Officer

  
	
   

  	
   

  
	
  With Copies of

  	
   

  
	
  Notices to

  	
   

  
	
  Guarantor to:

  	
  Equity Residential

  
	
   

  	
  Two North Riverside Plaza

  
	
   

  	
  Suite 400

  
	
   

  	
  Chicago, Illinois 60606

  
	
   

  	
  Attn: General Counsel

  
	
   

  	
   

  
	
   

  	
  and

  
	
   

  	
   

  
	
   

  	
  DLA Piper Rudnick Gray Cary US LLP

  
	
   

  	
  203 North LaSalle Street

  
	
   

  	
  Suite 1900

  
	
   

  	
  Chicago, Illinois 60601

  
	
   

  	
  Attn: James M. Phipps, Esq.

  
	
   

  	
   

  
	
  If to the

  	
   

  
	
  Administrative

  	
   

  
	
  Agent:

  	
  Bank of America, N.A.

  
	
   

  	
  Structured Debt Group

  
	
   

  	
  Mail Code

  
	
   

  	
  231 South LaSalle Street

  
	
   

  	
  Chicago, IL 60697

  
	
   

  	
  Attn:

  
	
   

  	
   

  
	
  With Copies of

  	
   

  
	
  Notices to the

  	
   

  
	
  Administrative

  	
   

  
	
  Agent to:

  	
  Skadden, Arps, Slate,

  
	
   

  	
  Meagher & Flom LLP

  
	
   

  	
  Four Times Square

  
	
   

  	
  New York, New York 10036

  
	
   

  	
  Attn: Martha Feltenstein, Esq.

  

 

Each such notice, request or other communication shall be effective (i) if
given by facsimile transmission, when such facsimile is transmitted to the
facsimile number specified in this Section and the appropriate facsimile
confirmation is received, (ii) if given by certified or registered mail,
return receipt

 

11

 

requested, with first class postage
prepaid, addressed as aforesaid, upon receipt or refusal to accept delivery, (iii) if
given by a nationally recognized overnight carrier, 24 hours after such
communication is deposited with such carrier with postage prepaid for next day
delivery, or (iv) if given by any other means, when delivered at the
address specified in this Section.

 

17.  Any acknowledgment or new
promise, whether by payment of principal or interest or otherwise by Borrower
or Guarantor, with respect to the Guaranteed Obligations shall, if the statute
of limitations in favor of Guarantor against the Administrative Agent and the
Banks shall have commenced to run, toll the running of such statute of
limitations, and if the period of such statute of limitations shall have
expired, prevent the operation of such statute of limitations.

 

18.  This Guaranty shall be
binding upon Guarantor and its successors and assigns and shall inure to the
benefit of the Administrative Agent and the Banks and their successors and
permitted assigns; provided, however, that the Guarantor may not assign or
transfer any of its rights or obligations hereunder without the prior written
consent of all of the Banks, and any attempted such assignment or transfer
without such consent shall be null and void.

 

19.  The failure of the
Administrative Agent to enforce any right or remedy hereunder, or promptly to
enforce any such right or remedy, shall not constitute a waiver thereof, nor
give rise to any estoppel against the Administrative Agent or any Bank, nor
excuse Guarantor from its obligations hereunder.  Any waiver of any such right or remedy to be
enforceable against the Administrative Agent and the Banks must be expressly
set forth in a writing signed by the Administrative Agent (acting with the
requisite consent of the Banks as provided in the Credit Agreement).

 

20.  (a) THIS
GUARANTY AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE
CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAWS OF THE STATE OF
ILLINOIS.

 

(b)   Any legal action or proceeding
with respect to this Guaranty and any action for enforcement

 

12

 

of any judgment in respect thereof may be brought in the courts of the
State of Illinois or of the United States of America for the Northern District
of Illinois, and, by execution and delivery of this Guaranty, the Guarantor
hereby accepts for itself and in respect of its property, generally and
unconditionally, the non-exclusive jurisdiction of the aforesaid courts and
appellate courts from any thereof.  The
Guarantor irrevocably consents to the service of process out of any of the
aforementioned courts in any such action or proceeding by the mailing of copies
thereof by registered or certified mail, postage prepaid, to the Guarantor at
its address for notices set forth herein. 
The Guarantor hereby irrevocably waives any objection which it may now
or hereafter have to the laying of venue of any of the aforesaid actions or
proceedings arising out of or in connection with this Guaranty brought in the
courts referred to above and hereby further irrevocably waives and agrees not
to plead or claim in any such court that any such action or proceeding brought
in any such court has been brought in an inconvenient forum.  Nothing herein shall affect the right of the
Administrative Agent to serve process in any other manner permitted by law or
to commence legal proceedings or otherwise proceed against the Guarantor in any
other jurisdiction.

 

(c)   GUARANTOR HEREBY WAIVES ITS
RIGHTS TO A JURY TRIAL OF ANY AND ALL CLAIMS OR CAUSES OF ACTION BASED UPON OR
ARISING OUT OF THIS GUARANTY.  IT IS
HEREBY ACKNOWLEDGED BY GUARANTOR THAT THE WAIVER OF A JURY TRIAL IS A MATERIAL
INDUCEMENT FOR THE ADMINISTRATIVE AGENT AND THE BANKS TO ACCEPT THIS GUARANTY
AND THAT THE LOANS AND OTHER EXTENSIONS OF CREDIT MADE BY THE BANKS ARE MADE IN
RELIANCE UPON SUCH WAIVER.  GUARANTOR FURTHER WARRANTS AND REPRESENTS THAT SUCH WAIVER HAS BEEN
KNOWINGLY AND VOLUNTARILY MADE, FOLLOWING CONSULTATION WITH LEGAL COUNSEL.  IN THE EVENT OF LITIGATION, THIS GUARANTY MAY BE
FILED BY THE ADMINISTRATIVE AGENT IN COURT AS A WRITTEN CONSENT TO A NON-JURY
TRIAL.

 

(d)   Guarantor does hereby further
covenant and agree to and with the Administrative Agent and the Banks that
Guarantor may be joined in any action against Borrower in connection with the
Loan Documents and that recovery may be had against Guarantor in such action or
in any independent action against Guarantor (with respect to the Guaranteed
Obligations), without the

 

13

 

Administrative Agent and the Banks first pursuing or exhausting any
remedy or claim against Borrower or its successors or assigns.  Guarantor also agrees that, in an action
brought with respect to the Guaranteed Obligations in any jurisdiction, it
shall be conclusively bound by the judgment in any such action by the
Administrative Agent (wherever brought) against Borrower or its successors or
assigns, as if Guarantor were a party to such action, even though Guarantor was
not joined as a party in such action.

 

(e)   Guarantor agrees to pay all
reasonable expenses (including, without limitation, attorneys’ fees and
disbursements) which may be incurred by the Administrative Agent or the Banks
in connection with the enforcement of their rights under this Guaranty, whether
or not suit is initiated.

 

21.  Notwithstanding anything to
the contrary contained herein (but subject to Section 6 hereof), this
Guaranty shall terminate and be of no further force or effect upon the full
performance and payment of the Guaranteed Obligations hereunder.  Upon termination of this Guaranty in
accordance with the terms of this Guaranty, the Administrative Agent promptly
shall deliver to Guarantor such documents as Guarantor or Guarantor’s counsel
reasonably may request in order to evidence such termination.

 

22.  All of the Administrative
Agent’s and the Banks’ rights and remedies under each of the Loan Documents or
under this Guaranty are intended to be distinct, separate and cumulative and no
such right or remedy therein or herein mentioned is intended to be in exclusion
of or a waiver of any other right or remedy available to the Administrative
Agent or any Bank.

 

23.  No claim may be made by
Guarantor or any other Person acting by or through Guarantor against the
Administrative Agent or any Bank or the affiliates, directors, officers,
employees, attorneys or agent of any of them for any consequential or punitive
damages in respect of any claim for breach of contract or any other theory of
liability arising out of or related to the transactions contemplated by this
Guaranty or by the other Loan Documents, or any act, omission or event
occurring in connection therewith; and Guarantor hereby

 

14

 

waives, releases and agrees not to sue upon
any claim for any such damages, whether or not accrued and whether or not known
or suspected to exist in its favor.

 

15

 

IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Guaranty as of the date and year first above written.

 

 

	
   

  	
  GUARANTOR:

  
	
   

  	
   

  
	
   

  	
  EQUITY RESIDENTIAL

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mark J. Parrell

  
	
   

  	
   

  	
  Name:  Mark J. Parrell

  
	
   

  	
   

  	
  Title:  Senior Vice President
  & Treasurer

  
	
   

  	
   

  
	
   

  	
   

  
	
  ACCEPTED:

  	
   

  
	
   

  	
   

  
	
  BANK OF AMERICA, N.A.,

  	
   

  
	
  AS ADMINISTRATIVE AGENT

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Michael W. Edwards

  	
   

  	
   

  
	
   

  	
  Name:  Michael W. Edwards

  	
   

  
	
   

  	
  Title:  Senior Vice President

  	
   

  
					

 

 

ACKNOWLEDGMENT FOR GUARANTOR

 

	
  STATE OF ILLINOIS

  	
  )

  
	
   

  	
  ) ss.

  
	
  COUNTY OF COOK

  	
  )

  

 

On August 25, 2005, before me personally came Mark J. Parrell,  to me known to be the person who executed the
foregoing instrument, and who, being duly sworn by me, did depose and say that
he is Senior Vice President and Treasurer of Equity Residential, and that he
executed the foregoing instrument in the organization’s name, and that he had
authority to sign the same, and he acknowledged to me that he executed the same
as the act and deed of said organization for the uses and purposes therein
mentioned.

 

[Seal]

 

 

	
   

  	
  /s/ Kim M. Brown

  	
   

  
	
   

  	
  Notary PublicExhibit 4.2

 

 

USANA Health Sciences 401(k) Plan

 

SUMMARY PLAN DESCRIPTION

 

 

August 30,
2005

 

 

TABLE OF
CONTENTS

 

	
  INTRODUCTION

  	
   

  
	
   

  	
   

  
	
  GENERAL PLAN INFORMATION

  	
   

  
	
   

  	
   

  	
   

  
	
  A.

  	
  Agent for Service of
  Legal Process

  	
   

  
	
  B.

  	
  Effective Date

  	
   

  
	
  D.

  	
  Three-Digit
  Plan Number:

  	
   

  
	
  E.

  	
  Plan
  Administrator

  	
   

  
	
  F.

  	
  Plan Year

  	
   

  
	
  G.

  	
  Trustee(s)

  	
   

  
	
  H.

  	
  Plan Assets

  	
   

  
	
   

  	
   

  	
   

  
	
  ELIGIBILITY
  AND PARTICIPATION IN THE PLAN

  	
   

  
	
   

  	
   

  	
   

  
	
  Q3:1

  	
  What
  are the eligibility requirements I must meet to participate in this Plan?

  	
   

  
	
  Q3:2

  	
  What is an “Hour of
  Service”?

  	
   

  
	
  Q3:3

  	
  What
  methods of counting Service does this Plan use for eligibility to receive an
  Employer Contribution and for Vesting?

  	
   

  
	
  Q3:4

  	
  Are
  all Employees eligible to participate in the Plan once they have met the
  eligibility requirements?

  	
   

  
	
  Q3:5

  	
  After
  I meet the eligibility requirements, when do I actually enter the Plan?

  	
   

  
	
  Q3:6

  	
  If
  I terminate employment and I am later rehired, do I have to meet the
  eligibility requirements again?

  	
   

  
	
  Q3:7

  	
  If
  I am not in a group of Employees who is eligible to participate in the Plan
  but later become eligible to participate, when will I enter the Plan?

  	
   

  
	
  Q3:8

  	
  What
  will happen if I am a Participant in the Plan and I then become ineligible to
  participate?

  	
   

  
	
  Q3:9

  	
  Does my Service for any
  other company count for eligibility?

  	
   

  
	
  Q3:10

  	
  What is a Break in Service?

  	
   

  
	
  Q3:11

  	
  If
  I go on parental leave, will this be considered a Break-in-Service?

