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AMENDED AND RESTATED
LICENSING AND SALES AGREEMENT
TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS................................................2
1.1 "Agreement"...........................................3
1.2 "Bonus Payments"......................................3
1.3 "Commission Expense...................................3
1.4 "Copyrights" .........................................3
1.5 "Distributor Contract"................................3
1.6 "Distributor Lists"...................................3
1.7 "Fixed Commission Expense"............................3
1.8 "Independent Distributor Network".....................3
1.9 "Know-How"............................................4
1.10 "Licensed Property"...................................4
1.11 "Net Sales"...........................................4
1.12 "NSI Independent Distributor".........................4
1.13 "Products"............................................4
1.14 "Proprietary Information".............................4
1.15 "Resident NSI Independent Distributor"................5
1.16 "Sales Compensation Plan".............................5
1.17 "Sales Aids"..........................................5
1.18 "Starter Kit".........................................5
1.19 "Territory"..........................................5
ARTICLE II
GRANT OF LICENSE AND PARTIAL
ASSIGNMENT OF OBLIGATIONS; LICENSE FEES....................6
2.1 Grant of License......................................6
2.2 Assignment of Obligations.............................6
2.3 NSI's Interest in Licensed Property...................6
2.4 Recitals of Value of Licensed Property................6
2.5 Warranty of Title.....................................7
2.6 Modifications.........................................7
2.7 License Fee...........................................7
ARTICLE III
COMPUTATION AND PAYMENT TERMS..............................7
3.1 Bonus Payments........................................7
3.2 License Fee...........................................9
3.4 Payments to NSI........................................9
3.6 Default Rate..........................................10
ARTICLE IV
CERTAIN OBLIGATIONS OF THE PARTIES UNDER THE AGREEMENT....10
4.1 Certain Obligations, Rights and Duties of NSI........10
4.2 Certain Obligations, Rights and Duties of NSJ........11
ARTICLE V
STARTER KIT SALES.........................................12
5.1 Agreement to Purchase Starter Kits...................12
5.2 Pricing..............................................12
5.3 Payment Method.......................................12
5.4 Quantities...........................................13
5.5 Quality of Starter Kits..............................13
5.6 Merchantability......................................13
ARTICLE VI
GOVERNMENTAL APPROVALS, LAWS AND REGULATIONS..............13
6.1 Government Approvals.................................13
6.2 Compliance with Laws.................................13
6.3 Compliance of Licensed Property.....................14
ARTICLE VII
TERM AND TERMINATION......................................14
7.1 Term.................................................14
7.2 Termination..........................................15
7.3 Termination on Default...............................15
7.4 Termination on Change of Control.....................16
7.5 Survival of Obligations..............................16
7.6 Reversion of Rights..................................16
ARTICLE VIII
INFRINGEMENT; INDEMNIFICATION.............................16
ARTICLE IX
NATURE OF RELATIONSHIP....................................17
ARTICLE X
CONFIDENTIALITY...........................................18
ARTICLE XI
MAINTENANCE OF LICENSED PROPERTY; RECORDING...............19
ARTICLE XII
MISCELLANEOUS.............................................19
12.1 Assignment..........................................19
12.2 Force Majeure.......................................19
12.3 Governing Law and Dispute Resolution................20
12.4 Applicability of Post-Effective Law.................21
12.5 Waiver and Delay....................................21
ii
12.6 Notices.............................................21
12.7 Integrated Contract.................................22
12.8 Modifications and Amendments........................22
12.9 Severability........................................22
12.10 Counterparts and Headings..........................23
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AMENDED AND RESTATED
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LICENSING AND SALES AGREEMENT
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WHEREAS, NSI is engaged in the design, production and marketing of products
and related sales aids, for multi-national distribution through a network of
independent distributors; and
