SECOND
AMENDED AND RESTATED
NU SKIN ENTERPRISES, INC.
1996 STOCK INCENTIVE PLAN
TABLE OF CONTENTS
PAGE
1. PURPOSE ........................................................... 1
2. DEFINITIONS ....................................................... 1
3. ADMINISTRATION .................................................... 4
4. SHARES SUBJECT TO THE PLAN ........................................ 5
5. PARTICIPANTS ...................................................... 5
6. AWARDS UNDER THE PLAN ............................................. 5
7. STOCK OPTIONS ..................................................... 5
8. STOCK APPRECIATION RIGHTS ......................................... 8
9. CONTINGENT STOCK AWARDS ...........................................10
10. RESTRICTED STOCK AWARDS ...........................................11
11. GENERAL RESTRICTIONS ..............................................12
12. RIGHTS OF A SHAREHOLDER ...........................................12
13. RIGHTS TO TERMINATE EMPLOYMENT ....................................13
14. WITHHOLDING OF TAXES ..............................................13
15. NON-ASSIGNABILITY .................................................13
16. NON-UNIFORM DETERMINATIONS ........................................13
17. ADJUSTMENTS .......................................................13
18. AMENDMENT .........................................................14
19. EFFECT ON OTHER PLAN ..............................................15
20. DURATION OF PLAN ..................................................15
21. FUNDING OF THE PLAN ...............................................15
22. PLAN STATUS .......................................................15
23. GOVERNING LAW .....................................................16
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SECOND
AMENDED AND RESTATED
NU SKIN ENTERPRISES, INC.
1996 STOCK INCENTIVE PLAN
1. PURPOSE
1.1 The purpose of the Second Amended and Restated Nu Skin
Enterprises, Inc. 1996 Stock Incentive Plan (the "Plan") is to provide
incentives to specified individuals whose performance, contributions and skills
add to the value of Nu Skin Enterprises, Inc. (the "Company") and its affiliated
companies. The Company also believes that the Plan will facilitate attracting,
retaining and motivating employees, directors and consultants of high caliber
and potential. This Second Amended and Restated Nu Skin Enterprises, Inc. 1996
Stock Incentive Plan amends and restates the Amended and Restated Nu Skin Asia
Pacific, Inc. 1996 Stock Incentive Plan dated December 9, 1996 and includes
amendments previously adopted by the Board of Directors on February 11, 1999.
1.2 Plan participants shall include those officers, directors,
employees and consultants of the Company and subsidiaries who, in the opinion of
the Committee, are making or are in a position to make substantial contributions
to the Company by their ability and efforts.
2. DEFINITIONS
2.1 For purposes of the Plan, the following terms shall have the
following meanings, unless the context clearly indicates to the contrary.
(a) "Award" means a grant of Restricted Stock, Contingent Stock, an
Option, or an SAR.
(b) "Award Agreement" means the agreement approved by the Committee
evidencing an Award to a Grantee.
(c) "Board" means the Company's Board of Directors.
(d) "Code" means the Internal Revenue Code of 1986, as amended.
(e) "Committee" means the members of the Board until the Compensation
Committee of the Board is appointed, and after the Compensation
Committee is appointed means the members of the Compensation
Committee of the Board, who are "outside directors" (within the
meaning of Section 162(m) of the Code and any regulations or
rulings promulgated thereunder) to the extent required for
purposes of compliance with such
Code Section, and "disinterested persons" (within the meaning of
Rule 16b-3 of the Exchange Act), to the extent required for
compliance with such Rule.
(f) "Company" means Nu Skin Enterprises, Inc.
(g) "Consultant" means any individual who provides services to the
Company as an independent contractor and not as an Employee or
Director.
(h) "Contingent Stock" means stock which will be issued to a Grantee
upon the attainment of certain conditions pursuant to Section 9
hereof.
(i) "Director(s)" means a member or the members of the Board.
(j) "Employee" means any individual who is an employee of the
Company, a Parent or Subsidiary.
(k) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(l) "Fair Market Value" of a Share means on, or with respect to, any
given date:
(i) If the Shares are listed on a national stock exchange, the
closing market price of such Shares as reported on the
composite tape for issues listed on such exchange on such
date or, if no trade shall have been reported for such date,
on the next preceding date on which there were trades
reported; provided, that if no such quotation shall have
been made within the ten business days preceding such date,
Fair Market Value shall be determined under (iii) below.