  	
   

  
	
  Q3:12

  	
  If
  I am credited with Hours of Service because of parental leave, will these
  hours count for calculating Years of Service for eligibility, vesting or
  benefits?

  	
   

  
	
   

  	
   

  	
   

  
	
  CONTRIBUTIONS TO THIS PLAN

  	
   

  
	
   

  	
   

  	
   

  
	
  Q4:1

  	
  What are Elective
  Deferrals?

  	
   

  
	
  Q4:2

  	
  What
  is my Compensation (or salary) for Plan purposes?

  	
   

  
	
  Q4:3

  	
  Are
  my Elective Deferrals included in my Compensation?

  	
   

  
	
  Q4:4

  	
  Are
  there any other items excluded from my Compensation for Plan purposes?

  	
   

  
	
  Q4:5

  	
  Is
  there a limit on how much of my Compensation I can contribute?

  	
   

  
	
  Q4:6

  	
  If
  I contributed part of my Compensation to another plan and this Plan in the
  same year, may I contribute the full dollar limit into each plan?

  	
   

  
	
  Q4:7

  	
  What
  should I do if I exceed the annual dollar limit?

  	
   

  
	
  Q4:8

  	
  Must I participate in
  the Plan?

  	
   

  
	
  Q4:9

  	
  May I
  choose to have all or part of any bonus I receive contributed to the Plan?

  	
   

  
	
  Q4:10

  	
  When
  may I change the percentage or amount of my Compensation that I am
  contributing to the Plan, or stop my contributions entirely?

  	
   

  
	
  Q4:11

  	
  If
  I stop my contributions, when can I restart them?

  	
   

  
	
  Q4:12

  	
  What is a Rollover
  Contribution?

  	
   

  
	
  Q4:13

  	
  Are
  Rollover Contributions permitted to this Plan?

  	
   

  
	
  Q4:14

  	
  If
  there is an investment gain or loss, will the amount in my rollover account
  be affected?

  	
   

  
	
  Q4:15

  	
  What is a Transfer
  Contribution?

  	
   

  
	
  Q4:16

  	
  Are
  Transfer Contributions permitted to this Plan?

  	
   

  

 

i

 

	
  Q4:17

  	
  May I
  make Rollover or Transfer Contributions from this Plan to another Qualified
  Plan or IRA?

  	
   

  
	
  Q4:18

  	
  What is a Matching
  Contribution?

  	
   

  
	
  Q4:19

  	
  Will my
  Employer make a Matching Contribution?

  	
   

  
	
  Q4:20

  	
  What
  time period will the Employer use to determine my entitlement to and the
  amount of my Matching Contribution?

  	
   

  
	
  Q4:21

  	
  If
  I make an Elective Deferral and then withdraw my Elective Deferrals from the
  Plan, will I still receive a Matching Contribution?

  	
   

  
	
  Q4:22

  	
  Will
  any other types of Matching Contribution be made to the Plan?

  	
   

  
	
  Q4:23

  	
  What is a
  Discretionary Contribution?

  	
   

  
	
  Q4:24

  	
  Who
  is eligible to receive a contribution from the Employer?

  	
   

  
	
  Q4:25

  	
  Are
  there any limits on the total amount of contributions that can be made on my
  behalf each year?

  	
   

  
	
  Q4:26

  	
  Who is a
  Non-Highly Compensated Employee?

  	
   

  
	
  Q4:27

  	
  Who is considered a
  “family member”?

  	
   

  
	
   

  	
   

  	
   

  
	
  PARTICIPANT
  ACCOUNTS

  	
   

  
	
   

  	
   

  	
   

  
	
  Q5:1

  	
  What is a Participant
  Account?

  	
   

  
	
  Q5:2

  	
  What
  monies will be contributed to my account?

  	
   

  
	
  Q5:3

  	
  What
  subtractions will be made from my account?

  	
   

  
	
  Q5:4

  	
  Can I lose
  any of the money in my account?

  	
   

  
	
  Q5:5

  	
  When
  will contributions to my account be valued?

  	
   

  
	
   

  	
   

  	
   

  
	
  VESTING

  	
   

  
	
   

  	
   

  	
   

  
	
  Q6:1

  	
  What is vesting?

  	
   

  
	
  Q6:2

  	
  Are
  my contributions 100% vested?

  	
   

  
	
  Q6:3

  	
  What does “forfeited” mean?

  	
   

  
	
  Q6:4

  	
  Are Employer
  Contributions 100% vested?

  	
   

  
	
  Q6:5

  	
  What
  is a Year of Service for purposes of vesting?

  	
   

  
	
  Q6:6

  	
  Does
  the time I worked for the company prior to the Effective Date of this Plan
  count for purposes of vesting?

  	
   

  
	
  Q6:7

  	
  If
  I worked for the company before age 18, does this Service count towards
  vesting?

  	
   

  
	
  Q6:8

  	
  Does my Service for any
  other company count towards vesting?

  	
   

  
	
  Q6:9

  	
  Will
  I become 100% vested if I retire, become disabled, die, or if the Plan
  terminates?

  	
   

  
	
  Q6:10

  	
  What
  happens to the part of my account that is not vested after I terminate
  employment?

  	
   

  
	
  Q6:11

  	
  When
  is the nonvested part of my account balance forfeited if I terminate
  employment?

  	
   

  
	
  Q6:12

  	
  What
  will happen to the nonvested part of my account balance if I do not take my
  vested balance when I terminate employment?

  	
   

  
	
  Q6:13

  	
  What is a
  “buy back”?

  	
   

  
	
  Q6:14

  	
  If
  I do not repay the amount I received, what will happen to my nonvested
  account balance?

  	
   

  
	
  Q6:15

  	
  If
  I am rehired, will my Service before I terminated employment count for
  vesting?

  	
   

  
	
  Q6:16

  	
  What will happen if I am not
  vested in any part of my Employer Contribution account balance before I
  terminate employment and I have a Break in Service, but I am reemployed
  before I have five (5) consecutive one (1) year Breaks in Service?

  	
   

  
	
  Q6:17

  	
  What will happen if I am not
  vested in any of the Employer Contributions in my account, and I leave work
  and am reemployed after I have five (5) consecutive one (1) year Breaks
  in- Service?

  	
   

  
	
   

  	
   

  	
   

  
	
  TOP-HEAVY RULES

  	
   

  
	
   

  	
   

  	
   

  
	
  Q7:1

  	
  What
  is a “Top-Heavy” Plan?

  	
   

  
	
  Q7:2

  	
  Who
  is a “Key Employee”?

  	
   

  

 

ii

 

	
  Q7:3

  	
  What
  are the requirements if a Plan is top-heavy?

  	
   

  
	
  Q7:4

  	
  What is a
  “top-heavy minimum contribution”?

  	
   

  
	
  Q7:5

  	
  What
  is the special vesting schedule when the Plan is top-heavy?

  	
   

  
	
  Q7:6

  	
  Who
  is entitled to receive the top-heavy minimum contribution?

  	
   

  
	
   

  	
   

  	
   

  
	
  RETIREMENT BENEFITS

  	
   

  
	
   

  	
   

  	
   

  
	
  Q8:1

  	
  When
  may I receive retirement benefits from the Plan?

  	
   

  
	
  Q8:2

  	
  What
  happens if I work beyond the Normal Retirement Age?

  	
   

  
	
  Q8:3

  	
  Does this
  Plan provide for Early Retirement?

  	
   

  
	
  Q8:4

  	
  If
  I stop working for my Employer before Normal Retirement Age, when can I
  receive my benefits?

  	
   

  
	
  Q8:5

  	
  May I
  take out my retirement benefits if I do not terminate employment?

  	
   

  
	
  Q8:6

  	
  Does
  the Plan permit a distribution while I am still employed?

  	
   

  
	
  Q8:7

  	
  What is a “hardship”
  withdrawal?

  	
   

  
	
  Q8:8

  	
  Does this
  Plan permit hardship withdrawals?

  	
   

  
	
  Q8:9

  	
  Do
  I have to take a distribution of my benefits by a certain time?

  	
   

  
	
   

  	
   

  	
   

  
	
  BENEFICIARY
  DESIGNATION AND DEATH BENEFITS

  	
   

  
	
   

  	
   

  	
   

  
	
  Q9:1

  	
  If I die,
  who gets my benefits from this Plan?

  	
   

  
	
  Q9:2

  	
  If
  I am married, does my spouse have to be my Beneficiary?

  	
   

  
	
  Q9:3

  	
  How are
  benefits paid to my Beneficiary?

  	
   

  
	
  Q9:4

  	
  How
  does the annuity pay-out of a death benefit work?

  	
   

  
	
  Q9:5

  	
  What
  will happen if I die after my benefit payments have started?

  	
   

  
	
  Q9:6

  	
  What
  is the normal, or automatic, form of payment under this Plan?

  	
   

  
	
  Q9:7

  	
  Are
  there any other forms of payment available under the Plan?

  	
   

  
	
  Q9:8

  	
  Do
  I need my spouse’s consent in order to choose an optional form of payment?

  	
   

  
	
  Q9:9

  	
  May I
  roll my benefits into an IRA or into another plan instead of having them paid
  directly to me?

  	
   

  
	
  Q9:10

  	
  What
  taxes or penalties will I have to pay if I do not rollover my benefit
  directly to an IRA or another Qualified Plan?

  	
   

  
	
  Q9:11

  	
  If
  I decide to have the benefits paid to me directly, may I roll them over to a
  Qualified Plan or IRA later?

  	
   

  
	
  Q9:12

  	
  What
  distribution payments cannot be rolled over?

  	
   

  
	
  Q9:13

  	
  If
  I terminate employment with my Employer because I retire, become disabled, or
  die, when will my payments start?

  	
   

  
	
  Q9:14

  	
  If
  I terminate employment for a reason other than death, Disability, or
  retirement, when will my payments start?

  	
   

  
	
  Q9:15

  	
  What
  is a Qualified Domestic Relations Order (QDRO)?

  	
   

  
	
  Q9:16

  	
  If
  the Plan receives a QDRO, when will the benefit be distributed to the
  person(s) listed in the QDRO?

  	
   

  
	
  Q9:17

  	
  How
  long can I keep my vested account balance in the Plan without having to make
  a withdrawal?

  	
   

  
	
   

  	
   

  	
   

  
	
  INVESTMENTS

  	
   

  
	
   

  	
   

  	
   

  
	
  Q10:1

  	
  How
  will my contributions to the Plan be invested?

  	
   

  
	
  Q10:2

  	
  If
  Employees are permitted to direct their own investments, what types of
  contributions will I be allowed to invest?

  	
   

  
	
  Q10:3

  	
  What
  are my investment choices and how do I change my investment selection?

  	
   

  
	
  Q10:4

  	
  Is investment in
  insurance permitted?

  	
   

  
	
  Q10:5

  	
  May I take a loan
  from the Plan?

  	
   

  
	
   

  	
   

  	
   

  
	
  ADMINISTRATION
  OF THE PLAN

  	
   

  
	
   

  	
   

  	
   

  
	
  Q11:1

  	
  Who administers the Plan?

  	
   

  
	
  Q11:2

  	
  Who
  is the Plan Administrator and what are his or her duties?

  	
   

  
	
  Q11:3

  	
  What are the duties
  of the Trustee?

  	
   

  

 

iii

 

	
  Q11:4

  	
  Are
  there any other circumstances which may result in the disqualification,
  ineligibility, or denial, loss, forfeiture, suspension, offset, reduction, or
  recovery of any benefits that I as a Participant or my Beneficiary might
  otherwise reasonably expect the Plan to provide?

  	
   

  
	
  Q11:5

  	
  Is
  there any circumstance where a fee or charge may be imposed in order to
  receive a benefit under the Plan?

  	
   

  
	
   

  	
   

  	
   

  
	
  AMENDMENT AND
  TERMINATION

  	
   

  
	
   

  	
   

  	
   

  
	
  Q12:1

  	
  May my Employer
  amend the Plan?

  	
   

  
	
  Q12:2

  	
  May my Employer
  terminate the Plan?

  	
   

  
	
  Q12:3

  	
  What is a
  partial termination of the Plan?

