EX-10.34
(This is the form of Wholesale Distribution Agreement for Nu Skin USA, Inc. and
the other North American Private affiliates. Payments are paid in the local
currency of the country in which the private affiliate operates)
Nu Skin International, Inc.
AND
Nu Skin USA, Inc.
WHOLESALE DISTRIBUTION AGREEMENT
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TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS....................................................2
1.1 "Agreement"....................................................2
1.2 "Independent Distributor Network"..............................2
1.3 "Intercompany Agreements"......................................2
1.4 "NSI Independent Distributor"..................................2
1.5 "NSI"..........................................................2
1.6 "Products".....................................................2
1.7 "Sales Aids"...................................................3
1.8 "Territory"....................................................3
1.9 "Trademarks"...................................................3
ARTICLE II APPOINTMENT AS EXCLUSIVE WHOLESALE DISTRIBUTOR.................3
2.1 Scope..........................................................3
2.2 Sub-distributors...............................................3
2.3 Sales of Products and Sales Aids...............................3
2.4 NSI Sales in the Territory.....................................4
2.5 Sales Outside the Territory....................................4
2.6 Territory Orders and Inquiries.................................4
ARTICLE III GOVERNMENTAL APPROVALS AND REGISTRATIONS.......................5
ARTICLE IV OBLIGATIONS OF NSUSA AS EXCLUSIVE WHOLESALE DISTRIBUTOR
IN THE TERRITORY...............................................5
4.1 Marketing and Distribution.....................................5
4.2 NSUSA Operations...............................................6
4.3 Pricing Information............................................7
4.4 NSUSA Claims and Representations...............................7
4.5 Capitalization.................................................7
4.6 Customer Support...............................................7
4.7 Allocation of Expenses.........................................7
ARTICLE V PURCHASE SALE & DELIVERY OF PRODUCTS AND SALES AIDS............8
5.1 Agreement to Purchase..........................................8
5.2 Payment Due Date...............................................9
5.3 Passage of Title and Risk of Loss..............................9
5.4 Product Returns/Exchanges Inspection...........................9
ARTICLE VI PRODUCT AND SALES AIDS PURCHASE PRICES AND TERMS OF PAYMENT...10
6.1 Product Availability and Pricing..............................10
6.2 Payment Method................................................10
ARTICLE VII OBLIGATIONS OF NSUSA AS SUPPLIER OF PRODUCTS AND
SALES AIDS....................................................11
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7.1 Product Formulation...........................................11
7.2 Warranty......................................................11
7.3 Delivery......................................................11
ARTICLE VIII SALE AND MANUFACTURE OF PRODUCTS..............................12
8.1 Non-Competing Products........................................12
8.2 Competing Products............................................12
8.3 Discontinued Products.........................................12
ARTICLE IX NATURE OF RELATIONSHIP........................................13
ARTICLE X TERM..........................................................13
ARTICLE XI TERMINATION...................................................13
ARTICLE XII EFFECT OF TERMINATION.........................................15
ARTICLE XIII CONFIDENTIALITY...............................................16
ARTICLE XIV INDEMNIFICATION AND INSURANCE.................................17
ARTICLE XV MISCELLANEOUS 19
15.1 Assignment....................................................19
15.2 Notices.......................................................19
15.3 Waiver and Delay..............................................20
15.4 Force Majeure.................................................20
15.5 Governing Law and Dispute Resolution..........................21
15.6 Integrated Contract...........................................21
15.7 Modifications and Amendments..................................22
15.8 Severability..................................................22
15.9 Counterparts and Headings.....................................22
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WHOLESALE DISTRIBUTION AGREEMENT
THIS WHOLESALE DISTRIBUTION AGREEMENT (hereinafter "Agreement") entered
into and made effective this 31st day of December, 1997 (the "Effective Date"),
by and between Nu Skin U.S.A., Inc., a corporation organized under the laws of
the State of Delaware, U.S.A., (hereinafter "NSUSA"), and Nu Skin International,
Inc., a corporation organized under the laws the State of Utah, U.S.A.,
(hereinafter "NSI"). Hereinafter, NSUSA and NSI collectively shall be referred
to as the "Parties."
