SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
240.14a-12
USANA, INC.
..............................................................................
(Name of Registrant as Specified in Charter)
..............................................................................
(Name of Person(s) Filing Proxy Statement If Other Than The Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1),
14a-6(i)(2) or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(4) and 0-11.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
1) Title of each class of securities to which transaction
applies:
..............................................................
2) Aggregate number of securities to which transaction applies:
..............................................................
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how it
was determined):
..............................................................
4) Proposed maximum aggregate value of transaction:
..............................................................
5) Total fee paid:
..............................................................
[ ] Fee paid previously with preliminary materials
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by
registration statement number, or the For of Schedule and the date
of its filing.
1) Amount Previously Paid:.......................................
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4) Date Filed:...................................................
<PAGE>
USANA, INC.
3838 West Parkway Blvd.
Salt Lake City, Utah 84120-6336
(801) 954-7100
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD OCTOBER 24, 1996
To the Shareholders:
Notice is hereby given that the Annual Meeting of the Shareholders of
USANA, Inc. ("the Company") will be held at the corporate offices of the
Company located at 3838 West Parkway Blvd., Salt Lake City, Utah on Thursday,
October 24, 1996, at 9:30 a.m., local time, for the following purposes, which
are discussed in the following pages and which are made part of this Notice:
1. To elect five directors to serve for one year each, until the next
annual meeting of shareholders and until his or her successor is elected and
shall qualify;
2. To ratify an amendment to the Directors' 1995 Stock Option Plan and
the Long Term Incentive Stock Plan to increase the number of shares available
to be issued pursuant to grants and awards made under each plan;
3. To approve the Board of Directors' selection of Grant Thornton LLP,
as the Company's independent public accountants; and
4. To consider and act upon any other matters that properly may come
before the meeting or any adjournment thereof.
The Company's Board of Directors has fixed the close of business on
August 26, 1996 as the record date for the determination of shareholders
having the right to receive notice of, and to vote at, the Annual Meeting of
Shareholders and any adjournment thereof. A list of such shareholders will
be available for examination by a shareholder for any purpose germane to the
meeting during ordinary business hours at the offices of the Company at 3838
West Parkway Blvd., Salt Lake City, Utah, during the ten days prior to the
meeting.
You are requested to date, sign and return the enclosed proxy which is
solicited by the Board of Directors of the Company and will be voted as
indicated in the accompanying proxy statement and proxy. Your vote is
important. Please sign and date the enclosed proxy and return it promptly in
the enclosed return envelope whether or not you expect to attend the
meeting. The giving of your proxy as requested hereby will not affect your
right to vote in person should you decide to attend the Annual Meeting. The
return envelope requires no postage if mailed in the United States. If
mailed elsewhere, foreign postage must be affixed. Your proxy is revocable at
any time before the meeting.
By Order of the Board of Directors,
Dr. Myron Wentz, Chairman
Salt Lake City, Utah
September 24, 1996
<PAGE>
USANA, INC.
3838 West Parkway Blvd.
Salt Lake City, Utah 84120-6336
(801) 954-7100
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
The enclosed proxy is solicited by the Board of Directors of USANA, Inc.
("USANA" or the "Company") for use in voting at the Annual Meeting of
Shareholders to be held at the corporate offices of the Company located at
3838 West Parkway Blvd., Salt Lake City, Utah on Thursday, October 24, 1996,
at 9:30 a.m. local time, and at any postponement or adjournment thereof, for
the purposes set forth in the attached notice. When proxies are properly
dated, executed and returned the shares they represent will be voted at the
Annual Meeting in accordance with the instructions of the shareholder
completing the proxy. If no specific instructions are given, the shares will
be voted FOR the election of the nominees for directors set forth herein, FOR
approval of an amendment to the incentive stock plans of the Company
increasing the number of shares available for issuance pursuant to such
plans, and FOR ratification of the selection of Grant Thornton LLP as the
independent auditors of the Company. A shareholder giving a proxy has the
power to revoke it at any time prior to its exercise by voting in person at
the Annual Meeting, by giving written notice to the Company's Secretary prior
to the Annual Meeting or by giving a later dated proxy.
The presence at the meeting, in person or by proxy, of shareholders
holding in the aggregate a majority of the outstanding shares of the
Company's common stock entitled to vote shall constitute a quorum for the
transaction of business. The Company does not have cumulative voting for
directors; a plurality of the votes properly cast for the election of
directors by the shareholders attending the meeting, in person or by proxy,
will elect directors to office. A majority of votes properly cast upon any
question presented for consideration and shareholder action at the meeting,
other than the election of directors, shall decide the question. Abstentions
and broker non-votes will count for purposes of establishing a quorum, but
will not count as votes cast for the election of directors or any other
questions and accordingly will have no effect. Votes cast by shareholders who
attend and vote in person or by proxy at the Annual Meeting will be counted
by inspectors to be appointed by the Company.
The close of business on August 26, 1996, has been fixed as the record
date for determining the shareholders entitled to notice of, and to vote at,
the Annual Meeting. Each share shall be entitled to one vote on all
matters. As of the record date there were 6,341,119 shares of the Company's
common stock outstanding and entitled to vote. For a description of the
principal holders of such stock, see "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT" below.
This Proxy Statement and the enclosed Proxy are being furnished to
shareholders on or about September 24, 1996.
<PAGE>
PROPOSAL 1 -- ELECTION OF DIRECTORS
The Company's Bylaws provide that the number of directors shall be
determined from time to time by the shareholders or the Board of Directors,
but that there shall be no less than three. Presently the Company's Board of
Directors consists of five members, all of whom are nominees for election or
reelection at the Annual meeting. Each director elected at the Annual
meeting will hold office until a successor is elected and qualified, or until
the director resigns, is removed or becomes disqualified. Unless marked
otherwise, proxies received will be voted FOR the election of each of the
nominees named below. If any such person is unable or unwilling to serve as a
nominee for the office of director at the date of the Annual Meeting or any
postponement or adjournment thereof, the proxies may be voted for a
substitute nominee, designated by the proxy holders or by the present Board of
Directors to fill such vacancy, or for the balance of those nominees named
without nomination of a substitute, or the Board may be reduced accordingly.
The Board of Directors has no reason to believe that any of such nominees will
be unwilling or unable to serve if elected as a director.
The following information is furnished with respect to the nominees.
Stock ownership information is shown under the heading "Security Ownership of
Certain Beneficial Owners and Management" and is based upon information
furnished by the respective individuals.
Dr. Myron Wentz, 56, has been the President and Chairman of the Board of
Directors of the Company since its inception. From 1969 to 1973, Dr. Wentz
served as Director of Microbiology for Methodist Medical Center, Proctor
Community Hospital, and Pekin Memorial Hospital, all in Peoria, Illinois.
Dr. Wentz received a Ph.D. in microbiology and immunology from the University
of Utah, an M.S. in microbiology from the University of North Dakota, and a
B.S. in biology from North Central College, Naperville, Illinois. Dr. Wentz
founded Gull Laboratories, Inc. (AMEX:GUL), the former parent of USANA, in
1974, and retains the position of Chairman of the Board of that company.
Gull develops, manufactures and sells medical diagnostic test kits and
related products.
David Wentz, 26, received a B. S. degree in Bioengineering (Pre-Med)
from the University of California, San Diego in 1993. Mr. Wentz served with
the Company first on a part-time basis and then was employed by the Company
fulltime in 1994. He has served as a director of the Company since its
becoming a separate entity from Gull Laboratories, Inc. in 1993. From 1994
until 1995, he served as Vice President and Executive Vice President of the
Company. In August 1996, Mr. Wentz was appointed Vice President of Strategic
Development.
Ronald S. Poelman, 43, was appointed to the Company's Board of Directors
on November 7, 1995 to fill the vacancy created by the resignation of David
Gillen in September 1995. He currently is a partner in the Salt Lake City,
Utah law firm of Jones, Waldo, Holbrook & McDonough, where he is head of the
Corporate Finance Group. Prior to joining Jones, Waldo, Holbrook & McDonough
in 1993, Mr. Poelman was a shareholder at the Salt Lake City law firm of
Parsons, Behle & Latimer from 1989 to 1992. His specialty is corporate and
securities law. Mr. Poelman received a B.A. in English from Brigham Young
University in Provo, Utah and a J.D. from the University of California,
Berkeley.
Dr. Suzanne Winters, 42, was appointed to the Board on July 15, 1996.
Dr. Winters has been the State Science Advisor for the State of Utah since
1993. In that capacity, Dr. Winters advises the Governor and the State
Legislature on matters related to science and technology and their
applications to government, industry and public issues. From 1990 to 1993,
Dr. Winters was the President of MC2 -- Membranes and Coatings Consultants,
Inc., a Salt Lake City, Utah-based business providing management services
with respect to research and development for implantable, continuous,
self-calibrating blood gas, pH, and electrolyte sensors and intravenous bubble
oxygenators, and other technology-related management services. Dr. Winters
received a doctorate degree in Pharmaceutics from the University of Utah in
1986.
Robert Anciaux, 50, is a resident of Brussels, Belgium. Mr. Anciaux was
appointed to the Board on July 15, 1996. Since 1982, Mr. Anciaux has been
self-employed as a venture capitalist in Europe, investing in various
commercial, industrial and real estate venture companies in Belgium and
abroad. Mr. Anciaux has been involved for a number of years as a shareholder
of various companies that manage institutional or private investment funds.
In some of these privately-held companies Mr. Anciaux has also served as a
director.
Except for Dr. Wentz and his son David, there is no family relationship
between any executive officer or director of the Company and any other
executive officer or director.
BOARD OF DIRECTORS MEETINGS, COMMITTEES AND DIRECTOR COMPENSATION
The Company's Board of Directors took action at three duly noticed
meetings of the Board during 1995, and acted on five additional occasions by
unanimous written consent. Each director attended at least 75% of the
Company's special meetings of the Board of Directors. During 1995, the
Company's Board of Directors had no audit committee or compensation
committees. In conjunction with the inclusion of the Company's shares in the
Nasdaq National Market System, the Board of Directors created two additional
directorships and appointed two additional independent directors. In
addition, the Board created an audit committee comprised of two outside
directors of the Company, Ronald S. Poelman and Robert Anciaux. Directors
receive an initial grant of options to purchase shares pursuant to the 1995
Directors' Stock Option Plan as described below. Except for the grant of
options pursuant to the plan, the Company's directors receive no fees or
other compensation for participating in Board meetings or otherwise serving on
the Board, whether in person or by telephone, although the Company's policy is
to reimburse directors for their out-of-pocket expenses incurred in
connection with their services as directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH NOMINEE DIRECTOR
EXECUTIVE OFFICERS
In addition to the previously named directors and executive officers,
the following individuals serve as executive officers of the Company:
Dallin Larsen, 36, is the Company's Vice President of Sales. He has
been employed by the Company since January 1993. He has been actively
involved in network marketing since 1989 and, for seven years, served as
president of a corporation that owned weight-loss clinics in several states.
Mr. Larsen graduated from Brigham Young University in Provo, Utah with a B.S.
degree in 1986.
John B. ("Jeb") McCandless, IV, 48, was employed as the Director of
Scientific Operations of the Company on October 2, 1995. Since July 1996, he
has been Vice President of Operations. From January 1994 until joining the
Company, Mr. McCandless was a consultant with Apogee Strategic Services, of
Sandy, Utah. From September 1987 to December 1993, Mr. McCandless was the
President of Utah Biomedical Test Laboratories, located in Salt Lake City,
Utah, where he supervised that company's business of contract research and
scientific testing. He also served in managerial positions in toxicology at
both Atlantic Richfield Company in Los Angeles and at Biodynamics, Inc. in
New Jersey. Mr. McCandless received a B.A. degree in zoology from the
University of California, Santa Barbara, an M.S. in pathology from the
University of Utah, and M.A. and M.B.A. degrees from Claremont Graduate School
in California.
