EX-10.35
(This is the form of Licensing and Sales 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.
LICENSING AND SALES AGREEMENT
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TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS.................................................2
1.1
"Agreement".................................................2
1.2 "Bonus
Payments"............................................2
1.3
"Commission Expense.........................................2
1.4
"Copyrights" ...............................................2
1.5
"Distributor Contract"......................................3
1.6
"Distributor Lists".........................................3
1.7 "Fixed
Commission Expense"..................................3
1.8
"Independent Distributor Network"...........................3
1.9
"Intercompany Agreements"...................................3
1.10
"Introductory Kit"..........................................3
1.11
"Know-How"..................................................3
1.12
"Licensed Property".........................................3
1.13
"Net Sales".................................................3
1.14
"NSI Independent Distributor"...............................4
1.15
"Products"..................................................4
1.16
"Proprietary Information"...................................4
1.17
"Resident NSI Independent Distributor"......................5
1.18
"Sales Compensation Plan"...................................5
1.19
"Sales Aids"................................................5
1.20
"Territory".................................................5
ARTICLE II
GRANT OF LICENSE AND PARTIAL ASSIGNMENT OF
OBLIGATIONS; LICENSE FEES...................................5
2.1 Grant of
License............................................5
2.2 Assignment
of Obligations...................................5
2.3
NSI's
Interest in Licensed Property.........................6
2.4 Recitals
of Value of Licensed Property......................6
2.5 Warranty
of Title...........................................6
2.6
Modifications...............................................6
2.7 License
Fee.................................................6
ARTICLE III
COMPUTATION AND PAYMENT TERMS...............................6
3.1 Bonus
Payments..............................................6
3.2 License
Fee.................................................8
3.3
Records.....................................................9
3.4 Payments
to NSI.............................................9
3.5 Payments
to NSUSA...........................................9
3.6 Default
Rate................................................9
ARTICLE IV
CERTAIN OBLIGATIONS OF THE PARTIES UNDER
THE AGREEMENT...............................................9
4.1 Certain
Obligations, Rights and Duties of NSI...............9
4.2 Certain
Obligations, Rights and Duties of NSUSA............10
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ARTICLE V
INTRODUCTORY KIT
SALES.....................................11
5.1 Agreement
to Purchase Introductory Kits....................11
5.2
Pricing....................................................11
5.3 Payment
Method.............................................11
5.4
Quantities.................................................12
5.5 Quality of
Introductory Kits...............................12
5.6
Merchantability............................................12
ARTICLE VI
GOVERNMENTAL APPROVALS, LAWS AND REGULATIONS...............12
6.1 Government
Approvals.......................................12
6.2 Compliance
with Laws.......................................13
6.3 Compliance
of Licensed Property............................13
ARTICLE VII TERM
AND TERMINATION.......................................13
7.1
Term.......................................................13
7.2
Termination................................................13
7.3
Termination on Default.....................................14
7.4
Termination on Change of Control...........................14
7.5 Survival of
Obligations....................................14
7.6 Reversion
of Rights........................................14
ARTICLE VIII
INFRINGEMENT; INDEMNIFICATION..............................15
ARTICLE IX
NATURE OF RELATIONSHIP.....................................16
ARTICLE X
CONFIDENTIALITY............................................17
ARTICLE XI
MAINTENANCE OF LICENSED PROPERTY; RECORDING................18
ARTICLE XII
TECHNOLOGY TRANSFER REGISTRY (TTR) REQUIREMENTS............18
12.1
Continued Access to Improvements...........................18
ARTICLE XIII
MISCELLANEOUS..............................................18
13.1
Assignment.................................................18
13.2
Force Majeure..............................................18
13.3
Governing Law and Dispute Resolution.......................19
13.4
Waiver and Delay...........................................19
13.5
Notices....................................................20
13.6
Integrated Contract........................................20