W I T N E S S E T H
WHEREAS, NSI is engaged in the design, production and marketing of
Products and Sales Aids (as hereinafter defined) for distribution in markets
through a network of independent distributors; and,
WHEREAS, NSUSA desires, on the terms and conditions hereinafter set
forth, to act as NSI's exclusive distributor of NSI of Products and Sales Aids
in the Territory (as hereinafter defined); and,
WHEREAS, NSI is willing, on the terms and conditions hereinafter set
forth, to grant to NSUSA the exclusive right to so distribute Products and Sales
Aids in the Territory; and,
WHEREAS, the Parties wish to enter into a Wholesale Distribution
Agreement as set forth herein; NOW, THEREFORE, in consideration of the premises,
the mutual covenants herein contained and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
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ARTICLE I
DEFINITIONS
For the purposes of this Agreement the following words, terms, and
phrases shall have the meaning assigned to them in this Article I, unless the
context otherwise requires or the parties otherwise agree within the terms of
this Agreement: 1.1 "Agreement" shall mean this Wholesale Distribution Agreement
between NSI and NSUSA (together with any exhibits and schedules hereto), as the
same may be modified, amended or supplemented from time to time.
1.2 "Independent Distributor Network" shall mean the network of all NSI
Independent Distributors.
1.3 "Intercompany Agreements" shall mean the Wholesale Distribution
Agreement, The Licensing and Sales Agreement, The Management Services Agreement
and the Trademark/Tradename Agreement between the Parties.
1.4 "NSI Independent Distributor" shall mean a person or business
entity authorized by contract with NSI to distribute, as an independent
contractor, the Products and Sales Aids in accordance with the terms of such
distributor contract.
1.5 "NSI" shall mean Nu Skin International, Inc., a corporation duly
organized and existing under the laws of the State of Utah, U.S.A.
1.6 "Products" shall mean cosmetics, nutritional products, dietary
supplements, vitamins, over-the-counter drugs, quasi-drugs, drugs and
pharmaceutical products that are produced, manufactured or purchased by NSI for
sale or resale, and bearing a Nu Skin brand or trademark existing as of the date
hereof, subject to availability due to local regulatory requirements in the
Territory.
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1.7 "Sales Aids" shall mean materials, in whatever form, designed,
approved and produced by NSUSA to assist in the marketing of the Products in the
Territory.
1.8 "Territory" shall mean the United States of America including all
its territories.
1.9 "Trademarks" shall mean those words, symbols, devices, logos, trade
names and company names or combinations thereof owned by NSI and used in
relation to or on Products and Sales Aids, whether or not registered.
ARTICLE II
APPOINTMENT AS EXCLUSIVE WHOLESALE DISTRIBUTOR
2.1 Scope. NSI hereby appoints NSUSA as NSI's exclusive distributor,
during the term of this Agreement, for the sale and distribution of Products and
Sales Aids in the Territory, under the Products' names, logos, and Trademarks,
subject to all terms and conditions of this Agreement, and NSUSA hereby accepts
such appointment and authorization.
2.2 Sub-distributors. Except for the sale of Products and Sales Aids to
NSI Independent Distributors, NSUSA shall not, without the prior written
approval of NSI, appoint sub-distributors or agents to promote or distribute
Products or Sales Aids inside or outside the Territory.
2.3 Sales of Products and Sales Aids.
2.3(a) NSUSA agrees that any distribution of Products or Sales
Aids in the Territory shall be made only to NSI Independent
Distributors.
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2.3(b) To facilitate sales to NSI Independent Distributors,
NSUSA shall have the right to access information regarding such NSI
Independent Distributors in the Territory on NSI's computer system or
as otherwise retained by NSI .
2.4 NSI Sales in the Territory. NSI agrees not to sell and, to use its
best efforts to prohibit any third party from selling Products or Sales Aids to
any party within the Territory or to any party outside the Territory for
delivery within the Territory, except to NSUSA pursuant to the terms and
conditions of this Agreement, unless NSI has received the written consent of
NSUSA. Notwithstanding the foregoing, NSI retains the right to license to other
entities the use of the Independent Distributor Network for distribution of
products other than those included in the definition of Products in Section 1.5,
without the consent of NSUSA.
2.5 Sales Outside the Territory. NSUSA agrees that it will neither sell
nor enable any third party to sell Products or Sales Aids outside the Territory
or sell Products or Sales Aids to any party within the Territory for resale or
delivery outside the Territory. Further, NSUSA shall not promote or solicit
customers for Products or Sales Aids sales outside the Territory. NSUSA shall
not establish any facility outside the Territory through which orders are
solicited or in which inventories of Products or Sales Aids are stored without
NSI's written consent.
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2.6 Territory Orders and Inquiries. The Parties acknowledge that from
time to time inquiries and orders concerning the Territory will arise. If NSI
receives any order or inquiry concerning the sale of Products or Sales Aids in
the Territory, NSI agrees to give prompt notice of such inquiry or order to
NSUSA, such notice to include the name and address of the person making the
order or inquiry as well as any other relevant details regarding such order or
inquiry that NSUSA shall reasonably request. If NSUSA receives any order or
inquiry concerning the sale of Products or Sales Aids outside the Territory,
NSUSA agrees to give NSI prompt notice of such inquiry or order, such notice to
include the name and address of the person making the order or inquiry, as well
as any other relevant details regarding such order or inquiry that NSI shall
reasonably request.