WHEREAS, NSJ desires to act as the exclusive wholesale distributor of NSI
products in Japan, having entered a separate written Wholesale Distribution
Agreement with Nu Skin Hong Kong, Inc., the exclusive regional distributor of
such products and sales aids in the Asia-Pacific region; and
WHEREAS, NSI and NSJ desire to implement NSI's Independent Distributor
Network (as defined below) to promote sales of products and sales aids; and
WHEREAS, NSI desires to further develop and enlarge its Independent
Distributor Network in the country of Japan with the assistance of NSJ, for
their mutual benefit, in accordance with the terms and conditions hereinafter
provided; and
WHEREAS, NSJ recognizes and agrees that NSI has expended considerable time,
effort and resources to develop and maintain the Licensed Property (as hereafter
defined) and NSJ further agrees it will derive a considerable benefit from its
use of the Licensed Property in the Territory and from NSI's efforts and
expenditures respecting the Licensed Property; and
WHEREAS, NSI and NSJ (as assignee of Nu Skin Japan, Inc.) entered into a
Licensing and Sales Agreement on November 11, 1993, and entered into Amendments
to said agreement on July 12, 1994, December 15, 1994 and March 14, 1995 (the
"Prior Licensing and Sales Agreement"); and
WHEREAS, the Parties wish to amend and restate the Prior Licensing and
Sales Agreement as set forth herein;
NOW THEREFORE, in consideration of the premises, the mutual promises,
covenants, and warranties hereinafter set forth and for other valuable
consideration, the sufficiency of which is hereby acknowledged, the Parties
agree as follows:
ARTICLE I
DEFINITIONS
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For the purposes of this Agreement, the following words and terms shall
have the meaning assigned to them in this Article I:
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1.1 "Agreement" shall mean this Amended and Restated Licensing and Sales
Agreement (together with any exhibits and schedules hereto), as the same may be
modified, amended or supplemented from time to time.
1.2 "Bonus Payments" shall mean, for any NSI Independent Distributor, all
monetary obligations due to such Distributor accrued under the terms of the
Sales Compensation Plan and such Distributor's Distributor Contract with NSI.
1.3 "Commission Expense" shall mean all direct expenses of NSI incurred
in operating, managing, and executing the Sales Compensation Plan. These
expenses include, but are not limited to amounts paid to NSI Independent
Distributors as Bonus Payments as well as NSI's operational costs associated
with the calculation of these monthly payments.
1.4 "Copyrights" shall mean any and all protectable software, programs,
databases, source codes and applications owned by NSI or which NSI has a right
to use, license or sub-license, relating directly or indirectly to the
Independent Distributor Network, Distribution Lists or the Sales Compensation
Plan.
1.5 "Distributor Contract" shall mean, for any NSI Independent
Distributor, its contract with NSI pursuant to which NSI authorizes it to
distribute NSI's Products and Sales Aids.
1.6 "Distributor Lists" shall mean any and all individual or accumulated
name, address, identification number, sponsor name and/or similar lists of all
present or future NSI Independent Distributors expressed in any medium.
1.7 "Fixed Commission Expense" shall mean, for any period, forty-two
percent (42%) of the aggregate amount (in Yen) of sales by NSJ of Products
during such period.
1.8 "Independent Distributor Network" shall mean the network of all NSI
Independent Distributors.
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1.9 "Know-How" shall mean any information, including, without limitation,
any commercial or business information, lists, marketing methods, marketing
surveys, processes, specifications, quality control reports, drawings,
photographs, or any other information owned by NSI, whether or not considered
proprietary, relating to the Independent Distributor Network, the Distributor
Lists, and the Sales Compensation Plan.
1.10 "Licensed Property" shall mean the Independent Distributor Network,
the Distributor Lists, the Sales Compensation Plan, the Copyrights, and the
associated Know-How.
1.11 "Net Sales" shall mean, for any period, the number of Products and
Sales Aids sold by NSJ to NSI Independent Distributors during such period,
multiplied by NSJ's then current selling price to its distributors for each such
Product or Sales Aids less applicable consumption taxes and returns or refunds
reasonably accepted and credited by NSJ during such period.
1.12 "NSI Independent Distributor" shall mean a person or business entity
who has entered into a Distributor Contract.
1.13 "Products" shall mean those goods sold by NSI which carry a point
value within the Sales Compensation Plan.
