[LOGO- USANA, INC.]
3838 West Parkway Blvd.
Salt Lake City, Utah 84120-6336
(801) 954-7100
1997 USANA, Inc. Distributor Stock Purchase Plan
1. Nature and Purpose of the Plan. The purpose of this 1997 USANA,
Inc. Distributor Stock Purchase Plan (the "Plan") is to provide an additional
incentive to participating Distributors (as hereinafter defined) of USANA,
Inc., a Utah corporation ("USANA" or the "Company") by enabling them to
acquire a stock ownership interest in the Company, to assist the Company to
attract and retain persons of ability and commitment as independent
distributors of USANA, and to entice and encourage such persons to exert their
best efforts on behalf of USANA.
2. Definitions. As used in this document, the following capitalized
terms will have the meaning indicated:
(A) "Board" will mean the board of directors of the Company.
(B) "Broker-Dealer" will mean the broker-dealer, bank, trust company or
other entity appointed by the Committee to service the Plan and act as its
independent agent as provided hereinafter.
(C) "Committee" will mean the Compensation/Stock Option Committee of the
Board, or, in the absence of any such Committee, the Executive Committee of
the Board, which administers the Plan.
(D) "Common Stock" will mean the Company's Common Stock, no par value.
(E) "Distributor" will mean an individual, partnership, corporation or
other legal entity whose completed "Distributor Application and Agreement" has
been received and accepted by the Company and which continues in full force
and effect.
(F) "Distributor Application and Agreement" will mean the official,
approved USANA Distributor Application and Agreement form in effect and use by
the Company from time to time in the jurisdiction in which a Distributor
resides.
(G) "Participant" will mean any Distributor who is participating in the
Plan.
(H) "Plan" will mean this USANA, Inc. 1997 Distributor Stock Purchase
Plan, as the same may from time to time be amended.
(I) "Servicing Agreement" will mean the "Distributor Stock Purchase Plan
Servicing Agreement" entered into by the Company with the Broker-Dealer and
any successor Broker-Dealer.
(J) "Shares" will mean shares of USANA, Inc. Common Stock, no par value,
which may be purchased from time to time under this Plan.
3. Eligibility and Participation. Participation in the Plan will be
subject to the following conditions:
(A) Each active and effective Distributor in good standing with minimum
weekly commission compensation of $200.00 may participate in the Plan,
provided, however, that contributions to the Plan may only be made by a
Participant if the terms and conditions of the Plan and the Enrollment Forms
are complied with, as provided below.
(B) Participation in the Plan is entirely voluntary. Each Distributor
electing to participate in the Plan must evidence that election (and any
changes thereof, including without limitation any election to cancel
participation in the Plan as provided in Section 6, below) on such forms as
shall be supplied by the Company, including without limitation the USANA
Distributor Stock Purchase Plan Enrollment Form (collectively the "Enrollment
Forms") and in accordance with such administrative rules and procedures as may
be established by the Committee.
(C) Participation in the Plan by an eligible Distributor will be effective
as of the first day of the calendar month following receipt and approval of
the completed Enrollment Forms.
4. Contributions to Plan; Accounts. Contributions to the Plan will
be made solely by the Participants. The Company will make no contributions to
the Plan. All contributions will be subject to the following:
(A) Participants' Elected Deduction Contributions
(i) Each Participant whose weekly gross commission (the "Commission
Amount") is $200 (U.S. two hundred dollars) or more may elect to have an
amount (the "Elected Deduction") not to exceed 10 percent thereof, but in any
event not less than $20 (U.S. twenty dollars) and not in excess of $500 (U.S.
five hundred dollars) withheld by USANA by deduction from the Participant's
weekly Commission check and contributed to the Participant's Account (as
defined below) in lieu of otherwise receiving such amount of compensation.
The Company may adjust as necessary the amount of a Participant's Elected
Deduction Contributions to comply with the aforementioned contribution
parameters, resulting in an "Eligible Deduction Amount." The Commission
Amount is a gross amount, before deduction of the Elected Deductions, and may,
as provided in the Distributor Application and Agreement and in USANA's
Policies and Procedures, be subject to offsets and further reductions,
including without limitation, outstanding product payments and expenses.