ARTICLE III
GOVERNMENTAL APPROVALS AND REGISTRATIONS
NSUSA agrees to obtain, or cause to be obtained, at its sole cost and
expense, any governmental approval and make, or cause to be made, any filings or
notifications required under all applicable laws, regulations and ordinances of
the Territory to enable this Agreement to become effective, to enable the
Products or Sales Aids to be imported in the Territory (except as otherwise
provided herein) or to enable any payment pursuant to the provisions of this
Agreement to be made. NSUSA agrees to keep NSI informed of the progress in
obtaining all such government approvals.
ARTICLE IV
OBLIGATIONS OF NSUSA AS EXCLUSIVE WHOLESALE
DISTRIBUTOR IN THE TERRITORY
4.1 Marketing and Distribution. NSUSA shall have the following
obligations with respect to marketing and distribution of the Products and Sales
Aids:
4.1(a) To use its best efforts to further the promotion,
marketing, sales and other distribution of the Products and Sales Aids
in the Territory.
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4.1(b) To maintain, or cause to be maintained, an adequate and
balanced inventory of Products, Sales Aids, supplies and necessary
materials to promote, market, sell and distribute the Products and
Sales Aids within the Territory.
4.1(c) To ensure that all inquiries by NSI Independent
Distributors and customers, including complaints are responded to
promptly. To ensure that all orders are processed and all shipments of
Products and Sales Aids are made within the Territory in a timely
fashion.
4.1(d) To diligently investigate or cause to be investigated
all leads with potential customers referred to it by NSI or NSI, or
their affiliates.
4.1(e) To permit NSI to visit NSUSA and to visit NSUSA's place
of business and inspect its inventories, service records, financial
records and other relevant documents.
4.1(f) To maintain, cause to be maintained, or contract to
maintain, adequate personnel, distribution and laboratory facilities
dedicated on a full-time or part-time basis to the quality control and
sale of Products, in compliance with and to the extent required by all
laws, ordinances and regulations applicable within the Territory.
4.1(g) To provide, at the request of NSI, a business plan for
the term and in the form and detail reasonably requested by NSI and to
update such business plan as reasonably requested by NSI.
4.1(h) To provide, at the request of NSI, reports of its
activities and sales respecting the Products and Sales Aids in the
Territory in a form and in such detail and for such time period as NSI
may reasonably require.
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4.2 NSUSA Operations. NSUSA agrees to maintain, or cause to be
maintained, such facilities and other places of business within the Territory
necessary to effect the purposes and intentions of this Agreement. NSUSA further
agrees to bear all costs and expenses it incurs in the negotiation,
memorialization, execution and performance of all leases, rentals, equipment,
salaries, taxes, licenses, insurance, permits, telephone, telegraph,
promotional, advertising, travel, accounting and legal expenses, relating to
such facilities.
4.3 Pricing Information. At the request of NSI, NSUSA agrees to advise
NSI of the distribution prices of the Products or Sales Aids to be sold to NSI
Independent Distributors within the Territory.
4.4 NSUSA Claims and Representations. NSUSA shall not make any
promises, representations, warranties or guarantees respecting the Products,
Sales Aids or the NSI distributor sales and compensation plan, except in
accordance with those representations, warranties or guarantees as provided by
NSI with respect thereto and in accordance and compliance with the applicable
laws of the Territory.
4.5 Capitalization. NSUSA agrees to capitalize itself adequately and
maintain its operations both on a financially sound basis and in compliance with
all applicable laws, regulations or ordinances covering the operations of such a
business entity within any country in which it may conduct business.
4.6 Customer Support. NSI agrees to cooperate with NSUSA in dealing
with any NSI Independent Distributor or customer complaints concerning the
Products and the Sales Aids and to take any action requested by NSUSA to solve
such complaints. NSI also agrees to assist NSUSA in arranging for any customer
warranty service required by law or required pursuant to the judgement of NSUSA.
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4.7 Allocation of Expenses.
4.7(a) Import Licenses. To the extent import licenses are
required for the importation of the Products or Sales Aids into the
Territory, NSUSA hereby agrees that it will be responsible for securing
and maintaining such import licenses and payment of all costs and
expenses associated therewith.
