EX-10.34
(This is the form of Wholesale Distribution Agreement for Nu Skin
USA, Inc. and
the other North
American Private
affiliates.
Payments are paid in the local
currency of the country in which the private affiliate
operates)
Nu Skin International, Inc.
AND
Nu Skin USA, Inc.
WHOLESALE DISTRIBUTION AGREEMENT
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS....................................................2
1.1
"Agreement"....................................................2
1.2 "Independent
Distributor Network"..............................2
1.3
"Intercompany
Agreements"......................................2
1.4 "NSI
Independent Distributor"..................................2
1.5
"NSI"..........................................................2
1.6
"Products".....................................................2
1.7 "Sales
Aids"...................................................3
1.8
"Territory"....................................................3
1.9
"Trademarks"...................................................3
ARTICLE II APPOINTMENT AS
EXCLUSIVE WHOLESALE DISTRIBUTOR.................3
2.1
Scope..........................................................3
2.2
Sub-distributors...............................................3
2.3 Sales of
Products and Sales Aids...............................3
2.4 NSI Sales in
the Territory.....................................4
2.5 Sales Outside the
Territory....................................4
2.6 Territory
Orders and Inquiries.................................4
ARTICLE III GOVERNMENTAL APPROVALS
AND REGISTRATIONS.......................5
ARTICLE IV OBLIGATIONS OF
NSUSA AS EXCLUSIVE WHOLESALE DISTRIBUTOR
IN THE
TERRITORY...............................................5
4.1 Marketing
and Distribution.....................................5
4.2 NSUSA
Operations...............................................6
4.3 Pricing
Information............................................7
4.4 NSUSA Claims
and Representations...............................7
4.5
Capitalization.................................................7
4.6 Customer
Support...............................................7
4.7 Allocation
of Expenses.........................................7
ARTICLE V PURCHASE
SALE & DELIVERY OF PRODUCTS AND SALES AIDS............8
5.1 Agreement to
Purchase..........................................8
5.2 Payment Due
Date...............................................9
5.3 Passage of
Title and Risk of Loss..............................9
5.4 Product
Returns/Exchanges Inspection...........................9
ARTICLE VI PRODUCT AND
SALES AIDS PURCHASE PRICES AND TERMS OF PAYMENT...10
6.1 Product
Availability and Pricing..............................10
6.2 Payment
Method................................................10
ARTICLE VII OBLIGATIONS OF NSUSA
AS SUPPLIER OF PRODUCTS AND
SALES
AIDS....................................................11
<PAGE>
7.1 Product
Formulation...........................................11
7.2
Warranty......................................................11
7.3
Delivery......................................................11
ARTICLE VIII
SALE AND MANUFACTURE OF
PRODUCTS..............................12
8.1
Non-Competing
Products........................................12
8.2 Competing
Products............................................12
8.3 Discontinued
Products.........................................12
ARTICLE IX NATURE OF
RELATIONSHIP........................................13
ARTICLE X
TERM..........................................................13
ARTICLE XI
TERMINATION...................................................13
ARTICLE XII EFFECT OF
TERMINATION.........................................15
ARTICLE XIII
CONFIDENTIALITY...............................................16
ARTICLE XIV INDEMNIFICATION AND
INSURANCE.................................17
ARTICLE XV MISCELLANEOUS
19
15.1
Assignment....................................................19
15.2
Notices.......................................................19
15.3 Waiver and
Delay..............................................20
15.4 Force
Majeure.................................................20
15.5 Governing Law and
Dispute Resolution..........................21
15.6 Integrated
Contract...........................................21
15.7 Modifications and
Amendments..................................22
15.8
Severability..................................................22
15.9 Counterparts and
Headings.....................................22
<PAGE>
WHOLESALE DISTRIBUTION AGREEMENT
THIS WHOLESALE DISTRIBUTION AGREEMENT (hereinafter "Agreement")
entered
into and made effective this 31st day of December, 1997 (the "Effective Date"),
by and between Nu Skin U.S.A., Inc., a corporation organized under the laws of
the State of Delaware, U.S.A., (hereinafter "NSUSA"), and Nu Skin
International,
Inc., a corporation organized under the laws the State of Utah, U.S.A.,
(hereinafter "NSI").