Gilbert Fuller, 55, has served as the Vice President of Finance of the
Company since June 1996. Prior to joining the Company, Mr. Fuller was the
Executive Vice President of Winder Dairy, Inc., a regional commercial dairy
operation located in Utah. From May 1991 through October 1993, Mr. Fuller
was Chief Administrative Officer and Treasurer of Melaleuca, Inc., a
manufacturer and network marketing distributor of personal care products
located in Idaho. From July 1984 through January 1991, Mr. Fuller was the
Vice President and Treasurer of Norton Company of Worcester, Massachusetts, a
multi-national manufacturer of ceramics and abrasives. Mr. Fuller is a
Certified Public Accountant and holds a bachelors degree in accounting and a
M.B.A. degree from the University of Utah.
EXECUTIVE COMPENSATION
The Company's president, Dr. Myron Wentz, has served in that position
since 1992. Dr. Wentz receives no salary or other compensation for his
services to the Company. The following table sets summarizes the
compensation of each person serving in the capacity of Chief Executive Officer
during 1995 and all executive officers of the Company who earned $100,000 or
more during the last fiscal year of the Company and the amounts earned during
the past three fiscal years:
<PAGE>
<TABLE>
Summary Compensation Table
<CAPTION>
Annual Compensation
Other Long-term
Name Annual Compensation All other
and Compensa- Awards of Compensa-
Principal Salary Bonus tion Stock Options tion
Position Year ($) ($) ($) (#) ($)
<S> <C> <C> <C> <C> <C> <C>
Dr. Myron Wentz
CEO/President 1993 $ 0 $ 16,733 $ 0 none $ 0
1994 0 0 0 none 0
1995 0 0 0 none 0
Dallin Larsen
Vice President 1995 $131,834 $ 9,849 $ 5,354(1) 140,000(2) $ 3,125(3)
</TABLE>
________________________
(1) Represents the approximate value of the employee's use of a
Company-owned car.
(2) Shares subject to options granted under a compensation plan. See
Stock Option Grants below.
(3) Represents the Company's matching contribution to employee's 401(k)
plan.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
To the Company's knowledge, the following table sets forth information
regarding ownership of the Company's outstanding common stock on August 26,
1996 by (i) beneficial owners of more than 5% of the outstanding shares of
common stock, (ii) each director and the named executive officers, and (iii)
all directors and executive officers as a group. As of August 26, 1996,
there were 6,341,119 shares of the Company's voting common stock issued,
outstanding and entitled to vote at the Annual Meeting. Except as otherwise
indicated below and subject to applicable community property laws, each owner
has sole voting and sole investment powers with respect to the stock listed.
<TABLE>
<CAPTION>
Name/Address of 5% Number of Shares Percentage of Class(1)
Beneficial Owner,
Director, Officer
<S> <C> <C>
Dr. Myron Wentz, Director(2) 3,968,016 62.6%
3838 West Parkway Blvd.
Salt Lake City, Utah 84120
David Wentz, Director 6,000 *
3838 West Parkway Blvd.
Salt Lake City, Utah 84120
Ronald S. Poelman, Director 0 -
170 South Main Street, Suite 1500
Salt Lake City, Utah 84101
Dr. Suzanne Winters, Director 0 -
3838 West Parkway Blvd.
Salt Lake City, Utah 84120
Robert Anciaux, Director 0 -
3838 West Parkway Blvd.
Salt Lake City, Utah 84120
Dallin Larsen, Vice President 8,000 *
3838 West Parkway Blvd.
Salt Lake City, Utah 84120
Gull Holdings, Ltd. 3,968,016 62.6%
4 Finch Road
Douglas, Isle of Man
Officers and Directors
as a group (5 persons) 3,982,016 62.8%
</TABLE>
_________________________
* Less than one percent. Officer and Director group total does not
include duplicate entries.
(1) Percentages rounded to nearest one-tenth of one percent.
(2) All shares held of record by Gull Holdings, Ltd. ("Holdings"), an
Isle of Man company owned 100% by Dr. Wentz. Because of his control of
Holdings, Dr. Wentz is deemed to be the beneficial owner of the shares owned
of record by Holdings.
Stock Option Grants
The following table sets forth all options granted to the directors and
executive officers of the Company during 1995. The Company has never granted
any stock appreciation rights ("SARs") and no options were exercisable at
December 31, 1995.
<TABLE>
Option/SAR Grants in Last Fiscal Year
Individual Grants
<CAPTION>
(a) (b) (c) (d) (e)
Number of % of Total
Securities Options/SARs
Underlying Granted to
Options/SAR's Employees Exercise or Base
Name Granted (#) in Fiscal Year Price ($/Sh) Expiration Date
<S> <C> <C> <C> <C>
Dr. Myron Wentz 0 - - -
David Wentz 62,500(1) 9.5% $3.05 May 21, 2005
Ronald S. Poelman 62,500(1) 9.5 9.75 Nov. 7, 2005
David Gillen 12,500(2) 1.9 3.05 May 21, 2005
Dallin Larsen 140,000(3) 21.3 3.05 May 21, 2005
John B. ("Jeb")
McCandless IV 100,000(4) 15.2 $9.70 Oct. 29, 2005
</TABLE>
(1) Options vest or become exercisable at the rate of 12,500 shares per
year over a five-year period.
(2) Mr. Gillen resigned from the Board of Directors in September 1995.
Pursuant to the authority of the Plan Committee, Mr. Gillen was vested upon
his resignation as to the options shown in the table. These options became
exercisable six months after the date of grant.
(3) Options vest at the rate of 20,000 shares per year over seven years.
(4) Options vest at the rate of 20,000 shares per year over five years.
Remuneration of Directors
During the fiscal year ended December 31, 1995, the Company's directors
were not paid for attendance at director's meetings or otherwise compensated
for their services as directors, except for the stock option grants described
above under the Directors' Stock Option Plan. The Company pays all expenses
incurred by directors in connection with attendance at board meetings.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors, and persons who beneficially own more than
ten percent of a registered class of the Company's equity securities, to file
reports of ownership and changes in ownership with the Securities and
Exchange Commission. Officers, directors and shareholders owning more than 10
percent of the Company are required by regulation of the Securities and
Exchange Commission to furnish the Company with copies of all Section 16(a)
forms which they file. Based solely on its review of the copies of such forms
furnished to the Company during the fiscal year ended December 31, 1995, the
Company is aware of the untimely filing of one Section 16(a) report with
respect to one transaction by Dr. Myron Wentz, which transaction resulted in a
change to Dr. Wentz's beneficial ownership. The transaction was reported in a
subsequent report. Mr. Poelman, who was appointed a director on November 7,
1995, was also late in filing Form 3. The Company did not receive copies of
reports during 1995 from David Wentz or David Gillen, the latter a director
until September 1995. Other than as disclosed immediately above, the Company
believes that during its 1995 fiscal year all Section 16(a) filings required
of its officers, directors and beneficial owners of greater than 10 percent
of the Company were made timely.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In June 1995, Gull Holdings, Ltd., an Isle of Man company ("Holdings")
that is the Company's majority shareholder, agreed to arrange up to $2.5
million in financing to the Company to facilitate the purchase of real
property and construction of the Company's new corporate headquarters and
manufacturing facility. Pursuant to its agreement with the Company, Holdings
agreed to provide direct funding and to secure a $3.0 million letter of
credit to facilitate additional bank funding for the Company. In
consideration for its capital contribution and assistance, Holdings was issued
952,381 shares of the Company's restricted common stock. Holdings assistance
was required by the bank due to the Company's limited operating history.
Holdings is owned by Dr. Wentz.
On July 27, 1995, Dr. Wentz and the Company executed an agreement
pursuant to which Dr. Wentz agreed to convey to the Company a condominium
property located in Salt Lake City, Utah (the "Condominium") in exchange for
11,996 shares of the Company's restricted common stock valued at
approximately $31,500. The Company believes that such value constituted the
fair value of the Company's restricted stock at that time.
On July 28, 1995, the Company and David Wentz, a director of the
Company, and the son of Dr. Myron Wentz, entered into a contract pursuant to
which David Wentz agreed to purchase the Condominium from the Company for the
purchase price of $101,500, which was, in the Company's belief, the fair
market value of the Condominium. This transaction was closed in August, 1995.
In 1994, the Company engaged in certain transactions with Dr. Wentz
involving the transfer and exchange of certain leased and purchased
transportation equipment owned by the Company and Dr. Wentz and the repayment
of two short-term loans, which resulted in Dr. Wentz transferring cash of
$147,000 to the Company. In a separate transaction, $160,000 was paid on a
line of credit owed by Dr. Wentz, which has since been repaid.
PROPOSAL 2 -- AMENDMENT TO PLANS
At the annual meeting of shareholders in 1995, the Company's
shareholders approved the Company's 1995 Long-Term Stock Investment and
Incentive Plan (the "Incentive Plan"). The Incentive Plan provides for the
award of incentive stock options to key employees and the award of
nonqualified stock options, stock appreciation rights, bonus rights, and other
incentive grants to employees and certain non-employees (but not Directors who
also serve as members of the committee that administers the Plan) who have
important relationships with the Company or its subsidiaries. As originally
adopted, a maximum of 700,000 shares of common stock of the Company were made
available to be issued under the Incentive Plan. The Board has determined
that the number of shares available for issuance under the Incentive Plan
should be increased to 1,400,000 shares, to accommodate the needs of the
Company.
The Directors' Stock Option Plan (the "Director Plan") provides for the
award of options to purchase Common Stock to directors of the Company to
attract, reward, and retain the best available personnel to serve as
directors and to provide added incentive to such persons by increasing their
ownership interest in the Company. The total number of shares of Common Stock
that may be issued pursuant to options under the Director Plan as originally
adopted may not exceed 300,000 shares. If any option awarded under the
Director Plan is forfeited or not exercised, the shares that would have been
issued upon the exercise of such option will again be available for purposes
of the Director Plan. With the addition of two directors to the Board, the
Board proposes that the number of shares issuable under the Director Plan
should be increased to 600,000 shares.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF
THE PLAN AMENDMENTS
PROPOSAL 3 -- APPROVAL OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors of the Company has selected Grant Thornton LLP,
as the independent public accountants for the Company for the fiscal year
ending December 31, 1996. Grant Thornton LLP served as the Company's
independent public accountants for the fiscal year ended December 31, 1995.
At the Annual Meeting, shareholders will be asked to ratify the
selection by the Board of Directors of Grant Thornton LLP as the Company's
independent accountants.
THE BOARD RECOMMENDS SHAREHOLDER APPROVAL OF THE SELECTION OF AUDITORS
Representatives of Grant Thornton LLP, are expected to attend the 1996
Annual Meeting and will have an opportunity to make a statement if they
desire to do so, and they will be available to answer appropriate questions
from shareholders.
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors of the
Company does not intend to present and has not been informed that any other
person intends to present a matter for action at the 1996 Annual Meeting
other than as set forth herein and in the Notice of Annual Meeting. If any
other matter properly comes before the meeting, it is intended that the
holders of proxies will act in accordance with their best judgment.
The accompanying proxy is being solicited on behalf of the Board of
Directors of the Company. In addition to the solicitation of proxies by
mail, certain of the officers and employees of the Company, without extra
compensation, may solicit proxies personally or by telephone, and, if deemed
necessary, third party solicitation agents may be engaged by the Company to
solicit proxies by means of telephone, facsimile or telegram, although no
such third party has been engaged by the Company as of the date hereof. The
Company will also request brokerage houses, nominees, custodians and
fiduciaries to forward soliciting materials to the beneficial owners of
Common Stock held of record and will reimburse such persons for forwarding
such material. The cost of this solicitation of proxies will be borne by the
Company.
ANNUAL REPORT
Copies of the Company's Annual Report on Form 10-KSB (including
financial statements and financial statements schedules) filed with the
Securities and Exchange Commission may be obtained without charge by writing
to the Company - Attention: Investor Relations, 3838 West Parkway Blvd., Salt
Lake City, Utah 84120-6336.
A Copy of the Company's 1995 Annual Report on Form 10-KSB is being mailed
with this Proxy Statement, but is not deemed a part of the proxy soliciting
material.
SHAREHOLDER PROPOSALS
Any shareholder proposal intended to be considered for inclusion in the
proxy statement for presentation in connection with the 1997 Annual Meeting
of Shareholders must be received by the Company by December 31, 1996. The
proposal must be in accordance with the provisions of Rule 14a-8 promulgated
by the Securities and Exchange Commission under the Securities Exchange Act
of 1934. The Company suggests that any such request be submitted by
certified mail - return receipt requested. The Board of Directors will review
any proposal which is received by December 31, 1996, and determine whether it
is a proper proposal to present to the 1997 Annual Meeting.