4.7(b) Import Expenses. NSUSA agrees that it will be
responsible for payment of all customs duties, excise taxes, similar
governmental charges and levies, and any other charges or expenses
related to any Products or Sales Aids imported into the Territory.
4.7(c) Other Expenses. In addition to the costs and expenses
described in clauses (a) and (b) above, NSUSA agrees that it will be
responsible for payments of the following expenses, fees and costs,
related to the development and maintenance of the Nu Skin business in
the Territory: (a) fees and expenses to incorporate operating entities;
(b) fees and expenses for obtaining business licenses and permits; (c)
fees, costs and expenses incurred in drafting and producing required
promotional documentation, Sales Aids, and other literature such as
product catalogues as well as contracts such as local product purchase
agreements; (d) fees and costs incurred in determining the requirements
for registering Products, including ascertaining and complying with
labelling and custom\import requirements; (e) expenses and costs
related to locating and establishing office, warehouse and other
physical facilities, including build out, furnishings and equipment, as
well as negotiation and securing of necessary leases and permits; (f)
all costs and expenses related to hiring a general manager and staff,
and compliance with local labor laws and requirements.
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ARTICLE V
PURCHASE, SALE AND DELIVERY OF PRODUCTS AND SALES AIDS
5.1 Agreement to Purchase. NSUSA shall order such quantities of
Products and Sales Aids as it deems necessary to meet its sales requirements
within the Territory.
5.1(a) NSI shall use its best effort to supply and deliver
Products and Sales Aids to NSUSA in a timely and productive manner,
subject to Section 15.4 hereof and the availability of NSI's current
inventory of the Product(s) or Sales aids requested by NSUSA.
5.1(b) NSUSA shall source Products and Sales Aid(s)
exclusively from NSI; provided however that, if NSI cannot deliver such
Product(s) or Sales Aid(s) in a timely fashion, NSUSA may source any
such Product(s) or Sales Aid(s) from any other Nu Skin affiliate. 5.2
Payment Due Date. NSUSA shall pay for each delivery of Products and
Sales Aids within sixty (60) days after the date of arrival or the date
of dispatch of a commercial shipping invoice, whichever is later, and
shall make payment for such Products and Sales Aids as provided in
Section 6.2 of this Agreement.
5.3 Passage of Title and Risk of Loss. Title to and risk of loss for
any Product(s) or Sales Aid(s) ordered and supplied pursuant to this Agreement
shall pass to NSUSA upon delivery of the goods unless otherwise indicated in
writing. Delivery shall be made in a commercially reasonable manner in
accordance with standards applicable in the trade and industry. Delivery and
passage of title shall be effected within the confines of the NSI
distribution/warehousing facility as NSUSA personnel pick Products and/or Sales
Aids from inventory set for shipping to Independent Distributors.
5.4 Product Returns/Exchanges Inspection. If any Products or Sales Aids
are returned to NSUSA because of defect, NSUSA shall within forty-five (45) days
following actual receipt, return such Products or Sales Aids to NSI. In the
event of such a return, NSI shall make appropriate arrangements, acceptable to
NSUSA, to replace any such defective Products or Sales Aids at NSI's sole cost
and expense or, failing such replacement, shall, at the option of NSI, either
credit the purchase price of the defective Products or Sales Aids to NSUSA's
account or promptly grant NSUSA a cash refund for such purchase price. If NSI is
not notified in writing of any defective Products or Sales Aids within
forty-five (45) days after actual receipt thereof by NSUSA, then NSUSA shall be
deemed to have waived its right to claim any defect in the Products or Sales
Aids; provided that for any latent or other defect not reasonably discernible
upon inspection of the Products or Sales Aids under the prevailing circumstances
NSUSA shall have until forty-five (45) days after discovery of such defect to
exercise its rights under this Section 5.4.
ARTICLE VI
PRODUCT AND SALES AIDS PURCHASE PRICES AND TERMS OF PAYMENT
6.1 Product Availability and Pricing. Prices to be paid by NSUSA to NSI
for Products and Sales Aids purchased hereunder shall be negotiated and
determined on an arm's length basis and be adjusted from time to time as agreed
by the Parties in writing, provided that the purchase and price terms shall be
based upon the terms offered by NSI to its other Nu Skin affiliates.
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6.2 Payment Method. NSUSA shall pay the commercial invoices for
Products and Sales Aids shipped under this Agreement in immediately available
funds by wire transfer to a bank or banks designated by NSI, or by such other
means of payment agreed to by NSI from time to time. All purchases of Products
and Sales Aids will be payable in U.S. dollars . Without limiting any of NSI's
other rights and remedies pursuant to this Agreement, amounts not paid within
the time period set forth in the payment provisions herein shall bear interest
at the prime interest rate as reported in The Wall Street Journal plus two
percent (2%) for the full period outstanding.