Therefore, no Elected Deduction will be deducted from the Commission check
during any week that the net amount payable to Distributor after application
of all such offsets and reductions is less than the Eligible Deduction Amount,
computed as provided above, notwithstanding the Commission Amount earned by
the Participant may actually exceed such threshold. Commissions may not be
"rolled" or aggregated with future Commission Amount payments for purposes of
making contributions or determining eligibility of a Distributor under the
Plan.
(ii) The election under (i), above, (and any modifications or changes
thereof) will be made on the Enrollment Forms. Termination of an election to
make Elected Deductions must be made in writing to the Company, in accordance
with the rules and procedures as shall be established by the Company.
(B) Participants' Direct Contributions. A Participant, at the sole
election of the Participant and provided the Participant is otherwise entitled
to participate in the Plan in all other respects hereunder, may make direct
contributions to an Account for the purchase of Shares, subject to the terms
and conditions of the Account Agreement.
(C) Accounts.
(i) Upon enrollment and upon acceptance and approval by the
Broker-Dealer, a separate brokerage account will be opened with the
Broker-Dealer to reflect each Participant's interest under the Plan (each, an
"Account"). Each Participant's Eligible Deduction Amount will be forwarded
weekly by the Company to the Broker-Dealer. The Broker-Dealer (or the
Company, as the case may be) may commingle such contributions with the
contributions of all other Participants eligible to participate during such
period (a "Commission File") to purchase Shares and fractional interests in
Shares as provided by and subject to the terms and conditions of the Servicing
Agreement.
(ii) Each Account established for a Participant may be used by that
Participant only for transactions in the Company's securities as provided by
this Plan and by the Enrollment Forms and the Servicing Agreement. The
relationship between the Broker-Dealer and a Participant with respect to the
Account and any successor account or program and transactions therein will be
governed by a separate written agreement of terms and conditions between the
Broker-Dealer and the Participant (an "Account Agreement"), which constitutes
part of the Enrollment Forms. Each Account Agreement, unless it is previously
terminated, will survive the termination of the Servicing Agreement and each
Account Agreement is subject to amendment and modification in accordance with
its terms without notice to or consent from the Company.
(iii) All Shares will be held in each Account in the name of the
Broker-Dealer or its nominee, unless otherwise directed by the Participant for
whom the Account is maintained, in which case, however, the Participant may be
subject to a fee payable to the Broker-Dealer for registration and delivery of
the Shares involved.
(iv) All cash dividends paid on Shares received in an Account will be
reinvested by the Broker-Dealer in additional Shares to the extent possible.
(v) The Broker-Dealer is responsible to provide each Participant with
a report at least quarterly of Shares acquired for the Participant's Account
under the Plan. No other purchases may be made through the Account while the
Participant is participating in the Plan and no securities other than Shares
may be held in such Account during such period.
(vi) The Broker-Dealer will transmit to each Participant all proxy
statements, annual reports, meeting notices and other shareholder
communications received from the Company with respect to Shares acquired
pursuant to and held under the Plan in the Participant's Account. Proxies
will be voted with respect to full Shares held in a Participant's Account in
accordance with a Participant's instructions duly delivered to the
Broker-Dealer.
5. Purchases of Shares. All purchases of Shares will be subject to
the following terms as well as the terms and conditions of the Servicing
Agreement and policies and procedures that may be adopted by the Committee.
(A) Purchases of Shares will be made on behalf of Participants' Accounts
within 30 days of receipt of a Commission File for the Participants included
in such file. The Broker-Dealer has full discretion as to all matters
relating to purchases of Shares, including without limitation, determining the
number of Shares, if any, to be purchased on any day or at any time of that
day, the prices paid for such Shares, the markets on which such purchases are
made, and the persons (including other brokers and dealers) from or through
whom such purchases are made.
(B) No fees, commissions or other charges in connection with the purchase
of Shares under the Plan will be paid by or otherwise charged to Participants
or their Accounts.