The enclosed Proxy is furnished for you to specify your choices with
respect to the matters referred to in the accompanying notice and described
in this Proxy Statement. If you wish to vote in accordance with the Board's
recommendations, merely sign, date and return the Proxy in the enclosed
envelope which requires no postage if mailed in the United States. A prompt
return of your Proxy will be appreciated.
By Order of the Board of Directors,
Dr. Myron Wentz, Chairman
Salt Lake City, Utah
September 24, 1996
<PAGE>
PROXY
USANA, INC.
a Utah corporation
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Dr. Myron Wentz and Gilbert Fuller and each
of them as Proxies, with full power of substitution, and hereby authorizes
them to represent and vote, as designated below, all shares of Common Stock of
the Company held of record by the undersigned on August 26, 1996 at the
Annual Meeting of Shareholders to be held at 3838 West Parkway Boulevard, Salt
Lake City, Utah 84120, on Thursday, October 24, 1996, at 9:30 a.m., local time,
or at any adjournment thereof.
1. Election of Directors.
FOR WITHHOLD AS TO ALL FOR ALL EXCEPT
/ / / / / /
(INSTRUCTIONS: IF YOU MARK THE "FOR ALL EXCEPT" CATEGORY ABOVE, INDICATE THE
NOMINEE(S) AS TO WHICH YOU DESIRE TO WITHHOLD AUTHORITY BY STRIKING A LINE
THROUGH SUCH NOMINEE(S) NAME IN THE LIST BELOW:)
Dr. Myron Wentz David Wentz Ronald S. Poelman
Dr. Suzanne Winters Robert Anciaux
2. To approve an amendment to the Company's 1995 Long-Term Stock
Investment and Incentive Plan and the Company's 1995 Directors' Stock Option
increasing the number of shares available for issuance under each Plan.
FOR AGAINST ABSTAIN
/ / / / / /
3. To approve and ratify the selection of Grant Thornton LLP as the
Company's independent accountants.
FOR AGAINST ABSTAIN
/ / / / / /
4. In their discretion, the Proxies are authorized to vote upon such
other business as may properly come before the Annual Meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSALS 1, 2 AND 3.
DATE:____________________________
______________________________________________
Signature
______________________________________________
Signature of joint holder, if any
PLEASE SIGN EXACTLY AS THE SHARES ARE ISSUED. WHEN SHARES ARE HELD BY JOINT
TENANTS, BOTH SHOULD SIGN. WHEN SIGNING AS ATTORNEY, AS EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH. IF A
CORPORATION, PLEASE SIGN IN FULL CORPORATE NAME BY PRESIDENT OR OTHER
AUTHORIZED OFFICER. IF A PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY
AUTHORIZED PERSON. PLEASE DATE, SIGN AND RETURN THIS PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE
<PAGE>
APPENDIX
Pursuant to Instruction 3 to Item 10 of Schedule 14A, the Company has
appended to this Proxy Statement electronic copies of the Plan and the
Directors Plan. Copies of the plans are not being distributed to
shareholders.
USANA, Inc.
a Utah corporation
Long-Term Stock Investment and Incentive Plan
ARTICLE I GENERAL
1.01. Purpose.
The purpose of this Long-Term Stock Investment and Incentive Plan (the "Plan")
are to: (1) closely associate the interests of the management of USANA, Inc.,
a Utah corporation, and its Parent and Subsidiary Corporations and Affiliates
(collectively referred to as the "Company") with the shareholders of the
Company by reinforcing the relationship between participants' rewards and
shareholder gains; (2) provide management with an equity ownership in the
Company commensurate with Company performance, as reflected in increased
shareholder value; (3) maintain competitive compensation levels; and (4)
provide an incentive to management to remain in continuing employment with the
Company and to put forth maximum efforts for the success of its business.
1.02. Administration.
(a) Pursuant to Utah Code Annotated Section 16-10a-624, the Board of
Directors of USANA, Inc., (the "Board") shall appoint a Committee consisting
of two or more disinterested directors to administer the Plan (the
"Committee"), as constituted from time to time. Any Committee member shall
also be a member of the Board. During the one year prior to commencement of
service on the Committee, the Committee members will not have participated in,
and while serving and for one year after serving on the Committee, such
members shall not be eligible for selection as persons to whom stock may be
allocated or to whom Options or Stock Appreciation Rights may be granted under
the Plan or any other discretionary plan of the Company under which
participants are entitled to acquire stock, Options or Stock Appreciation
Rights of the Company.
Once appointed, the Committee shall continue to serve until otherwise
directed by the Board. From time to time, the Board may increase or change
the size of the Committee, and appoint new members thereof, remove members
(with or without cause) and appoint new members in substitution therefor, fill
vacancies, however caused, or remove all members of the Committee; provided,
however, that at no time shall any person administer the Plan who is not
otherwise "disinterested" as that term is defined in Rule 16 b-3(c)(2)(i)
promulgated under the Securities Exchange Act of 1934 (the "1934 Act").
Members of the Board who are either presently eligible or who have been
eligible at any time within the preceding year for Options or Stock
Appreciation Rights, may not vote on any matters affecting the administration
of the Plan or the grant of any Options or Stock Appreciation Rights pursuant
to the Plan.
(b) The Committee shall have the authority without limitation, in its
sole discretion, subject to and not inconsistent with the express provisions
of the Plan, and from time to time, to:
(i) administer the Plan and to exercise all the powers and authorities
either specifically granted to it under the Plan or necessary or advisable in
the administration of the Plan;
(ii) designate the employees or classes of employees eligible to participate
in the Plan from among those described in Section 1.03 below;
(iii) grant awards provided in the Plan in such form, amount and under such
terms as the Committee shall determine;
(iv) determine the purchase price of shares of Common Stock covered by each
Option (the "Option Price");
(v) determine the Fair Market Value of Common Stock for purposes of Options
or of determining the appreciation of Common Stock with respect to Stock
Appreciation Rights;
(vi) determine the time or times at which Options and/or Stock Appreciation
Rights shall be granted;
(vii) determine the terms and provisions of the various Option or Stock
Appreciation Rights Agreements (none of which need be identical or uniform)
evidencing Options or Stock Appreciation Rights granted under the Plan and to
impose such limitations, restrictions and conditions upon any such award as
the Committee shall deem appropriate; and
(viii) interpret the Plan, adopt, amend and rescind rules and regulations
relating to the Plan, and make all other determinations and take all other
action necessary or advisable for the implementation and administration of the
Plan.
The Committee may delegate to one or more of its members or to one or more
agents such administrative duties as it may deem advisable, and the Committee
or any delegate may employ one or more persons to render advice with respect
to any responsibility the Committee or such person may have under the Plan.
(c) All decisions, determinations and interpretations of the
Committee on all matters relating to the Plan shall be in its sole discretion
and shall be final, binding and conclusive on all Optionees and the Company.
(d) One member of the Committee shall be elected by the Board as
chairman. The Committee shall hold its meetings at such times and places as
it shall deem advisable. All determinations of the Committee shall be made by
a majority of its members either present in person or participating by
conference telephone at a meeting or by written consent. The Committee may
appoint a secretary and make such rules and regulations for the conduct of its
business as it shall deem advisable, and shall keep minutes of its meetings.
(e) No member of the Board or Committee shall be liable for any
action taken or decision or determination made in good faith with respect to
any Option, Stock Appreciation Right, the Plan, or any award thereunder.
1.03. Eligibility for Participation
Participants in the Plan shall be selected by the Committee, and awards under
the Plan, as described in Section 1.04 below, may be granted to officers and key
employees of the Company and to other key individuals such as consultants and
non-employee agents to the Company whom the Committee believes have made or
will make an essential contribution to the Company; provided, however, that
Incentive Stock Options may only be granted to executive officers and other
key employees of the Company who occupy responsible managerial or professional
positions, who have the capability of making a substantial contribution to the
success of the Company, and who agree, in writing, to remain in the employ of,
and to render services to, the Company for a period of at least one (1) year
from the date of the grant of the award. The Committee has the authority to
select particular employees within the eligible group to receive awards under
the Plan. In making this selection and in determining the persons to whom
awards under the Plan shall be granted and the form and amount of awards under
the Plan, the Committee shall consider any factors deemed relevant in
connection with accomplishing the purposes of the Plan, including the duties
of the respective persons and the value of their present and potential
services and contributions to the success, profitability and sound growth of
the Company. A person to whom an award has been granted is sometimes referred
to herein as an "Optionee." An Optionee shall be eligible to receive more
than one Option and/or Stock Appreciation Rights during the term of the Plan,
but only on the terms and subject to the restrictions hereinafter set forth.
1.04. Types of Awards Under Plan.
Awards under the Plan may be in the form of any one or more of the
following:
(i) "Stock Options" which are nonqualified stock options, the tax
consequences of which are governed by the provisions of Section 83 of the
Internal Revenue Code (the "Code"), as described in Article II;
(ii) "Incentive Stock Options" which are statutory stock options, the
tax consequences of which are governed by Section 422 of the Code, as
described in Article III;
(iii) "Reload Options" which are also nonqualified stock options, the
tax consequences of which are governed by Section 83 of the Code, as described
in Article IV;
(iv) "Alternate Rights" which are Stock Appreciation Rights, the tax
consequences of which are governed by Section 83 of the Code, as described in
Article V; and/or
(v) "Limited Rights" which are also Stock Appreciation Rights, the
tax consequences of which are governed by Section 83 of the Code, as described
in Article VI.
(vi) "Stock Bonuses" which are compensation, the tax consequences of
which are governed by Section 83 of the Code, as described in Article VII.
(vii) "Cash Bonuses" which are compensation, the tax consequences of
which are governed by Section 61 of the Code, as described in Article VIII.
1.05. Aggregate Limitation on Awards.
(a) Except as may be adjusted pursuant to Section 9.12(i) below,
shares of stock which may be issued as Stock Bonuses or upon exercise of
Options or Alternate Rights under the Plan shall be authorized and unissued or
treasury shares of Common Stock of the Company ("Common Stock"). The number
of shares of Common Stock the Company shall reserve for issuance as Stock
Bonuses or upon exercise of Options or Alternate Rights to be granted from
time to time under the Plan, and the maximum number of shares of Common Stock
which may be issued under the Plan, shall not exceed in the aggregate 700,000
shares. In the absence of an effective registration statement under the
Securities Act of 1933 (the "Act"), all Stock Bonuses, Options and Stock
Appreciation Rights granted and shares of Common Stock subject to their
exercise will be restricted as to subsequent resale or transfer, pursuant to
the provisions of Rule 144, promulgated under the Act.
(b) For purposes of calculating the maximum number of shares of
Common Stock which may be issued under the Plan:
(i) all the shares issued (including the shares, if any, withheld for tax
withholding requirements) shall be counted when cash is used as full payment
for shares issued upon exercise of an Option;
(ii) only the shares issued (including the shares, if any, withheld for tax
withholding requirements) as a result of an exercise of Alternate Rights shall
be counted; and
(iii) only the net shares issued (including the shares, if any, withheld for
tax withholding requirements) shall be counted when shares of Common Stock are
used as full or partial payment for shares issued upon exercise of an Option.
(iv) all shares issued (including the shares, if any, withheld for tax
withholding requirements as Stock Bonuses shall be counted.
(c) In addition to shares of Common Stock actually issued pursuant to
Stock Bonuses or the exercise of Options or Alternate Rights, there shall be
deemed to have been issued a number of shares equal to the number of shares of
Common Stock in respect of which Limited Rights shall have been exercised.
(d) Shares tendered by a participant as payment for shares issued
upon exercise of an Option shall be available for issuance under the Plan.
Any shares of Common Stock subject to an Option or Stock Appreciation Right
granted without a related Option, which for any reason is cancelled,
terminated, unexercised or expires in whole or in part shall again be
available for issuance under the Plan, but shares subject to an Option or
Alternate Right which are not issued as a result of the exercise of Limited
Rights shall not again be available for issuance under the Plan.