1.14 "Proprietary Information" shall mean, without limitation, all
information other than information in published form or expressly designated by
either party in writing as non-confidential, which is directly or indirectly
disclosed to the other party, regardless of the form in which it is disclosed,
relating in any way to the following property owned by the Parties or which the
Parties have been licensed to use or sub-license: (1) proprietary technical
information related to the Licensed Property and the Starter Kit; (2)
information respecting actual or potential customers or customer contacts and
customer sales strategies, names, addresses, phone numbers, identification
numbers, database information and its organization, unique business methods; (3)
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market studies, penetration data, customers, products, contracts, copyrights,
computer programs, applications, technical data, licensed technology, patents,
inventions, procedures, methods, designs, strategies, plans, liabilities,
assets, cost revenues, sales costs, production costs, raw material sources and
other market information; (4) other sales and marketing plans, programs and
strategies; (5) trade secrets, Know-How, designs and proprietary commercial and
technical information, methods, practices, procedures, processes, formulae with
respect to manufacturing, assembly, design or processing products subject to
this Agreement and any component, part or manufacture thereof; (7) profits,
organization, employees, agents, distributors, suppliers, trade marks, trade
names and services; (8) other business and commercial practices in general
relating directly or indirectly to the foregoing; and, (9) computer disks or
other records or documents, originals or copies, containing in whole or in part
any of the foregoing.
1.15 "Resident NSI Independent Distributor" shall mean any NSI
Independent Distributor whose country of residence as shown on the records of
NSI is in the Territory.
1.16 "Sales Compensation Plan" shall mean the method employed by NSI to
calculate Bonus Payments paid to the Independent Distributor Network upon the
Sale of Products.
1.17 "Sales Aids" shall mean materials, in whatever form and/or design
produced to assist in the marketing of Products.
1.18 "Starter Kit" shall mean those materials purchased by an NSI
Independent Distributor upon the execution of a Distributor Contract which
explains the Sales Compensation Plan and other NSI policies, procedures and
programs, the contractual relationship with NSI and the marketing support
programs for the Territory.
1.19 "Territory" shall mean the country of Japan.
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ARTICLE II
GRANT OF LICENSE AND PARTIAL
ASSIGNMENT OF OBLIGATIONS; LICENSE FEES
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2.1 Grant of License. Subject to the terms and conditions of this
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Agreement, NSI hereby grants to NSJ an exclusive license to use the Licensed
Property in the Territory; provided that all such uses shall comply in all
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material respects with the terms of this Agreement and; provided further that
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NSJ shall not have the right to grant any right, title, use or sublicense for
the Licensed Property.
2.2 Assignment of Obligations. NSI hereby transfers and assigns to
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NSJ its obligations to make Bonus Payments to Resident Independent Distributors
under their Distributor Contracts and NSJ hereby accepts such transfer and
assignment and assumes such obligations.
2.3 NSI's Interest in Licensed Property. NSI hereby retains legal
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title to the Licensed Property for all purposes, including but not limited to,
the bringing or defending of any legal action in the Territory which it deems
reasonable to protect its rights therein. NSJ agrees to assist NSI in any
manner to protect NSI's rights in the Licensed Property which NSI may reasonably
request. NSI shall reimburse NSJ for any third party costs incurred by NSJ in
providing such assistance.
2.4 Recitals of Value of Licensed Property. NSJ recognizes and
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agrees that NSI has expended considerable time, effort and resources to develop,
maintain and enhance the Licensed Property. NSJ further agrees it will derive a
considerable benefit from its use of the Licensed Property in the Territory and
from NSI's efforts and expenditures respecting the Licensed Property.
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2.5 Warranty of Title. NSI hereby warrants and represents that it is
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the sole and exclusive owner of the Licensed Property and that to the best of
its knowledge and information no claim exists or has been made contesting the
ownership and title of said Licensed Property.
2.6 Modifications. NSJ shall make no modification to the Licensed
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Property without the express, prior written consent of NSI.
2.7 License Fee. As compensation for the exclusive licenses granted
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pursuant to the terms of this Agreement, NSJ shall pay to NSI a license fee
equal to four percent (4%) of its Net Sales of Products, Sales Aids and other
items (exclusive of Starter Kits and goods sold on consignment) sold to NSI
Independent Distributors.