  	
   

  
	
  Q12:4

  	
  May my
  rights and benefits under the Plan be assigned or transferred?

  	
   

  
	
  Q12:5

  	
  Are
  there Plan events other than full or partial Plan termination that may
  require 100% vesting?

  	
   

  
	
   

  	
   

  	
   

  
	
  LEGAL
  PROVISIONS AND RIGHTS OF PLAN PARTICIPANTS

  	
   

  

 

iv

 

401(k) PLAN

SUMMARY
PLAN DESCRIPTION

 

ARTICLE I

INTRODUCTION

 

Your Employer has set up a
401(k) Plan to help you save for your retirement.  Details about how the Plan works are
contained in this booklet. While this summary describes the main provisions of
the Plan, it does not include every detail or limitation. Every attempt has
been made to give you accurate, but easily understandable information about the
Plan.  If, however, there is a
disagreement between this booklet and the official Plan document, the Plan
document will apply. You may get a copy of the Plan document from the Plan
Administrator who may charge you a reasonable fee for the copy.

 

ARTICLE II

GENERAL PLAN INFORMATION

 

A.                                    Agent for Service of Legal Process.

The
name of the person designated as agent for service of legal process and the
address at which process may be served on such person is listed below.  Additionally, service of legal process may
also be made upon a Plan Trustee or the Plan Administrator.

 

	
  Name of individual(s) or
  position at the Employer:

  
	
   

  	
  Benefits Administrator

  
	
  Address:

  	
  3838 W. Parkway Blvd

  
	
   

  	
  Salt Lake City, UT 84120

  

 

B.                                    Effective Date.

The Effective Date is the
date on which this Plan originally was established or the date that an
amendment to this Plan goes into effect. This is an amended or restated Plan.  The Effective Date of the Plan was  07/01/1994. The Effective Date of the
amendment or restatement of the Plan is 03/01/2004.

 

C.                                    Employer.

	
  Name:

  	
  USANA Health
  Sciences, Inc.

  
	
  Address:

  	
  3838 W. Parkway Blvd.

  
	
   

  	
  Salt Lake City, UT
  84120-6336

  
	
  Telephone:

  	
  801-954-7755

  
	
  Tax ID Number:

  	
  87-0500306

  

 

D.                                    Three-Digit Plan Number:

001

 

E.                                      Plan Administrator.

The
Employer is the Plan Administrator.

 

F.                                      Plan
Year.

The
Plan Year is the consecutive twelve-month period beginning on 01/01 and ending
on 12/31.

 

G.                                    Trustee(s).

Name
and Address:

Circle
Trust Company

One
Thorndal Circle

Darien,
CT 06820

 

1

 

H.                                    Plan
Assets.

Plan
assets are held in a Trust Fund.

 

ARTICLE III

ELIGIBILITY
AND PARTICIPATION IN THE PLAN

 

Q3:1                    What are the eligibility requirements I must meet to participate in
this Plan?

 

A3:1                     There may be a Service or an age requirement or both for eligibility as
described below:

 

a.                                       The Service requirement is:

 

Employer Contributions:

To
participate in this Plan, you must complete .25 Years of Service with the
Employer.

 

Employee Contributions:

To
participate in this Plan, you must complete .25 Years of Service with the
Employer.

 

b.                                       The age requirement is:

To
participate in this Plan, you must be age 18 or older.

 

Q3:2                    What is an “Hour of Service”?

 

A3:2                     You will receive credit for each hour for
which you are paid or entitled to be paid, even if you are not at work (such as
vacation, sickness, leave of absence, or Disability), or hours for which you
receive back pay if hours were not already counted.  A maximum of 501 hours will be credited to
you in any year for periods that you are not at work but are paid.  Hours will be calculated using an equivalency
method that credits you with 190 hours for each month during which you complete
an Hour of Service.

 

Q3:3                    What methods of counting Service does this Plan use for eligibility
to receive an Employer Contribution and for Vesting?

 

A3:3                     This Plan uses the following methods:

 

a.                                       Service for eligibility to qualify for an
Employer Contribution will be based on the Hours of Service Method. A Year of
Service will be credited to all Participants employed on the last day of the
Plan Year or who have terminated with more than 1 Hours of Service.

 

b.                                       Service for vesting Employer Contributions
will be based on the Hours of Service Method. A Year of Service will be
credited upon completion of more than 1000 Hours of Service.

 

Q3:4                    Are all Employees eligible to participate in the Plan once they have
met the eligibility requirements?

 

A3:4                     Generally, yes, however, your Employer may
exclude certain groups of Employees from participating in this Plan. All
Employees who meet the eligibility requirements will participate in the Plan
except for the following:

 

All Contributions:

Employees
covered by a collective bargaining agreement (union employees).

 

2

 

Employees who are
nonresident aliens and who do not receive any U.S. source income from the
Employer.

Individuals who become
Employees as a result of a merger or acquistion.

 

Qualified Non-Elective Contributions (“QNEC”):

Highly
Compensated Employees.

 

Q3:5                    After I meet the eligibility requirements, when do I actually enter
the Plan?

 

A3:5                     After you have met all of the eligibility
requirements, you will begin participation in the Plan on the earlier of the
first day of the Plan Year, or the first day of the fourth, seventh or tenth
month of the Plan Year coinciding with or next following the date on which you
meet the eligibility requirement.

 

Q3:6                    If I terminate employment and I am later rehired, do I have to meet
the eligibility requirements again?

 

A3:6                     If you were a Participant before you
terminated employment, you do not have to meet the eligibility requirements
again. You will become a Participant on your date of rehire. If you did not
meet the eligibility requirements at the time you terminated employment, you
must meet the eligibility requirements as if you were a new Employee.

 

Q3:7                    If I am not in a group of Employees who is eligible to participate
in the Plan but later become eligible to participate, when will I enter the
Plan?

 

A3:7                     You will enter the Plan immediately, if you
have already satisfied the Plan’s age and Service requirements.

 

Q3:8                    What will happen if I am a Participant in the Plan and I then become
ineligible to participate?

 

A3:8                     If you become ineligible to participate in
the Plan because you are no longer an eligible Employee, you must stop making
all Employee Contributions to the Plan and you will not receive future Employer
Contributions. You will participate immediately if you again become an eligible
Employee. All Years of Service with your Employer, even when you were not
eligible, will be counted when calculating your vested percentage in your
account balance.

 

Q3:9                    Does my Service for any other company count for
eligibility?

 

A3:9                     Yes, you will receive credit for eligibility
if you worked for the following company/companies: 

Wasatch Product Development
Inc.

 First-Vision Media Group

 

Q3:10             What is a Break in Service?

 

A3:10              A Break in Service is a Plan Year during
which you are not credited with or are not paid for at least 500 Hours of
Service. If you terminate employment and have a Break in Service, all
contributions to your Plan Account are suspended.

 

Q3:11             If I go on parental leave, will this be considered a
Break-in-Service?

 

A3:11              You will be credited with enough additional
Hours of Service (up to 501) to prevent a Break in Service, either in the year
you leave employment or in the following year. The extra Hours of Service
credited to prevent a Break in Service may only be used in one Plan Year.

 

Example: You work 750 hours in
the year that your child is born and you take parental leave. You will not
receive any additional hours in that year because you did not have a Break in
Service. However, if you do not return to work the next year, you will be
credited with 501 Hours of Service to prevent a Break in

 

3

 

Service
from occurring in that year. Had you instead returned to work in that year, but
only worked 300 hours, you will be credited with 201 additional Hours of
Service to prevent a Break in Service.

 

Q3:12             If I am credited with Hours of Service because of parental leave,
will these hours count for calculating Years of Service for eligibility,
vesting or benefits?

 

A3:12              Hours of Service credited for parental leaves
are used only to prevent a Break in Service.

 

ARTICLE IV

CONTRIBUTIONS TO THIS PLAN

 

Elective
Deferrals

 

Q4:1                    What are Elective Deferrals?

 

A4:1                     Elective Deferrals are contributions you
elect to have made to the Plan on your behalf instead of being paid to you in
cash as salary or wages.  You make this
choice when you complete a salary deferral election form that withholds a
portion of your salary to be contributed to the Plan on your behalf. The money
contributed to the Plan and any earnings on that money is not taxable until it
is actually distributed to you.  However,
you must still pay Social Security taxes on your contributions to this Plan.

 

Q4:2                    What is my Compensation (or salary) for Plan purposes?

 

A4:2                     Your Compensation for Plan purposes includes
your income or salary as reflected on your pay stub.

 

Q4:3                    Are my Elective Deferrals included in my Compensation?

 

A4:3                     Your salary includes all pre-tax Elective
Deferrals you may make to this or other plans of your Employer.

 

Q4:4                    Are there any other items excluded from my Compensation for Plan
purposes?

 

A4:4                     No, there are no other items excluded from
Compensation for Plan purposes.

 

Q4:5                    Is there a limit on how much of my Compensation I can contribute?

 

A4:5                     Yes. 
As an eligible Employee, you may authorize your Employer to withhold up
to 75% of your salary not to exceed the annual dollar limit set by law.

 

The
annual dollar limit for 2002 was $11,000; in 2003 this limit increased to
$12,000; in 2004 it will increase to $13,000; in 2005 it will increase to
$14,000; and in 2006 it will increase to $15,000. The annual dollar limit will
be adjusted annually for inflation in $500 increments beginning in 2007 and
later years. For a further explanation of this limit, ask your Plan
Administrator.

 

In
addition, eligible Participants may make Catch-up Contributions to the Plan.

 

For
individuals who are at least age 50 before the end of the Plan Year, the
current dollar limits on Elective Deferrals are increased for 401(k)
Plans.  The additional dollar amount is
$1,000 for the 2002 calendar year; $2,000 for 2003; $3,000 for 2004; $4,000 for
2005; and $5,000 for calendar years beginning in 2006 and later.  The $5,000 amount applicable for 2006 and
later years will be adjusted annually for inflation in $500 increments
beginning in 2007.

 

Matching
Contributions will not be made on Catch-up Contributions.

 

4

 

Q4:6                    If I contributed part of my Compensation to another plan and this
Plan in the same year, may I contribute the full dollar limit into each plan?

 

A4:6                     No. The annual dollar limit is a limit
that applies to all salary
deferrals you make in a given calendar year to this Plan or any other plan that
is a cash or deferred arrangement. Such plans include 403(b) annuities, a
Simplified Employee Pension (SEP), or another 401(k) plan. (If you participate
in both this Plan and a 457 eligible deferred compensation plan, ask the employer
maintaining the 457 plan about certain contribution limits that may be
applicable to you.)

 

Q4:7                    What should I do if I exceed the annual dollar limit?

 

A4:7                     If the Elective Deferrals you make to this
Plan and the plan of another unrelated employer are more than the annual dollar
limit in a given year, you must ask one of the plans to refund the excess
amount to you.  If you choose this Plan,
you must notify the Plan Administrator, in writing, by March 1 of the next
calendar year so the excess amount and related earnings may be refunded by April 15.  The excess amount is taxable for the year in
which you made the excess deferral.  If
you fail to request a refund, you will be taxed twice: once in the year of
deferral and again in the year the excess amount is actually paid to you. If
the excess amount was contributed to this Plan or another plan maintained by
this Employer, the Plan Administrator will automatically return the excess
amount and associated earnings to you by April 15.

 

Q4:8                    Must I participate in the Plan?

 

A4:8                     Participation in this Plan is voluntary.

 

Q4:9                    May I choose to have all or part of any bonus I receive contributed
to the Plan?

 

A4:9                     Bonuses will be automatically deferred at the
rate you elected on your Salary Deferral Agreement or you may elect to defer up
to 75% of your bonus to the Plan. If you wish to defer an additional portion of
your bonus, you must notify the Plan Administrator in writing. The additional
amount you may defer is limited by the annual dollar limit and the overall plan
limit on Elective Deferrals.

 

Q4:10             When may I change the percentage or amount of my Compensation that I
am contributing to the Plan, or stop my contributions entirely?

 

A4:10              You may increase or decrease, the percentage
of your Compensation that you have elected to defer to the Plan on the first
day of each quarter. Participants are permitted to terminate their Elective
Deferrals at any time upon proper and timely notice to the Employer.