(ii) If the Shares are not listed on a national stock exchange
but are traded on the over-the-counter market, the mean
between the closing dealer bid and asked price of such
Shares as reported by the National Association of Securities
Dealers through their Automated Quotation System for such
date, or if no quotations shall have been made on such date,
on the next preceding date on which there were quotations;
provided, that, if such quotations shall have been made
within the ten business days preceding such date, Fair
Market Value shall be determined under (iii) below.
(iii)If (i) and (ii) do not apply, the Fair Market Value of a
Share shall be determined without regard to any control
premium or discount for lack of control (except as otherwise
required by Section 422 of the Code) by the Committee in
good faith consistent with the valuation of the Company as
provided by a third party appraiser for
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other corporate purposes before adjustments or any discounts
applied due to lack of marketability. The Committee may rely
upon the most recent valuation (if it is based on a date
within 3 months of the valuation date) and there shall be no
requirement to cause a more recent valuation to be made
(except as may be required for purposes of Section 422 of
the Code). If no such valuation exists, the Committee may
engage a third party appraiser to prepare the valuation.
(m) "Grantee" means an Employee, Director of the Company, a Parent or
any Subsidiary or Consultant who has received an Award.
(n) "Incentive Stock Option" shall have the same meaning as given to
the term by Section 422 of the Code and any regulations or
rulings promulgated thereunder.
(o) "Non-qualified Stock Option" means any Option granted pursuant to
Section 7 which when awarded by the Committee was not intended to
be, or does not qualify as, an Incentive Stock Option.
(p) "Option" means the right to purchase from the Company a stated
number of Shares at a specified Option Price. The Option may be
granted to an Employee, Director or Consultant subject to the
terms of this Plan, and such other conditions and restrictions as
the Committee deems appropriate. Each Option shall be designated
by the Committee to be either an Incentive Stock Option or a
Non-qualified Stock Option. Only Employees may be granted
Incentive Stock Options.
(q) "Option Agreement" means the Award Agreement pursuant to which an
Option is granted under Section 7.
(r) "Option Price" means the purchase price per Share under an
Option, as described in Section 7.
(s) "Parent" means any corporation (other than the Company) in an
unbroken chain of corporations ending with the Company if, at the
time of the granting of an Option, each of the corporations
(other than the Company) owns stock possessing 50% or more of the
total combined voting power of all classes of stock in one of the
other corporations in such chain within the meaning of Section
424(e) of the Code and any regulations or rulings promulgated
thereunder.
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(t) "Plan" means Amended and Restated Nu Skin Asia Pacific, Inc. 1996
Stock Incentive Plan, as evidenced herein and as amended from
time to time.
(u) "Restricted Stock" means Shares issued, subject to restrictions,
to a Grantee pursuant to Section 10.
(v) "SAR" means a stock appreciation right which provides a Grantee a
potential right to a payment based on the appreciation in the
fair market value of a Share granted pursuant to Section 8.
(w) "SEC" means the U.S. Securities and Exchange Commission.
(x) "Section 16 Person" means a person who is an "insider" within the
meaning of Section 16(b) of the Exchange Act with respect to
transactions involving equity securities of the Company,
including the Shares.
(y) "Share" means one share of the Company's Class A common stock,
$.001 par value.
(z) "Subsidiary" means any corporation in an unbroken chain of
corporations beginning with the Company if, at the time of the
granting of the Option, each of the corporations (other than the
last corporation) in the unbroken chain owns stock possessing 50%
or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain, within the
meaning of Section 424(f) of the Code and any regulations or
rulings promulgated thereunder.
3.ADMINISTRATION
3.1 The Plan shall be administered by the Committee. The Committee
shall have full and final authority in its discretion to:
(a) conclusively interpret the provisions of the Plan and to decide
all questions of fact arising in its application;
(b) determine the individuals to whom Awards shall be made under the
Plan;
(c) determine the type of Award to be made to such individuals and
the amount, size and terms of each Award;
(d) determine the time when Awards will be granted to such
individuals; and
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(e) make all other determinations necessary or advisable for the
administration of the Plan.
4. SHARES SUBJECT TO THE PLAN
4.1 The Shares subject to Awards under the Plan shall not exceed in the
aggregate 8,000,000 Shares.