ARTICLE III
COMPUTATION AND PAYMENT TERMS
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3.1 Bonus Payments. Pursuant to Section 2.2 hereof, NSJ agrees to
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make Bonus Payments to Resident Independent Distributors under their Distributor
Contracts. The Parties further agree to settle the difference between the
amount of such Bonus Payments paid by NSJ in each month and the Fixed Commission
Expense in such month. The procedures for such payment and settlement are as
follows:
3.1(a) Within eight (8) days following the close of each month, NSJ
shall deliver to NSI, by electronic transmission or such other medium
as the Parties shall agree to from time to time, a statement of NSJ's
sales of Products during such month (including a detail of sales to
each NSI Independent Distributor to which sales were made during such
month) and of such other items as NSI shall reasonably request from
time to time (the "Detailed Sales Report").
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3.1(b) By the later of twelve (12) days after receipt of the Detailed
Sales Report or twenty (20) days after the end of such month, NSI
shall deliver to NSJ, by electronic transmission or such other medium
as the parties shall agree to from time to time, a calculation of the
Bonus Payments due to Resident Independent Distributors under their
Distributor Contracts for such month (the "Monthly Bonus Amount"), a
calculation of the Fixed Commission Expense for such month and such
other items as NSJ shall reasonably request from time to time (the
"Bonus Statement").
3.1(c) By the later of ten (10) days after receipt of the Bonus
Statement or thirty (30) days after the end of such month, NSJ shall
pay Bonus Payments due to the Resident Independent Distributors.
Concurrently with or promptly after such payment NSJ shall deliver to
NSI (i) if the Monthly Aggregate Bonus Amounts paid to all Resident
Independent Distributors is less than the Fixed Commission Expense for
such month, payment of the deficiency in accordance with the
procedures set forth in Section 3.4(a) hereof, or (ii) if the
aggregate Monthly Bonus Amounts paid to all Resident Independent
Distributors exceeds the Fixed Commission Expense for such month, an
invoice to NSI for reimbursement of such excess amount. In the event
NSJ shall have given NSI an invoice for reimbursement of excess Bonus
Payments as set forth in clause (i) above, NSI shall pay the amount so
invoiced to NSJ pursuant to the procedures set forth in this Section
3.1 within 10 days after receipt thereof.
3.1(d) The Parties acknowledge that the percentage used in calculating
the Fixed Commission Expense has been set on the basis of NSI's
historical experience. The Parties agree that the percentage used in
calculating the Fixed Commission Expense shall remain consistent with
actual Commission Expense as a percentage of sales of Products to NSI
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Independent Distributors and shall be negotiated and determined on an arm's
length basis, and may be adjusted from time to time as agreed by the Parties in
writing based upon an annual review thereof.
3.2 License Fee. The procedures for payment of the License Fees
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payable hereunder are as follows:
3.2(a) Within 30 days following the close of each month, NSJ shall
deliver to NSI, by electronic transmission or such other medium as the
parties shall agree to from time to time, a statement of its Net Sales
during such month in the Territory and a computation of the license
fees payable under Section 2.7 hereof. NSJ shall make payment of such
license fees in accordance with Section 3.4(a) hereof concurrently
with delivery of such statement.
3.2(b) For purposes of computing the license fee, Products and Sales
Aids shall be considered sold when recognized for accounting purposes
as a sale by NSJ as per U.S. GAAP.
3.2(c) The Parties agree that the license fee shall remain competitive
within the market and shall be negotiated and determined on an arm's
length basis and may be adjusted from time to time as agreed by the
Parties in writing.
3.3 Records. Each Party shall keep complete and accurate records of
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its compliance with its obligations under this Agreement which shall be open to
inspection by authorized representatives of the other Party at any reasonable
time.
3.4 Payments to NSI. Payments made by NSJ to NSI under this Agreement
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shall be payable in Japanese Yen. Payments shall be made either directly to NSI
in immediately available
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funds by wire transfer to an account designated by NSI or by such other means of
payment acceptable to NSI from time to time.
3.5 Payments to NSJ. Payments made by NSI to NSJ under this Agreement
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shall be payable in Japanese Yen. Payments shall be made either directly to NSJ
in immediately available funds by wire transfer to an account designated by NSJ
or by such other means of payment acceptable to NSJ from time to time.