 

Your
Employer may also reduce or terminate your contributions if it is necessary to
keep the Plan within the limits imposed by law.

 

Q4:11             If I stop my contributions, when can I restart them?

 

A4:11              If you stop making contributions to the Plan,
you may resume contributions again on the first day of each quarter.

 

Employee Contributions

 

Q4:12             What is a Rollover Contribution?

 

A4:12              A rollover contribution is a direct transfer
of your retirement benefits from another qualified plan to this Plan, or a
distribution from another qualified plan that was first transferred to an IRA
(a “conduit IRA”) and then from that IRA to this Plan. A Rollover Contribution
may also be made within sixty (60) days of the time it was distributed to you
by another qualified plan or an IRA, if your Plan permits such rollovers. A tax
Form 1099-R will be issued to you showing that either a direct transfer to
another qualified plan or an IRA has been made, or that a distribution has been
made to you.

 

5

 

Q4:13             Are Rollover Contributions permitted to this Plan?

 

A4:13              Yes, Rollover Contributions may be made to
this Plan at any time after you become an Employee.

 

In
addition, the Plan will accept a
Participant contribution of an Eligible Rollover Distribution from:

 

A
Qualified Retirement Plan described in Code Section 401(a) or 403(a).

 

An
annuity contract described in Code Section 403(b).

 

An
eligible plan under Code Section 457(b) which is maintained by a
state, political subdivision of a state, or any agency or instrumentality of a
state or political subdivision of a state.

 

The
Plan will accept a Participant Rollover Contribution of the portion of a
distribution from an Individual Retirement Account or Annuity described in Code
Section 408(a) or 408(b).

 

In
addition, the Plan will accept a Direct Rollover of an Eligible Rollover
Distribution or Contribution from the following plans:

 

A
Qualified Plan described in Code Section 401(a) or 403(a), excluding
Voluntary After-tax Contributions.

 

An
annuity contract described in Code Section 403(b), excluding Voluntary
After-tax Contributions.

 

An
eligible plan under Code Section 457(b) which is maintained by a
state, political subdivision of a state, or an agency or instrumentality of a
state or political subdivision of a state.

 

Q4:14             If there is an investment gain or loss, will the amount in my
rollover account be affected?

 

A4:14              A separate account will be established for
your Rollover Contribution. You are always 100% vested in your rollover account
balance and you will always have the right to receive the full amount of your
rollover account balance. However, your rollover account balance will be
affected by investment gains and losses (your account may increase or decrease
in value).

 

Q4:15             What is a Transfer Contribution?

 

A4:15              A Transfer Contribution is the direct
transfer of your account balance from another Qualified Plan to this Plan.  In a transfer, the money is not treated as
having been distributed to you and “rolled over” because it is a transaction
between the trustees of two qualified plans. No tax Form 1099-R will be
issued to you in a transfer because you did not have access to the assets that
were transferred.

 

Q4:16             Are Transfer Contributions permitted to this Plan?

 

A4:16              Yes, Transfer Contributions may be made to
this Plan at any time after you become an Employee.

 

Q4:17             May I make Rollover or Transfer Contributions from this Plan to
another Qualified Plan or IRA?

 

A4:17              Generally, you may rollover your account
balance from this Plan to an IRA if you cease to be an Employee.  Whether you may make a transfer or rollover
your account balance to another Qualified Plan will depend on whether the other
plan accepts these contributions.

 

If you believe you qualify for a rollover or transfer, see
your Plan Administrator for more details.

 

6

 

Employer Contributions

 

Q4:18             What is a Matching Contribution?

 

A4:18              A Matching Contribution is money that your
Employer contributes to the Plan for you based on your Elective Deferrals to
the Plan. A Matching Contribution may be subject to vesting requirements
discussed below.

 

Q4:19             Will my Employer make a Matching Contribution?

 

A4:19              Yes. The Matching Contribution is as follows:

 

A
Matching Contribution will be made if you are an eligible Participant equal to
50% of your Elective Deferrals, up to a maximum of 6% of your Compensation.

 

Example:
Your Employer gives a Matching Contribution equal to 50% of your Elective
Deferrals. If you defer of 6% of your Compensation, your Employer will make a
Matching Contribution of 3% of your Compensation.

 

Q4:20             What time period will the Employer use to determine my entitlement
to and the amount of my Matching Contribution?

 

A4:20              If you make Elective Deferrals, your Employer
will calculate your Matching Contributions related to deferrals on a payroll
based schedule.

 

Q4:21             If I make an Elective Deferral and then withdraw my Elective
Deferrals from the Plan, will I still receive a Matching Contribution?

 

A4:21              Yes.

 

Q4:22             Will any other types of Matching Contribution be made to the Plan?

 

A4:22              The Employer may make another type of a
matching contribution and/or a discretionary contribution known as a Qualified
Matching (QMAC) and Qualified Non-Elective Contribution (QNEC),
respectively.  These qualified contributions
are 100% vested when made, but they are subject to withdrawal restrictions
before you attain age 591/2 while you are still employed.
These contributions may be used to help the Plan pass certain tests required by
law.

 

Discretionary Percentage QNEC Contribution Formula: The Employer shall have the right to make a
discretionary QNEC contribution which shall be made to each eligible
Participant in proportion to his or her Compensation as a percentage of the
Compensation of all eligible Participants. This part of the Employer’s
contribution and the allocation thereof shall be unrelated to any other
Employer contribution made hereunder and shall be fully vested. This
contribution will be made to only eligible Participants who are Non-Highly
Compensated Employees.

 

Corrective QNEC Contribution Formula: The Employer shall have the right to make a
QNEC contribution in the amount necessary to pass the necessary tests required
under the law.

 

Q4:23             What is a Discretionary Contribution?

 

A4:23              A discretionary contribution is an amount
that may be contributed to the Plan by the Employer on your behalf.  This type of contribution is made at the
discretion of the Employer.  Whether any
contribution will be made is determined on an annual basis.  For example, a contribution may be made for
three Plan Years, and none made for the fourth Plan Year. Your Employer’s
discretionary contribution may be subject to a vesting schedule as
discussed below.  Your share of the
Employer’s contribution depends on the allocation formula your Employer has
selected.  Employer contributions will
not be conditioned on profits.

 

7

 

If
your Employer makes a discretionary contribution, your share will be determined
as follows:

 

Proportionate Compensation Formula: If you are an eligible Participant, you will
receive a contribution based on your Compensation as a percentage of the
Compensation of all eligible Participants.

 

Q4:24             Who is eligible to receive a contribution from the Employer?

 

A4:24              You
will be eligible to receive an Employer contribution if you satisfy the
following conditions:

 

You
must be credited with a Year of Service to receive an allocation of non-safe
harbor Employer contributions.  A Year of
Service will be determined on the basis of the Hour of Service Method. A Year
of Service will be credited to all Participants who are employed on the last
day of the Plan Year or those Participants who have terminated after
completing more than 1 Hours of Service in the Plan Year.

 

Employer
contributions for a Plan Year will be allocated to all active and terminated
Participants who have met the allocation accrual requirements above and those
terminated Participants who have met the following requirements:

 

	
   

  	
   

  	
  Matching

  	
   

  	
  Employer

  	
   

  
	
   

  	
   

  	
  Formula

  	
   

  	
  Contribution

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Completion of more than 1 Hours of Service

  	
   

  	
  ý

  	
   

  	
  o

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  No Hours of Service requirement in the Plan
  Year of termination due to:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  a.

  	
  Retirement

  	
   

  	
  ý

  	
   

  	
  ý

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  b.

  	
  Disability

  	
   

  	
  ý

  	
   

  	
  ý

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  c.

  	
  Death

  	
   

  	
  ý

  	
   

  	
  ý

  	
   

  

 

Government Regulations

 

Q4:25             Are there any limits on the total amount of contributions that can
be made on my behalf each year?

 

A4:25              Yes, Federal law places certain limits on the
maximum contribution that can be made to a retirement plan.  The first limit is an individual limit based
on total contributions. The maximum contribution (including Employer
Contributions, Elective Deferrals) that you may have allocated to your account
in a given year may not be more than 100% of your Compensation or $40,000
(indexed for inflation), whichever is less.

 

The
second limit is a group limit based on the percentage of contributions made to
the Plan by all Participants. The amount of contributions that Highly
Compensated Employees will receive in given year may be limited by the amount
of contributions that are made on behalf of Non-Highly Compensated Employees.
See your Plan Administrator for a more detailed explanation of the various
limitations.

 

Generally,
a Highly Compensated Employee is any Employee who during the current or prior
Plan Year was a more than 5% owner
of the company or who in the prior Plan Year received Compensation of more than
$80,000, as indexed. (The Compensation amount will increase to $90,000 for
determining who is a Highly Compensated Employee in 2003, 2004 and 2005.  This figure may further increase in years
after 2005.) The Plan Administrator will inform you if you are a Highly
Compensated Employee.

 

Q4:26             Who is a Non-Highly Compensated Employee?

 

A4:26              If you are not currently or never were a
Highly Compensated Employee, as described above, or a family member of a 5%
owner, you are a Non-Highly Compensated Employee.

 

8

 

Q4:27             Who is considered a “family member”?

 

A4:27              Family
members include your parents, spouse, children, and grandchildren.  Family members do not include brothers or
sisters, aunts, uncles, grandparents, or cousins, or in-laws of your children.

 

ARTICLE V

PARTICIPANT
ACCOUNTS

 

Q5:1                    What is a Participant Account?

 

A5:1                     Your Employer will set up a recordkeeping
account in your name to show the value of your retirement benefit.  This is called your Participant Account.

 

Q5:2                    What monies will be contributed to my account?

 

A5:2                     Your Employer will make the following
contributions to your account:

 

•                  your share of any Employer Contributions made
on your behalf.

•                  the amount of any Elective Deferrals,
Transfer Contributions, Rollover Contributions and Catch-Up Contributions, if
applicable.

•                  your share of any forfeited amounts of former
Employees (these are amounts left behind by Employees who stopped working
before they were 100% vested in their benefit).

•                  your share of any investment earnings and
increases in the value of investments.

 

Q5:3                    What subtractions will be made from my account?

 

A5:3                     The Employer will subtract the following from
your account:

 

•                  any withdrawals or distributions you receive,

•                  any investment losses or decreases in the
value of investments, and

•                  your share of administrative fees and
expenses paid out of the Plan, if applicable.

 

Q5:4                    Can I lose any of the money in my account?

 

A5:4                     It is possible to lose all or a portion of
your account for the following reasons:

 

•                  if applicable, you terminate your employment
before you are 100% vested in the part of your account balance made up of
Employer Contributions,

•                  you have any investment losses or you pay
your share of Plan administrative expenses or other Plan costs,

•                  you cannot be located when a benefit becomes
payable to you, or

•                  a portion of or all of your benefits are
assigned (transferred) to an alternate payee under a Qualified Domestic
Relations Order.

 

Q5:5                    When will contributions to my account be valued?

 

A5:5                     The Employer will value the contributions in
your account on a daily basis.

 

9

 

ARTICLE VI

VESTING

 

Q6:1                    What is vesting?

 

A6:1                     Vesting means that you have earned the right
to a portion of or the full amount of your Participant Account.  Once you have “vested” a portion of or the
full amount of your account, that amount cannot be forfeited or taken away from
you. (However, your vested account balance will be adjusted for any investment
gains and losses.) You determine your vested account balance by multiplying the
percentage from the vesting schedule described below by the total value of
your Participant Account.  The vesting schedule is
based on your Years of Service, and determines how rapidly your Account Balance
becomes non-forfeitable.

 

Q6:2                    Are my contributions 100% vested?

 

A6:2                     All contributions that you make, plus any investment earnings on those contributions are always 100%
vested and cannot be forfeited for any reason.

 

Q6:3                    What does “forfeited” mean?

 

A6:3                     The portion of your account balance to which
you are not entitled is called a “forfeiture” and is left behind in the Plan
when you terminate your employment.

 

Q6:4                    Are Employer Contributions 100% vested?

 

A6:4                     No, not automatically. You will vest in the
Employer’s contribution 25% upon completing 1 Year of Service; 50% upon
completing 2 Years of Service; 75% upon completing 3 Years of Service; 100%
upon completing 4 Years of Service

 

Q6:5                    What is a Year of Service for purposes of vesting?

 

A6:5                     A Year of Service for vesting will be determined using the Hour of
Service Method.  A Year of Service will
be credited upon completion of 1000 Hours of Service.

 

The
computation period for purposes of determining Years of Service, Breaks in
Service and Periods of Service for purposes of computing a Participant’s
nonforfeitable right to his or her account balance derived from Employer
contributions shall commence on the first day of the Plan Year during which an
Employee first performs an Hour of Service for the Employer and each subsequent
12-consecutive month period shall commence on the anniversary thereof.

 

A
Participant shall receive credit for a Year of Service if he or she completes
the number of hours specified above at any time during the 12-consecutive month
computation period. A Year of Service may be earned prior to the end of the 12-consecutive
month computation period and the Participant need not be employed at the end of
the 12-consecutive month computation period to receive credit for a Year of
Service.

 

Q6:6                    Does the time I worked for the company prior to the Effective Date
of this Plan count for purposes of vesting?

 

A6:6                     Service before the Effective Date of the Plan
is counted.

 

Q6:7                    If I worked for the company before age 18, does this Service count
towards vesting?

 

A6:7                     Service before age 18 is counted.

 

10

 

Q6:8                    Does my Service for any
other company count towards vesting?

 

A6:8                     Yes, you will receive credit for vesting if you worked for the
following company/companies:

Wasatch Product Development Inc.

First-Vision Media Group

 

Q6:9                    Will I become 100% vested if I retire, become disabled, die, or if
the Plan terminates?

 

A6:9                     You will become fully vested automatically if you attain Normal
Retirement Age or Early Retirement Age, if you terminate employment due to
Disability, if you die, or if the Plan is terminated.

 

Disability
is defined as an illness or injury of a potentially permanent nature that is
expected to last for a continuous period at least 12 months (or is expected to
result in death) which prevents a Participant from engaging in any occupation
for which the Participant may reasonably fill based on training, education or
experience. A physician who has been chosen by or is satisfactory to the
Employer must certify disability.

 

Q6:10             What happens to the part of my account that is not vested after I terminate
employment?

 

A6:10              The portion of your account balance that is
not vested when you terminate employment is called a “forfeiture” and remains
in the Plan for the benefit  of the other
Plan Participants.

 

Q6:11             When is the nonvested part of my account balance forfeited if I
terminate employment?

 

A6:11              The nonvested part of your account will be
forfeited at the end of the Plan Year during which the former Participant
received full payment of his or her vested benefit.

 

Q6:12             What will happen to the nonvested part of my account balance if I do
not take my vested balance when I terminate employment?

 

A6:12              If you do not receive a distribution of your
vested account balance, the nonvested portion of your account balance cannot be
forfeited until the end of the Plan Year in which your fifth consecutive one (1) year
Break in Service occurs.  [See Article III,
Q&A 3(10)-(12) for the definition of a Break in Service].

 

Q6:13             What is a “buy back”?

 

A6:13              If you terminate employment and receive a
distribution of the vested portion of your account balance, the nonvested part
of your account will be forfeited as described above. If you are rehired, you
may repay the amount you received if you are re-employed before you have five (5) consecutive
one (1) year Breaks in Service.  If
you repay the amount you received, the nonvested part of your account that was
forfeited will be restored to your account. This is called a “buy back”. If you
want to buy back, you must complete repayment within five (5) years after
your date of reemployment, or if earlier, before five (5) consecutive one (1) year
Breaks in Service have occurred.

 

Q6:14             If I do not repay the amount I received, what will happen to my
nonvested account balance?

 

A6:14              The nonvested portion of your account balance
will be forfeited permanently.

 

Q6:15             If I am rehired, will my Service before I terminated employment
count for vesting?

 

A6:15              All
periods of Service with your Employer will count toward vesting Service for
future employer contributions, even if you do not decide to “buy back”.

 

Example: At the time you quit, you
had a total account balance of $10,000. If you were only 40% vested and you
decided to take a distribution of your vested balance, you would receive 40% of
$10,000, or $4,000. The nonvested part of your account balance ($6,000) was
forfeited at that time. Three (3) years later you are rehired.  Since you were rehired within five (5) years,
you may repay the $4,000 distribution.

 

11

 

If
you buy back, you must repay the $4,000 within five (5) years of being
rehired, and the nonvested portion of your account ($6,000) will be restored to
your Plan Account. After the nonvested portion of your account is restored, you
will be vested in 40% of the “old” and “new” portions of your account
balance.  Your vested percentage will
then increase based upon your Years of Service after your reemployment.  Your prior Service will also be included in
determining the vested percentage of Employer Contributions that you receive
after you are rehired regardless of whether you buy back.

 

Q6:16             What will happen if I am not
vested in any part of my Employer Contribution account balance before I
terminate employment and I have a Break in Service, but I am reemployed before I have five (5) consecutive
one (1) year Breaks in Service?

 

A6:16              If you were not vested in any of the Employer
Contributions in your account, your old account balance will be restored
automatically and you will continue to vest in both your “old” and “new”
account balances based on all periods of Service you have with your Employer.

 

Q6:17             What will happen if I am not
vested in any of the Employer Contributions in my account, and I leave work and
am reemployed after I have five (5) consecutive
one (1) year Breaks in- Service?

 

A6:17              You will forfeit your old account balance,
but all periods of Service with your Employer will count towards the vesting of
your “new” account balance.

 

ARTICLE VII

TOP-HEAVY RULES

 

Q7:1                    What is a “Top-Heavy” Plan?

 

A7:1                     A Top-Heavy Plan is one in which the total
account balances of all Key Employees are more than 60% of the total account
balances of all Employees.

 

Q7:2                    Who is a “Key Employee”?

 

A7:2                     A Key Employee is an Employee who, at any
time during the Plan Year or the prior Plan Year is (or was) of the following
individuals:

 

a.                                       an officer earning more than $130,000, as
adjusted;

b.                                      a more than 5% owner (or a family member of a
more than 5% owner) of the Employer; or

c.                                       a 1% or more owner (or a family member of a
1% or more owner) earning more than $150,000.

 

All
other Employees are Non-Key Employees. Your Plan Administrator will notify you
if you are a Key Employee.

 

Q7:3                    What are the requirements if a Plan is top-heavy?

 

A7:3                     If the Plan becomes top-heavy, a top-heavy
minimum contribution must be made to the Plan and a special vesting schedule may
apply.

 

Q7:4                    What is a “top-heavy minimum contribution”?

 

A7:4                     If the Plan becomes top-heavy and you
qualify, you will receive a contribution equal to 3% of your salary or, if less,
equal to the highest actual percentage of contribution allocated to any Key
Employee.  Your Employer may make the
minimum contribution to another qualified retirement plan, if your Employer
maintains more than one plan. If this applies, see your Plan Administrator for
more details.

 

12

 

Q7:5                    What is the special vesting schedule when the Plan is top-heavy?

 

A7:5                     If the Plan becomes top-heavy, the Plan
Administrator will inform you of the change in the vesting schedule. Such schedule will
remain in effect even if the Plan later stops being top-heavy.

 

Q7:6                    Who is entitled to receive the top-heavy minimum contribution?

 

A7:6                     If the Plan is top-heavy, you will receive a
top-heavy minimum contribution if you have been credited with at least one Hour
of Service during the Plan Year and you are employed on the last day of the
Plan Year.

 

ARTICLE VIII

RETIREMENT
BENEFITS

 

Q8:1                    When may I receive retirement benefits from the Plan?

 

A8:1                     Generally, the full value of your account
balance is payable at Normal Retirement Age. The Normal Retirement Age under
this Plan is the attainment of age 65.

 

Q8:2                    What happens if I work beyond the Normal Retirement Age?

 

A8:2                     If you work beyond your Normal Retirement
Age, and have not terminated employment, you may request to start receiving benefit
payments. Whether or not you work past Normal Retirement Age, you will continue
to fully participate in the Plan.

 

Q8:3                    Does this Plan provide for Early Retirement?

 

A8:3                     You may retire early upon reaching the later
of age 55 and completing 6 Years of Service.

 

Q8:4                    If I stop working for my Employer before Normal Retirement Age, when
can I receive my benefits?

 

A8:4                     You may  request to receive your benefits at any
time after you terminate employment due to reasons other than death,
disability, or retirement.

 

Q8:5                    May I take out my retirement benefits if I do not terminate
employment?

 

A8:5                     Generally, this Plan may not pay retirement
benefits to you earlier than when you terminate employment or attain Normal
Retirement Age.

 

Q8:6                    Does the Plan permit a distribution while I am still employed?

 

A8:6                     Yes. In-Service distributions shall be made
under the following conditions:

 

If
you are fully vested, you may withdraw all or any part of your account balance
after having attained age 59 1/2.

 

Q8:7                    What is a “hardship” withdrawal?

 

A8:7                     A hardship withdrawal is a distribution taken
to satisfy an immediate and heavy financial need that cannot be satisfied from
other financial resources.

 

Q8:8                    Does this Plan permit hardship withdrawals?

 

A8:8                     Hardship withdrawals are permitted from this
Plan. Your Employer must approve
hardship withdrawal applications in a nondiscriminatory manner. The amount of a
hardship withdrawal is limited to that amount

 

13

 

needed
to meet the need (including the amount necessary to pay any taxes that you will
have to pay). You show you are qualified for a hardship distribution by
completing a written application form that you will get from the Plan
Administrator. If you are married, your spouse must consent in writing to the
withdrawal unless the plan is a safe-harbor plan. (A safe harbor plan is a plan
with lump sum as the normal form of distribution. While you continue to be
eligible to receive Employer Contributions to the Plan, your right to make
Elective Deferrals will be suspended for 6 months.  Amounts withdrawn for hardship may not be
redeposited to the Plan, and they may not be rolled over to either an IRA or
another qualified retirement plan. Generally, you must first take any other
available distribution and, if applicable, borrow the maximum loan amount
allowed under this and all other plans of your Employer. However, if a Plan
loan would increase the amount of your financial need, you do not have to take
the loan. For example, if you need money to purchase your principal residence,
and a Plan loan would disqualify you from obtaining other necessary financing,
you do not have to take the loan.

 

You
may apply for a hardship withdrawal from this Plan for the following reasons
only:

 

a.                                       to purchase your principal residence (but not
to pay mortgage payments),

b.                                      to pay tuition and related post-secondary
educational expenses for you, your Spouse, or your dependents for the next 12
months,

c.                                       to pay medical care expenses of the type that
are otherwise deductible for income tax purposes that are not covered by
insurance and are incurred or will be incurred by you, your Spouse or your
dependents, or

d.                                      to prevent your eviction from or foreclosure
on your principal residence.

 

You may withdraw the
following types of contributions:

 

Elective
Deferrals (but not earnings unless they were credited to you for a Plan Year
ending before July 1, 1989.

 

Rollover
Contributions.

 

Income
taxes must be paid on a hardship withdrawal. 
If you are under age 591/2, you may also have to
pay a 10% penalty tax on the withdrawal. Hardship withdrawals of vested
Employer contributions are not subject to the mandatory 20% income tax
withholding because they are no longer eligible to be rolled over to an IRA or
another qualified retirement plan.

 

Q8:9                    Do I have to take a distribution of my benefits by a certain time?

 

A8:9                     If you are not a more than 5% owner of your
Employer, you may delay starting payment of your retirement benefits until you
terminate employment, even if you are older than age 701/2.
At that time, you must take at least a minimum amount called a “required
minimum distribution”.  If you are a more
than 5% owner, you must take a distribution upon attainment of age 701/2,
even if you are still working.

 

The
required minimum distribution rules were changed for 2003 and later years,
although the new rules could have been used for distributions made in
2002.  During your lifetime,
distributions generally will be based on the “Uniform Life Expectancy Table”
published by the IRS. Upon your death, if you have named a Beneficiary or
Beneficiaries (see the discussion in Article IX) their life expectancy
generally will be used to determine their payments. The rules result in
smaller annual payments being required. These rules will be explained to
you and your Beneficiary(ies), by the Plan Administrator once you reach age 701/2,
or earlier if you should die.