4.2 Shares may be authorized and unissued Shares or treasury Shares.
4.3 Except as provided herein, any Shares subject to an Award, which Award
for any reason expires or is terminated unexercised as to such Shares
shall again be available under the Plan.
5. PARTICIPANTS
5.1 Awards permitted pursuant to this Plan which are Incentive Stock
Options may only be made to Employees (including Directors who are
also Employees). All other Awards permitted pursuant to the Plan may
only be made to Employees, Directors or Consultants.
6. AWARDS UNDER THE PLAN
6.1 Awards under the Plan may be in the form of Options (both
Non-qualified Stock Options and Incentive Stock Options), Contingent
Stock, Restricted Stock, and SARs and any combination of the above.
6.2 The maximum number of Awards that may be awarded to any one Employee,
Director or Consultant during the life of the Plan shall be 10% of the
total Shares reserved for issuance under the Plan.
7. STOCK OPTIONS
7.1 The Committee in its sole discretion shall designate whether an Option
is to be an Incentive Stock Option or a Non-qualified Stock Option.
The Committee may grant both Incentive Stock Options and Non-qualified
Stock Options to the same individual. However, where both an Incentive
Stock Option and a Non-qualified Stock Option are awarded at one time,
such Options shall be deemed to have been awarded in separate grants,
shall be clearly identified, and in no event will the exercise of one
such Option affect the right to exercise the other such Option except
to the extent so provided in the Award Agreement as determined by the
Committee.
7.2 Options granted pursuant to the Plan shall be authorized by the
Committee under terms and conditions approved by the Committee, not
inconsistent with this Plan or Exchange Act Rule 16b-3(c), and shall
be evidenced by Option Agreements in such form as the Committee shall
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from time to time approve, which Option Agreements shall contain or
shall be subject to the following terms and conditions, whether or not
such terms and conditions are specifically included therein:
(a) The Option Price of an Incentive Stock Option shall not be less
than 100% of the Fair Market Value of a Share on the day the
Option is granted, as determined by the Committee. The Option
Price of a Non-qualified Stock Option shall be such price as
determined by the Committee in its discretion, which price may be
more or less than the Fair Market Value of a Share on the day the
Option is granted. Notwithstanding the immediately preceding
sentence, the Award Agreement for a Non-qualified Stock Option at
the Committee's sole discretion, may, but need not, provide for a
reduction of the Option Price by dividends paid on a Share during
the period the Option is outstanding and unexercised, but in no
event shall the Option Price be less than the par value of such
Share.
(b) Each Option Agreement shall state the period or periods of time,
as determined by the Committee, within which the Option may be
exercised by the Grantee, in whole or in part, provided such
period shall not commence earlier than six months after the date
of the grant of the Option and not later than ten years after the
date of the grant of the Option. The Committee shall have the
power to permit in its discretion an acceleration of previously
determined exercise terms, subject to the terms of this Plan, to
the extent permitted by Exchange Act Rule 16b-3(c), and under
such circumstances and upon such terms and conditions as deemed
appropriate and which are not inconsistent with Exchange Act Rule
16b-3(c)(1).
(c) An Option may be exercised, in whole or in part, by giving
written notice of exercise to the Company specifying the number
of Shares to be purchased. Shares purchased upon exercise of an
Option shall be paid for in full at the time of purchase in the
form of cash unless the Committee has adopted rules authorizing a
different method of exercise as set forth below that have not
been rescinded and that apply to the Options being exercised. The
Committee shall have the authority, as it may determine to be
appropriate from time to time, to adopt rules governing the
exercise of Options that may provide for payment to be made (i)
in Shares already owned by the Grantee having a Fair Market Value
equal to the purchase price, (ii) by delivery (on a form
prescribed by the Committee) of an irrevocable direction to a
securities broker approved by the Committee to sell Shares and to
deliver all or part of the sales proceeds to the Company in
payment of all or part of the purchase price and any withholding
taxes, (iii) by the delivery (on a form prescribed by the
Committee) of an irrevocable direction to pledge Shares to a
securities broker or lender
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approved by the Committee as security for a loan and to deliver
all or part of the loan proceeds to the Company in payment of all
or part of the purchase price and any withholding taxes, or (iv)
such other method or form of consideration as may be determined
to be appropriate by the Committee consistent with applicable
laws, rules and regulations, including a true cashless or net
exercise procedure. The adoption of such rules by the Committee
shall not provide any Grantee with any vested right to exercise
Options pursuant to the methods or form of consideration set
forth in such rules. The Committee may rescind any rule governing
the exercise of Options at any time, and upon such rescission, no
Grantee shall have any further rights to exercise Options
pursuant to the methods or form of consideration set forth in
such rule. In addition, the Committee shall have the right to
provide in any rule adopted pursuant hereto that (i) such rule
shall only apply to designated Options or grants of Options, (ii)
such rule shall apply to all Options generally, or (iii) prior
Committee approval, which may be granted or withheld in its sole
discretion, shall be required with respect to such exercise
method or form of consideration. The Committee shall have no
obligation to make the rules applicable to all Grantees or to all
Options. The Committee shall have no obligation to adopt rules
providing for any of the above methods of exercise or forms of
consideration.