Hereinafter, NSUSA and
NSI collectively shall be referred
to as the "Parties."
W I T N E S S E T H
WHEREAS, NSI is
engaged in the design,
production and
marketing of
Products and Sales Aids (as hereinafter defined) for distribution in markets
through a network of independent distributors; and,
WHEREAS, NSUSA
desires, on the terms
and conditions
hereinafter set
forth, to act as NSI's
exclusive distributor
of NSI of Products and Sales Aids
in the Territory (as hereinafter defined); and,
WHEREAS, NSI is
willing, on the terms
and conditions
hereinafter set
forth, to grant to NSUSA the exclusive right to so distribute
Products and Sales
Aids in the Territory; and,
WHEREAS, the
Parties wish to enter into a Wholesale Distribution
Agreement as set forth herein; NOW, THEREFORE, in consideration of
the premises,
the mutual covenants herein contained and other good and valuable
consideration,
the receipt and sufficiency of which are hereby acknowledged, the
parties hereto
agree as follows:
<PAGE>
ARTICLE I
DEFINITIONS
For the purposes of this Agreement the following words, terms, and
phrases shall have the
meaning assigned to
them in this Article
I, unless the
context otherwise
requires or the
parties otherwise
agree within the terms of
this Agreement: 1.1 "Agreement" shall mean this Wholesale
Distribution Agreement
between NSI and NSUSA (together with any exhibits and schedules
hereto), as the
same may be modified, amended or supplemented from time to
time.
1.2 "Independent Distributor Network" shall mean the network of all
NSI
Independent Distributors.
1.3 "Intercompany
Agreements"
shall mean the
Wholesale
Distribution
Agreement, The
Licensing and Sales Agreement, The Management Services
Agreement
and the Trademark/Tradename Agreement between the Parties.
1.4 "NSI Independent
Distributor"
shall mean a person or business
entity authorized
by contract with NSI to distribute, as an independent
contractor, the
Products and Sales
Aids in accordance
with the terms of
such
distributor contract.
1.5 "NSI" shall mean Nu Skin International, Inc., a corporation duly
organized and existing under the laws of the State of Utah,
U.S.A.
1.6 "Products" shall
mean cosmetics,
nutritional
products, dietary
supplements,
vitamins,
over-the-counter
drugs,
quasi-drugs,
drugs and
pharmaceutical products that are produced, manufactured or purchased by NSI
for
sale or resale, and bearing a Nu Skin brand or trademark existing
as of the date
hereof, subject to
availability
due to local
regulatory
requirements in
the
Territory.
<PAGE>
1.7 "Sales Aids" shall
mean materials,
in whatever
form, designed,
approved and produced by NSUSA to assist in the marketing of the
Products in the
Territory.
1.8 "Territory" shall
mean the United States of America including all
its territories.
1.9 "Trademarks" shall mean those words, symbols, devices, logos,
trade
names and company names or combinations thereof owned by NSI and used in
relation to or on Products and Sales Aids, whether or not
registered.
ARTICLE II
APPOINTMENT AS EXCLUSIVE WHOLESALE DISTRIBUTOR
2.1 Scope. NSI hereby
appoints NSUSA as NSI's exclusive distributor,
during the term of this Agreement, for the sale and distribution of
Products and
Sales Aids in the Territory, under the Products' names,
logos, and
Trademarks,
subject to all terms and conditions of this Agreement, and NSUSA hereby accepts
such appointment and authorization.
