EMPLOYEE BENEFITS ALLOCATION AGREEMENT
This Employee Benefits Allocation Agreement (this "Agreement") is
effective as of the date of execution by and between Nu Skin International,
Inc., a Utah corporation ("NSI"), and Nu Skin USA, Inc., a Delaware corporation
("NUSA").
Recitals:
Whereas, pursuant to the terms of the Contribution and Distribution
Agreement (the "C&D Agreement") effective as of December 31, 1997 by and between
NSI and NUSA, NSI and NUSA have agreed to determine each party's rights and
obligations as applied to employee benefits.
Whereas, as a result of the events contemplated in the C&D Agreement,
NSI will transfer certain employees to NUSA (the "NUSA Employees").
Whereas, following the execution of the Stock Acquisition Agreement
between the stockholders of NSI and Nu Skin Asia Pacific, Inc. ("NSAP"), a
Delaware Corporation, it is reasonably likely that NSI and NUSA will no longer
be in the same "controlled group" under Section 414(b), (c), (m) or (o) of the
Internal Revenue Code of 1986, as amended (the "Code"), but neverthless will
continue to have substantial common ownership.
Agreement:
Now, therefore, the parties do agree as follows:
1. Nu Skin International, Inc. 401(k) Plan (the "401(k) Plan").
(a) Employee Participation; Participating Employer
Status.
Subject to compliance with applicable law, NUSA
Employees shall continue to participate in the 401(k) Plan on
the same terms and conditions under which they participated
prior to the execution of this Agreement. NUSA shall become a
participating employer in the 401(k) Plan as soon as possible
following the execution of the Agreement, and in no event
later than the next following payroll date of NUSA. NUSA shall
execute the original of the 401(k) Plan or a supplemental
participation agreement as a participating employer in a
multiple employer plan. NSI shall continue to serve as plan
sponsor and plan administrator of the 401(k) Plan. The power
to amend the 401(k) Plan shall remain exclusively with NSI,
subject to NUSA's right to withdraw from the 401(k) Plan.
(b) 401(k) Plan Contributions/Expenses.
Contributions made to the 401(k) Plan by NUSA and
administrative expenses incurred by the 401(k) Plan on behalf
of NUSA Employee participants of the 401(k) Plan shall be paid
by NUSA in accordance with the terms of the 401(k) Plan and
shall be paid either directly to the trustee and service
providers of the 401(k) Plan or through an internal accounting
charge from NSI to NUSA; provided, that in all cases, all NUSA
Employee participant elective deferrals shall be forwarded to
the 401(k) Plan trustee within the legally required time
frame.
(c) Application of "Same Desk" Rule.
The "same desk" rule of Code section 401(k) shall
apply to all NUSA Employees for purposes of restricting the
ability of any NUSA Employee to receive a distribution from
the 401(k) Plan following their transfer from NSI to NUSA. No
"separation from service" shall be deemed to have occurred
with respect to the NUSA Employees transferred under the
Agreement.
2. Nu Skin International Employee Medical Benefit Plan (the "Medical
Plan").
(a) Employee Participation; Participating Employer
Status.
NUSA Employees shall continue to participate in the
Medical Plan on the same terms and conditions under which they
participated prior to the execution of this Agreement. NSI
shall amend the Medical Plan to permit participation by NUSA
Employees in the Medical Plan.
(b) Notification to Carriers; Additional Actions.
NSI agrees to notify all of its insurance carriers
who provide welfare benefits under the Medical Plan as soon as
possible following the execution of this Agreement that NUSA
Employees are to be covered employees of the NSI insured group
pursuant to the terms of the respective insurance
arrangements. Such notification shall be provided to the
following insurance carriers: Blue Cross/ValueCare; FHP
Healthcare; Standard Insurance Company; and Sun Life Assurance
Company of Canada. NSI also agrees to provide notification of
the coverage of NUSA Employees as part of the NSI insured
group to any other medical, life or disability insurance
carrier that may cover any of the NSI employees who become
NUSA Employees. NSI and NUSA agree to take any actions that
may be required by any insurance carrier to ensure coverage of
the NUSA Employees on an uninterrupted basis.
(c) Premiums/Plan Expenses.
Premiums, administrative expenses and claims incurred
or paid by the Medical Plan on behalf of NUSA Employee
participants of the Medical Plan shall be paid by NUSA, either
directly by NUSA, by NUSA to the insurance carriers of the
Medical Plan, or through an internal accounting charge from
NSI to NUSA.
3. Nu Skin USA, Inc. Cafeteria Plan (the "Cafeteria Plan").
(a) Implementation of New Cafeteria Plan.
Effective as soon as possible following the execution
of the Agreement, but in no event later than the first payroll
date of NUSA, NUSA shall adopt the Cafeteria Plan, which shall
be identical to the Nu Skin International, Inc. Cafeteria Plan
(the "NSI Cafeteria Plan") in which NUSA Employees
participated while employed by NSI. NUSA Employees shall
participate in this Cafeteria Plan on the same terms and
conditions under which they participated in the NSI Cafeteria
Plan prior to the execution of the Agreement. No "change in
family status" under Section 5.4 of the NSI Cafeteria Plan
shall be deemed to have occurred as a result of the transfer
of NUSA Employees from NSI to NUSA.
(b) Transfer of Accounts.
NSI and NUSA shall transfer to the Cafeteria Plan
following its adoption all amounts deferred into the NSI
Cafeteria Plan medical flexible spending account by NUSA
Employees year-to-date.
4. Nu Skin International, Inc. Deferred Compensation Plans and Trust
Plan (the "Deferred Compensation Plans").