ARTICLE VII
OBLIGATIONS OF NSUSA AS SUPPLIER OF PRODUCTS AND SALES AIDS
7.1 Product Formulation. NSI and NSUSA agree to cooperate to mutually
determine the formulae or ingredients to be used for Products in the Territory
based on local market regulations and consumer preferences.
7.2 Warranty. NSI warrants that the Products and Sales Aids supplied
hereunder shall be merchantable under (and will comply with) the laws and
regulations of the jurisdiction in which distribution of such Product or Sales
Aid is intended; that it will deliver good title thereto and that Products and
Sales Aids will be delivered free from any lawful security interest or other
lien or encumbrance.
7.2(a) NSI's liability for any breach of such warranties shall
not exceed in amount the price of the Products or Sales Aids in respect
of which any breach is claimed. NSI'S WARRANTY STATED HEREIN IS
EXPRESSLY IN LIEU OF ANY OTHER WARRANTIES, EXPRESS OR IMPLIED,
INCLUDING ANY IMPLIED WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE.
7.2(b) NSI neither assumes nor authorizes any person or entity
to assume for it any other liability in connection with the Products or
Sales Aids supplied hereunder, and there are no oral contracts or
warranties collateral to or affecting this Agreement. NSI shall not be
liable to NSUSA or any third parties for consequential, special or
incidental damages.
7.3 Delivery. NSI shall promptly, in accordance with normal and
commercially reasonable delivery schedules in the trade, deliver to NSUSA those
Products or Sales Aids for which NSUSA requires in accordance with Article V
hereof.
ARTICLE VIII
SALE AND MANUFACTURE OF PRODUCTS
8.1 Non-Competing Products. Nothing contained herein, shall restrict or
prohibit NSUSA from selling, distributing, manufacturing or causing to be
manufactured products or materials which do not compete directly or indirectly
with the Products and Sales Aids, provided that such other products do not
infringe upon any patent, name, Trademark, emblem, trade name, design right,
model or other commercial or industrial property right of NSI.
8.2 Competing Products. During the term of this Agreement, NSUSA shall
not, and shall not authorize a third party to, manufacture, cause to be
manufactured, distribute or sell (i) any products or materials which directly or
indirectly compete with the Products or the Sales Aids or (ii) copies of the
Products, Sales Aids, or other products that might reasonably be deemed under
U.S. or foreign law to be confusingly similar to the Products or Sales Aids, in
each case without the prior written consent of NSI.
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8.3 Discontinued Products. Notwithstanding the foregoing, in the event
NSUSA receives notice from NSI of the discontinuance of the sale of any Product,
NSUSA may elect to manufacture or cause to be manufactured such Product;
provided that, if such discontinued Product competes directly or indirectly with
any other NSI Product, the prior written consent of NSI shall be required which
consent shall not be unreasonable withheld or delayed. If NSUSA elects to so
manufacture or cause to be manufactured such discontinued Product, NSI shall, ,
request that NSI license the formula to such discontinued Product to NSUSA on
substantially the same terms as set forth in the Trademark/Tradename License
Agreement, dated as of the date hereof, by and between NSI and NSUSA.
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ARTICLE IX
NATURE OF RELATIONSHIP
The relationship of NSUSA and NSI shall be and at all times remain,
respectively, that of independent contractor and contracting party. Nothing
contained or implied in this Agreement shall be construed to constitute either
party as the legal representative or agent of the other or to constitute or
construe the Parties as partners, joint venturers, co-owners or otherwise as
participants in a joint or common undertaking. Neither Party is authorized to
conclude any contract or agreement or make any commitment, representation or
warranty that binds the other or otherwise act in the name of or on behalf of
the other.
ARTICLE X
TERM
This Agreement shall be effective from the Effective Date for a term
of five (5) years unless terminated pursuant to Article XI. The Term of this
Agreement shall be renewed automatically for successive one (1) year terms
unless terminated 90 days prior to the expiration of the current term.
ARTICLE XI
TERM AND TERMINATION
11.1 Term. This Agreement shall be effective from the Effective Date
for a term of five (5) years unless terminated pursuant to paragraph 7.2 below.
The term of this Agreement shall be renewed automatically for successive one
year terms unless terminated (90) days prior to the then current term.
