EXHIBIT 10.12
NSI - NSK
AMENDED AND RESTATED
LICENSING AND SALES AGREEMENT
TABLE OF CONTENTS
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ARTICLE I DEFINITIONS....................... 2
1.1 "Agreement"......................................... 2
1.2 "Bonus Payments".................................... 3
1.3 "Commission Expense Cap"............................ 3
1.4 "Copyrights" ...................................... 3
1.5 "Distributor Contract".............................. 3
1.6 "Distributor Lists"................................. 3
1.7 "Independent Distributor Network"................... 3
1.8 "Know-How".......................................... 3
1.9 "Licensed Property"................................. 4
1.10 "Net Sales"......................................... 4
1.11 "NSI Independent Distributor"....................... 4
1.12 "Products".......................................... 4
1.13 "Proprietary Information"........................... 4
1.14 "Resident NSI Independent Distributor".............. 5
1.15 "Sales Compensation Plan"........................... 5
1.16 "Sales Aids"........................................ 5
1.17 "Starter Kit"....................................... 5
1.18 "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
2.8. Consulting Fee...................................... 7
2.9 Commission Expense Cap.............................. 7
ARTICLE III COMPUTATION AND PAYMENT TERMS.............. 8
3.1 Bonus Payments and Consulting Fee................... 8
3.2 License Fee......................................... 9
3.3 Records.............................................. 10
3.4 Payments to NSI...................................... 10
3.5 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 NSK....... 11
ARTICLE V STARTER KIT SALES.................... 12
5.1 Agreement to Purchase Starter Kits.................. 12
5.2 Pricing............................................. 13
5.3 Payment Method...................................... 13
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................................ 14
6.3 Compliance with Licensed Property.................. 14
ARTICLE VII TERM AND TERMINATION................... 14
7.1 Term................................................ 14
7.2 Termination......................................... 15
7.3 Termination of Default.............................. 16
7.4 Termination of Change of Control.................... 16
7.5 Survival of Obligations............................. 16
7.6 Reversion of Rights................................. 16
ARTICLE VIII INFRINGEMENT; INDEMNIFICATION.............. 17
ARTICLE IX NATURE OF RELATIONSHIP.................. 18
ARTICLE X CONFIDENTIALITY..................... 18
ARTICLE XI MAINTENANCE OF LICENSED PROPERTY; RECORDING....... 19
ARTICLE XII MISCELLANEOUS...................... 20
12.1 Assignment......................................... 20
12.2 Force Majeure...................................... 20
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12.3 Governing Law and Dispute Resolution............... 20
12.4 Applicability of Post-Effective Law................ 21
12.5 Waiver and Delay................................... 21
12.6 Notices............................................ 22
12.7 Integrated Contract................................ 23
12.8 Modifications and Amendments....................... 23
12.9 Severability....................................... 23
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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THIS AMENDED AND RESTATED LICENSING AND SALES AGREEMENT is made and
entered into this ______day of November, 1996, between Nu Skin International,
Inc. a corporation organized under the laws of the State of Utah, U.S.A.
(hereinafter referred to as "NSI"), and Nu Skin Korea, Inc., a corporation
organized under the laws of the Republic of Korea and the State of Delaware,
U.S.A. (hereinafter "NSK"). Hereinafter, NSI and NSK shall collectively 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 related sales aids, for multi-national distribution through a network of
independent distributors; and
WHEREAS, NSK desires to act as the exclusive wholesale distributor of NSI
products in the Territory (as hereafter defined), 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 NSK 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 Territory with the assistance of NSK, for their
mutual benefit, in accordance with the terms and conditions hereinafter
provided; and
WHEREAS, NSK recognizes and agrees that NSI has expended considerable time,
effort and resources to develop and maintain the Licensed Property (as hereafter
defined) and NSK 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 NSK entered into a Licensing and Sales Agreement on
February 8, 1996 (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:
1.1 "Agreement" shall mean this Amended and Restated Licensing and Sales
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Agreement (together with any exhibits and schedules hereto), as the same may be
modified, amended or supplemented from time to time.
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1.2 "Bonus Payments" shall mean, for any NSI Independent Distributor, all
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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 Cap" shall mean, for any period, thirty-five
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percent (35%) of the aggregate amount (in Korean Won) of sales by NSK of
Products during such period.