 

14

 

ARTICLE IX

BENEFICIARY DESIGNATION AND DEATH BENEFITS

 

Q9:1                    If I die, who gets my benefits from this Plan?

 

A9:1                     You may choose the person or persons (the
Beneficiary or Beneficiaries) who will receive benefits under the Plan if you
die.  You must name your Beneficiary (or
Beneficiaries) on a form provided by the Plan Administrator, and return the
form to the Plan Administrator.  Subject
to certain written consent requirements if you are married, you may change your
Beneficiary at any time.

 

Q9:2                    If I am married, does my spouse have to be my Beneficiary?

 

A9:2                     If you are married, your spouse is your
Beneficiary automatically.  If you wish
to name someone else, you must complete a beneficiary designation form and get
your spouse’s written consent. Your spouse’s signature must be witnessed by a
notary public or by the Plan Administrator.

 

Q9:3                    How are benefits paid to my Beneficiary?

 

A9:3                     If you die before your retirement benefits
begin, the full value of your account is payable to your Beneficiary in a lump
sum or, if the plan permits, in installment payments over any period that does
not exceed the life expectancy of your Beneficiary. If your Plan Administrator
so notifies you, your Beneficiary may also be paid in the form of an annuity.

 

Q9:4                    How does the annuity pay-out of a death benefit work?

 

A9:4                     This Plan does not pay benefits in the form
of an annuity.

 

Q9:5                    What will happen if I die after my benefit payments have started?

 

A9:5                     If you die after you have reached age 701/2
and started payment of your benefits in installment payments, your Beneficiary
(or Beneficiaries) will continue to receive payments based on the appropriate
life expectancy values.

 

Q9:6                    What is the normal, or automatic, form of payment under this Plan?

 

A9:6                     The normal form of payment is a lump
sum.  When benefits become due, you or
your representative should apply to the Employer requesting payment of your
account.

 

Q9:7                    Are there any other forms of payment available under the Plan?

 

A9:7                     If you do not want the Plan’s normal form of
benefit payment, you may request to receive your benefit in any of the
following optional forms indicated below:

 

Forms
of Payment:

 

1.                                       lump sum

 

Payments
may not be made over any period that exceeds the life expectancy of you and
your Beneficiary.

 

Q9:8                    Do I need my spouse’s consent in order to choose an optional form of
payment?

 

A9:8                     You may need the written consent of your
spouse to select an optional form of payment. See your Plan Administrator for
details.

 

15

 

Rollover of Payment

 

Q9:9                    May I roll my benefits into an IRA or into another plan instead of
having them paid directly to me?

 

A9:9                     If your distribution is an “eligible rollover
distribution,” you may either have them paid directly to you or you may have
them directly rolled over to
another qualified plan or your IRA. The Plan Administrator will provide
information to you about eligible rollover distributions shortly before your
distribution is to occur. Required Minimum Distributions may never be rolled
over.

 

Q9:10             What taxes or penalties will I have to pay if I do not rollover my
benefit directly to an IRA or another Qualified Plan?

 

A9:10              If you do not
have your benefits, which are “eligible rollover distributions”, directly
rolled over, the Plan Administrator will withhold 20% of the distribution for
payment of Federal taxes.  If you are
under age 591/2, the benefit payment may also be subject
to a 10% early distribution penalty. 
There is no tax withholding for any penalty tax that may be due when you
file your Federal income tax return for the year in which you receive a pre-age
591/2 distribution

 

Q9:11             If I decide to have the benefits paid to me directly, may I roll
them over to a Qualified Plan or IRA later?

 

A9:11              You may do a rollover yourself, if you
complete the rollover within sixty (60) days of when you received the
distribution. Check with your personal tax advisor to make sure that your
distribution is an eligible rollover distribution. However, the 20% of your
payment that was withheld by your Employer will be taxable unless you also
deposit an equivalent amount into a Qualified Plan or an IRA.

 

Example: You have a vested
account balance of $100,000 at the time you terminate employment. If you elect
a direct rollover, the entire $100,000 will be transferred to the trustee of
another qualified retirement plan or the IRA. The entire amount is reported as
a rollover on your tax return, and you will not pay taxes.  If you receive the benefit directly, 20% of
the distribution ($20,000) will be automatically withheld from your payment.
You will receive only $80,000. If within sixty (60) days you decide to roll
over the entire $100,000 to an IRA, you will need to deposit $20,000 of your
own money to make up the difference.  If
you do this, the $20,000 withheld may be refunded to you when you file your
taxes. However, if you do not, only $80,000 will be rolled over and the
remaining $20,000 will be taxable income. If you are under 591/2
when you receive your payment, you will also be subject to the 10% early
distribution penalty unless you qualify for an exception such as death or
disability.

 

Q9:12             What distribution payments cannot be rolled over?

 

A9:12              Certain benefit payments are not eligible for
rollover and therefore will also not be subject to the 20% mandatory
withholding.  The payments include:

 

a.                                       annuities paid over your lifetime,

b.                                      installments payments for a period of at
least ten (10) years,

c.                                       minimum required distributions at age 701/2,

d.                                      hardship withdrawals, and

e.                                       (depending on the plan you are rolling over
to) Voluntary or Required After-tax Contributions.

 

Time of
Payment

 

Q9:13             If I terminate employment with my Employer because I retire, become
disabled, or die, when will my payments start?

 

A9:13              Your payments will start as soon as
administratively feasible following the date on which a distribution is
requested by you or is payable.

 

16

 

Q9:14             If I terminate employment for a reason other than death, Disability,
or retirement, when will my payments start?

 

A9:14              Your
payments will start as soon as administratively feasible following the date on
which a distribution is requested by you or is payable.

 

Q9:15             What is a Qualified Domestic Relations Order (QDRO)?

 

A9:15              A QDRO is a court order issued under state
domestic relations law relating to divorce, legal separation, custody or
support proceedings. The QDRO recognizes the right of someone other than you
(the Alternate Payee) to receive all or a portion of your Plan benefits. You will
be notified if a QDRO relating to your Plan benefits is received by the Plan.

 

Participants
and Beneficiaries under the Plan may obtain from the Plan Administrator without
charge a copy of the Plan’s QDRO procedures.

 

Q9:16             If the Plan receives a QDRO, when will the benefit be distributed to
the person(s) listed in the QDRO?

 

A9:16              The
benefit established by a QDRO may be distributed to the Alternate Payee as of
the date the QDRO is determined to be qualified.

 

Q9:17             How long can I keep my vested account balance in the Plan without
having to make a withdrawal?

 

A9:17              You may delay payment of your benefit if your
account balance is more than $5,000 at the time you terminate Service. If your
vested account balance is less than $5,000, you may be “cashed out”.  Generally, you do not have to take a
withdrawal until your “Required Beginning Date”, even if you have terminated
employment.  If you have terminated
employment, your “Required Beginning Date” is the April 1st of
the calendar year following the calendar year in which you attain age 701/2.  See your Plan Administrator for more details.

 

Rollover
Contributions will be excluded in the value of your nonforfeitable account
balance for purposes of the Plan’s involuntary cash-out provisions.

 

ARTICLE X

INVESTMENTS

 

Q10:1             How will my contributions to the Plan be invested?

 

A10:1              Your contributions to the Plan may be
invested in any security or other form of property which is considered suitable
for a retirement plan.  Such investments
can include, but are not limited to, common and preferred stocks, put and call
options which are traded on an exchange, bonds, money market instruments,
mutual funds, savings accounts, certificates of deposit, Treasury bills or
insurance contracts. (Note: If you are permitted to direct your own investments
you may be limited as to your investment choices.)

 

Q10:2             If Employees are permitted to direct their own investments, what
types of contributions will I be allowed to invest?

 

A10:2              Employee investment direction is permitted
and you may direct the investment of All Contributions.

 

Q10:3             What are my investment choices and how do I change my investment
selection?

 

A10:3              You may invest in the alternatives made
available by the Employer under the Plan.

 

17

 

A
description of what investment vehicles are available to you and the procedures
for making investment selections and changes in investment selections may be
obtained from the Plan Administrator.

 

Certain
restrictions have been placed on USANA stock as an investment option relating
to maximum contributions and reallocations or transfers.  Contributions to USANA common stock are
limited to 25 percent of total participant contributions to the Plan. Reallocations
or transfers into USANA common stock are not permitted.

 

The
Plan permits Participants the right to reallocate their contributions to a
different fund and to transfer contributions into and out of investments
provided under the Plan, subject to possible restrictions on these types of transactions.
The Plan Administrator may decline to implement investment directives where it
in its sole discretion deems it appropriate (for example, directive may be
declined for excessive trading, market timing, or for any other legitimate
reason where the Plan Administrator, in fulfilling its fiduciary role under
ERISA, believes that it would be imprudent to implement the directive).  The Plan Administrator has the power to adopt
such rules and procedures to govern all Participant elections and directions
under the terms of the Plan.

 

If
the Plan invests or permits investments in mutual funds, Plan Participants are
advised to consult the mutual fund prospectus, which may contain restrictions
on the frequent trading of shares in response to short-term market
fluctuations, a practice known as “market timing.”  The prospectus may provide that the manager
of the fund reserves the right to refuse purchase orders and fund exchanges if
the fund manager believes the transaction would have a disruptive effect on the
portfolio of the mutual fund.

 

Q10:4             Is investment in insurance permitted?

 

A10:4              Insurance is not a permitted investment
option.

 

Q10:5             May I take a loan from the Plan?

 

A10:5              Participant loans are permitted.  The Plan Administrator will advise you of the
procedures to obtain a loan. Loans must be approved by the Plan Administrator
and are subject to a strict set of rules established by law. The rules are
covered in the loan documentation, which is available from the Plan
Administrator.

 

ARTICLE XI

ADMINISTRATION
OF THE PLAN

 

Q11:1             Who administers the Plan?

 

A11:1              The Plan Administrator and the Trustee.

 

Q11:2             Who is the Plan Administrator and what are his or her duties?

 

A11:2              Your Employer has established the Plan and
has overall control and authority to administer the Plan.  The Plan Administrator’s duties include:

 

a.                                       appointment of professional advisors needed
to administer the plan, including, among others, an accountant, attorney,
actuary or administrator;

b.                                      instruction to the Trustee(s) regarding payments
from the Plan Trust Fund;

c.                                       communication with Employees about
participation and benefits under the Plan, including claims procedures and
domestic relations orders;

d.                                      preparation and filing of any returns and
reports with the Internal Revenue Service, Department of Labor or any other governmental
agency, as required;

e.                                       review and approval of any financial reports,
investment reviews, or other reports prepared by any party appointed by the
Employer;

 

18

 

f.                                         establishment of a funding policy and
investment objectives that are consistent with the purposes of the Pan and the
Employee Retirement Income Security Act of 1974 (ERISA); and

g.                                      resolution of any question of Plan
interpretation.  The Plan Administrator’s
interpretation and application of the Plan is final.

 

Q11:3             What are the duties of the Trustee?

 

A11:3              The Trustee will be responsible for the
administration of investments held in the Plan Trust Fund. These duties will
include:

 

a.                                       receipt of contributions under the terms of
the Plan;

b.                                      investment of Plan assets, unless investment
responsibility is delegated to another party;

c.                                       distribution of monies from the fund in
accordance with written instructions received from the Plan Administrator;

d.                                      maintenance of accounts and records of the
financial transactions of the Plan Trust Fund;

e.                                       preparation of an annual report of the Plan
Trust Fund that shows the financial transactions for the Plan Year.

 

Q11:4             Are there any other circumstances which may result in the
disqualification, ineligibility, or denial, loss, forfeiture, suspension,
offset, reduction, or recovery of any benefits that I as a Participant or my
Beneficiary might otherwise reasonably expect the Plan to provide?

 

A11:4              Yes,
there may be circumstances which may result in the disqualification,
ineligibility, or denial, loss, forfeiture, suspension, offset, reduction or
recovery of any benefits that you or your Beneficiary(or Beneficiaries) might
otherwise reasonably expect the Plan to provide.   These events are listed below:

 

•                  You leave the employ of the Employer prior to
become one hundred percent (100%) vested in contributions made to the Plan on
your behalf.