2.2 Sub-distributors. Except for the sale of Products and Sales
Aids to
NSI Independent
Distributors,
NSUSA shall not, without the prior written
approval of NSI,
appoint
sub-distributors or
agents to promote or
distribute
Products or Sales Aids inside or outside the Territory.
2.3 Sales of Products and Sales Aids.
2.3(a) NSUSA agrees that any distribution of Products or Sales
Aids in the Territory shall be made only to NSI Independent
Distributors.
<PAGE>
2.3(b) To facilitate
sales to NSI
Independent
Distributors,
NSUSA shall have the
right to access
information regarding
such NSI
Independent
Distributors in the
Territory on NSI's computer system or
as otherwise retained by NSI .
2.4 NSI Sales in the Territory. NSI agrees not to sell and, to use
its
best efforts to prohibit any third party from selling Products or Sales Aids to
any party within
the Territory or to any party outside the Territory for
delivery within
the Territory, except to NSUSA pursuant to the terms and
conditions of this
Agreement,
unless NSI has
received the written
consent of
NSUSA. Notwithstanding
the foregoing, NSI retains the right to license to other
entities the use of the Independent Distributor Network for distribution of
products other than those included in the definition of Products in
Section 1.5,
without the consent of NSUSA.
2.5 Sales Outside the Territory. NSUSA agrees that it will neither
sell
nor enable any third party to sell Products or Sales Aids outside the
Territory
or sell Products or
Sales Aids to any party within the Territory for resale or
delivery outside
the Territory. Further, NSUSA shall not promote or
solicit
customers for Products
or Sales Aids sales outside the Territory. NSUSA shall
not establish
any facility outside the Territory through which orders are
solicited or in which
inventories of
Products or Sales Aids are stored without
NSI's written consent.
<PAGE>
2.6 Territory Orders and Inquiries. The Parties acknowledge that from
time to time inquiries and orders concerning the Territory will arise.
If NSI
receives any order or inquiry concerning the sale of Products or Sales Aids
in
the Territory,
NSI agrees to give
prompt notice of such inquiry or order to
NSUSA, such
notice to include
the name and
address of the person
making the
order or inquiry as well as any other relevant details regarding such order or
inquiry that NSUSA
shall reasonably
request. If NSUSA receives any order or
inquiry concerning
the sale of Products
or Sales Aids outside
the Territory,
NSUSA agrees to give NSI prompt notice of such inquiry or order,
such notice to
include the name and address of the person making the order or
inquiry, as well
as any other relevant
details regarding such order or inquiry that NSI
shall
reasonably request.
ARTICLE III
GOVERNMENTAL APPROVALS AND REGISTRATIONS
NSUSA agrees to obtain, or cause to be obtained,
at its sole cost
and
expense, any governmental approval and make, or cause to be made,
any filings or
notifications required
under all applicable laws, regulations and ordinances of
the Territory
to enable this Agreement to become effective, to enable the
Products or Sales Aids
to be imported in the
Territory (except as otherwise
provided herein) or to
enable any payment
pursuant to the
provisions of this
Agreement to be made.
NSUSA agrees to keep NSI informed of the progress in
obtaining all such government approvals.
ARTICLE IV
OBLIGATIONS OF NSUSA AS EXCLUSIVE WHOLESALE
DISTRIBUTOR IN THE TERRITORY
4.1 Marketing
and Distribution. NSUSA shall have the following
obligations with respect to marketing and distribution of the
Products and Sales
Aids:
4.1(a) To use its best
efforts to further the promotion,
marketing, sales and
other distribution of the Products and Sales Aids
in the Territory.
<PAGE>
4.1(b) To maintain, or cause to be maintained, an adequate and
balanced inventory of
Products, Sales Aids, supplies and necessary
materials to promote,
market, sell and distribute the Products and
Sales Aids within the Territory.
4.1(c) To ensure that all inquiries by NSI Independent
Distributors and
customers,
including complaints are responded to
promptly. To ensure
that all orders are processed and all shipments of
Products and Sales
Aids are made
within the Territory in a timely
fashion.