3.6 Default Rate. Without limiting any of NSI's other rights and
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remedies under this Agreement, amounts outstanding under the terms of this
Agreement not paid within 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
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the full period outstanding.
ARTICLE IV
CERTAIN OBLIGATIONS OF THE PARTIES UNDER THE AGREEMENT
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4.1 Certain Obligations, Rights and Duties of NSI. NSI agrees that,
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in addition to its other obligations under this Agreement, NSI will maintain and
provide support for the Sales Compensation Plan. NSI agrees, among other
things: (1) to maintain a computer system, including hardware, software, data
links, computer peripherals, printers, etc. to adequately fulfill NSI's
obligations under the Sales Compensation Plan; (2) to provide necessary training
and support to NSJ relating to the Resident Independent Distributors, including
information relating to training methods, motivational strategies, convention
and event planning, technical policies and procedure knowledge, etc; (3) to
receive and use NSJ's sales information to compute the correct and appropriate
payments to the Resident Independent Distributors as set forth in Section 3.1(b)
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hereof; (4) in consultation with NSJ, to discipline NSI Independent Distributors
as it deems necessary to help insure the reputation of NSI; (5) to maintain a
record of the Distributor Contracts and provide such information to NSJ, as
reasonably requested; and (6) to perform any other function or provide the
necessary support to comply with the terms of this Agreement and to otherwise
support and maintain the Independent Distributor Network within the Territory.
4.2 Certain Obligations, Rights and Duties of NSJ. In addition to
---------------------------------------------
its other obligations under this Agreement NSJ agrees, among other things: (1)
to maintain, at its sole cost and expense, such facilities and other places of
business within the Territory necessary to effect the purposes and intentions of
this Agreement and 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, legal and such similar expenses,
relating to the business of NSJ under the terms and conditions of this
Agreement, unless otherwise agreed in writing by the Parties; (2) to manage its
business affairs in such a manner that the reputation of NSI is not damaged;
(3) to sell Starter Kits to potential NSI Independent Distributors in accordance
with all applicable laws and industry standards; (4) to collect requests for
Distributor Contracts from potential NSI Independent Distributors and forward
these contracts to NSI in a timely fashion (provided that all such requests for
Distributor Contracts shall be reviewed for acceptance or rejection by NSI in
the United States and in no instance shall NSJ accept such requests for
Distributor Contracts,); (5) to train and lend assistance to NSI Independent
Distributors in the Territory; (6) to transmit information regarding Net Sales
to NSI Independent Distributors and such other information as NSI may reasonably
request; (7) to pay Bonus Payments to Resident Distributor subject to settlement
as set forth in Section 3.1 hereof; (8) to use its best efforts to monitor and
supervise
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the activities of Resident NSI Distributors; (9) to use its best efforts to
cause the enforcement of the Distributor Contracts to ensure compliance
therewith and with NSI's policies and procedures and to any action against
Resident NSI Distributors for violation of the terms and conditions of the
Distributor Contract, NSI's policies and procedures, or any other rules and
regulations of NSI or NSJ as NSI shall reasonably request; and (10) to perform
any other function or provide support as NSI shall reasonably request to enable
NSI to fully perform its obligations to the NSI Independent Distributors under
the Sales Compensation Plan and their Distributor Contracts.
ARTICLE V
STARTER KIT SALES
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5.1 Agreement to Purchase Starter Kits. The Parties acknowledge that
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pursuant to this Agreement NSJ is being granted an exclusive license to use the
Licensed Property, including the Independent Distributor Network, in the
Territory. NSJ agrees to use its best efforts in supporting the development of
the Independent Distributor Network in the Territory by selling to potential NSI
Independent Distributors in the Territory Starter Kits which NSI has either (i)
purchased from NSI, or (ii) has sourced and priced locally, or any part thereof,
subject to review, approval and oversight of NSI and in accordance with
instructions and specifications given by NSI.
5.2 Pricing. The Parties agree that the price of Starter Kits shall
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be negotiated and determined on an arm's length basis and may be adjusted from
time to time as agreed by the Parties in writing.
5.3 Payment Method. NSJ shall pay the commercial invoices for
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Starter Kits shipped under this Agreement in the manner set forth in Section
3.4.