•                  A payment from your Plan account was required
under the terms of a Qualified Domestic Relations Order.

•                  You do not meet the requirements of the Plan
to receive a contribution.

•                  You failed to repay a Participant loan on a
timely basis and an offset of that amount occurred in your account.

 

No
benefits under this Plan may be assigned or transferred by you or any other
person entitled to benefits.  If any
person attempts to assign, sell or otherwise transfer any benefits under the
Plan, the Plan Administrator may terminate that person’s interest in the
benefit and dispose of that interest for the benefit of such person or the
dependents of such person as it sees fit. 
However, your benefit under the Plan may be subject to the terms of
certain divorce, child support or property agreements involving a Spouse,
former Spouse or dependent.

 

If
any person to whom a benefit is payable, is in the opinion of the Plan
Administrator, unable to care for his or her affairs, than any payment due such
person may be paid to a relative or other person deemed by the Plan
Administrator to be the proper recipient on behalf of the person otherwise
entitled to payments.

 

Q11:5             Is there any circumstance where a fee or charge may be imposed  in order to receive a benefit under the Plan?

 

A11:5              There
may be investment fund transaction fees or expenses (e.g., commissions,
front-end or back-end loads) associated with the investments that will affect
your account.  Prior to making any
investment, you should obtain and read all available information concerning
that particular investment, including financial statements, prospectuses, if
applicable, reports or other offering documents, where available.

 

Depending on the transaction there may be a payment of fees involved as
a condition to receipt of benefits under the Plan.  If applicable, the Plan Administrator will
provide you with written information at the time of the transaction.

 

19

 

The costs of administering the Plan are shared between you and your
Employer.  In addition to any loan set-up
charge and any self-directed brokerage account charges (if applicable under the
Plan), other administrative costs may be deducted from your contributions or
accounts. These additional costs may include, but are not limited to,
distribution charges for benefits that are distributed to you and fees
associated with the qualification of a domestic relations order. The Plan
Administrator will notify you of any costs that are charged to your account in
the operation of the Plan.

 

ARTICLE XII

AMENDMENT
AND TERMINATION

 

Q12:1             May my Employer amend the Plan?

 

A12:1              Only the Employer (or Employers) sponsoring
this Plan has the authority to amend this Plan. 
Any amendment, including the restatement of an existing Plan, may not
decrease a Participant’s Vested Account Balance except to the extent permitted
under Internal Revenue Code Section 412(c)(8), and may not reduce or
eliminate a Code Section 411(d)(6) protected benefit (except as
provided under the Internal Revenue Code or any Regulation issued thereunder)
determined immediately prior to the date of the adoption, or if later the
effective date, of any amendment to the Plan. 
The Plan Sponsor may in its discretion amend the Plan to eliminate
benefits on a prospective basis, but has no legal authority to eliminate
benefits which a Participant has already earned.

 

Q12:2             May my Employer terminate the Plan?

 

A12:2              Your Employer expects to continue the Plan
indefinitely; however, in the unlikely event the Plan is terminated or if there
is a complete discontinuance of contributions under a plan maintained by the
Employer, all amounts credited to your account shall vest and become 100%
vested, regardless of the Plan’s current vesting schedule.  Vesting means that you have earned the right
to a portion of or the full amount of your account.  Once you have “vested” a portion or the full
amount of your account, that amount cannot be forfeited or taken away from you.

 

In
the event of the termination of the Plan, the Plan Administrator shall direct
the distribution of accounts to or for the exclusive benefit of you and your
Beneficiaries.  Such distribution shall
be made directly to you or, at your direction, may be transferred directly to
another Eligible Retirement Plan or individual retirement account as selected
by you and/or your Beneficiary.  If you
do not respond the communication sent regarding the distribution of your assets
in a timely manner, under the law the Plan Administrator has the right to “cash
out” any Participant who does not respond to the communications regarding the
Plan termination.  That means a check
will be sent to you at your last known address less any applicable withholding,
representing your balance in the Plan. 
Except as permitted by Internal Revenue Service regulations, the
termination of the Plan shall not result in any reduction of protected
benefits.

 

Q12:3             What is a partial termination of the Plan?

 

A12:3              A partial termination may occur if either a
Plan amendment or severance from Service excludes a group of employees who were
previously covered by this Plan.  Whether
a partial termination has occurred will depend on the facts and circumstances of each case.  If a partial termination occurs, only those
Participants who cease participation due to the partial termination will become
100% vested. The Plan Administrator will advise you if a partial termination
occurs and how such partial termination affects you as a Participant.

 

Q12:4             May my rights and benefits under the Plan be assigned or
transferred?

 

A12:4              Your rights and benefits under this Plan may
not be assigned, sold, transferred or pledged by you or reached by your
creditors or anyone else.  For example,
you cannot agree to pledge a part of your benefit under the Plan as security
for a bank loan. However, there is an exception for a Qualified Domestic

 

20

 

Relations
Order (QDRO) or if you are a Plan fiduciary and you are found guilty of a
violation of the law involving the assets of this Plan.

 

Q12:5             Are there Plan events other than full or partial Plan termination
that may require 100% vesting?

 

A12:5              If your Employer completely discontinues
making contributions to the Plan, 100% vesting may be required.

 

ARTICLE XIII

LEGAL PROVISIONS AND RIGHTS OF PLAN
PARTICIPANTS

 

Benefit
Claims Procedure:  If you feel that you are entitled to a
benefit under the Plan, mail or deliver your written claim to the Plan
Administrator.  The Plan Administrator
will notify you, your Beneficiary, or authorized representative of the action
taken within sixty (60) days of receipt of the claim.    If
you believe that you are being improperly denies a benefit in full or in part,
the Employer must give you a written explanation of the reason for the denial.

 

If the Employer denies your
claim, you may, within sixty (60) days after receiving the denial, submit a
written request asking the Employer to review your claim for benefits.  Documents or records in support of your
appeal should accompany any such request. 
You, your Beneficiary, or your authorized representative may review
pertinent documents and submit issues and comments in writing.

 

Your Rights
As A Plan Participant:  As a Participant in this Plan, you are
entitled to certain rights and protections under the Employee Retirement Income
Security Act of 1974 (ERISA).  The
Pension Benefit Guaranty Corporation does not insure your benefits under this
Plan because the law does not require plan termination insurance for this type
of Plan.  ERISA provides that all Plan
participants shall be entitled to the items described below.

 

Receive
Information About Your Plan And Benefits: 
Examine, without charge, at the Plan Administrator’s office and at other
specified locations such as work-sites and union halls, all documents governing
the Plan, including insurance contracts and collective bargaining agreements
(if applicable), and a copy of the latest annual report (Form 5500 Series)
filed by the Plan with the U.S. Department of Labor and available at the Public
Disclosure Room of the Employee Benefits Security Administration.

 

You are also entitled to
receive a summary of the Plan’s annual financial report.  The Plan Administrator is required by law to
furnish each Participant with a copy of this summary annual report.

 

Additionally, you may obtain
a statement telling you whether you have a right to receive a pension at Normal
Retirement Age and if so, what your benefits would be at Normal Retirement Age
under the Plan if you stop working now. 
If you do not have a right to a pension, the statement will tell you how
many more years you have to work to get a right to a pension.  This statement must be requested in writing
and is not required to be given more than once every twelve (12) months.  The Plan must provide the statement free of
charge.

 

Prudent
Actions by Plan Fiduciaries:  In addition to creating rights for Plan
Participants, ERISA imposes duties upon the people who are responsible for the
operation of the employee benefit Plan. 
The people who operate your Plan, called “fiduciaries” of the Plan, have
a duty to do so prudently and in the interest of you and other Plan
Participants and Beneficiaries.  No one,
including your Employer, your union, or any other person, may fire you or
otherwise discriminate against you in any way to prevent you from obtaining a
(pension, welfare) benefit or exercising your rights under ERISA.

 

Benefit
Claims Procedure For Non-Disability Claims:  Benefits normally will be paid to
Participants and Beneficiaries without the necessity of formal claims.  You or your beneficiary(ies), however, may
make a request for any Plan benefits to which you believe you may be
entitled.  Any such request must be made
in writing, and it should be made to the Plan Administrator.  The following claims appeal procedure applies
to claims [other than claims for benefits due to disability, which are governed
by the section entitled “Benefits Claims Procedure (For Disability Claims)”]
that are filed on or after January 1, 2002.

 

21

 

Your request for Plan
benefits will be considered a claim for Plan benefits, and it will be subject
to a full and fair review.  If your claim
for such benefits under the Plan is wholly or partially denied, the Plan
Administrator shall furnish you or your beneficiary (referred to below as a “claimant”)
or your authorized representative with a written or electronic notice of the
denial within a reasonable period of time (generally, ninety (90) days after
the Plan Administrator receives the claim or 180 days, if the Plan
Administrator determines that special circumstances require an extension of
time for processing the claim and furnishes written notice of the extension to
the claimant or his authorized representative before the initial 90-day period
ends), which sets forth, in an understandable manner, the following
information:

 

•                  The specific reason(s) for the denial of the
claim;

•                  Reference to the specific Plan provision on
which the denial is based;

•                  A description of any additional material or
information necessary for the claimant to perfect the claim and an explanation
of why that material or information is necessary; and

•                  A description of the Plan’s review procedures
and the time limits applicable to those procedures, including a statement of
the claimant’s right to bring a civil action under ERISA Section 502(a) following
a denial on review.

 

The Plan Administrator’s
written extension notice must indicate the special circumstances requiring an
extension of time for processing the claim and the date by which the Plan
Administrator expects to render its decision on the claim.

 

The claimant or his
authorized representative may appeal the Plan Administrator’s decision denying
the claim within 60 days after the claimant or his authorized representative
receives the Plan Administrator’s notice denying the claim.  The claimant or his authorized representative
may submit to the Plan Administrator written comments, documents, records and
other information relating to the claim. 
The claimant or his authorized representative shall be provided, upon
request and free of charge, reasonable access to, and copies of, all documents,
records and other information relevant to the claim.  For these purposes, a document, record or
other information is “relevant” to the claim if it:

 

•                  was relied upon the Plan Administrator in
making its decision on the claim,

•                  was submitted, considered or generated in the
course of the Plan Administrator’s making its decision on the claim without
regard to whether the Plan Administrator relied upon it in making its decision,
or

•                  complies with administrative processes and
safeguards which are designed to ensure and to verify that decisions on claims
are made in accordance with governing Plan documents, whose provisions are
applied consistently with respect to similarly-situated claimants.

 

The Plan Administrator’s
review of the claim and of its denial of the claim shall take into account all
comments, documents, records and other information submitted by the claimant or
his authorized representative relating to the claim, without regard to whether
these materials were submitted or considered by the Plan Administrator in its
initial decision on the claim.

 

The Plan Administrator’s
decision on the appeal of a denied claim shall be made within a reasonable
period of time (generally sixty (60) days after the Plan Administrator receives
the claim or one hundred and twenty (120) days if the Plan Administrator
determines that special circumstances require an extension of time for
processing the claim and furnishes written notice of the extension to the
claimant or his authorized representative before the initial sixty (60) day
period ends indicating the special circumstances requiring extension of time
and the date by which the Plan Administrator expects to render its decision on
the claim).  The Plan Administrator will
furnish the claimant or his authorized representative with written or
electronic notice of its decision on appeal. 
In the case of a decision on appeal upholding the Plan Administrator’s
initial denial of the claim, the Plan Administrator’s notice of its decision on
appeal shall set forth, in an understandable manner, the following information:

 

•                  The specific reason(s) for the decision on
appeal;

•                  Reference to the specific Plan provision on
which the decision on appeal is based;

 

22

 

•                  A statement that the claimant is entitled to
receive, upon request and free of charge, reasonable access to, and copies of,
all documents, records and other information relevant to the claim for
benefits; and

•                  A statement describing any voluntary appeal
procedures (including voluntary arbitration or any other form of dispute
resolution) offered by the Plan and the claimant’s right to obtain information
sufficient to enable you or your beneficiary to make an informed judgment about
whether to submit a benefit dispute to the voluntary level of appeal, and a
statement of the claimant’s right to bring an action under ERISA Section 502(a).