1.4 "Copyrights" shall mean any and all protectable software, programs,
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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
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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
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name, address, identification number, sponsor name and/or similar lists of all
present or future NSI Independent Distributors expressed in any medium.
1.7 "Independent Distributor Network" shall mean the network of all NSI
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Independent Distributors.
1.8 "Know-How" shall mean any information, including, without limitation,
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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.
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1.9 "Licensed Property" shall mean the Independent Distributor Network,
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the Distributor Lists, the Sales Compensation Plan, the Copyrights, and the
associated Know-How.
1.10 "Net Sales" shall mean, for any period, the number of Products, Sales
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Aids and other items (exclusive of Starter Kits and goods sold on consignment)
sold by NSK to NSI Independent Distributors during such period, multiplied by
NSK's then current selling price to its distributors for each such Product,
Sales Aids or items less applicable consumption taxes and returns or refunds
reasonably accepted and credited by NSK during such period.
1.11 "NSI Independent Distributor" shall mean a person or business entity
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who has entered into a Distributor Contract.
1.12 "Products" shall mean those goods sold by NSI which carry a point
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value within the Sales Compensation Plan.
1.13 "Proprietary Information" shall mean, without limitation, all
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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)
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
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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.
1.14 "Resident NSI Independent Distributor" shall mean any NSI Independent
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Distributor whose country of residence as shown on the records of NSI is in the
Territory.
1.15 "Sales Compensation Plan" shall mean the method employed by NSI to
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calculate Bonus Payments paid to the Independent Distributor Network upon the
Sale of Products.
1.16 "Sales Aids" shall mean materials, in whatever form and/or design
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produced to assist in the marketing of Products.
1.17 "Starter Kit" shall mean those materials purchased by an NSI
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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.
1.18 "Territory" shall mean the country of the Republic of Korea.
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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 NSK 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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NSK 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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NSK its obligations to make Bonus Payments to Resident Independent Distributors
under their Distributor Contracts and NSK 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. NSK agrees to assist NSI in any
manner to protect NSI's rights in the Licensed Property which NSI may reasonably
request. NSI shall reimburse NSK for any third party costs incurred by NSK in
providing such assistance.
2.4 Recitals of Value of Licensed Property. NSK recognizes and
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agrees that NSI has expended considerable time, effort and resources to develop,
maintain and enhance the Licensed Property. NSK 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. NSK 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, NSK shall pay to NSI a license fee
equal to four percent (4%) of its Net Sales.
2.8. Consulting Fee. Until February 28, 1998, NSK shall pay to NSI a
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consulting fee (the "Consulting Fee") equal, for any period, to the costs
incurred by NSI for such period in support of NSI Independent Distributors
providing consulting services to NSK in establishing operations in the
Territory, including training Resident NSI Distributors in product knowledge,
motivational strategies, training methods, the Sales Compensation Plan and NSI's
policies and procedures. The specific services to be provided by such NSI
Independent Distributors to NSK may be adjusted by the Parties from time to
time.
2.9 Commission Expense Cap. Notwithstanding anything else in this
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Agreement, in no event shall the Consulting Fee paid by NSK to NSI in any month,
if any, in aggregate with the Bonus Payments paid by NSK to Resident NSI
Distributors, exceed the Commission Expense Cap.
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ARTICLE III
COMPUTATION AND PAYMENT TERMS
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3.1 Bonus Payments and Consulting Fee. Pursuant to Section 2.2
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hereof, NSK agrees to make Bonus Payments to Resident Independent Distributors
under their Distributor Contracts and, pursuant to Section 2.8 hereof, NSK
agrees to pay a Consulting Fee to NSI under certain circumstances. The
procedures for such payment are as follows:
3.1(a) Within eight (8) days following the close of each month, NSK shall
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deliver to NSI, by electronic transmission or such other medium as the
Parties shall agree to from time to time, a statement of NSK'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").
3.1(b) By the later of twelve (12) days after receipt of the Detailed
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Sales Report or twenty (20) days after the end of such month, NSI shall
deliver to NSK, by electronic transmission or such other medium as the
parties shall agree to from time to time, a summary of information
necessary for 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 Consulting Fee for such month and such
other items as NSK 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
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or thirty (30) days after the end of such month, NSK shall calculate and
pay Bonus Payments due to the Resident Independent Distributors.
Concurrently with or promptly after such
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payment NSK shall pay to NSI the Consulting Fee in accordance with the
procedures set forth in Section 3.4(a) hereof.