1.06. Effective Date and Term of Plan.
(a) The Plan shall become effective as of the 1st day of May 1995,
the date the Plan is adopted by a majority of the Board (the "Effective
Date"), but for purposes of qualifying awards under the Plan under Section
16(b) of the Securities Exchange Act of 1934, as amended, and rules
promulgated thereunder, shall be subject to approval by the holders of a
majority of the issued and outstanding shares of USANA, Inc. Common Stock
present in person or by proxy and entitled to vote at the earlier of either a
Special Meeting of Shareholders called for that purpose or the 1995 Annual
Meeting of Shareholders of USANA, Inc., which meeting shall in any event, be
held not more than twelve (12) months after adoption of the Effective Date.
(b) No awards shall be granted under the Plan after or on the 30th
day of April, 2005, which date is ten (10) years after the Effective Date (the
"Plan Termination Date"). Provided, however, that the Plan and all awards
made under the Plan prior to such Plan Termination Date shall remain in effect
until such awards have been satisfied or terminated in accordance with the
Plan and the terms of such awards.
ARTICLE II STOCK OPTIONS
2.01. Award of Stock Options.
The Committee may from time to time, and subject to the provisions of the
Plan, and such other terms and conditions as the Committee may prescribe,
grant to any participant in the Plan one or more options to purchase for cash
or for Company shares the number of shares of Common Stock allotted by the
Committee ("Stock Options"). The date a Stock Option is granted shall mean
the date selected by the Committee as of which the Committee allots a specific
number of shares to a participant pursuant to the Plan.
2.02. Stock Option Agreements.
The grant of a Stock Option shall be evidenced by a written Stock Option
Agreement, executed by the Company and the holder of a Stock Option (the
"Optionee"), stating the number of shares of Common Stock subject to the Stock
Option evidenced thereby, and in such form as the Committee may from time to
time determine.
2.03 Stock Option Price.
The Option Price per share of Common Stock deliverable upon the exercise of a
Stock Option shall be 100% of the Fair Market Value of a share of Common Stock
on the date the Stock Option is granted, unless the Committee shall determine,
in its sole discretion, that there are circumstances which reasonably justify
the establishment of a lower Option Price.
2.04. Term and Exercise.
Each Stock Option shall be fully exercisable at any time within the period
beginning not earlier than six months after the date of its grant and, unless
a shorter period is provided by the Committee or by another Section of this
Plan, ending not later than ten years after the date of grant thereof (the
"Option Term"). No Stock Option shall be exercisable after the expiration of
its Option Term.
2.05 Manner of Payment.
Each Stock Option Agreement shall set forth the procedure governing the
exercise of the Stock Option granted thereunder, and shall provide that, upon
such exercise in respect of any shares of Common Stock subject thereto, the
Optionee shall pay to the Company, in full, the Option Price for such shares
with cash or with Common Stock previously owned by Optionee.
2.06 Death of Optionee.
(a) Upon the death of the Optionee, any rights to the extent exercisable
on the date of death may be exercised by the Optionee's estate, or by a person
who acquires the right to exercise such Stock Option by bequest or inheritance
or by reason of the death of the Optionee, provided that such exercise occurs
within both the remaining effective term of the Stock Option and one year
after the Optionee's death.
(b) The provisions of this Section shall apply notwithstanding the fact
that the Optionee's employment may have terminated prior to death, but only to
the extent of any rights exercisable on the date of death.
2.07 Retirement or Disability.
Upon termination of the Optionee's employment by reason of retirement or
permanent disability (as each is determined by the Committee), the Optionee
may, within 36 months from the date of termination, exercise any Stock Options
to the extent such options are exercisable during such 36-month period.
2.08 Termination for Other Reasons.
Except as provided in Sections 2.06 and 2.07, or except as otherwise
determined by the Committee, all Stock Options shall terminate three months
after the termination of the Optionee's employment.
2.9 Effect of Exercise.
The exercise of any Stock Option shall cancel that number of related Alternate
Rights and/or Limited Rights, if any, which is equal to the number of shares
of Common Stock purchased pursuant to said Stock Option.
ARTICLE III INCENTIVE STOCK OPTIONS
3.01 Award of Incentive Stock Options.
The Committee may, from time to time and subject to the provisions of the Plan
and such other terms and conditions as the Committee may prescribe, grant to
any participant in the Plan one or more "incentive stock options" which are
intended to qualify as such under the provisions of Section 422 of the Code,
to purchase for cash or for Company shares the number of shares of Common
Stock allotted by the Committee ("Incentive Stock Options"). The date an
Incentive Stock Option is granted shall mean the date selected by the
Committee as of which the Committee shall allot a specific number of shares to
a participant pursuant to the Plan.
3.02 Incentive Stock Option Agreements.
The grant of an Incentive Stock Option shall be evidenced by a written
Incentive Stock Option Agreement, executed by the Company and the holder of an
Incentive Stock Option (the "Optionee"), stating the number of shares of
Common Stock subject to the Incentive Stock Option evidenced thereby, and in
such form as the Committee may from time to time determine.
3.03 Incentive Stock Option Price.
Except as provided in Section 3.10 below, the Option Price per share of Common
Stock deliverable upon the exercise of an Incentive Stock Option shall be 100%
of the Fair Market Value of a share of Common Stock on the date the Incentive
Stock Option is granted.
3.04 Term and Exercise.
Except as provided in Section 3.10 below, each Incentive Stock Option shall be
fully exercisable at any time within the period beginning not earlier than six
months after the date of its grant and, unless a shorter period is provided by
the Committee or another Section of this Plan, ending not later than ten years
after the date of grant thereof (the "Option Term"). No Incentive Stock
Option shall be exercisable after the expiration of its Option Term.
3.05 Maximum Amount of Incentive Stock Option Grant.
The aggregate Fair Market Value (determined on the date the Incentive Stock
Option is granted) of Common Stock subject to an Incentive Stock Option
granted to any Optionee by the Committee in any calendar year shall not exceed
$100,000. Multiple Incentive Stock Options may be granted to an Optionee in
any calendar year, which Multiple Incentive Stock Options may in the aggregate
exceed such $100,000 Fair Market Value limitation, so long as each such
Incentive Stock Option within the Multiple Incentive Stock Option award does
not exceed such $100,000 Fair Market Value limitation and so long as no two
such Incentive Stock Options may be exercised by the Optionee in the same
calendar year.
3.06 Death of Optionee.
(a) Upon the death of the Optionee, any Incentive Stock Option
exercisable on the date of death may be exercised by the Optionee's estate or
by a person who acquires the right to exercise such Incentive Stock Option by
bequest or inheritance or by reason of the death of the Optionee, provided
that such exercise occurs within both the remaining Option Term of the
Incentive Stock Option and one year after the Optionee's death.
(b) The provisions of this Section shall apply notwithstanding the fact
that the Optionee's employment may have terminated prior to death, but only to
the extent of any Incentive Stock Options exercisable on the date of death.
3.07 Retirement or Disability.
Upon the termination of the Optionee's employment by reason of permanent
disability or retirement (as each is determined by the Committee), the
Optionee may, within 36 months from the date of such termination of
employment, exercise any Incentive Stock Options to the extent such Incentive
Stock Options were exercisable at the date of such termination of employment.
Notwithstanding the foregoing, the tax treatment available pursuant to Section
422 of the Code, upon the exercise of an Incentive Stock Option will not be
available to an Optionee who exercises any Incentive Stock Options more than
(i) 12 months after the date of termination of employment due to permanent
disability or (ii) three months after the date of termination of employment
due to retirement.
3.08 Termination for Other Reasons.
Except as provided in Sections 3.06 and 3.07 or except as otherwise determined
by the Committee, all Incentive Stock Options shall terminate three months
after the date of termination of the Optionee's employment.
3.09 Applicability of Stock Options Sections and Other Restrictions.
Sections 2.05, Manner of Payment; 2.06, Restrictions on Certain Shares; and
2.10, Effect of Exercise, applicable to Stock Options, shall apply equally to
Incentive Stock Options. Said Sections are incorporated by reference in this
Article III as though fully set forth herein. In addition, the Optionee shall
be prohibited from the sale, exchange, transfer, pledge, hypothecation, gift
or other disposition of the shares of Common Stock underlying the Incentive
Stock Options until the later of either two (2) years after the date of
granting the Incentive Stock Option or one (1) year after the transfer to the
Optionee of such underlying Common Stock after the Optionee's exercise of such
Incentive Stock Options.
3.10 Employee/Ten Percent Shareholders.
In the event the Committee determines to grant an Incentive Stock Option to an
employee who is also a Ten Percent Stockholder, as defined in 9.07(i) below,
(i) the Option Price shall not be less than 110% of the Fair Market Value of
the shares of Common Stock of the Company on the date of grant of such
Incentive Stock Option, and (ii) the exercise period shall not exceed 5 years
from the date of grant of such Incentive Stock Option. Fair Market Value
shall be as defined in 9.07(c) below.
ARTICLE IV RELOAD OPTIONS
4.01. Authorization of Reload Options.
Concurrently with the award of Stock Options and/or the award of Incentive
Stock Options to any participant in the Plan, the Committee may, subject to
the provisions of the Plan, particularly the provisions of Section 9.12 below,
and such other terms and conditions as the Committee may prescribe, authorize
reload options to purchase for cash or for Company shares a number of shares
of Common Stock allotted by the Committee ("Reload Options"). The number of
Reload Options shall equal (i) the number of shares of Common Stock used to
exercise the underlying Stock Options or Incentive Stock Options and (ii) to
the extent authorized by the Committee, the number of shares of Common Stock
used to satisfy any tax withholding requirement incident to the exercise of
the underlying Stock Options or Incentive Stock Options. The grant of a
Reload Option will become effective upon the exercise of underlying Stock
Options, Incentive Stock Options or other Reload Options through the use of
shares of Common Stock held by the Optionee for at least 12 months.
Notwithstanding the fact that the underlying Option may be an Incentive Stock
Option, a Reload Option is not intended to qualify as an "incentive stock
option" under Section 422 of the Code.
4.02. Reload Option Amendment.
Each Stock Option Agreement and Incentive Stock Option Agreement shall state
whether the Committee has authorized Reload Options with respect to the
underlying Stock Options and/or Incentive Stock Options. Upon the exercise of
an underlying Stock Option, Incentive Stock Option or other Reload Option, the
Reload Option will be evidenced by an amendment to the underlying Stock Option
Agreement or Incentive Stock Option Agreement.
4.03. Reload Option Price.
The Option Price per share of Common Stock deliverable upon the exercise of a
Reload Option shall be the Fair Market Value of a share of Common Stock on the
date the grant of the Reload Option becomes effective, unless the Committee
shall determine, in its sole discretion, that there are circumstances which
reasonably justify the establishment of a lower Option Price.
4.04. Term and Exercise.
Each Reload Option is fully exercisable not earlier than six months from the
effective date of grant. The term of each Reload Option shall be equal to the
remaining Option Term of the underlying Stock Option and/or Incentive Stock
Option.
4.05. Termination of Employment.
No additional Reload Options shall be granted to Optionees when Stock Options,
Incentive Stock Options and/or Reload Options are exercised pursuant to the
terms of this Plan following termination of the Optionee's employment.
4.06. Applicability of Stock Options Sections.
Sections 2.05, Manner of Payment; 2.06, Restrictions on Certain Shares; 2.07,
Death of Optionee; 2.08, Retirement or Disability; 2.09, Termination for Other
Reasons; and 2.10, Effect of Exercise, applicable to Stock Options, shall
apply equally to Reload Options. Said Sections are incorporated by reference
in this Article IV as though fully set forth herein.
ARTICLE V ALTERNATE STOCK APPRECIATION RIGHTS
5.01. Award of Alternate Rights.
Concurrently with or subsequent to the award of any Option to purchase one or
more shares of Common Stock, the Committee may, subject to the provisions of
the Plan and such other terms and conditions as the Committee may prescribe,
award to the Optionee with respect to each share of Common Stock, a related
alternate stock appreciation right, permitting the Optionee to be paid the
appreciation on the Option in Common Stock in lieu of exercising the Option
("Alternate Right").
5.02. Alternate Rights Agreement.
Alternate Rights shall be evidenced by written agreements in such form as the
Committee may from time to time determine.