(d) Notwithstanding anything herein to the contrary, the aggregate
Fair Market Value (determined as of the time the Option is
granted) of Incentive Stock Options for any Employee which may
become first exercisable in any calendar year shall not exceed
$100,000.
(e) Notwithstanding anything herein to the contrary, no Incentive
Stock Option shall be granted to any individual if, at the time
the Option is to be granted, the individual owns stock possessing
more than 10% of the total combined voting power of all classes
of stock of the Company unless at the time such Option is granted
the Option Price is at least 110% of the Fair Market Value of the
stock subject to the Option and such Option by its terms is not
exercisable after the expiration of five years from the date such
Option is granted.
(f) Each Option Agreement for an Incentive Stock Option shall contain
such other terms, conditions and provisions as the Committee may
determine to be necessary or desirable in order to qualify such
Option as an incentive stock option within the meaning of Section
422 of the Code, or any amendment thereof, substitute therefor,
or regulation thereunder. Subject to the limitations of Section
18, and without limiting any provisions hereof,
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the Committee shall have the power without further approval to
amend the terms of any Option for Grantees.
7.3 If any Option is not granted, exercised, or held pursuant to the
provisions of the Plan or Section 422 of the Code applicable to an Incentive
Stock Option, it will be considered to be a Non-qualified Stock Option to the
extent that any or all of the grant is in conflict with such provisions.
7.4 An Option may be terminated (subject to any shorter periods set
forth in an individual Option Agreement by the Committee, in its sole
discretion) as follows:
(a) During the period of continuous employment or service as a
Consultant with the Company or Subsidiary, an Option will be
terminated only if it has been fully exercised or it has expired
by its terms.
(b) In the event of termination of employment as an Employee or
service as a Director or Consultant for any reason, the Option
will terminate upon the earlier of (i) the full exercise of the
Option, (ii) the expiration of the Option by its terms, or (iii)
except as provided in Section 7.4(c), no more than one year
(three months for Incentive Stock Options) following the date of
employment termination (or termination of service as a Director
or Consultant) for Non-qualified Stock Options. For purposes of
the Plan, a leave of absence approved by the Company shall not be
deemed to be termination of employment except with respect to an
Incentive Stock Option as required to comply with Section 422 of
the Code and the regulations issued thereunder.
(c) If a Grantee's employment as an Employee, or service as a
Director or Consultant, terminates by reason of death or
disability prior to the termination of an Option, such Option may
be exercised to the extent that the Grantee shall have been
entitled to exercise it at the time of death or disability, as
the case may be, by the Grantee, the estate of the Grantee or the
person or persons to whom the Option may have been transferred by
will or by the laws of descent and distribution for the period
set forth in the Option Agreement, but no more than three years
following the date of such death or disability, provided,
however, with respect to an Incentive Stock Option, such right
must be exercised, if at all, within one year after the date of
such death or disability.
8 STOCK APPRECIATION RIGHTS
8.1 SARs shall be evidenced by Award Agreements for SARs in such form,
and not inconsistent with this Plan or Exchange Act Rule 16b-3(c)(1), as the
Committee shall approve from
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time to time, which Award Agreements shall contain in substance the following
terms and conditions as discussed in Sections 8.2 through 8.4.