3.1(d) The Parties agree that the Commission Expense Cap shall remain
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consistent with actual Bonus Payments to NSI Independent Distributors for
Products sold in the territory 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 payable
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hereunder are as follows:
3.2(a) Within 30 days following the close of each month, NSK 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. NSK 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 NSK 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.
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3.3 Records. Each Party shall keep complete and accurate records of its
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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 NSK to NSI under this Agreement shall
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be payable in Korean Won. Payments shall be made either directly to NSI in
immediately available 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 Default Rate. Without limiting any of NSI's other rights and remedies
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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 the full period
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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, in
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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 NSK relating to the Resident Independent Distributors, including
information relating to training methods, motivational strategies, convention
and event planning, technical policies
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and procedure knowledge, etc; (3) to receive and use NSK's sales information to
compute the correct and appropriate payments to the Resident Independent
Distributors as set forth in Section 3.1(b) hereof; (4) in consultation with
NSK, 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 NSK, 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 NSK. In addition to its
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other obligations under this Agreement, NSK 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 NSK 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 NSK accept such Distributor
Contracts,); (5) to
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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 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 NSK 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 NSK is being granted an exclusive license to use the
Licensed Property, including the Independent Distributor Network, in the
Territory. NSK agrees to use its best efforts in supporting the development of
the Independent Distributor Network in the Territory 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
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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 be
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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. NSK shall pay the commercial invoices for Starter
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Kits shipped under this Agreement in the manner set forth in Section 3.4.
5.4 Quantities. NSK agrees to purchase sufficient quantities of the
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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 maintain
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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 NSK pursuant
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to this Agreement will be merchantable and of sufficient quality for sales
within the Territory. If NSK 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 NSK for, the
purchase price of such non-merchantable Starter Kits.
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ARTICLE VI
GOVERNMENTAL APPROVALS, LAWS AND REGULATIONS
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6.1 Government Approvals. NSK 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. NSK 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 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 with 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 NSK informed of its progress in obtaining all such
government approvals.
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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.
7.2 Termination. This Agreement may be terminated by either party
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immediately or at any time upon 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
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(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 of Default. This Agreement may be terminated by either
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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.
7.4 Termination of Change of Control. This Agreement may be terminated by
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NSI if Nu Skin Asia shall no longer own or control a majority of the voting
interest in NSK or by NSK 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 NSK of the occurrence
of a change in control and its intention to terminate this Agreement based
thereon.
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7.5 Survival of Obligations. The obligations of the Parties to pay any
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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 rights
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and licenses herein granted to NSK shall immediately cease and shall revert to
NSI, and NSK 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
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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 Territory that relate to the Licensed Property
and NSI is not presently aware of any such infringement or misappropriation.
NSI shall indemnify and hold NSK harmless from and against all claims, actions,
suits, proceedings, losses, liabilities, costs, damages and attorneys' fees in
respect of a third party claim alleging infringement or misappropriation by NSK
in respect of its use of the Licensed Property in the Territory; provided that
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NSK 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
17
reasonable efforts to make such changes in the Licensed Property to permit NSK
to continue to make use of the Licensed Property to permit NSK to continue to
make use of the Licensed Property to permit NSK to continue to make use of the
Licensed Property free and clear of all infringement and misappropriation. NSK
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, NSK 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 NSK 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.
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ARTICLE X
CONFIDENTIALITY
---------------
All Proprietary Information or other non-public or proprietary
business or technical information owned or used by NSI or NSK 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) are otherwise lawfully available to the receiving
party, or (iii) are 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 NSK as a registered
user in the Territory. NSK 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.
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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 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 of 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
21
resolved by mutual agreement of NSI and NSK within 30 days after written notice
of such dispute is given by NSK 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 NSK. 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
NSK. The decision of the arbitrator shall be final and binding upon NSI and NSK
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 NSK;
provided, that each of NSI and NSK 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
22
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:
If to NSK: General Manager
Nu Skin Korea, Inc.
Dabong Tower
▇▇▇-▇▇ ▇▇▇▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇-▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
If to NSI: Chief Operating Officer
Nu Skin International, Inc.
▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇.▇.▇.
23
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 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.
24
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 KOREA, INC.
BY: BY:
---------------------- --------------------------
NAME: NAME:
TITLE: TITLE:
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