11.2 Termination. This Agreement may be terminated by either party
immediately or at any time after the occurrence of any of the following events:
(a) the other Party shall commence any case, proceeding or
other action (i) under any existing or future law of any jurisdiction,
domestic or foreign, relating to bankruptcy, insolvency, reorganization
or relief of debtors, seeking to have an order for relief entered with
respect to it, or seeking to adjudicate it a bankrupt or insolvent, or
seeking reorganization, arrangement, adjustment, winding-up,
liquidation, dissolution, compensation or other relief with respect to
it or its debts, or (ii) seeking appointment of a receiver, trustee,
custodian or other similar action; or
(b) there shall be commenced against the other Party any case,
proceeding or other action of a nature referred to in clause (a) above
which (A) results in the entry of an order for relief or any such
adjudication or appointment or (B) remains undismissed, undischarged or
unbonded for a period of 90 days. Events described in clauses (a) and
(b) of this Section 7.2 shall be referred to as a "Bankruptcy Event".
If a Bankruptcy Event occurs, all amounts owing under this Agreement
shall become immediately due and payable, without any notice thereof.
11.3 Termination on Default. This Agreement may be terminated by either
party, if the other party is in default in the performance of any material
obligation under this Agreement and such default has not been cured within
ninety (90) days after receipt of written notice of such default by the
defaulting party.
11.4 Termination by NSI . This Agreement may be terminated by NSI (a)
if the original pre-IPO shareholders of Nu Skin Asia Pacific no longer owns or
controls a majority of the voting interest in NSUSA; such termination will be
effective thirty (30) days after delivery of written notice by NSI to NSUSA of
the occurrence of a change in control and its intention to terminate this
Agreement based thereon); or, (b) if NSUSA causes or allows a judgment in excess
of twenty-five million dollars ($25,000,000) to be entered against it or
involuntarily allows a lien, security interest, or other encumbrance to attach
to its assets which secures an amount in excess of twenty-five million dollars
($25,000,000).
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11.5 Survival of Obligations. The obligations of the Parties to pay any
sums which are due and payable as of the expiration or termination of this
Agreement shall survive the expiration or termination of this Agreement.
11.6 Reversion of Rights. Upon termination of this Agreement by NSI all
rights and licenses herein granted to NSUSA shall immediately cease and shall
revert to NSI, and NSUSA shall cease representing to any third party that it has
any right to use, assign, convey or otherwise transfer the Licensed Property.
ARTICLE XII
EFFECT OF TERMINATION
12.1 Upon termination of this Agreement by NSI, all rights and licenses
herein granted to NSUSA shall cease and shall revert to NSI and NSUSA shall
immediately cease holding itself out to the public as NSI's exclusive wholesale
distributor in the Territory or otherwise represent that it is associated in any
manner with NSI.
12.2 Upon termination of this Agreement, NSI may either (a) deliver,
and NSUSA shall pay for, all Products and Sales Aids ordered by NSUSA prior to
such termination or (b) cancel, without cost or liability, the order of such
Products or Sales Aids. 12.3 Upon termination of this Agreement, neither party
shall be released from its obligations to pay monies due or to become due to the
other party or to complete any unfulfilled obligations under this Agreement, and
each party shall immediately pay, perform and discharge all debts, obligations
and liabilities hereunder.
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12.4 Upon termination of this Agreement for any reason, neither party
shall be liable for any special, indirect, incidental, punitive or consequential
damages, regarding such termination, irrespective of whether such obligations or
liabilities may be contemplated in any law applicable within the Territory and
or elsewhere, and, except as otherwise provided by applicable law, each party
hereby waives and relinquishes any rights, pursuant to law or otherwise, to any
such damages. The remedies contained herein shall be exclusive.
12.5 The provisions of Article XII, Article XIII and Article XIV, as
well as any other provisions that by their terms so provide, shall survive
termination of this Agreement and continue in full force and effect thereafter.
ARTICLE XIII
CONFIDENTIALITY
13.1 All trade secrets, proprietary technology, know-how or other
non-public or proprietary business or technical information owned or used by NSI
or NSUSA and supplied to or acquired by the other whether in oral or documentary
form (the "Confidential Information") shall be supplied and acquired in
confidence and shall be solely for the use of the receiving party pursuant to
this Agreement and such party shall keep the Confidential Information
confidential and shall not disclose the same, at any time during the term of
this Agreement or after its termination, except to its employees, or its
affiliates, or its affiliates' employees for the purposes of its business in
accordance with this Agreement and except as may be required by law; provided
that if the receiving party determines that a disclosure is required by law, the
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receiving party shall notify the disclosing party in order to give the
disclosing party an opportunity to seek an injunction or otherwise attempt to
keep the Confidential Information confidential. The receiving party shall, at
the request of the disclosing party, destroy or return the Confidential
Information without retaining copies if, as and when this Agreement is
terminated or expires. For purposes of this Agreement, the term "Confidential
Information" shall not include information or documents that (i) become
generally available to the public other than as a result of a disclosure by the
receiving party, (ii) was otherwise lawfully available to the receiving party,
or (iii) was generated independently by the receiving party. The provisions of
this Article shall survive termination of this Agreement.
ARTICLE XIV
INDEMNIFICATION AND INSURANCE
14.1 NSI agrees during and after the term of this Agreement to
indemnify and hold harmless NSUSA from liability, loss, cost or damage,
(including reasonable attorneys' fees)which NSUSA may incur as a result of
claims, demands or judgements, of any kind or nature, by anyone whomsoever,
arising out of (i) an alleged or actual defect in the design, manufacture or
content of, or any harm caused by any Products or Sales Aids or the failure of
any Product to comply with all applicable regulatory requirements in the
Territory; or (ii) a claim that NSI's proprietary information infringes any
patent, copyright, trade secret or other intellectual property right of a third
party; provided that NSUSA provides NSI with prompt notice in writing of any
such claim or demand and NSUSA cooperates with NSI in the defense or settlement
of any such claim or action. Notwithstanding the foregoing, NSI shall have no
obligation to indemnify NSUSA for any liabilities arising out of NSUSA's failure
or the failure of the NSI Independent Distributors in the Territory to utilize,
sell, market or promote the Products (i) in the manner for which the Products
are reasonably intended, (ii) in compliance with Nu Skin policies and procedures
or (iii) as contemplated by the Intercompany Agreements, including, but not
limited to, liabilities arising out of false or misleading claims made by the
NSI Independent Distributors, unless NSUSA shall have requested NSI to take
disciplinary actions against an NSI Independent Distributor operating in the
Territory and NSI shall have, either negligently or in breach of its fiduciary
duties, failed to take such actions against such NSI Independent Distributor and
the failure of NSI to take such actions is deemed to have reasonably and
proximately resulted in NSUSA incurring a loss in which event NSI shall
indemnify NSUSA for such loss pursuant to the provisions of this Section 14.1.
14.2 NSUSA agrees during and after the term of this Agreement to indemnify and
hold harmless NSI from liability, loss, cost or damage (including reasonable
attorney's fees), which NSI may incur as a result of claims, demands or
judgements, of any kind or nature, by anyone whosoever, arising out of or
resulting from the possession, use or sale of the Products or Sales Aids by
NSUSA or any of the NSI Independent Distributors (except to the extent NSI has
indemnified NSUSA against such claims, demands, or judgements pursuant to
Section 14.1 hereof);
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By way of elaboration, but not limitation, NSUSA shall indemnify NSI for any
liabilities arising out of NSUSA's failure or the failure of the NSI Independent
Distributors to utilize, sell, sell, market or promote the Products (i) in the
manner for which the Products are reasonably intended, (ii) in compliance with
Nu Skin policies and procedures or (iii) as contemplated by the Intercompany
Agreements, including but not limited to, liabilities arising out of false or
misleading claims made by NSI Independent Distributors. Notwithstanding the
foregoing, in the event NSUSA shall have requested NSI to take disciplinary
actions against an NSI Independent Distributors operating in the Territory and
NSI shall have, either negligently or in breach of its fiduciary duties, failed
to take such actions against such NSI Independent Distributor, NSUSA shall not
be obligated to indemnify NSI for any loss which NSI might incur as a reasonable
and proximate result of such failure. 14.3 At all times during and following the
terms of this Agreement, each of NSI and NSUSA shall maintain insurance (or
cause the other party to be added as an additional insured to any policy not
maintained by such party) with one or more reputable insurers reasonable in
coverage and amount in direct proportion and corresponding to the business to be
conducted by such party pursuant to this Agreement.
ARTICLE XV
MISCELLANEOUS
15.1 Assignment. This Agreement shall be binding on and inure to the
benefit of the heirs, successors, assigns and beneficiaries of the Parties;
provided that neither Party may assign this Agreement or any rights or
obligations hereunder, whether by operation of law or otherwise, without the
prior written consent of the other party's authorized representative. Any such
attempted assignment, without the written consent provided herein, shall be void
and unenforceable.
<PAGE>
15.2 Notices. All notices, requests and other communications hereunder
shall be in writing and shall be deemed to have been duly given, if delivered by
hand, or if communicated by facsimile, cable or similar electronic means to the
facsimile number or cable identification number as previously provided by each
party to the other, at the time that receipt thereof has been confirmed by
return electronic communication or signal that the message has been received, or
if mailed, ten (10) days after dispatch by registered airmail, postage prepaid,
from any post office addressed as follows:
If to NSI: Attn.: General Manager
Nu Skin International, Inc.
75 West Center Street
Provo, Utah 84601
USA
Facsimile: 801-345-5999
If to NSUSA: Attn.: General Manager
Nu Skin U.S.A., Inc.
75 West Center Street
Provo, Utah 84601
USA
Facsimile No.: 801-345-5099
Either party may change its facsimile number, cable identification
number or address by a notice given to the other party in the manner set forth
above.
15.3 Waiver and Delay. No waiver by either party of any breach or
default in performance by the other party, and no failure, refusal or neglect of
either party to exercise any right, power or option given to it hereunder or to
insist upon strict compliance with or performance of the other party's
obligations under this Agreement, shall constitute a waiver of the provisions of
this Agreement with respect to any subsequent breach thereof or a waiver by
either party of its right at any time thereafter to require exact and strict
compliance with the provisions thereof.
<PAGE>
15.4 Force Majeure. The Parties shall not be responsible for failure to
perform hereunder due to force majeure, which shall include, but not be limited
to: fires, floods, riots, strikes, labor disputes, freight embargoes or
transportation delays, shortage of labor, inability to secure fuel, material,
supplies, equipment or power at reasonable prices or on account of shortage
thereof, acts of God or of the public enemy, war or civil disturbances, any
existing or future laws, rules, regulations or acts of any government (including
any orders, rules or regulations issued by any official or agency or such
government) affecting a party that would delay or prohibit performance
hereunder, or any cause beyond the reasonable control of a party. If an event of
force majeure should occur, the affected party shall promptly give notice
thereof to the other party and such affected party shall use its reasonable best
efforts to cure or correct any such event of force majeure.
15.5 Governing Law and Dispute Resolution. This Agreement shall be
governed by and construed in accordance with the laws of the State of Utah,
applicable to contracts made and to be wholly performed within such State. Any
dispute arising out of this Agreement, if not resolved by mutual agreement of
NSI and NSUSA within 30 days after written notice of such dispute is given by
NSI or NSUSA, as the case may be, shall be resolved through the Utah office and
division of the American Arbitration Association ("AAA"). If the dispute is not
resolved within such 30-day period, the Parties shall petition the AAA to
promptly appoint a competent, disinterested person to act as such arbitrator.
Within 30 days after the designation or appointment of such arbitrator, such
<PAGE>
arbitrator shall be required to commence the arbitration proceeding in the State
of Utah at a time and place to be fixed by the arbitrator, who shall so notify
NSI and NSUSA. Such arbitration proceeding shall be conducted in accordance with
the applicable rules and procedures of the AAA, and/or as otherwise may be
agreed by NSI and NSUSA. The decision of the arbitrator shall be final and
binding upon NSI and NSUSA and may be enforced in any court of competent
jurisdiction. The expenses and costs of such arbitration shall be divided and
borne equally by NSI and NSUSA; provided, that each of NSI and NSUSA shall pay
all fees and expenses incurred by it in presenting or defending against such
claim, right or cause of action.
15.6 Integrated Contract. This Agreement together with the document and
agreements referred to herein constitutes the entire agreement between the
Parties relating to the subject matter hereof and supersedes all prior or
contemporaneous negotiations, representations, agreements and understandings
(both oral and written) of the Parties.
15.7 Modifications and Amendments. No supplement, modification or
amendment of this Agreement shall be binding unless it is in writing and
executed by both of the Parties.
15.8 Severability. To the extent that any provision of this Agreement
is (or, in the opinion of counsel mutually acceptable to both parties, would be)
prohibited, judicially invalidated or otherwise rendered unenforceable in any
jurisdiction, such provision shall be deemed ineffective only to the extent of
such prohibition, invalidation or unenforceability in that jurisdiction, and
only within that jurisdiction. Any prohibited, judicially invalidated or
unenforceable provision of this Agreement will not invalidate or render
unenforceable any other provision of this Agreement, nor will such provision of
this Agreement be invalidated or rendered unenforceable in any other
jurisdiction.
15.9 Counterparts and Headings. This Agreement may be executed in one
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument. All headings and
captions are inserted for convenience of reference only and shall not affect the
meaning or interpretation of any provision hereof.
<PAGE>
IN WITNESS WHEREOF, the Parties have caused this Agreement to be
executed in the United States of America by their respective duly authorized
representatives as of the day and the year first above written.
NU SKIN INTERNATIONAL, INC. NU SKIN USA, INC.
By: /s/ Steven J. Lund By: /s/ Keith R. Halls
Name: Steven J. Lund Name: Keith R. Halls
Its: Executive Vice President & Secretary Its: Vice President