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5.4 Quantities. NSJ agrees to purchase sufficient quantities of the
----------
Starter Kits from NSI to fill orders, in a timely fashion, received from
potential NSI Independent Distributors in the Territory.
5.5 Quality of Starter Kits. NSI shall use its best efforts to
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maintain and augment the quality, image and value of the Starter Kits such that
Starter Kits sold in the Territory are consistent with the quality of those sold
in the United States of America.
5.6 Merchantability. NSI warrants that Starter Kits sold to NSJ
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pursuant to this Agreement will be merchantable and of sufficient quality for
sales within the Territory. If NSJ determines that certain Starter Kits
supplied under this Agreement are not merchantable, a claim for a refund of the
price paid can be made within 45 days from the day the Starter Kits are received
in the Territory. NSI agrees to refund, or credit the account of NSJ, for the
purchase price of such non-merchantable Starter Kits.
ARTICLE VI
GOVERNMENTAL APPROVALS, LAWS AND REGULATIONS
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6.1 Government Approvals. NSJ agrees to obtain, or cause to be
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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 in the Territory to enable this Agreement to
become effective or to enable any payment pursuant to the provisions of this
Agreement to be made. NSJ agrees to keep NSI informed of its progress in
obtaining all such government approvals.
6.2 Compliance with Laws. Each party agrees to refrain from any
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action that will cause the other party to be in violation of any applicable law,
regulation, or ordinance of any jurisdiction
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in the Territory or the United States or elsewhere or any international
convention or bilateral or multilateral treaty to which any jurisdiction in the
Territory or the United States is a signatory, including, without limitation,
the U.S. Foreign Corrupt Practices Act of 1977, the U.S. Export Control Laws,
and the U.S. Anti-Boycott laws.
6.3 Compliance of Licensed Property. NSI agrees to take, or cause
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to be taken, at its sole cost and expense, all actions necessary to ensure the
compliance of the Licensed Property with applicable laws, regulations and
ordinances in the Territory (including, without limitation, direct selling
laws). NSI agrees to keep NSJ informed of its progress in obtaining all such
government approvals.
ARTICLE VII
TERM AND TERMINATION
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7.1 Term. Subject to Section 7.2 hereof, this Agreement shall be for
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a term ending on December 31, 2016 provided, however, that this Agreement is
subject to renegotiation after December 31, 2001 in the event that (i) ▇▇▇▇▇ ▇.
▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇ ▇. Halls (the "Existing
Stockholders"), or members of their families, or trusts or foundations
established by or for the benefit of the Existing Stockholders or members of
their families on a combined basis no longer beneficially own a majority of the
voting stock of Nu Skin Asia Pacific, Inc. ("Nu Skin Asia"), or (ii) the
Existing Stockholders, or members of their families, or trusts or foundations
established by or for the benefit of the Existing Stockholders or members of
their families on a combined basis no longer beneficially own a majority of the
voting stock of NSI.
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7.2 Termination. This Agreement may be terminated by either party
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immediately or at any time 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; 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) to be placed upon its assets.
7.3 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
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such default has not been cured within sixty (60) days after receipt of written
notice of such default by the defaulting party.
7.4 Termination on Change of Control. This Agreement may be
--------------------------------
terminated by NSI if Nu Skin Asia shall no longer own or control a majority of
the voting interest in NSJ or by NSJ if the Existing Stockholders should no
longer own or control a majority of the voting interest in NSI, with such
termination to take effect thirty (30) days after NSI gives written notice to
NSJ of the occurrence of a change in control and its intention to terminate this
Agreement based thereon.
7.5 Survival of Obligations. The obligations of the Parties to pay
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any sums which are due and payable as of the expiration or termination of this
Agreement and their obligation under Section 2.3, Article VIII and Article X
hereof shall survive the expiration or termination of this Agreement.
7.6 Reversion of Rights. Upon termination of this Agreement, all
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rights and licenses herein granted to NSJ shall immediately cease and shall
revert to NSI, and NSJ shall cease representing to any third party that it has
any right to use, assign, convey or otherwise transfer the Licensed Property.