8.2 An SAR may be, but is not required to be, granted in connection
with an Option. An SAR shall entitle the Grantee, subject to such terms and
conditions determined by the Committee, to receive, upon surrender of the SAR,
all or a portion of the excess of (i) the Fair Market Value of a specified
number of Shares at the time of the surrender, as determined by the Committee,
over (ii) 100% of the Fair Market Value of such Shares at the time the SAR was
granted less any dividends paid on such Shares while the SAR was outstanding but
unexercised.
8.3 SARs shall be granted for a period of not less than one year nor
more than ten years, and shall be exercisable in whole or in part, at such time
or times and subject to such other terms and conditions as shall be prescribed
by the Committee at the time of grant, subject to the following:
(a) No SAR shall be exercisable, in whole or in part, during the one
year period starting with the date of grant; and
(b) SARs will be exercisable only during a Grantee's employment by,
or service as a Consultant for, the Company or a Subsidiary,
except that in the discretion of the Committee an SAR may be made
exercisable for up to three months after the Grantee's
employment, or service as a Director or Consultant, is terminated
for any reason other than death, retirement or disability. In the
event that a Grantee's employment as an Employee, or service as a
Director or Consultant, is terminated as a result of death,
retirement or disability without having fully exercised such
Grantee's SARs, the Grantee or such Grantee's beneficiary may
have the right to exercise the SARs during their term within a
period of 6 months after the date of such termination to the
extent that the right was exercisable at the date of such
termination, or during such other period and subject to such
terms as may be determined by the Committee. Subject to the
limitations of Section 18, the Committee in its sole discretion
may reserve the right to accelerate previously determined
exercised terms, within the terms of the Plan, under such
circumstances and upon such terms and conditions as it deems
appropriate.
(c) The Committee shall establish such additional terms and
conditions, without limiting the foregoing, as it determines to
be necessary or desirable to avoid "short-swing" trading
liability in connection with an SAR within the meaning of Section
16(b) of the Exchange Act.
(d) The Committee, in its sole discretion, may establish different
time periods than specified above for any individual or group of
individual Awards.
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8.4 Upon exercise of an SAR, payment shall be made within ninety days
in the form of common stock of the Company (at Fair Market Value on the date of
exercise), cash, or a combination thereof, as the Committee may determine.
9. CONTINGENT STOCK AWARDS
9.1 Contingent Stock Awards under the Plan shall be evidenced by Award
Agreements for Contingent Stock in such form and not inconsistent with this Plan
as the Committee shall approve from time to time, which Award Agreements shall
contain in substance the terms and conditions described in Sections 9.2 through
9.5.
9.2 The Committee shall determine the number of Shares subject to a
Contingent Stock Award to be granted to an Employee, Director or Consultant
based on the past or expected impact the Employee, Director or Consultant has
had or can have on the financial well-being of the Company and other factors
deemed by the Committee to be appropriate.
9.3 Contingent Stock Awards made pursuant to this Plan shall be subject
to such terms, conditions, and restrictions, including without limitation,
substantial risks of forfeiture and/or attainment of performance objectives, and
for such period or periods as shall be set forth in the Award Agreement as
determined by the Committee at the time of grant. The Committee shall have the
power to permit, in its discretion, an acceleration of the expiration of the
applicable restriction period with respect to any part or all of the Award to
any Grantee. The Committee shall have the power to make a Contingent Stock Award
that is not subject to vesting or any other contingencies in recognition of an
Employee's, Director's or Consultant's prior service and financial impact on the
Company. During the restriction period, the Grantee shall not have the rights of
a shareholder.
9.4 The Award Agreement for the Contingent Stock Award shall specify
the terms and conditions upon which any restrictions on the right to receive
Shares representing Contingent Stock Awards under the Plan shall lapse, as
determined by the Committee. Upon the lapse of such restrictions, Shares shall
be issued to the Grantee or such Grantee's legal representative.
9.5 In the event of a Grantee's termination of employment as an
Employee, or service as a Director or Consultant, whichever is applicable, for
any reason prior to the lapse of restrictions applicable to a Contingent Stock
Award made to such Grantee and unless otherwise provided for herein by this Plan
or as provided for in the Award Agreement for Contingent Stock, all rights to
Shares as to which there still remain unlapsed restrictions shall be forfeited
by such Grantee to the Company without payment or any consideration by the
Company, and neither the Grantee nor any successors, heirs, assigns or personal
representatives of such Grantees shall thereafter have any further rights or
interest in such Shares.