(C) If purchases of Shares are made over a period of time, the Shares so
purchased will be allocated to each Account based on the average price paid
for all Shares purchased in connection with the processing of the Commission
File to which such purchases apply.
(D) Unless there is on file with the Securities and Exchange Commission of
the United States an effective registration statement covering the Shares
which are newly issued shares of Common Stock or shares of Common Stock held
for resale by an affiliate of the Company, all purchases under the Plan will
be limited to open market purchases. Purchases made on behalf of Participants
who are not residents of the United States will be made only in compliance
with such federal, state or provincial or other governmental rule or
regulation applicable to such purchases.
(E) Subject to the foregoing, Shares purchased by the Broker-Dealer on the
open market may be made on any stock exchange in the U.S. where the Common
Stock is traded, in the over-the-counter market, or by negotiated transactions
on such terms as the Broker-Dealer may reasonably determine at the time of
purchase. Any Shares purchased by the Broker-Dealer from the Company or from
an affiliate, if permitted hereunder, will be made in accordance with
applicable requirements. Neither the Company nor any Participant will have
any authority or power to direct the time or the price at which Shares are
purchased, or the selection of the broker or dealer through or from whom
purchases are made.
6. Sales of Shares. Participants may sell some or all of the whole
or fractional Shares in their Account by following the procedures contained in
their Account Agreement. Each Participant is solely responsible for the
expenses, including without limitation any commissions, administrative fees,
taxes or other costs incurred or payable in connection with the transfer, sale
or other disposition of Shares from the Participant's Account.
7. Termination of Participation under the Plan.
(A) Voluntary Cancellation; Other Termination. A Participant's
participation in the Plan shall immediately terminate if and when:
(i) the Participant voluntarily elects to cancel its participation in
the Plan (such cancellation to be effective as of the date of receipt by the
Company of a properly executed Termination Form evidencing such termination);
(ii) the Participant ceases to be eligible to participate in the Plan
by reason of the termination of the Participant as a Distributor, the
Participant's death (if an individual), dissolution or liquidation, or
otherwise; or
(iii) the Participant has made no Distributor Contributions under the
Plan for a continuous period of twelve months.
Upon any termination of participation under this subsection (other than
by reason of a Participant's death), any funds contributed by the Participant
that remain in the Participant's Account shall be paid to the Participant,
without payment of interest thereon, and any Shares credited to the
Participant's Account shall be delivered to the Participant, provided,
however, that Participant may convert its Account to a standard broker account
with Broker-Dealer, subject to the terms of the Account Agreement and provide
for other disposition of the Shares thereunder. Upon termination of
participation by reason of a Participant's death, the Participant's Account
shall be disbursed in accordance with the terms and conditions of the Account
Agreement.
(B) Participation Following Termination. A Participant whose
participation in the Plan is terminated may, after a period of six (6) months
from the date participation is terminated, elect to again participate in the
Plan so long as the Participant continues to be a Distributor in good
standing, is otherwise eligible to do so, and completes and delivers to the
Company appropriate enrollment materials.
8. No Assignment of Plan Interests. No rights of a Participant under
this Plan, including without limitation such Participant's rights in and to
its Account, are assignable by the Participant by operation of law or
otherwise. Any attempt by a Participant or other person to assign, alienate,
or create a security interest in or otherwise encumber, any of the
Participant's interest under the Plan, or to subject the same to attachment,
execution, garnishment or other legal or equitable process shall be void.
9. Responsibility of the Company and Broker-Dealer. Neither the
Company nor the Broker-Dealer will be responsible or liable for any act done
in good faith or for any good faith act or omission to act, including, without
limitation, the failure to terminate a Participant's Account upon such
Participant's death prior to receipt of notice in writing of such death, or
any act or omission to act with respect to the prices at which Shares are
purchased or sold for a Participant's Account or the times at which such
purchases or sales are made.
10. Expenses; Reports.
(A) All expenses of administering the Plan, including the maintenance of
Participant's Accounts, will be paid or otherwise borne by USANA as expressly
provided by this Plan and the Servicing Agreement. The Company's incurrence
and payment of such expenses shall not be deemed to be a contribution by the
Company to any Participant or to any Participant's Account.