(a) Employee Participation; Participating Employer
Status.
NUSA Employees who are currently participating in the
Deferred Compensation Plans shall continue to participate in
the Deferred Compensation Plans on the same terms and
conditions under which they participated prior to the
execution of this Agreement. NSI shall amend the Deferred
Compensation Plans to permit participation by NUSA Employees
in the Deferred Compensation Plans.
(b) Crediting of Service.
The transfer of the NUSA Employees from NSI to NUSA
shall not be deemed to cause a "Retirement Date" to occur
under section 10 of the Deferred Compensation Plans. All
service with NUSA shall be recognized for purposes of vesting
pursuant to section 13.2 of the Deferred Compensation Plans.
5. Nu Skin USA, Inc. 1998 Stock Incentive Plan (the "Stock Plan").
(a) Implementation of New Stock Plan.
Effective as soon as possible following the execution
of this Agreement and, if required, with appropriate approval
by the stockholders of NSAP, NUSA shall adopt the Stock Plan,
which shall be identical in form and substance to the Nu Skin
International, Inc. 1996 Stock Incentive Plan (the "NSI Stock
Plan") in which NUSA Employees participated while employed by
NSI. NUSA Employees shall participate in the Stock Plan on the
same terms and conditions under which they participated in the
NSI Stock Plan prior to the execution of this Agreement.
(b) Transfer of Shares.
Following the adoption by NUSA of the Stock Plan, NSI
and NUSA shall take all actions necessary to transfer to NUSA
shares of NSAP Class A Common Stock in accordance with the
terms of the C&D Agreement. NUSA shall bear all costs of such
transfer and subsequent holding of such shares including, but
not limited to: (1) any filing fees in the event that
additional registration or other filing with the Securities
and Exchange Commission or state securities regulatory body is
required; and (2) NUSA's allocable portion of any costs
associated with updating any previously filed registration
statement covering such shares.
(c) Assumption of Outstanding Awards.
NUSA shall assume all award agreements
governing the terms of awards made pursuant to the NSI Stock
Plan to NUSA Employees. The transfer of NUSA Employees from
NSI to NUSA under the C&D Agreement shall not constitute a
termination of employment for purposes of awards granted under
the NSI Stock Plan. Prior service with NSI shall be recognized
for purposes of the vesting of awards granted under the NSI
Stock Plan and assumed by NUSA.
6. Vacation/Sick Leave and Severance Policies.
(a) Adoption of Identical Policies.
Effective on the first day following the execution
date of the Agreement, NUSA shall adopt vacation/sick leave
and severance policies which are identical to those provided
by NSI immediately prior to the execution of the Agreement.
(b) Crediting of Service; Accounting of Leave Used .
Any service to NSI resulting in the accrual of
vacation/sick leave or severance by an NUSA Employee prior to
his or her transfer from NSI shall be recognized by NUSA for
purposes of accrual under the NUSA programs. Correspondingly,
any vacation or sick leave used by an NUSA Employee during the
1998 calendar year prior to his or her transfer from NSI shall
be treated as if used while employed by NUSA
7. Family and Medical Leave Act ("FMLA").
NUSA shall be a "successor in interest" to NSI under the terms of FMLA.
As such, NUSA shall count for NUSA Employees periods of employment with NSI to
determine eligibility for FMLA leave, grant or continue leave to NUSA Employees
who had previously provided notice to NSI, and comply with job restoration
requirements for NUSA Employees at the conclusion of FMLA leave.
8. Other Non-Enumerated Benefits.
It is the parties' intent that NUSA Employees be provided with the same
benefits following the execution of this Agreement as were provided to them by
NSI prior to the execution of this Agreement, subject to compliance with
applicable law. With respect to benefit plans or programs that are not
specifically discussed herein, where legally permissible and advisable, the
parties shall construe this Agreement liberally so as to permit continued
participation by NUSA employees in NSI benefit plans or programs. Participation
shall be continued without the imposition of new restrictions, including, but
not limited to (where applicable) new eligibility periods, new vesting periods,
new deductibles, new out-of-pocket maximums or new service accrual periods.
Where participation by NUSA Employees in NSI benefit plans is not legally
permissible, administratively practicable or finanically feasible (for either
NSI or NUSA), NUSA shall adopt parallel plans and policies to replicate the
benefits previously available to NUSA Employees while employed by NSI. A
termination of employment shall not be deemed to have occurred for benefits
purposes with respect to the NUSA Employees transferred under the C&D Agreement.
9. Appropriate Action.
As soon as possible following the execution of this Agreement, to
permit NUSA to become a participating employer in the 401(k) Plan, the Medical
Plan and the Deferred Compensation Plans, NSI and NUSA shall: (1) execute
appropriate Board resolutions approving NUSA's participation as a participating
employer in such plans; (2) adopt an amendment to each such plan reflecting
NUSA's participation; and (3) take any other actions necessary or advisable to
permit such participation. With respect to all other employee benefit plans or
policies, NSI and NUSA agree to take all actions necessary or advisable to carry
out the parties' stated intent.
10. Incorporation by Reference. To the extent not inconsistent with the
terms of this Agreement, Article V of the C&D Agreement shall be incorporated
herein by reference.
In Witness Whereof, the parties have caused this Agreement to be duly
executed as of this _______ day of _______, 199__.
Nu Skin International, Inc.
By: /s/ Xxxxxx X. Xxxx
Name: Xxxxxx X. Xxxx
Title:
Nu Skin USA, Inc.
By: /s/ Xxxxx Halls
Name: Xxxxx Halls
Title:
