EX-10.33
(This is the form of Management Services Agreement for Nu Skin USA, Inc. and the
other North American Private affiliates.)
MANAGEMENT SERVICES AGREEMENT
between
NU SKIN INTERNATIONAL MANAGEMENT GROUP, INC.
and
NU SKIN U.S.A., INC.
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TABLE OF CONTENTS
Page
ARTICLE 1 DEFINITIONS................................................1
"Agreement"................................................1
"Allocable Expenses".......................................1
"Consulting Personnel".....................................1
"Direct Expenses"..........................................2
"Intercompany Agreements" .................................2
"Management and Consulting Services" ......................2
"NSI" .....................................................2
ARTICLE 2 MANAGEMENT AND CONSULTING SERVICES.........................2
Services...................................................2
Performance of Services. ..................................2
ARTICLE 3 COMPENSATION OF SERVICE PROVIDER...........................2
Compensation for Services by Consulting Personnel..........2
Determination of Allocable Expenses. .....................3
Currency. ................................................3
Payment and Invoicing......................................3
Due Date...................................................3
Delinquent Payments........................................3
ARTICLE 4 PREPARATION AND SHARING OF REPORTS AND INFORMATION
Periodic Reports on Management and Consulting Services.....3
Time Allocation Study......................................3
Sharing of Information and Witnesses.......................3
ARTICLE 5 NON-DISCLOSURE OF CONFIDENTIAL INFORMATION.................4
ARTICLE 6 TERM.......................................................5
ARTICLE 7 TERMINATION................................................5
ARTICLE 8 EFFECT OF TERMINATION......................................6
Cessation of Rights........................................6
Damages....................................................6
(i)
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ARTICLE 9 COMPLIANCE WITH APPLICABLE LAWS............................6
Compliance Generally.......................................6
Authorizations.............................................8
ARTICLE 10 GENERAL PROVISIONS.........................................6
Assignment.................................................6
Notices....................................................7
Waiver and Delay...........................................7
Force Majeure..............................................7
Governing Law and Dispute Resolution.......................8
Integrated Contract........................................8
Modifications and Amendments...............................8
Severability...............................................8
Counterparts and Headings..................................8
(ii)
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MANAGEMENT SERVICES AGREEMENT
THIS MANAGEMENT SERVICES AGREEMENT is made and entered into effective
December 31st , 1997 between Nu Skin International Management Group, Inc., a
corporation organized under the laws of the State of Utah, U.S.A. (hereinafter
referred to as "NSIMG"), and Nu Skin U.S.A., Inc., a corporation organized under
the laws of the State of Delaware, U.S.A. (hereinafter referred to as "NSUSA").
I NSIMG and NSUSA shall hereinafter be collectively referred to as the "Parties"
and each shall be individually referred to as a "Party."
W I T N E S S E T H
WHEREAS, NSIMG desires to provide Management and Consulting Services
(as hereinafter defined) to NSUSA, and NSUSA desires to obtain such Management
and Consulting Services from NSIMG;
NOW, THEREFORE, in consideration of the premises, the mutual promises
and covenants hereinafter set forth and for other good and valuable
consideration, the sufficiency of which is hereby acknowledged, the Parties
agree as follows:
ARTICLE 1
DEFINITIONS
For purposes of this Agreement, the following terms shall have the
meaning set out below:
1.1 "Agreement" shall mean this Management Services Agreement
between NSIMG and NSUSA, as the same may be modified, amended
or supplemented from time to time.
1.2 "Allocable Expenses" shall mean all expenses incurred by NSIMG
in providing Management and Consulting Services other than
Direct Expenses including without limitation, the following:
rents, utilities, telephone, equipment, recruitment, office
supplies, and other overhead expenses, certain salary costs,
payroll, benefits and expenses related to conventions, travel
and accommodations at anniversary events, the permitted use
and appropriation of the names and licenses of directors, and
executive officials of NSUSA or NSIMG, telephone calls and
counseling and conferences and meetings with NSUSA managers
and NSIMG independent distributors. Allocable Expenses shall
be calculated in accordance with Sections 3.2 and 4.2.
1.3 "Consulting Personnel" shall mean employees of NSIMG or, with
the consent of NSUSA, such other persons or entities as NSIMG
may retain, hire, or otherwise contract with for the provision
of Management and Consulting Services on behalf of, or in
conjunction with, NSIMG.
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1.4 "Direct Expenses" shall mean all expenses incurred in the
provision of Management and Consulting Services for NSUSA,
which expenses are measured solely for the benefit of NSUSA,
including, without limitation, certain salary costs, benefits
and business expenses, convention expenses and travel
expenses.
1.5 "Intercompany Agreements" shall mean the Wholesale
Distribution Agreement, The Licensing and Sales Agreement, The
Management Services Agreement, and the Trademark/Tradename
License Agreement between the Parties.
1.6 "Management and Consulting Services" shall mean the following
services provided by Consulting Personnel: management, legal,
financial, marketing and distribution support/training, public
relations, international expansion, human resources, strategic
planning, product development and operations administration
and such other services as the Parties may agree to from time
to time.
1.7 "NSI" shall mean Nu Skin International, Inc., a corporation
duly organized and existing under the laws of the State of
Utah.
ARTICLE 2
MANAGEMENT AND CONSULTING SERVICES
2.1 Services. NSIMG hereby agrees to provide Management and
Consulting Services to NSUSA as NSUSA may request from time to
time, until termination of this Agreement. NSUSA agrees to
reimburse and compensate NSIMG for Management and Consulting
Services rendered pursuant to this Agreement in accordance
with the applicable compensation and invoicing provisions
hereof.
2.2 Performance of Services. Unless otherwise agreed between the
Parties, the Management and Consulting Services shall be
provided through Consulting Personnel, as requested by NSUSA.
2.3 Approval of Services. NSUSA hereby agrees that, by accepting
and paying invoices as provided in Article 3 herein, NSUSA
will be deemed to have approved the nature and extent of the
Management and Consulting Services so invoiced.
ARTICLE 3
COMPENSATION OF SERVICE PROVIDER
3.1 Compensation for Services by Consulting Personnel. NSUSA
agrees to compensate NSIMG for Management and Consulting
Services that it provides to NSUSA in the form of a fee equal
to the Direct Expenses plus Allocable Expenses incurred by
NSIMG for Management and Consulting Services provided to NSUSA
plus three percent (3%) of such Direct Expenses and Allocable
Expenses, as such fee may be adjusted from time to time by
mutual agreement of
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the Parties; provided that, unless otherwise agreed between
the Parties, Allocable Expenses shall not, for any period,
exceed one and one-half percent (1.5%) of NSUSA's revenues for
such period.
3.2 Determination of Allocable Expenses. Allocable Expenses for
any period shall be equal to the total Allocable Expenses
incurred by NSIMG or NSIMG's internal departments for such
period multiplied by the percentage of such Allocable Expenses
allocable to NSUSA pursuant to the then applicable time
allocation study prepared pursuant to Section 4.2 hereof.
3.3 Currency. Any compensation to be paid to NSIMG for Management
and Consulting Services rendered pursuant to this Agreement
shall be paid in United States Dollars.
3.4 Payment and Invoicing. Within thirty (30) days after the end
of each month, NSIMG shall prepare and deliver an invoice to
NSUSA setting forth the fees payable hereunder for Management
and Consulting Services rendered pursuant to this Agreement
during such month.
3.5 Due Date. Payments due under this Agreement shall be due and
payable within sixty (60) days after the date of dispatch of
the invoice for such payments.
3.6 Delinquent Payments. Without limiting any of Parties' other
rights and remedies under this Agreement, amounts outstanding
under the terms of this Agreement not paid within sixty (60)
days from the date due and payable, and as 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. Whether or not
interest charges are actually levied is at the discretion of
the Party to whom payment is due and payable.
ARTICLE 4
PREPARATION AND SHARING OF REPORTS AND INFORMATION
4.1 Periodic Reports on Management and Consulting Services. NSUSA
may, upon thirty (30) days written notice, request operations
reports of NSIMG setting forth such information regarding the
Management and Consulting Services provided under this
Agreement and for such time periods as NSUSA shall reasonably
request.
4.2 Time Allocation Study. NSIMG has prepared a study accurately
reflecting the allocation of time spent by NSIMG's internal
department and consulting personnel on the services provided
to NSUSA under this Agreement. The study shall be updated on a
quarterly basis. NSUSA may request a copy of the then
applicable time allocation study from NSIMG upon thirty (30)
days written notice.
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4.3 Sharing of Information and Witnesses. At all times during the
term of this Agreement and for a period of three years
thereafter, each of the Parties shall maintain at its
principal place of business full, complete and accurate books
of account and records with regard to its activities under
this Agreement. In addition to books and records, NSIMG and
NSUSA may from time to time have in their possession or under
their control (or the control of persons or entities which
have rendered services) additional books, records, contracts,
instruments, data and other information (together with the
books and records referred to in the first sentence of this
Section 4.3, the "Information") which may prove necessary or
desirable to the other in connection with the other's
business. Accordingly, (i) NSIMG shall provide to NSUSA, and
NSUSA shall provide to NSIMG upon the other's request, at all
reasonable times, full and complete access to persons and all
Information as the other may reasonably request and require in
the conduct of its business, and (ii) NSIMG shall make
available to NSUSA and NSUSA shall make available to NSIMG,
upon the other's request, such persons as may reasonably be
required to assist with any legal, administrative or other
proceedings in which NSUSA or NSIMG, as the case may be, may
from time to time be involved. The Information shall include,
without limitation, information sought for audit, accounting,
claims, litigation and tax purposes. The Party providing
Information or making available witnesses shall be entitled to
receive from the other Party, upon the presentation of
invoices therefor, payment for its reasonable out-of-pocket
expenses incurred in connection therewith (but not the labor
costs thereof), but shall not be entitled to receive any other
payment with respect thereto. Nothing in this Agreement shall
require either Party to reveal to the other any information if
to do so would violate such Party's written and enforceable
duty of confidence to a third party from whom or which such
information was obtained; under such circumstances, however,
the parties shall work together to obtain a release of such
information without violation of such duty of confidence.
ARTICLE 5
NON-DISCLOSURE OF CONFIDENTIAL INFORMATION
All trade secrets, proprietary technology, know-how or other non-public
or proprietary business or technical information owned or used by NSIMG 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 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 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.
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ARTICLE 6
TERM
This Agreement shall be effective from the Effective Date for a term of
five (5) years unless terminated Pursuant to Article 7. The term of this
Agreement shall be renewed automatically for successive one year terms ,unless
terminated ninety (90) days prior to the end of the then current term.
ARTICLE 7
TERMINATION
7.1 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 as 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 7.1(a)
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; or
(c) if the other Party 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).
7.2 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 sixty (60) days after receipt of written notice
of such default by the defaulting Party; or
7.3 This Agreement may be terminated by NSIMG if the original
pre-IPO shareholders of Nu Skin Asia Pacific no longer own or
control a majority of the voting interest in NSUSA. Such
termination shall be effective thirty (30) days after NSIMG
gives written notice to NSUSA of the occurrence of a change in
control and its intention to terminate this Agreement based
thereon.
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7.4 NSUSA may terminate any specific Management and Consulting
Service provided pursuant to this Agreement by providing
written notice thereof to NSIMG not less than sixty (60) days
prior to the desired termination date. NSIMG may discontinue
providing any specific Management and Consulting Service
provided pursuant to this Agreement by providing written
notice thereof to the NSUSA not less than sixty (60) days
prior to the desired termination date; provided, however, that
NSIMG shall not deliver any such notice in respect of any
service to the extent that NSIMG continues to provide such
service to any other international affiliate of NSIMG.