5.03. Term and Exercise.
An Optionee who has been granted Alternate Rights may, from time to time, in
lieu of the exercise of an equal number of Options, elect to exercise one or
more Alternate Rights and thereby become entitled to receive from the Company
payment in Common Stock the number of shares determined pursuant to Sections
5.04 and 5.05. Alternate Rights shall be exercisable only to the same extent
and subject to the same conditions and within the same Option Terms as the
Options related thereto are exercisable, as provided in this Plan. The
Committee may, in its discretion, prescribe additional conditions to the
exercise of any Alternate Rights.
5.04. Amount of Payment.
The amount of payment to which an Optionee shall be entitled upon the exercise
of each Alternate Right shall be equal to 100% of the amount, if any, by which
the Fair Market Value of a share of Common Stock on the exercise date exceeds
the Fair Market Value of a share of Common Stock on the date the Option
related to said Alternate Right was granted or became effective, as the case
may be.
5.05. Form of Payment.
Upon exercise of Alternate Rights, the Company shall pay Optionee the amount
of payment determined pursuant to Section 5.04 in Common Stock. The number of
shares to be paid shall be determined by dividing the amount of payment
determined pursuant to Section 5.04 by the Fair Market Value of a share of
Common Stock on the exercise date of such Alternate Rights. As soon as
practicable after exercise, the Company shall deliver to the Optionee a
certificate or certificates for such shares of Common Stock. All such shares
shall be issued with the rights and restrictions specified in Section 2.06.
5.06. Effect of Exercise.
The exercise of any Alternate Rights shall cancel an equal number of Stock
Options, Incentive Stock Options, Reload Options and Limited Rights, if any,
related to said Alternate Rights.
5.07. Retirement or Disability.
Upon termination of the Optionee's employment (including employment as a
director of the Company after an Optionee terminates employment as an officer
or key employee of the Company) by reason of permanent disability or
retirement (as each is determined by the Committee), the Optionee may, within
six months from the date of such termination, exercise any Alternate Rights to
the extent such Alternate Rights are exercisable during such six-month period.
5.08. Death of Optionee or Termination for Other Reasons.
Except as provided in Section 5.07, or except as otherwise determined by the
Committee, all Alternate Rights shall terminate three months after the date of
termination of the Optionee's employment or upon the death of the Optionee.
ARTICLE VI LIMITED RIGHTS
6.01. Award of Limited Rights.
Concurrently with or subsequent to the award of an Option or Alternate Right,
the Committee may, subject to the provisions of the Plan and such other terms
and conditions as the Committee may prescribe, award to the Optionee with
respect to each share of Common Stock underlying such Option or Alternate
Right, a related limited right permitting the Optionee, during a specified
limited time period, to be paid the appreciation on the Option in cash in lieu
of exercising the Option ("Limited Right").
6.02. Limited Rights Agreement.
Limited Rights granted under the Plan shall be evidenced by written agreements
in such form as the Committee may from time to time determine.
6.03. Term and Exercise.
An Optionee who has been granted Limited Rights may, from time to time, in
lieu of the exercise of an equal number of Options and Alternate Rights
related thereto, elect to exercise one or more Limited Rights and thereby
become entitled to receive from the Company payment in cash the amount
determined pursuant to Sections 6.04 and 6.05. Limited Rights shall be
exercisable only to the same extent and subject to the same conditions and
within the same Option Terms as the Options or Alternate Rights related
thereto are exercisable, as provided in this Plan. The Committee may, in its
discretion, prescribe additional conditions to the exercise of any Limited
Rights.
Notwithstanding anything above to the contrary, Limited Rights are exercisable
in full for a period of seven months following the date of a Change in Control
of the Company, (the "Exercise Period"); provided, however, that Limited
Rights may not be exercised under any circumstances until the expiration of
the six-month period following the date of grant.
As used in the Plan, a "Change of Control" shall be deemed to have occurred if
(a) individuals who are currently directors of USANA, Inc. immediately prior
to a Control Transaction shall cease, within one year of such Control
Transaction, to constitute a majority of the Board (or of the Board of
Directors of any successor to USANA, Inc. or to all or substantially all of
its assets), or any entity, person or Group other than USANA, Inc. or a
Subsidiary Corporation of USANA, Inc. acquires shares of USANA, Inc. in a
transaction or series of transactions that result in such entity, person or
Group directly or indirectly owning beneficially fifty-one percent (51%) or
more of the outstanding shares of USANA, Inc.
As used herein, "Control Transaction" shall be (i) any tender offer for or
acquisition of capital stock of USANA, Inc., (ii) any merger, consolidation,
reorganization or sale of all or substantially all of the assets of USANA,
Inc. which has been approved by the shareholders, (iii) any contested election
of directors of USANA, Inc. or (iv) any combination of the foregoing which
results in a change in voting power sufficient to elect a majority of the
Board. As used herein, "Group" shall mean persons who act in concert as
described in Sections 13(d)(3) and/or 14(d)(2) of the Securities Exchange Act
of 1934, as amended.
6.04. Amount of Payment.
The amount of payment to which an Optionee shall be entitled upon the exercise
of each Limited Right shall be equal to 100% of the amount, if any, which is
equal to the difference between the Fair Market Value per share of Common
Stock covered by the related Option or Alternative Right on the date the
Option or Alternate Right was granted and the Fair Market Value per share of
such Common Stock on the exercise date.
6.05. Form of Payment.
Payment of the amount to which an Optionee is entitled upon the exercise of
Limited Rights, as determined pursuant to Section 6.04, shall be paid by the
Company solely in cash.
6.06. Effect of Exercise.
If Limited Rights are exercised, the Options and Alternate Rights, if any,
related to such Limited Rights cease to be exercisable to the extent of the
number of shares with respect to which the Limited Rights were exercised.
Upon the exercise or termination of the Options and Alternate Rights, if any,
related to such Limited Rights, the Limited Rights granted with respect
thereto terminate to the extent of the number of shares as to which the
related Options and Alternate Rights were exercised or terminated.
6.07. Retirement or Disability.
Upon termination of the Optionee's employment (including employment as a
director of this Company after an Optionee terminates employment as an officer
or key employee of this Company) by reason of permanent disability or
retirement (as each is determined by the Committee), the Optionee may, within
six months from the date of termination, exercise any Limited Right to the
extent such Limited Right is exercisable during such six-month period.
6.08. Death of Optionee or Termination for Other Reasons.
Except as provided in Sections 6.07 and 6.09, or except as otherwise
determined by the Committee, all Limited Rights granted under the Plan shall
terminate three months after the date of termination of the Optionee's
employment or upon the death of the Optionee.
6.09. Termination Related to a Change in Control.
The requirement that an Optionee be terminated by reason of retirement or
permanent disability or be employed by the Company at the time of exercise
pursuant to Sections 6.07 and 6.08 respectively, is waived during the Exercise
Period as to any Optionee who (i) was employed by the Company at the time of
the Change in Control and (ii) is subsequently terminated by the Company other
than for just cause or who voluntarily terminates if such termination was the
result of a good faith determination by the Optionee that as a result of the
Change in Control he is unable to effectively discharge his present duties or
the duties of the position which he occupied just prior to the Change in
Control. As used herein "just cause" shall mean willful misconduct or
dishonesty or conviction of or failure to contest prosecution for a felony, or
excessive absenteeism unrelated to illness.
ARTICLE VII STOCK BONUSES
7.01 Terms, Conditions and Restrictions.
The Committee may from time to time, and subject to the provisions of the Plan
and such other terms and conditions as the Committee may prescribe, grant to
any participant in the Plan one or more Stock Bonuses as compensation the
number of shares of Common Stock allotted by the Committee ("Stock Bonuses").
Stock awarded as a Stock Bonus shall be subject to the terms, conditions and
restrictions determined by the Committee at the time of the award. The
Committee may require the recipient to sign an agreement as a condition of the
award. The agreement may contain such terms, conditions, representations, and
warranties as the Committee may require.
ARTICLE VIII CASH BONUSES
8.01 Grant.
The Committee may from time to time, and subject to the provisions of the Plan
and such other terms and conditions as the Committee may prescribe, grant to
any participant in the Plan one or more cash bonuses as compensation ("Cash
Bonuses"). The Committee may grant Cash Bonuses under the Plan outright or in
connection with (i) an Option or Stock Appreciation Right granted or
previously granted or (ii) a Stock Bonus awarded, or previously awarded.
Bonuses will be subject to rules, terms, and conditions as the Committee may
prescribe.
8.02 Cash Bonuses in Connection with Options and Stock Appreciation
Rights.
Cash Bonuses granted in connection with Options will entitle an Optionee to a
Cash Bonus when the related Option is exercised (or surrendered in connection
with exercise of a Stock Appreciation Right related to the Option) in whole or
in part. Cash Bonuses granted in connection with Stock Appreciation Rights
will entitle the holder to a Cash Bonus when the Stock Appreciation Right is
exercised. Upon exercise of an Option, the amount of the Cash Bonus shall be
determined by multiplying the amount by which the total Fair Market Value of
the shares to be acquired upon the exercise exceeds the total Option Price for
the shares by the applicable bonus percentage. Upon exercise of a Stock
Appreciation Right, the cash bonus shall be determined by multiplying the
total Fair Market Value of the shares or cash received pursuant to the
exercise of the Stock Appreciation Right by the applicable bonus percentage.
The bonus percentage applicable to a Cash Bonus shall be determined from time
to time by the Committee but shall in no event exceed thirty percent.
8.03 Cash Bonuses in Connection with Stock Bonuses.
Cash Bonuses granted in connection with Stock Bonuses will entitle the person
awarded such Stock Bonuses to a Cash Bonus either at the time the Stock Bonus
is awarded or at such time as restrictions, if any, to which the Stock Bonus
is subject lapse. If a Stock Bonus awarded is subject to restrictions and is
repurchased by the Company or forfeited by the holder, the Cash Bonus granted
in connection with such Stock Bonus shall terminate and may not be exercised.
Whether any Cash Bonus is to be awarded and, if so, the amount and timing of
such Cash Bonus shall be determined from time to time by the Committee.
ARTICLE IX MISCELLANEOUS
9.01. General Restriction.
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 of Common Stock subject or related thereto upon
any securities exchange or under any state or Federal law, or (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 of Common Stock,
is necessary or desirable as a condition of, or in connection with, the
granting of such award or the issue or purchase of shares of Common Stock
thereunder, such award may not be exercised or consummated in whole or in part
unless and until such listing, registration, qualification, consent, approval
or agreement shall have been effected or obtained free of any conditions not
acceptable to the Committee.
9.02. Non-Assignability.
No award under the Plan shall be assignable or transferable by the recipient
thereof, except by Will or by the laws of descent and distribution or pursuant
to the terms of a qualified domestic relations order as defined in the U.S.
Internal Revenue Code. During the life of the recipient, such award shall be
exercisable only by such person or by such person's guardian or legal
representative.
9.03. Withholding Taxes.
Whenever the Company proposes or is required to issue or transfer shares of
Common Stock under the Plan, the Company shall, to the extent permitted or
required by law, have the right to require the grantee, as a condition of
issuance of a Stock Bonus or exercise of its Options or Stock Appreciation
Rights, to remit to the Company no later than the date of issuance or
exercise, or make arrangements satisfactory to the Committee regarding payment
of, any amount sufficient to satisfy any Federal, state and/or local taxes of
any kind, including, but not limited to, withholding tax requirements prior to
the delivery of any certificate or certificates for such shares. If the
participant fails to pay the amount required by the Committee, the Company
shall have the right to withhold such amount from other amounts payable by the
Company to the participant, including but not limited to, salary, fees or
benefits, subject to applicable law. Alternatively, the Company may issue or
transfer such shares of Common Stock net of the number of shares sufficient to
satisfy any such taxes, including, but not limited to, the withholding tax
requirements. For withholding tax purposes, the shares of Common Stock shall
be valued on the date the withholding obligation is incurred.
9.04. Right to Terminate Employment.
Nothing in the Plan or in any agreement entered into pursuant to the Plan
shall confer upon any participant the right to continue in the employment of
the Company or effect any right which the Company may have to terminate the
employment of such participant.