4.1(d) To diligently
investigate or cause to be investigated
all leads with
potential customers
referred to it by NSI or NSI, or
their affiliates.
4.1(e) To permit NSI to visit NSUSA and to visit NSUSA's place
of business and inspect its inventories, service records, financial
records and other relevant documents.
4.1(f) To maintain,
cause to be
maintained,
or contract to
maintain, adequate
personnel,
distribution and laboratory facilities
dedicated on a full-time or part-time basis to the quality control
and
sale of Products, in
compliance with and to the extent required by all
laws, ordinances and regulations applicable within the
Territory.
4.1(g) To provide, at
the request of NSI, a business plan for
the term and in the form and detail reasonably requested by NSI and to
update such business plan as reasonably requested by NSI.
4.1(h) To provide,
at the request of NSI, reports of its
activities and sales
respecting
the Products and Sales Aids in the
Territory in a form
and in such detail and for such time period as NSI
may reasonably require.
<PAGE>
4.2 NSUSA Operations. NSUSA agrees to maintain, or cause to be
maintained, such
facilities and other
places of business
within the Territory
necessary to effect the purposes and intentions of this Agreement.
NSUSA further
agrees to bear all costs and expenses it incurs in the negotiation,
memorialization,
execution and performance of all leases, rentals, equipment,
salaries, taxes,
licenses,
insurance,
permits,
telephone,
telegraph,
promotional,
advertising, travel,
accounting and legal
expenses, relating
to
such facilities.
4.3 Pricing Information. At the request of NSI, NSUSA
agrees to advise
NSI of the
distribution prices of
the Products or Sales Aids to be sold to NSI
Independent Distributors within the Territory.
4.4 NSUSA Claims and Representations. NSUSA shall not make any
promises,
representations,
warranties or guarantees respecting the Products,
Sales Aids or the NSI
distributor
sales and compensation plan, except in
accordance with those
representations,
warranties or guarantees as provided by
NSI with respect
thereto and in accordance and compliance with the applicable
laws of the Territory.
4.5 Capitalization.
NSUSA agrees to
capitalize itself
adequately and
maintain its operations both on a financially sound basis and in
compliance with
all applicable laws, regulations or ordinances covering the
operations of such a
business entity within any country in which it may conduct
business.
4.6 Customer Support.
NSI agrees to
cooperate with NSUSA in dealing
with any NSI
Independent
Distributor or
customer complaints
concerning
the
Products and the Sales
Aids and to take any action requested by NSUSA to solve
such complaints.
NSI also agrees to
assist NSUSA in arranging for any customer
warranty service required by law or required pursuant to the
judgement of NSUSA.
<PAGE>
4.7 Allocation
of Expenses.
4.7(a) Import
Licenses. To the extent import licenses are
required for the
importation
of the Products or Sales Aids into
the
Territory, NSUSA hereby agrees that it will be responsible for
securing
and maintaining
such import licenses and payment of all costs and
expenses associated therewith.
4.7(b) Import
Expenses.
NSUSA
agrees that it will be
responsible for
payment of all customs duties, excise taxes, similar
governmental charges
and levies, and any other charges or expenses
related to any Products or Sales Aids imported into the
Territory.
4.7(c) Other Expenses.
In addition to the
costs and expenses
described in clauses
(a) and (b) above,
NSUSA agrees that it
will be
responsible for
payments of the
following expenses,
fees and costs,
related to the
development and
maintenance of the Nu Skin business in
the Territory: (a) fees and expenses to incorporate operating
entities;
(b) fees and expenses for obtaining business licenses and permits;
(c)
fees, costs and
expenses incurred in
drafting and producing
required
promotional
documentation, Sales
Aids, and other
literature such as
product catalogues as
well as contracts such as local product purchase
agreements; (d) fees and costs incurred in determining the
requirements
for registering
Products, including
ascertaining
and complying with
labelling and