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10. RESTRICTED STOCK AWARDS
10.1 Restricted Stock Awards under the Plan shall be evidenced by Award
Agreements for Restricted Stock in such form, and not inconsistent with this
Plan, as the Committee shall approve from time to time, which Award Agreements
shall contain in substance the terms and conditions described in Sections 10.2
through 10.6.
10.2 The Committee shall determine the number of Shares subject to a
Restricted Stock Award to be granted to an Employee, Director or Consultant
based on the past or expected impact the Employee, Director or Consultant has
had or can have on the financial well-being of the Company and other factors
deemed by the Committee to be appropriate.
10.3 Restricted Stock Awards made pursuant to this Plan shall be
subject to such terms, conditions, and restrictions, including without
limitation, substantial risks of forfeiture and/or attainment of performance
objectives, and for such period or periods as set forth in the Award Agreement
as determined by the Committee at the time of grant. The Committee shall have
the power to permit, in its discretion, an acceleration of the expiration of the
applicable restriction period with respect to any part or all of the Award to
any Grantee. Upon issuance of a Restricted Stock Award, Shares will be issued in
the name of the Grantee. During the restriction period, Grantee shall have the
rights of a shareholder for all such Shares of Restricted Stock, including the
right to vote and the right to receive dividends thereon as paid.
10.4 Each certificate evidencing stock subject to Restricted Stock
Awards shall bear an appropriate legend referring to the terms, conditions and
restrictions applicable to such Shares. Any attempt to dispose of Shares of
Restricted Stock in contravention of such terms, conditions and restrictions
shall be ineffective. The Committee may adopt rules which provide that the
certificates evidencing such Shares may be held in custody by a bank or other
institution, or that the Company may itself hold such Shares in custody, until
the restrictions thereon shall have lapsed and may require as a condition of any
Award that the Grantee shall have delivered a stock power endorsed in blank
relating to the Shares of Restricted Stock covered by such Award.
10.5 The Award Agreement for Restricted Stock shall specify the terms
and conditions upon which any restrictions on the right to receive shares
representing Restricted Stock awarded under the Plan shall lapse as determined
by the Committee. Upon the lapse of such restrictions, Shares which have not
been delivered to the Grantee or such Grantee's legal representative shall be
delivered to such Grantee or such Grantee's legal representative.
10.6 In the event of a Grantee's termination of employment as an
Employee, or service as a Director or Consultant, whichever is applicable, for
any reason prior to the lapse of restrictions applicable to a Restricted Stock
Award made to such Grantee and unless otherwise provided for herein by this Plan
or as provided for in the Award Agreement for Restricted Stock, all rights to
Shares as to which there remain unlapsed restrictions shall be forfeited by such
Grantee to the Company without payment or any consideration by the Company, and
neither the Grantee nor any successors, heirs, assigns or personal
representatives of such Grantee shall thereafter have any further rights or
interest in such Shares.
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11. GENERAL RESTRICTIONS
11.1 The Plan and each Award under the Plan shall be subject to the
requirement that, if at any time the Committee shall determine that (i) the
listing, registration or qualification of the Shares subject or related thereto
upon any securities exchange or under any state or federal law, (ii) the consent
or approval of any government regulatory body, or (iii) an agreement by the
Grantee of an Award with respect to the disposition of Shares, is necessary or
desirable as a condition of, or in connection with the Plan or the granting of
such Award or the issue or purchase of Shares thereunder, the Plan will not be
effective and/or the Award may not be consummated in whole or in part unless
such listing, registration, qualification, consent, approval or agreement shall
have been effected or obtained free of any conditions not acceptable to the
Committee.