9.05. Non-Uniform Determinations.
The Committee's determinations under the Plan (including without limitation
determinations of the persons to receive awards, the form, amount and timing
of such awards, the terms and provisions of such awards and the agreements
evidencing same) need not be uniform and may be made by it selectively among
persons who receive, or are eligible to receive, awards under the Plan,
whether or not such persons are similarly situated.
9.06. Rights as a Shareholder.
The recipient 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 him or her.
9.07 Fractional Shares. Fractional shares shall not be granted under any
award under this Plan, unless the provision of the Plan which authorizes such
award also specifies the terms under which fractional shares or interests may
be granted.
9.08. Definitions.
As used in this Plan, the following words and phrases shall have the meanings
indicated in the following definitions:
(a)"AFFILIATE" means any person or entity which directly, or indirectly
through one or more intermediaries, controls, is controlled by, or is under
common control with USANA, Inc.
(b)"DISABILITY" shall mean an Optionee's inability to engage in any
substantial gainful activity by reason of any medically determinable physical
or mental impairment that can be expected to result in death or that has
lasted or can be expected to last for a continuous period of not less than one
year.
(c)"FAIR MARKET VALUE" per share in respect of any share of Common Stock as of
any particular date shall mean (i) the closing sales price per share of Common
Stock reflected on a national securities exchange for the last preceding date
on which there was a sale of such Common Stock on such exchange; or (ii) if
the shares of Common Stock are then traded on an over-the-counter market, the
average of the closing bid and asked prices for the shares of Common Stock in
such over-the-counter market for the last preceding date on which there was a
sale of such Common Stock in such market; or (iii) in case no reported sale
takes place, the average of the closing bid and asked prices on the National
Association of Securities Dealers' Automated Quotations System ("NASDAQ") or
any comparable system, or if the shares of Common Stock are not listed on
NASDAQ or comparable system, the closing sale price or, in case no reported
sale takes place, the average of the closing bid and asked prices, as
furnished by any member of the National Association of Securities Dealers,
Inc. selected from time to time by the Company for that purpose; or (iv) if
the shares of Common Stock are not then listed on a national securities
exchange or traded in an over-the-counter market, such value as the Committee
in its discretion may determine in any such other manner as the Committee may
deem appropriate. In no event shall the Fair Market Value of any share of
Common Stock be less than its par value. In the case of Incentive Stock
Options, the Fair Market Value shall not be discounted for restrictions, lack
of marketability and other such limitations on the enjoyment of the Common
Stock. In the case of other type of Options, the Fair Market Value of the
Common Stock shall be so discounted.
(d)"OPTION" means Stock Option, Incentive Stock Option or Reload Option.
(e)"OPTION PRICE" means the purchase price per share of Common Stock
deliverable upon the exercise of an Option.
(f)"PARENT CORPORATION" shall mean any corporation (other than USANA, Inc.) in
an unbroken chain of corporations ending with the Optionee's employer
corporation if, at the time of granting an Option, each of the corporations
other than the Optionee's employer corporation 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.
(g)"STOCK APPRECIATION RIGHT" shall mean Alternate Right or Limited
Right.
(h)"SUBSIDIARY CORPORATION" shall mean any corporation (other than USANA,
Inc.) in an unbroken chain of corporations beginning with the Optionee's
employer corporation if, at the time of granting an 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.
(i)"TEN PERCENT STOCKHOLDER" shall mean an Optionee who, at the time an
Incentive Stock Option is granted, is an employee of the Company who owns
stock possessing more than ten percent (10%) of the total combined voting
power of all classes of stock of the Company or of its Parent or Subsidiary
Corporations.
9.09. Leaves of Absence and Performance Targets.
The Committee shall be entitled to make such rules, regulations and
determinations as it deems appropriate under the Plan in respect of any leave
of absence taken by the recipient of any award. Without limiting the
generality of the foregoing, the Committee shall be entitled to determine (i)
whether or not any such leave of absence shall constitute a termination of
employment within the meaning of the Plan and (ii) the impact, if any, of such
leave of absence on awards under the Plan theretofore made to any recipient
who takes such leave of absence. The Committee shall also be entitled to make
such determination of performance targets, if any, as it deems appropriate and
to impose them upon an Optionee as a condition of continued employment.
9.10. Newly Eligible Employees.
The Committee shall be entitled to make such rules, regulations,
determinations and awards as it deems appropriate in respect of any employee
who becomes eligible to participate in the Plan or any portion thereof, after
the commencement of an award or incentive period.
9.11. Adjustments.
In the event of any change in the outstanding Common Stock by reason of a
stock dividend or distribution, recapitalization, merger, consolidation,
split-up, combination, exchange of shares or the like, the Committee may
appropriately adjust the number of shares of Common Stock which may be issued
under the Plan, the number of shares of Common Stock subject to Options
theretofore granted under the Plan, the Option Price of Options theretofore
granted under the Plan, the amount of Restricted Stock Units theretofore
awarded under the Plan, the performance targets referred to in Section 9.08
and any and all other matters deemed appropriate by the Committee.
9.12. Amendment of the Plan.
(a) The Committee may, without further action by the shareholders and
without receiving further consideration from the participants, amend this Plan
or condition or modify awards under this Plan in response to changes in
securities, tax or other laws or rules, regulations or regulatory
interpretations thereof applicable to this Plan or to comply with stock
exchange rules or requirements.
(b) The Committee may at any time and from time to time terminate or
modify or amend the Plan in any respect, except that without shareholder
approval the Committee may not (i) increase the maximum number of shares of
Common Stock which may be issued under the Plan (other than increases pursuant
to Section 9.10), (ii) extend the period during which any award may be granted
or exercised, or (iii) extend the term of the Plan. The termination or any
modification or amendment of the Plan, except as provided in subsection (a),
shall not without the consent of a participant, affect his other rights under
an award previously granted to him or her.
9.13. General Terms and Conditions of Options.
Each Option shall be evidenced by a written Option Agreement between the
Company and the Optionee, which agreement, unless otherwise stated in Articles
II, III or IV of the Plan, shall comply with and be subject to the following
terms and conditions:
(a) Number of Shares. Each Option Agreement shall state the number
of shares of Common Stock to which the Option relates.
(b) Type of Option. Each Option Agreement shall specifically
identify the portion, if any, of the Option which constitutes an Incentive
Stock Option and the portion, if any, which constitutes a Non-qualified Stock
Option in the form of either a Stock Option or a Reload Option.
(c) Option Price. Each Option Agreement shall state the Option Price
which, in the case of Incentive Stock Options (except to the extent provided
in Article III above), shall be not less than 100% of the undiscounted Fair
Market Value of the shares of Common Stock of the Company on the date of grant
of the Option. The Option Price shall be subject to adjustment as provided in
9.13(i) hereof. The date on which the Committee adopts a resolution expressly
granting an Option shall be considered the day on which such Option is
granted. No Options shall be granted under the Plan more than 10 years after
the date of adoption of the Plan by the Board, but the validity of Options
previously granted may extend and be validly exercised beyond that date.
Except as provided in Section 3.10 above, Options granted under the Plan shall
be for a period determined by the Committee as provided in Section 9.13(e),
below.
(d) Medium and Time of Payment. The Option Price shall be paid in
full at the time of exercise in cash or in shares of Common Stock having a
Fair Market Value equal to such Option Price or in a combination of cash and
such shares, and may be effected in whole or in part (i) with monies received
from the Company at the time of exercise as a compensatory cash payment, or
(ii) with monies borrowed from the Company pursuant to repayment terms and
conditions as shall be determined from time to time by the Committee, in its
discretion, separately with respect to each exercise of Options and each
Optionee; provided, however, that each such method and time for payment and
each such borrowing and terms and conditions of repayment shall be permitted
by and be in compliance with applicable law, and provided, further, if the
Option Price is paid with monies borrowed from the Company, such fact shall be
noted conspicuously on the certificate evidencing such shares in accordance
with applicable law.
(e) Term and Exercise of Options. Options shall be exercisable over
the exercise period as and at the times and upon the conditions that the
Committee may determine, as reflected in the Option Agreement; provided,
however, that the Committee shall have the authority to accelerate the
exercisability of any outstanding Option at such time and under such
circumstances, as it, in its sole discretion, deems appropriate. The exercise
period shall be determined by the Committee for all Options; provided, however
that such exercise period shall not exceed 10 years from the date of grant of
such Option. The exercise period shall be subject to earlier termination as
provided in Sections 9.13(f) and 9.13(g) hereof. An Option may be exercised,
as to any or all full shares of Common Stock as to which the Option has become
exercisable, by giving written notice of such exercise to the Committee;
provided, however, that an Option may not be exercised at any one time as to
fewer than 100 shares (or such number of shares as to which the Option is then
exercisable if such number of shares is less than 100).
(f) Termination. Except as provided in Section 9.13(e) and in this
Section 9.13(f) hereof, an Option may not be exercised unless the Optionee is
then in the employ of the Company or a Parent, division or Subsidiary
Corporation (or a corporation issuing or assuming the Option in a transaction
to which Code Section 424(a) applies), and unless the Optionee has remained
continuously so employed since the date of grant of the Option. If the
employment of an Optionee shall terminate (other than by reason of death,
disability or retirement), all Options of such Optionee that are exercisable
at the time of such termination may, unless earlier terminated in accordance
with their terms, be exercised within three months after such termination;
provided, however, that if the employment of an Optionee shall terminate for
cause, all Options theretofore granted to such Optionee shall, to the extent
not theretofore exercised, terminate forthwith. Nothing in the Plan or in any
Option shall limit the Company's rights under Section 9.04 above. No Option
may be exercised after the expiration of its term.
(g) Death, Disability or Retirement. If an Optionee shall die while
employed by the Company, a Parent or a Subsidiary Corporation thereof, or die
within three months after the termination of such Optionee's employment other
than for cause, or if the Optionee's employment shall terminate by reason of
disability or retirement, all Options theretofore granted to such Optionee (to
the extent otherwise exercisable) may, unless earlier terminated in accordance
with their terms, be exercised by the Optionee or by the Optionee's estate or
by a person who acquired the right to exercise such Option by bequest or
inheritance or otherwise by reason of the death or disability of the Optionee,
at any time within one year after the date of death, disability or retirement
of the Optionee.
(h) Non-transferability of Options. Options granted under the Plan
shall not be transferable otherwise than (i) by will; (ii) by the laws of
descent and distribution; or (iii) to a revocable inter vivos trust for the
primary benefit of the Optionee and his or her spouse. Options may be
exercised, during the lifetime of the Optionee, only by the Optionee, his or
her guardian, legal representative or the Trustee of an above described
trust. Except as permitted by the preceding sentences, no Option granted
under the Plan or any of the rights and privileges thereby conferred shall be
transferred, assigned, pledged, or hypothecated in any way (whether by
operation of law or otherwise), and no such Option, right, or privilege shall
be subject to execution, attachment, or similar process. Upon any attempt so
to transfer, assign, pledge, hypothecate, or otherwise dispose of the Option,
or of any right or privilege conferred thereby, contrary to the provisions of
this Plan, or upon the levy of any attachment or similar process upon such
Option, right, or privilege, the Option and such rights and privileges shall
immediately become null and void.
(i) Effect of Certain Changes.
(A) If there is any change in the number of shares of Common Stock
through the declaration of stock dividends, or through recapitalization
resulting in stock splits, or combinations or exchanges of such shares, the
number of shares of Common Stock available for awards under the Plan pursuant
to Section 1.05 above, the number of such shares covered by the outstanding
Options and the price per share of such Options shall be proportionately
adjusted by the Committee to reflect any increase or decrease in the number of
issued shares of Common Stock; provided, however, that any fractional shares
resulting from such adjustment shall be eliminated.
(B) In the event of the proposed dissolution or liquidation of the
Company, in the event of any corporate separation or division, including, but
not limited to split-up, split-off or spin-off, or in the event of a merger,
consolidation or other reorganization of the Corporation with another
corporation, the Committee may provide that the holder of each Option then
exercisable shall have the right to exercise such Option (at its then Option
Price) solely for the kind and amount of shares of stock and other securities,
property, cash or any combination thereof receivable upon such dissolution,
liquidation, or corporate separation or division, or merger, consolidation or
other reorganization by a holder of the number of shares of Common Stock for
which such Option might have been exercised immediately prior to such
dissolution, liquidation, or corporate separation or division, or merger,
consolidation or other reorganization; or the Committee may provide, in the
alternative, that each Option granted under the Plan shall terminate as of a
date to be fixed by the Committee; provided, however, that not less than
90-days' written notice of the date so fixed shall be given to each Optionee,
who shall have the right, during the period of 90 days preceding such
termination, to exercise the Options as to all or any part of the shares of
Common Stock covered thereby, including shares as to which such Options would
not otherwise be exercisable; provided, further, that failure to provide such
notice shall not invalidate or affect the action with respect to which such
notice was required.