 

Benefit
Claims Procedure For Disability Claims:  The following claims appeal procedure applies
to claims due to disability that are filed on or after January 1, 2002.

 

If your claim for such
benefits under the Plan is wholly or partially denied, the Plan Administrator
shall furnish you or your beneficiary (hereinafter referred to below as a “claimant”)
or your authorized representative with written or electronic notice of the
denial, within a reasonable period of time, generally not to exceed (forty
five) 45 days after the Plan Administrator receives the claim.  This 45-day period may be extended for up to
(thirty) 30 days, if the Plan Administrator both determines that such an
extension is necessary due to matters beyond its control and notifies the
claimant, prior to the expiration of the initial (forty five) 45 day period, of
the circumstances requiring the extension of time and the date by which the
Plan Administrator expects to render a decision.  If, prior to the end of the first thirty (30)
day extension period, the Plan Administrator determines that, due to matters
beyond its control, it cannot render a decision within that extension period,
the period for making the determination may be extended for up to an additional
(thirty) 30 days, provided that the Plan Administrator notifies the claimant,
prior to the expiration of the first 30-day extension period, of the
circumstances requiring the extension and the date by which the Plan
Administrator expects to render a decision. 
In the case of any extension, the notice of extension shall specifically
explain the standards on which entitlement to a benefit is based, the
unresolved issues that prevent a decision on the claim, and the additional
information needed to resolve those issues, and the claimant will be given at
least (forty five) 45 days within which to provide the specified information.

 

Any written or electronic
notice of the denial of benefits shall set forth, in an understandable manner,
the following information:

 

•                  The specific reason(s) for the denial of the
claim;

•                  Reference to the specific Plan provisions on
which the denial is based;

•                  A description of any additional material or
information necessary for the claimant to perfect the claim and an explanation
of why such material or information is necessary;

•                  A description of the Plan’s review procedures
and the time limits applicable to such procedures, including a statement of the
claimant’s right to bring a civil action under Section 502(a) of the
Act following a denial on review; and

•                  If the Plan Administrator relied upon an
internal rule, guideline, protocol, or other similar criterion in making the
adverse determination, the notice shall set forth the specific rule, guideline,
protocol, or other similar criterion or a statement that such a rule,
guideline, protocol, or other similar criterion was relied upon in making the
adverse determination and that a copy of such rule, guideline, protocol, or
other criterion will be provided free of charge to the claimant upon
request.  If the adverse benefit
determination is based on a medical judgment, the notice also shall set forth
an explanation of the scientific or clinical judgment for the determination,
applying the Plan’s terms to the claimant’s medical circumstances, or a
statement that such explanation will be provided free of charge upon request.

 

The
Plan Administrator’s written extension notice must indicate the special
circumstances requiring an extension of time for processing the claim, and the
date by which the Plan Administrator expects to render its decision on the
claim.

 

The
claimant or his authorized representative may appeal the Plan Administrator’s
decision denying his claim within one hundred and eighty (180) days after the
claimant or his authorized representative receives the Plan Administrator’s
notice denying the claim.  The claimant
or his authorized representative may submit to the Plan Administrator written
comments, documents, records, and other information relating to the claim.  The claimant or

 

23

 

his authorized
representative shall be provided, upon request and free of charge, reasonable
access to, and copies of all documents, records, and other information relevant
to the claim.  For these purposes, a
document, record or other information is “relevant” to the claim if it:

 

•                  was relied upon by the Plan Administrator in
making its decision on the claim;

•                  was submitted, considered, or generated in
the course of the Plan Administrator’s making its decision on the claim,
without regard to whether the Plan Administrator relied upon such document,
record or other information in making its decision, or

•                  complies with administrative processes and
safeguards which are designed to ensure and to verify that decisions on claims
are made in accordance with governing Plan documents, whose provisions are
applied consistently with respect to similarly situated claimants.

 

The Plan Administrator’s
review of the claimant’s claim and of the Plan Administrator’s denial of such
claim shall take into account all comments, documents, records, and other
information submitted by the claimant or his authorized representative relating
to the claim, without regard to whether these materials were submitted or
considered by the Plan Administrator in its initial decision on the claim.  The review of the Plan Administrator’s
initial adverse benefit determination shall not afford deference to such
determination and shall be conducted by a named fiduciary of the Plan who is
neither the individual who made the initial adverse benefit determination nor a
subordinate of that individual.  In
deciding an appeal of any initial adverse benefit determination that is based,
in whole or in part, on a medical judgment, the named fiduciary shall consult
with a health care professional who has appropriate training and experience in
the field of medicine involved in the medical judgment.  The medical or vocational experts whose
advise was obtained on behalf of the Plan Administrator in connection with its
adverse benefit determination shall be identified to the claimant or his authorized
representative, regardless of whether the Plan Administrator relied upon the
advice in making the benefit determination. 
The health care professional whom the named fiduciary consults in making
his review of the Plan Administrator’s initial adverse benefit determination
shall be an individual who is neither an individual whom the Plan Administrator
consulted in connection with the adverse benefit determination that is the
subject of the appeal, nor the subordinate of any such individual.

 

The named fiduciary’s
decision on the appeal of a denied claim shall be made within a reasonable
period of time (not to exceed 45 days after receipt of the claimant’s request
for review by the Plan, unless the named fiduciary determines that special
circumstances (such as a need to hold a hearing) require an extension of time
for processing the claim and furnishes written notice of the extension to the
claimant or his authorized representative before the initial 45-day
period.  In no event shall such extension
exceed a period of 45 days from the end of the initial period ends.  The extension notice shall indicate the
special circumstances requiring an extension of time and the date by which the
named fiduciary expects to render the determination on review.)  The named fiduciary will furnish the claimant
or his authorized representative with written or electronic notice of his
decision on appeal.  In the case of a
decision on appeal upholding the Plan Administrator’s initial denial of the
claim, the named fiduciary’s notice of its decision on appeal shall set forth,
in an understandable manner, the following information:

 

•                  The specific reason(s) for the decision on
appeal;

•                  Reference to the specific Plan provisions on
which the decision on appeal is based;

•                  A statement that the claimant is entitled to
receive, upon request and free of charge, reasonable access to, and copies of,
all documents, records and other information relevant to the claimant’s claim
for benefits;

•                  A statement describing any voluntary appeal
procedures (including voluntary arbitration or any other form of dispute
resolution) offered by the Plan and the claimant’s right to obtain information
sufficient to enable the claimant to make an informed judgment about whether to
submit a benefit dispute to the voluntary level of appeal, and a statement of
the claimant’s right to bring an action under ERISA Section 502(a);

•                  If the named fiduciary relied upon an
internal rule, guideline, protocol, or other similar criterion in making the
adverse determination, the notice shall set forth the specific rule, guideline,
protocol, or other similar criterion or a statement that such rule, guideline,
protocol or other similar criterion was relied upon in making the adverse
determination and that a copy of such rule, guideline, protocol, or other criterion
will be provided free of charge to the claimant upon request;

•                  If the adverse benefit determination is based
on a medical judgment, the notice also shall set forth and explanation of the
scientific or clinical judgment for the determination, applying the Plan’s
terms to the

 

24

 

claimant’s
medical circumstances, or a statement that such explanation will be provided
free of charge upon request; and

•                  In addition, the notice shall include the
following statement: “You and your Plan may have other voluntary alternatives
dispute resolution of terms, such as mediation. 
On way to find out what may be available is to contact your local U.S.
Department of Labor office and your State insurance regulatory agency.

 

Enforce
Your Rights:  If your claim for a pension benefit is denied
or ignored, in whole or in part, you have a right to know why this was done, to
obtain copies of documents relating to the decision without charge, and to
appeal any denial, all within certain time schedules.

 

Under ERISA, there are steps
you can take to enforce the above rights. 
For instance, if you request a copy of Plan documents or the latest
annual report from the Plan and do not receive them within thirty (30) days,
you may file suit in a Federal court.  In
such a case, the court may require the Plan Administrator to provide the
materials and pay you up to $110 a day until you receive the materials, unless
the materials were not sent because of reasons beyond the control of the Plan Administrator.  If you have a claim for benefits which is
denied or ignored, in whole or in part, you may file suit in a state or Federal
court.  In addition, if you disagree with
the Plan’s decision or lack thereof concerning the qualified status of a domestic
relations order or a medial child support order, you may file suit in Federal
court.  If it should happen that Plan
fiduciaries misuse the Plan’s money, or if you are discriminated against for
asserting your rights, you may seek assistance from the U.S. Department of
Labor, or you may file suit in a Federal court. 
The court will decide who should pay court costs and legal fees.  If you are successful, the court may order
the person you have sued to pay these costs and fees.  If you lose, the court may order you to pay
these costs and fees, for example, if it finds your claim is frivolous.

 

Assistance
With Your Questions:  If you have any questions about your Plan,
you should contact the Plan Administrator. 
If you have any questions about this statement or about your rights
under ERISA, or if you need assistance in obtaining documents from the Plan
Administrator, you should contact the nearest office of the Employee Benefits
Security Administration of the U.S. Department of Labor listed in your telephone
directory or the Division of Technical Assistance and Inquiries, Employee
Benefits Security Administration, U.S. Department of Labor, 200 Constitution
Avenue, N.W., Washington, DC 20210.  You
may also obtain certain publications about your rights and responsibilities
under ERISA by calling the publications hotline of the Employee Benefits
Security Administration.

 

If more than one Employer
maintains this Plan, you can obtain a complete list of all such Employers by
making a written request to the Plan Administrator.

 

This
booklet is not the Plan document, but only a Summary Plan Description of its
principal provisions and not every limitation or detail of the Plan is
included.  Every attempt has been made to
provide concise and accurate information. 
However, if there is a discrepancy between this booklet and the official
Plan document, the Plan document shall control.

 

25

 

SUMMARY OF MATERIAL MODIFICATIONS

 

TO THE

 

USANA Health Sciences 401(k) Plan

 

SUMMARY PLAN DESCRIPTION

 

The Summary Plan Description
of the USANA Health Sciences 401(k) Plan has been modified to add the following
regarding involuntary cash outs:

 

The question, “May I roll benefits into an IRA or another plan
instead of having them paid directly to me?” has been changed as
follows:

 

If
your distribution is an “eligible rollover distribution,” you may either have
them paid directly to you or you may have them directly rolled over to another
qualified plan or your IRA.

 

The
Plan has been amended to require a distribution of your Vested Account Balance
in the Plan after you terminate employment, if your balance is not more than
$5,000. Your prior consent to this distribution is not required. This is commonly referred to as an “involuntary
cash out” provision.

 

If
you do not provide us with written instructions indicating how you want this
distribution to be handled, the law requires that the Plan directly transfer
your Vested Account Balance to an individual retirement plan of a designated
trustee or issuer. This is commonly referred to as an “automatic rollover”
provision.

 

The
automatic rollover provisions of this section will apply to all amounts of
$5,000 or less.

 

At
the appropriate time after you terminate employment, we will send you a distribution
form for you to make an election as to how you would like your benefits
paid.   If you do not complete and return
this form to us within a reasonable period of time, the Plan Administrator will
proceed with an automatic rollover, as applicable, to the individual retirement
plan.  The Plan Administrator will send
all information relating to any IRA established on your behalf to your last
known mailing address.  Should you not
wish this automatic rollover to occur, it is imperative that you respond to all
communications from the Plan Administrator regarding the disposition of your
Plan Account.

 

The question “How long can I keep my vested account balance in the
Plan without having to make a withdrawal?” is changed to read as
follows:

 

Generally,
you do not have to take a withdrawal until your “Required Beginning Date”, even
if you have terminated employment.  If
you have terminated employment, your “Required Beginning Date” is the April 1st
of the calendar year following the calendar year in which you attain age 701/2.  Also see the above question, “May I roll my benefits into an IRA or into
another plan instead of having them paid directly to me?” and your
Plan Administrator for more details.

 

1

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