ARTICLE VIII
INFRINGEMENT; INDEMNIFICATION
-----------------------------
NSI hereby represents and warrants that, as of the date hereof, there
are no infringement or misappropriation suits pending or filed or, to its
knowledge, threatened against NSI within the Territories that relate to the
Licensed Property and NSI is not presently aware of any such infringement or
misappropriation. NSI shall indemnify and hold NSJ harmless from and against
all claims, actions, suits, proceedings, losses, liabilities, costs, damages and
attorneys' fees in
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respect of a third party claim alleging infringement or misappropriation by NSJ
in respect of its use of the Licensed Property in the Territory; provided that
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NSJ shall give NSI prompt written notice of any claim, action, suit or
proceeding and without limiting the generality of Section 2.3 hereof, shall
cooperate with NSI in the defense of any such claim, action, suit or proceeding.
NSI shall have the right to select counsel in any such claim, action, suit or
proceeding. In the event that any such claim, action or proceeding is
successful, NSI shall use reasonable efforts to make such changes in the
Licensed Property to permit NSJ to continue to make use of the Licensed Property
to permit NSJ to continue to make use of the Licensed Property to permit NSJ to
continue to make use of the Licensed Property free and clear of all infringement
and misappropriation. NSI shall give NSI prompt written notice of any
infringement or misappropriation of the Licensed Property by any third party.
NSI shall have the sole right to initiate any and all legal proceedings against
any such third party and, without limiting the generality of Section 2.3 hereof,
NSJ shall cooperate with NSI in the pursuit of any such proceeding. NSI shall
retain any damage award obtained from such third party.
ARTICLE IX
NATURE OF RELATIONSHIP
----------------------
The relationship of NSJ 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
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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
CONFIDENTIALITY
---------------
All Proprietary Information or other non-public or proprietary
business or technical information owned or used by NSI or NSJ 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 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) were otherwise lawfully available to the receiving
party, or (iii) were generated independently by the receiving party. The
provisions of this Article shall survive termination of this Agreement.
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ARTICLE XI
MAINTENANCE OF LICENSED PROPERTY; RECORDING
-------------------------------------------
NSI shall use its best efforts and take all reasonable steps
consistent with its existing internal policies and procedures and with this
Agreement to maintain the Licensed Property in the Territory. In no event shall
this clause be construed to require NSI to establish or maintain a branch
office, subsidiary corporation or fixed place of business or similar permanent
establishment in the Territory. NSI, in its sole discretion, shall have the
right to record this Agreement or proof thereof, or to enter NSJ as a registered
user in the Territory. NSJ agrees to cooperate, as reasonably requested by NSI,
in arranging for such recordings or entries, or in bearing or canceling such
recordings or entries in the event of amendments to or termination of this
Agreement for any reason.
ARTICLE XII
MISCELLANEOUS
12.1 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.
12.2 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
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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.
12.3 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 NSJ within 30 days after written notice of such dispute is given by NSJ
or NSI, 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 NSI and NSJ. 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 NSJ. The decision of the
arbitrator shall be final and binding upon NSI and NSJ and may be enforced in
any court of competent jurisdiction. The expenses and costs of such arbitration
shall be divided and borne
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equally by NSI and NSJ; provided, that each of NSI and NSJ shall pay all fees
--------
and expenses incurred by it in presenting or defending against such claim, right
or cause of action.
12.4 Applicability of Post-Effective Law. The parties agree that
-----------------------------------
neither the Vienna Convention on the International Sale of Goods nor any such
similar law, treaty or act that becomes effective during the term of this
Agreement shall be applicable to this Agreement or the transactions contemplated
hereunder.
12.5 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.
12.6 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:
21
If to NSJ: General Manager
Nu Skin Japan Company, Limited
Shinjuku I-Land Tower, 23rd Floor
6-5-1 Nishishinjuku, Shinjuku-ku
Tokyo, Japan, 163-13
Facsimile No.: ▇▇▇-▇▇▇▇-▇▇▇▇
If to NSI: Chief Operating Officer
Nu Skin International, Inc.
▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇.▇.▇.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
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.
12.7 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 understandings (both oral and written) of the Parties.
12.8 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.
12.9 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
22
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.
12.10 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.
23
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, INC. NU SKIN JAPAN COMPANY, LIMITED
BY: BY:
------------------------ ---------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
PRESIDENT GENERAL MANAGER
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