(C) If while unexercised Options remain outstanding under the Plan, the
stockholders of the Corporation approve a definitive agreement to merge,
consolidate or otherwise reorganize the Company with or into another
corporation or to sell or otherwise dispose of all or substantially all of its
assets, or adopt a plan of liquidation (each, a "Disposition Transaction"),
then the Committee may: (i) make an appropriate adjustment to the number and
class of shares available for awards under the Plan pursuant to Section 1.05
above, and to the amount and kind of shares or other securities or property
(including cash) receivable upon exercise of any outstanding options after the
effective date of such transaction, and the price thereof, or, in lieu of such
adjustment, provide for the cancellation of all options outstanding at or
prior to the effective date of such transaction; (ii) provide that
exercisability of all Options shall be accelerated, whether or not otherwise
exercisable; or (iii) in its discretion, permit Optionees to surrender
outstanding options for cancellation; provided, however, that if the
stockholders approve such Disposition Transaction within five years of the
date of adoption of this Plan and before the Company is taken public, the
Committee shall provide for the alternative in (ii) above. Upon any
cancellation of an outstanding Option pursuant to this 9.13(i)(C), the
Optionee shall be entitled to receive, in exchange therefor, a cash payment
under any such Option in an amount per share determined by the Committee in
its sole discretion, but not less than the difference between the per share
exercise price of such Option and the Fair Market Value of a share of Company
Common Stock on such date as the Committee shall determine.
(D) Paragraphs (B) and (C) of this Section 9.13(i) shall not apply to a
merger, consolidation or other reorganization in which the Company is the
surviving corporation and shares of Common Stock are not converted into or
exchanged for stock, securities of any other corporation, cash or any other
thing of value. Notwithstanding the preceding sentence, in case of any
consolidation, merger or other reorganization of another corporation into the
Company in which the Company is the surviving corporation and in which there
is a reclassification or change (including a change to the right to receive
cash or other property) of the shares of Common Stock (other than a change in
par value, or from par value to no par value, or as a result of a subdivision
or combination, but including any change in such shares into two or more
classes or series of shares), the Committee may provide that the holder of
each Option then exercisable shall have the right to exercise such Option
solely for the kind and amount of shares of stock and other securities
(including those of any new direct or indirect parent of the Company),
property, cash or any combination thereof receivable upon such
reclassification, change, consolidation or merger by the holder of the number
of shares of Common Stock for which such Option might have been exercised.
(E) In the event of a change in the Common Stock of the Company as
presently constituted which is limited to a change of all of its authorized
shares with par value into the same number of shares with a different par
value or without par value, the shares resulting from any such change shall be
deemed to be the Common Stock within the meaning of the Plan.
(F) To the extent that the foregoing adjustments relate to stock or
securities of the Company, such adjustments shall be made by the Committee,
whose determination in that respect shall be final, binding and conclusive,
provided that each Incentive Stock Option granted pursuant to Article III of
this Plan shall not be adjusted in a manner that causes such option to fail to
continue to qualify as an Incentive Stock Option within the meaning of Section
422 of the Code.
(G) Except as hereinbefore expressly provided in this Section 9.13(i),
the Optionee shall have no rights by reason of any subdivision or
consolidation of shares of stock or any class or the payment of any stock
dividend or any other increase or decrease in the number of shares of stock of
any class or by reason of any dissolution, liquidation, merger, consolidation
or other reorganization or spin-off of assets or stock of another corporation;
and any issue by the Company of shares of stock of any class shall not affect,
and no adjustment by reason thereof shall be made with respect to, the number
of price of shares of Common Stock subject to the Option. The grant of an
Option pursuant to the Plan shall not affect in any way the right or power of
the Company to make adjustments, reclassifications, reorganizations or changes
of its capital or business structures or to merge or to consolidate or to
dissolve, liquidate or sell, or transfer all or part of its business or
assets.
(j) Rights as a Shareholder. An Optionee or a transferee of an Option
shall have no right as a shareholder with respect to any shares covered by the
Option until the date of the issuance of a certificate evidencing such
shares. No adjustment shall be made for dividends (ordinary or extraordinary,
whether in cash, securities or other property) or distribution of other rights
for which the record date is prior to the date such certificate is issued,
except as provided in Section 9.13(i) hereof.
(k) Other Provisions. The Option Agreement authorized under the Plan
shall contain such other provisions, including, without limitation, (A) the
imposition of restrictions upon the exercise of an Option; (B) in the case of
an Incentive Stock Option, the inclusion of any condition not inconsistent
with such Option qualifying as an Incentive Stock Option; and (C) conditions
relating to compliance with applicable federal and state securities laws, as
the Committee shall deem advisable.
9.14. Effects of Headings
The Section and Subsection headings contained herein are for convenience only
and shall not affect the construction hereof.
ADOPTED BY RESOLUTION OF THE BOARD OF DIRECTORS, EFFECTIVE THE 1st DAY OF MAY
1995.
<PAGE>
USANA, Inc.
a Utah corporation
1995 Directors' Stock Option Plan
The purpose of this 1995 Directors' Stock Option Plan (the "Plan") is to
promote the long-term success of USANA, Inc. (the "Company") by creating a
long-term mutuality of interests between the Directors and the shareholders of
the Company, to provide an incentive to management to remain with the Company
and to provide a means through which the Company may attract able persons to
serve as Directors of the Company.
1. Administration
The Plan shall be administered by a Committee consisting of two or more
directors appointed by the Board of Directors of the Company (the "Board").
The Committee shall keep records of action taken at its meetings. A majority
of the Committee shall constitute a quorum at any meeting, and the acts of a
majority of the members present at any meeting at which a quorum is present or
acts approved in writing by all the members of the Committee shall be the acts
of the Committee. The Committee shall interpret the Plan and prescribe such
rules, regulations and procedures in connection with the operations of the
Plan as it shall deem to be necessary and advisable for the administration of
the Plan consistent with the purposes of the Plan. All questions of
interpretation and application of the Plan or as to stock options granted
under the Plan, shall be subject to the determination of the Committee, which
shall be final and binding. Notwithstanding the above, the selection of the
Directors to whom stock options are to be granted, the timing of such grants,
the number of shares subject to any stock option, the exercise price of any
stock option, the periods during which any stock option may be exercised and
the term of any stock option shall be as hereinafter provided by formula and
the Committee shall have no discretion as to such matters.
2. Shares Available Under the Plan
Except as may be adjusted as provided elsewhere herein, the shares of
stock which may be issued upon exercise of Options under the Plan shall be
authorized and unissued or treasury shares of Common Stock of the Company
("Common Stock"). The number of shares of Common Stock the Company shall
reserve for issuance upon exercise of Options to be granted from time to time
under the Plan, shall not exceed in the aggregate 300,000 shares. In the
absence of an effective registration statement under the Securities Act of
1933 (the "Act"), all Options granted and shares of Common Stock subject to
their exercise will be restricted as to subsequent resale or transfer,
pursuant to the provisions of Rule 144, promulgated under the Act; provided,
however, that the Company shall as soon as practicable, file a registration
statement covering the shares of Common Stock reserved for issuance under the
Plan on Form S-8, if such form is available for use by the Company.
3. Grant of Stock Options
Following the adoption of this Plan by the Board of Directors, there
shall be an initial grant of an option as provided below to Directors of the
Company on the first business day following the date a person becomes a member
of the Board of the Company. Such person shall automatically and without
further action by the Board or the Committee be granted a "nonstatutory stock
option" (i.e., a stock option which does not qualify under Sections 422 or 423
of the Internal Revenue Code of 1986 (the "Code")) to purchase 62,500 shares
of Common Stock, subject to adjustment and substitution as provided below.
Such option shall vest at a rate of 12,500 shares per year while such person
continues to serve as a Director, over a period of five (5) years, commencing
on the first anniversary date of the grant. At the date of grant, if the
number of shares remaining available for the grant of options under the Plan
is not sufficient for each Director to be granted an option as provided above,
then each Director shall be granted an option for a number of whole shares
equal to the number of shares then remaining available divided by the number
of Directors, disregarding any fractions of a share. A Director may decline
acceptance of the grant of options hereunder by notifying the Committee of
such decision.
4. Effective Date and Term of Plan
The Plan shall become effective as of the 1st day of May 1995, the date
the Plan is effectively adopted by a majority of the Board (the "Effective
Date"), but for purposes of qualification under the exemptions stated in
Section 16(b) of the Securities Exchange Act of 1934, the Plan must be
approved by the holders of a majority of the issued and outstanding shares of
USANA, Inc. Common Stock present in person or by proxy and entitled to vote at
the earlier of either a Special Meeting of Shareholders called for that
purpose or the 1995 Annual Meeting of Shareholders of USANA, Inc., which
meeting shall in any event, be held not more than twelve (12) months after
adoption of the Effective Date.
No awards shall be granted under the Plan after or on the 30th day of
April, 2005, which date is ten (10) years after the Effective Date (the "Plan
Termination Date"). Provided, however, that the Plan and all awards made
under the Plan prior to such Plan Termination Date shall remain in effect
until such awards have been satisfied or terminated in accordance with the
Plan and the terms of such awards.
5. Terms and Conditions of Stock Options
Stock options granted under the Plan shall be subject to the following
terms and conditions:
A. The grant of a Stock Option shall be evidenced by a written Stock
Option Agreement, executed by the Company and the holder of the Option (the
"Optionee"), stating the number of shares of Common Stock subject to the Stock
Option evidenced thereby, and in such form as the Committee may from time to
time determine.
B. The purchase price at which each stock option may be exercised
(the "Option Price") shall be one hundred percent (100%) of the fair market
value per share of the stock covered by the option on the date of grant as
provided below.
C. Subject to the vesting schedule under Paragraph 3, above, each
Stock Option shall be fully exercisable at any time within ten (10) years
after the date of grant thereof (the "Option Term"). No Stock Option shall be
exercisable after the expiration of its Option Term. A stock option to the
extent exercisable at any time may be exercised in whole or in part.
D. Each Stock Option Agreement shall set forth the procedure
governing the exercise of the Stock Option granted thereunder, and shall
provide that, upon such exercise in respect of any shares of Common Stock
subject thereto, the Optionee shall pay to the Company, in full, the Option
Price for such shares with cash or with Common Stock previously owned by
Optionee having a fair market value on the date of exercise of the stock
option, determined as provided below, equal to the option price for the shares
being purchased. Delivery of the shares may be accomplished through the
effective transfer to the Company of shares held by a broker or other agent.
The Company will also cooperate with any person exercising a stock option who
participates in a cashless exercise program of a broker or other agent under
which all or part of the shares received upon exercise of the stock option are
sold through the broker or other agent or under which the broker or other
agent makes a loan to such person. Notwithstanding the foregoing, the
exercise of the stock option shall not be deemed to occur and no shares of
stock will be issued by the Company upon exercise of the stock option until
the Company has received payment of the option price in full. The date of
exercise of a stock option shall be determined under procedures established by
the Committee as provided above. Payment of the option price with shares
shall not increase the number of shares of stock which may be issued under the
Plan.