ARTICLE 8
EFFECT OF TERMINATION
8.1 Cessation of Rights. Upon expiration or termination
(collectively, the "Termination") of this Agreement for any
reason whatsoever, all rights and obligations of the Parties
hereunder shall cease; provided, however, that upon
Termination of this Agreement, no Party shall be released from
its obligations to pay monies due or to become due or to
complete any unfulfilled obligations under this Agreement, and
the provisions of Article 5 shall service such Termination.
8.2. Damages. Upon the Termination of this Agreement for any
reason, no Party shall be liable or obligated to the other
Party with respect to any payments, future profits, exemplary,
special or consequential damages, indemnifications or other
compensation regarding such Termination, and, except as
otherwise required by applicable law, each Party hereby waives
and relinquishes any rights, pursuant to law or otherwise, to
any such payments, indemnifications or compensation.
ARTICLE 9
COMPLIANCE WITH APPLICABLE LAWS
9.1 Compliance Generally. In the performance of its obligations
under this Agreement, the Parties shall, at all times,
strictly comply with all applicable laws, regulations and
orders of the countries and jurisdictions in which they
operate and such United States laws as outlined in paragraph
9.3 of this Article.
9.2 Authorizations. Each Party shall, at its own expense, make,
obtain and maintain in force at all times during the term of
this Agreement, all filings, registrations, reports, licenses,
permits and authorizations required under applicable law,
regulations or orders in order for it to perform its
obligations under this Agreement.
ARTICLE 10
GENERAL PROVISIONS
10.1 Assignment. This Agreement shall be binding on and inure to
the benefit of the heirs, successors, assigns and
beneficiaries of the Parties; provided that no Party may
assign this Agreement or any rights or obligations hereunder,
whether by operation of law or otherwise, without the prior
written consent of all the other Party's authorized
representatives (which consent may be granted or withheld).
Any attempted assignment by any Party without the prior
written consent of the other Party shall be void and
unenforceable.
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10.2 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 to the facsimile number as may be provided from time
to time by each Party to the other, at the time that receipt
thereof has been confirmed by return electronic communication
signal that the message has been received, or if sent by
reputable international courier service three (3) days after
dispatch addressed to the Parties at the addresses outlined
hereafter. Either Party may change its facsimile number or
address by a notice given to the other Party in the manner set
forth as follows:
If to NSIMG: Attn.: General Manager
75 West Center
Provo, Utah 84601 USA
(801) 345-5500
(801) 345-5999 Fax
If to NSUSA: Attn.: Assistant Secretary
Nu Skin U.S.A., Inc.
Provo, Utah USA
(801) 345-3099
(801) 345-5060 Fax
10.3 Waiver and Delay. No waiver by any Party of any breach or
default in performance by any other Party, and no failure,
refusal or neglect of any 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 any Party of its
right at any time thereafter to require exact and strict
compliance with the provisions thereof.
10.4 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.
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10.5 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 NSIMG and
NSUSA within 30 days after written notice of such dispute is
given by NSIMG or NSUSA, as the case may be, shall be resolved
through arbitration with 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
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 NSIMG 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 NSIMG 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
NSIMG and NSUSA; provided, that such of NSIMG and NSUSA shall
pay all fees and expenses incurred by it in presenting or
defending against such claim, right or cause of action.
10.6 Integrated Contract. This Agreement constitutes the entire
agreement between the Parties relating to the subject matter
hereof and supersedes all prior or contemporaneous
negotiations, representations, agreements and understanding
(both oral and written) of the Parties.
10.7 Modifications and Amendments. No supplement, modification or
amendment of this Agreement shall be binding unless it is in
writing and executed by all Parties.
10.8 Severability. To the extent that any provision of this
Agreement is (or, in the opinion of counsel mutually
acceptable to all Parties, would be) prohibited, judicially
invalidated or otherwise rendered unenforceable in any
jurisdiction relevant to the Parties, 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.
10.9 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.
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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 year first-above written.
NU SKIN INTERNATIONAL NU SKIN USA, INC.
MANAGEMENT GROUP, INC.
By: /s/ Blake M. Roney By: /s/ Keith R. Halls
Name: Blake M. Roney Name: Keith R. Halls
Title: President Title: Vice President