11.2 The authority of the Committee under Section 3 to include
"forfeiture provisions" in Award Agreements is hereby confirmed. The Committee
may provide in any Award Agreement for the forfeiture of the Awards governed by
such Award Agreement and the benefits derived therefrom, in the event the
Grantee takes actions or engages in conduct that is harmful or contrary to, or
not in the best interests of, the Company. Such forfeiture may include, without
limitation, (a) the cancellation of unexercised Options and/or SARs and the
forfeiture or repayment to the Company of any gain realized from the exercise of
any Options and/or SARs, and (b) forfeiture, or repayment of the value, of any
shares of stock granted as Restricted Stock or Contingent Stock or the
forfeiture or repayment to the Company of any proceeds received from the sale
thereof. The Committee shall have broad discretion in defining what actions and
conduct constitute forfeiture events which may include, without limitation, (i)
conduct related to the Grantee's employment for which either criminal or civil
penalties may be sought, (ii) the commission of an act of fraud or intentional
misrepresentation, (iii) embezzlement or misappropriation or conversion of
assets or opportunities of the Company, (iv) accepting employment with or
serving as a consultant, adviser or in any other capacity to, or having any
ownership interest in, a person or entity that is in competition with or acting
against the interest of the Company, or any solicitation of employees or
distributors, (v) disclosing or misusing any confidential or proprietary
information of the Company in violation of the Key Employee Covenants, or any
other non-disclosure agreement with the Company or other duty of confidentiality
or the Company's insider trading policy, or (vi) any other actions or conduct of
Grantee that the Committee determines in good faith are harmful or contrary to,
or not in the best interests of, the Company. The Committee shall have broad
discretion and authority to determine the scope, duration and terms of any such
forfeiture provisions. The Committee, or its duly appointed agent, may waive any
or all of the restrictions authorized under this subsection whenever it (or its
duly appointed agent) determines in its sole discretion that such action is in
the best interests of the Company. For purposes of this Section 11 references to
the Company refers collectively to the Company and all of its Subsidiaries.
12. RIGHTS OF A SHAREHOLDER
12.1 The Grantee of any Award under the Plan shall have no rights as a
shareholder with respect thereto unless and until certificates for Shares of
common stock are issued to such Grantee, except for the rights provided in
Section 10 as it pertains to Restricted Stock Awards.
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13. RIGHTS TO TERMINATE EMPLOYMENT
13.1 Nothing in the Plan or in any agreement entered into pursuant to
the Plan shall confer upon any Grantee the right to continue in the employment
as an Employee, or service as a Director or Consultant, of the Company or a
Subsidiary or affect any right which the Company or its Subsidiary may have to
terminate the employment, or service as a Director or Consultant, of such
Grantee.
14. WITHHOLDING OF TAXES
14.1 Whenever the Company proposes, or is required, to issue or
transfer Shares under the Plan, the Company shall have the right to require the
Grantee to remit to the Company an amount, or a number of shares, sufficient to
satisfy any federal, state and/or local withholding tax requirements prior to
the delivery of any certificate or certificates for such Shares. Whenever under
the Plan payments are to be made in cash, such payments shall be net of an
amount sufficient to satisfy any federal, state and/or local withholding tax
requirements.
15. NON-ASSIGNABILITY
15.1 No Award or benefit under the Plan shall be assignable or
transferable by the Grantee thereof except by will or by the laws of descent and
distribution. During the life of the Grantee, such Award shall be exercisable
only by such person or by such person's guardian or legal representative.
16. NON-UNIFORM DETERMINATIONS
16.1 The Committee's determination under the Plan (including, without
limitation, determinations of the persons to receive Awards, the form, amount
and timing of such Awards, the terms and conditions of such Awards and the Award
Agreements evidencing same, and the establishment of values and performance
targets) need not be uniform and may be made by the Committee selectively among
persons who receive, or are eligible to receive, Awards under the Plan, whether
or not such persons are similarly situated.
17. ADJUSTMENTS
17.1 If the Class A Common Stock of the Company is subdivided or
combined into a greater or smaller number of shares or if the Company shall
issue any shares of Class A Common Stock as a stock dividend on its outstanding
Class A Common Stock, the number of shares deliverable upon the exercise or
vesting of any Awards granted hereunder shall be appropriately increased or
decreased proportionately, and appropriate adjustments shall be made in the
purchase price per share to reflect such subdivision, combination or stock
dividend.