E. If an Optionee ceases to be a Director of the Company for any
reason, any outstanding options held by the Director shall be exercisable
according to the following provisions:
(1) If the Optionee ceases to be a Director for any reason other than
resignation, removal for cause or death, any outstanding stock option held by
the Optionee at such time shall be exercisable by the Optionee (but only if
exercisable immediately prior to ceasing to be a Director) at any time prior
to the expiration date of such stock option or within three years after the
date the grantee ceases to be a Director, whichever is the shorter period;
(2) If during his term of office as a Director an Optionee resigns
from the Board or is removed from office for cause, any outstanding stock
option held by the Optionee which is not exercisable by him immediately prior
to resignation or removal shall terminate as of the date of resignation or
removal, and any outstanding stock option held by the Optionee which is
exercisable immediately prior to resignation or removal shall be exercisable
at any time prior to the expiration date of such stock option or within six
months after the date of resignation or removal, whichever period is shorter;
(3) Following the death of an Optionee during service as a Director
of the Company, any outstanding stock option held by him at the time of death
(whether or not exercisable by the grantee immediately prior to death) shall
be exercisable by the person entitled to do so under the Will of the Optionee,
or, if the Optionee shall fail to make testamentary disposition of the stock
option or shall die intestate, by the legal representative of the Optionee at
any time prior to the expiration date of such stock option or within three
years after the date of death of Optionee, whichever is the shorter period;
(4) Following the death of an Optionee after ceasing to be a Director
and during a period when a stock option is exercisable under (2) above, the
stock option shall be exercisable by such person entitled to do so under the
will of the Optionee or by such legal representative at any time prior to the ex
piration date of the stock option or within one year after the date of death,
whichever is the shorter period;
(5) Following the death of an optionee after ceasing to be a Director
and during a period when a stock option is exercisable under clause (3) above,
the stock option shall be exercisable by such person entitled to do so under
the Will of the optionee or by such legal representative at any time during
the shorter of the following two periods: (i) until the expiration date of
the stock option or (ii) until three years after the grantee ceased being a
Director or one year after the date of death of the Optionee, (whichever is
longer).
A stock option held by an Optionee who has ceased to be a Director of the
Company shall terminate upon the expiration of the applicable exercise period,
if any, specified in this Section 5E.
F. "FAIR MARKET VALUE" per share in respect of any share of Common
Stock as of any particular date shall mean (i) the closing sales price per
share of Common Stock reflected on a national securities exchange for the last
preceding date on which there was a sale of such Common Stock on such
exchange; or (ii) if the shares of Common Stock are then traded on an
over-the-counter market, the average of the closing bid and asked prices for
the shares of Common Stock in such over-the-counter market for the last
preceding date on which there was a sale of such Common Stock in such market;
or (iii) in case no reported sale takes place, the average of the closing bid
and asked prices on the National Association of Securities Dealers' Automated
Quotations System ("NASDAQ") or any comparable system, or if the shares of
Common Stock are not listed on NASDAQ or comparable system, the closing sale
price or, in case no reported sale takes place, the average of the closing bid
and asked prices, as furnished by any member of the National Association of
Securities Dealers, Inc. selected from time to time by the Company for that
purpose; or (iv) if the shares of Common Stock are not then listed on a
national securities exchange or traded in an over-the-counter market, such
value as the Committee in its discretion may determine in any such other
manner as the Committee may deem appropriate. In no event shall the Fair
Market Value of any share of Common Stock be less than its par value.
G. 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 of Common Stock subject or related
thereto upon any securities exchange or under any state or Federal law, or
(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
of Common Stock, is necessary or desirable as a condition of, or in connection
with, the granting of such award or the issue or purchase of shares of Common
Stock thereunder, such award may not be exercised or consummated in whole or
in part unless and until such listing, registration, qualification, consent,
approval or agreement shall have been effected or obtained free of any
conditions not acceptable to the Committee. No award under the Plan shall be
assignable or transferable by the recipient thereof, except by Will or by the
laws of descent and distribution or pursuant to the terms of a qualified
domestic relations order as defined in the U.S. Internal Revenue Code. During
the life of the recipient, such award shall be exercisable only by such person
or by such person's guardian or legal representative.
Subject to the foregoing provisions of Section 5 and the other provisions
of this Plan, any stock option granted under the Plan shall be subject to such
restrictions and other terms and conditions, if any, as shall be determined,
in its discretion, by the Committee and set forth in the agreement under which
the option is granted, or an amendment thereto; except that in no event shall
the Committee or the Board have any power or authority which would cause the
Plan to fail to be a plan described in Rule 16b-3(c)(2)(ii) of the Securities
Exchange Act or any successor Rule.
6. Withholding Taxes
Whenever the Company proposes or is required to issue or transfer shares
of Common Stock under the Plan, the Company shall, to the extent permitted or
required by law, have the right to require the grantee, as a condition of
exercise of its Options to remit to the Company no later than the date of
issuance or exercise, or make arrangements satisfactory to the Committee
regarding payment of, any amount sufficient to satisfy any federal, state
and/or local taxes of any kind, including, but not limited to, withholding tax
requirements prior to the delivery of any certificate or certificates for such
shares. If the participant fails to pay the amount required by the Committee,
the Company shall have the right to withhold such amount from other amounts
payable by the Company to the participant, including but not limited to,
salary, fees or benefits, subject to applicable law. Alternatively, the
Company may issue or transfer such shares of Common Stock net of the number of
shares sufficient to satisfy any such taxes, including, but not limited to,
the withholding tax requirements. For withholding tax purposes, the shares of
Common Stock shall be valued on the date the withholding obligation is
incurred.
7. Rights as a Shareholder
The recipient 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 him or her upon exercise of the options.
8. Adjustments
In the event of any change in the outstanding Common Stock by reason of a
stock dividend or distribution, recapitalization, merger, consolidation,
split-up, combination, exchange of shares or the like, the Committee may
appropriately adjust the number of shares of Common Stock which may be issued
under the Plan, the number of shares of Common Stock subject to Options
theretofore granted under the Plan and the Option Price of Options theretofore
granted under the Plan.
9. Effect of Certain Changes
Notwithstanding Section 8, above, the following adjustments shall be made
upon the occurrence of certain events or changes to the Company or its
capitalization:
(A) If there is any change in the number of shares of Common Stock
through the declaration of stock dividends, or through recapitalization
resulting in stock splits, or combinations or exchanges of such shares, the
number of shares of Common Stock available for awards under the Plan, the
number of such shares covered by the outstanding Options and the price per
share of such Options shall be proportionately adjusted by the Committee to
reflect any increase or decrease in the number of issued shares of Common
Stock; provided, however, that any fractional shares resulting from such
adjustment shall be eliminated.
(B) In the event of the proposed dissolution or liquidation of the
Company, in the event of any corporate separation or division, including, but
not limited to split-up, split-off or spin-off, or in the event of a merger,
consolidation or other reorganization of the Corporation with another
corporation, the Committee may provide that the holder of each Option then
exercisable shall have the right to exercise such Option (at its then Option
Price) solely for the kind and amount of shares of stock and other securities,
property, cash or any combination thereof receivable upon such dissolution,
liquidation, or corporate separation or division, or merger, consolidation or
other reorganization by a holder of the number of shares of Common Stock for
which such Option might have been exercised immediately prior to such
dissolution, liquidation, or corporate separation or division, or merger,
consolidation or other reorganization; or the Committee may provide, in the
alternative, that each Option granted under the Plan shall terminate as of a
date to be fixed by the Committee; provided, however, that not less than
90-days' written notice of the date so fixed shall be given to each Optionee,
who shall have the right, during the period of 90 days preceding such
termination, to exercise the Options as to all or any part of the shares of
Common Stock covered thereby, including shares as to which such Options would
not otherwise be exercisable; provided, further, that failure to provide such
notice shall not invalidate or affect the action with respect to which such
notice was required.
(C) If while unexercised Options remain outstanding under the Plan,
the stockholders of the Corporation approve a definitive agreement to merge,
consolidate or otherwise reorganize the Company with or into another
corporation or to sell or otherwise dispose of all or substantially all of its
assets, or adopt a plan of liquidation (each, a "Disposition Transaction"),
then the Committee may: (i) make an appropriate adjustment to the number and
class of shares available for awards under the Plan, and to the amount and
kind of shares or other securities or property (including cash) receivable
upon exercise of any outstanding options after the effective date of such
transaction, and the price thereof, or, in lieu of such adjustment, provide
for the cancellation of all options outstanding at or prior to the effective
date of such transaction; (ii) provide that exercisability of all Options
shall be accelerated, whether or not otherwise exercisable; or (iii) in its
discretion, permit Optionees to surrender outstanding options for
cancellation.
(D) Paragraphs (B) and (C) of this Section shall not apply to a
merger, consolidation or other reorganization in which the Company is the
surviving corporation and shares of Common Stock are not converted into or
exchanged for stock, securities of any other corporation, cash or any other
thing of value. Notwithstanding the preceding sentence, in case of any
consolidation, merger or other reorganization of another corporation into the
Company in which the Company is the surviving corporation and in which there
is a reclassification or change (including a change to the right to receive
cash or other property) of the shares of Common Stock (other than a change in
par value, or from par value to no par value, or as a result of a subdivision
or combination, but including any change in such shares into two or more
classes or series of shares), the Committee may provide that the holder of
each Option then exercisable shall have the right to exercise such Option
solely for the kind and amount of shares of stock and other securities
(including those of any new direct or indirect parent of the Company),
property, cash or any combination thereof receivable upon such
reclassification, change, consolidation or merger by the holder of the number
of shares of Common Stock for which such Option might have been exercised.
(E) In the event of a change in the Common Stock of the Company as
presently constituted which is limited to a change of all of its authorized
shares with par value into the same number of shares with a different par
value or without par value, the shares resulting from any such change shall be
deemed to be the Common Stock within the meaning of the Plan.
(F) To the extent that the foregoing adjustments relate to stock or
securities of the Company, such adjustments shall be made by the Committee,
whose determination in that respect shall be final, binding and conclusive.
(G) Except as hereinbefore expressly provided in this Section, the
Optionee shall have no rights by reason of any subdivision or consolidation of
shares of stock or any class or the payment of any stock dividend or any other
increase or decrease in the number of shares of stock of any class or by
reason of any dissolution, liquidation, merger, consolidation or other
reorganization or spin-off of assets or stock of another corporation; and any
issue by the Company of shares of stock of any class shall not affect, and no
adjustment by reason thereof shall be made with respect to, the number or
price of shares of Common Stock subject to the Option. The grant of an Option
pursuant to the Plan shall not affect in any way the right or power of the
Company to make adjustments, reclassifications, reorganizations or changes of
its capital or business structures or to merge or to consolidate or to
dissolve, liquidate or sell, or transfer all or part of its business or
assets.
10. Amendment of the Plan
(A) The Committee may, without further action by the shareholders and
without receiving further consideration from the participants, amend this Plan
or condition or modify awards under this Plan in response to changes in
securities, tax or other laws or rules, regulations or regulatory
interpretations thereof applicable to this Plan or to comply with stock
exchange rules or requirements. Provided, however, that no such amendment
pursuant to this Section 10 shall circumvent the provisions of the last
sentence of Paragraph 1, above or otherwise disqualify the Plan for exemption
under Rule 16b-3 of the Securities Exchange Act or any successor Rule.
(B) The Committee may at any time and from time to time terminate or
modify or amend the Plan in any respect, except that without shareholder
approval the Committee may not (i) increase the maximum number of shares of
Common Stock which may be issued under the Plan (other than increases pursuant
to Section 9), (ii) extend the period during which any award may be granted or
exercised, or (iii) extend the term of the Plan. The termination or any
modification or amendment of the Plan, except as provided in subsection (a),
shall not without the consent of a participant, affect his other rights under
an award previously granted to him or her.
(C) Notwithstanding anything contained in the preceding paragraph or
any other provision of the Plan or any stock option agreement, the Board shall
have the power to amend the Plan in any manner deemed necessary or advisable
for stock options granted under the Plan to qualify for the exemption provided
by Rule 16b-3 (or any successor Rule relating to exemption from Section 16(b)
of the Securities Exchange Act), and any such amendment shall, to the extent
deemed necessary or advisable by the Board, be applicable to any outstanding
stock options theretofore granted under the Plan notwithstanding any contrary
provisions contained in any stock option agreement. In the event of any such
amendment to the Plan, the holder of any stock option outstanding under the
Plan shall, upon request of the Committee and as a condition to the
exercisability of such option, execute a conforming amendment in the form
prescribed by the Committee to the stock option agreement within such
reasonable time as the Committee shall specify in such request.
11. Effect of Headings
The Section and Subsection headings contained herein are for convenience
only and shall not affect the construction hereof.
ADOPTED BY RESOLUTION OF THE BOARD OF DIRECTORS, EFFECTIVE THE 1st DAY OF MAY
1995.