(B) Each Participant will be furnished reports by the Broker-Dealer on a
quarterly basis as provided elsewhere in this Plan and under the terms of the
Account Agreement.
(C) Each Participant is solely responsible for the payment of any and all
expenses, including without limitation any commissions or taxes, payable in
connection with the transfer or sale or other disposition of any Shares from
its Account and other expenses under the Account Agreement.
11. Administration. The Plan will be administered by the Committee,
which shall have all of the powers of the Board with respect to the Plan. Any
member of the Committee may be removed at any time, with or without cause, by
resolution of the Board and any vacancy occurring on the Committee at any time
or from time to time may be filled by appointment by the Board. Any and all
decisions or determination of the Committee shall be made either (i) by a
majority vote of the members of the Committee at a meeting or (ii) without a
meeting by the unanimous written approval of the members of the Committee.
The Committee may, from time to time, adopt rules and regulations for carrying
out the purposes of the Plan. The determinations and interpretation and
construction of any provision of the Plan by the Committee shall be final and
conclusive. Notwithstanding the foregoing, the Committee may appoint a bank,
trust company, registered broker-dealer or other appropriate entity to serve
as Broker-Dealer of the Plan or agent for the Committee. The Broker-Dealer's
duties shall include establishing and maintaining a separate Account for each
Participant, purchasing Shares on behalf of Participants' Accounts,
maintaining records of each Participant's Account and furnishing to
Participant's the reports required by the Plan. The Committee shall direct
the Broker-Dealer with regard to its duties under the Plan, but shall do so
through a written Servicing Agreement. The Committee may employ accountants,
legal counsel and other agents to assist in the performance of its duties
under the Plan. All reasonable expenses of the Committee in connection with
its administration of the Plan shall be borne by the Company as provided in
this Plan.
12. Transfer of Shares to Participants. As a condition to the
purchase of any Shares for the benefit of, or the transfer of any Shares to a
Participant pursuant to the Plan, the Committee may require such agreements or
undertakings, if any, as the Committee may deem necessary or advisable to
assure compliance with any law or regulation, including, but not limited to a
representation, warranty and/or agreement to be bound by any legends that are,
in the opinion of the Committee, necessary or appropriate to comply with the
provisions of any securities law deemed by the Committee to be applicable to
the Participant's acquisition of such Shares and are endorsed upon the
certificates therefore.
13. Effective Date; Termination; Modification.
(A) The effective date of the Plan is June 1, 1997. The Plan will
terminate on May 31, 2007, the tenth (10th) anniversary of the effective
date thereof, unless earlier terminated in accordance with the following
paragraph. No Shares may be purchased pursuant to the Plan subsequent to
its termination.
(B) The Committee may at any time and from time to time amend, modify,
suspend or terminate the Plan at its sole and exclusive discretion.
(C) Notice of any amendment, modification, suspension, or termination of
the Plan will be sent to all Participants.
(D) Promptly after any termination of the Plan, each Participant will
receive any funds contributed by the Participant that remain in, and the
Shares credited to, Participant's Account as of the date of termination
without interest thereon and subject to the additional terms and conditions
contained in the Account Agreement and the Servicing Agreement.
14. Interpretation.
(A) If any provision of the Plan should be held invalid or illegal for any
reason, such determination shall not affect the remaining provisions hereof,
but instead the Plan shall be construed and enforced as if such provision had
never been included in the Plan.
(B) This Plan shall be governed by the laws of the State of Utah, United
States of America.
(C) Headings contained in this Plan are for convenience only and shall in
no manner be construed as part of the Plan. Any reference to the singular or
plural number, or to the masculine, feminine or neuter gender, shall be a
reference to such other number or gender, as the case may be, as is
appropriate.
ADOPTED BY RESOLUTION OF THE BOARD OF DIRECTORS, EFFECTIVE THE 1st DAY OF
JUNE 1997.
______________________________________
Corporate Secretary