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17.2 In the event of a consolidation of the Company, a merger in which
the Company is not the surviving entity, or the sale of all or substantially all
of the Company assets, the exercisability of any or all outstanding Awards shall
automatically be accelerated so that such Awards would be exercisable or vested
in full immediately prior to the effective date of such consolidation, merger or
asset sale. However, no such acceleration shall occur if and to the extent any
outstanding Awards are, in connection with such consolidation, merger, or asset
sale, either to be assumed by the successor corporation (or parent thereof or to
be replaced with a comparable Award to purchase shares of the capital stock of
the successor corporation (or a parent thereof). The determination of such Award
comparability shall be made by the Committee, and such determination shall be
final, binding and conclusive. Immediately following any such consolidation,
merger or asset, sale, the Awards, to the extent not previously exercised or
vested, shall terminate and cease to be outstanding, except to the extent
assumed by the successor corporation (or parent thereof) in connection with such
consolidation, merger or asset sale. If any outstanding Award hereunder is
assumed in connection with any such consolidation, merger or asset sale, then
such Award shall be appropriately adjusted, immediately after such
consolidation, merger or asset sale, to apply to the number and class of
securities which would have been issuable to the Grantee upon consummation of
such consolidation, merger, or asset sale if the Awards had been exercised or
vested immediately prior to any such transaction, and appropriate adjustment
shall also be made to the exercise price for such Awards, as applicable,
provided the aggregate exercise price shall remain the same. This Plan shall not
in any way affect the right of the Company to adjust, reclassify, reorganize or
otherwise change its capital or business structure or to merge, consolidate,
dissolve, liquidate, or sell or transfer any part of its business or assets.
17.3 In the event of a recapitalization or reorganization of the
Company (other than a consolidation, merger or asset sale described in Section
17.2 above) pursuant to which securities of the Company or of another entity are
issued with respect to the outstanding shares of the Company's Class A Common
Stock, a Grantee, upon exercising an Award or an Award becoming vested, shall be
entitled to receive for the purchase price paid upon such exercise the
securities the Grantee would have received if the Grantee had exercised the
Award or the Award had vested prior to such recapitalization or reorganization.
18. AMENDMENT
18.1 The Plan may be amended by the Board, without Shareholder
approval, at any time in any respect, unless Shareholder approval of the
amendment in question is required under Delaware law, the Code, any exemption
from Section 16 of the Exchange Act (including without limitation SEC Rule
16b-3) for which the Company intends Section 16 Persons to qualify, any national
securities exchange system on which the Shares are then listed or reported, by
any regulatory body having jurisdiction with respect to the Plan, or any other
applicable laws, rules or regulations.
18.2 The termination or modification or amendment of the Plan shall
not, without the consent of a Grantee, affect a Grantee's rights under an Award
previously granted. Notwithstanding the foregoing, however, the Company reserves
the right to terminate the Plan
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in whole or in part, at any time and for any reason, provided that appropriate
compensation, as determined in the sole and absolute discretion of the
Committee, is made to Grantees with respect to Awards previously granted.
19. EFFECT ON OTHER PLAN
19.1 Participation in this Plan shall not affect a Grantee's
eligibility to participate in any other benefit or incentive plan of the
Company, and any Awards made pursuant to this Plan shall not be used in
determining the benefits provided under any other plan of the Company unless
specifically provided.
20.DURATION OF PLAN
20.1 The Plan shall remain in effect until all Awards under the Plan
have been satisfied by the issuance of Shares or the payment of cash, but no
Awards shall be granted more than ten years after the date the Plan is adopted
by the Company. The Second Amended and Restated 1996 Stock Incentive Plan amends
and restates the Amended and Restated 1996 Stock Incentive Plan, as previously
amended, effective as of March 31, 1999 subject to shareholders approval.
21. FUNDING OF THE PLAN
21.1 This Plan shall be unfunded. The Company shall not be required to
establish any special or separate fund or to make any other segregation of
assets to assure the payment of any Award under this Plan, and payment of Awards
shall be on the same basis as the claims of the Company's general creditors. In
no event shall interest be paid or accrued on any Award including unpaid
installments of Awards.
22.PLAN STATUS
22.1 This Plan is intended to satisfy the requirements of a 16b-3 plan
under the Exchange Act.
22.2 This Plan is intended to qualify as a plan under Rule 701 issued
pursuant to The Securities Act of 1933, as amended.
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23. GOVERNING LAW
23.1 The laws of the State of Delaware shall govern, control and
determine all questions arising with respect to the Plan and the interpretation
and validity of its respective provisions.
NU SKIN ENTERPRISES, INC.
By: /s/ Steven J. Lund
Its: President
ATTEST:
/s/ Keith R. Halls
Its Secretary
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