13.7
Modifications and Amendments...............................20
13.8
Severability...............................................21
13.9
Counterparts and Headings..................................21
<PAGE>
LICENSING AND SALES AGREEMENT
THIS LICENSING AND SALES AGREEMENT (hereinafter the "Agreement") is
entered into and made effective this 31st day of December,
1997 (the
"Effective
Date"), 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 USA, Inc., a corporation organized under the laws of the State
of Delaware,
U.S.A. (hereinafter "NSUSA"). Hereinafter, NSI and NSUSA 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, NSUSA
desires to act as the wholesale distributor of NSI
products in the
Territory (as
hereafter defined) ,
having entered a
separate
written Wholesale Distribution Agreement with NSI; and,
WHEREAS, NSI and NSUSA
desire to allocate use of NSI's Independent
Distributor Network
(as defined below) to
promote sales of
Products and Sales
Aids (as hereafter defined); and
WHEREAS, NSI desires
to further develop
and enlarge its
Independent
Distributor Network in
the Territory with the
assistance of NSUSA,
for their
mutual benefit,
in accordance with the terms and conditions hereinafter
provided; and
WHEREAS, NSUSA recognizes and agrees that NSI has expended
considerable
time, effort and
resources to develop
and maintain the
Licensed Property
(as
hereafter defined)
and NSUSA 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
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WHEREAS, the
Parties wish to enter into this 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
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 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 Independent Distributor, all
monetary obligations
due to such
distributor
accrued under the terms of the
Sales Compensation Plan portion of such distributor's Distributor
Contract .
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 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.
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1.5 "Distributor
Contract"
shall mean, for any NSI Independent
Distributor, its
contract pursuant to which it is
authorized
to distribute
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 U.S. dollars of Net Sales of
Products
by NSUSA during such period.
1.8 "Independent Distributor Network" shall mean the network of all
NSI
Independent Distributors.
1.9 "Intercompany
Agreements"
shall mean the
Wholesale
Distribution
Agreement, The Licensing and Sales Agreement, the Management
Services Agreement,
and the Trademark/Tradename License Agreement between the
Parties.
1.10 "Introductory 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.
1.11 "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.
1.12 "Licensed
Property" shall mean the Independent Distributor
Network, the Distributor Lists, the Sales Compensation Plan, the
Copyrights, and
the associated Know-How.
1.13 "Net Sales" shall mean, for any period, the number of Products
and
Sales Aids sold by NSUSA to NSI Independent Distributors during such period,
multiplied by NSUSA's then current selling price to NSI Independent
Distributors
for each such Product
or Sales Aids less applicable value added taxes and
returns or refunds reasonably accepted and credited by NSUSA during
such period.
<PAGE>
1.14 "NSI Independent
Distributor"
shall mean a person or business
entity who has entered into a Distributor Contract.
1.15 "Products" shall mean those goods sold by NSI or NSUSA which
carry
a point value within the Sales Compensation Plan.
1.16 "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 Introductory 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 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; (6) profits,
organization,
employees, agents,
distributors,
suppliers, trade
marks, trade
names and services;
(7) other business and commercial practices in general
relating directly or
indirectly to the
foregoing; and, (8)
computer disks or
other records or documents, originals or copies, containing in
whole or in part
any of the foregoing.
<PAGE>
1.17 "Resident Independent Distributor" shall mean any NSI
Independent
Distributor whose
country of primary residence for tax purposes as shown on the
records of NSI is the Territory.
1.18 "Sales
Compensation Plan"
shall mean the copyrighted method set
forth in the
Distributor Contract
employed by NSI to
calculate Bonus Payments
paid to the Independent Distributor Network upon the sale of
Products.
1.19 "Sales Aids" shall mean materials, in whatever form and/or design
produced to assist in the marketing of Products. 1.20 "Territory"
shall mean the
United States including all of its Territories.
ARTICLE II
GRANT OF LICENSE AND PARTIAL ASSIGNMENT OF
DISTRIBUTOR CONTRACT OBLIGATIONS; AND LICENSE FEES
2.1 Grant of License.
Subject to the terms and conditions of this
Agreement, NSI hereby
grants to NSUSA an exclusive license to use the Licensed
Property in the
Territory;
provided that all such uses shall comply in all
material respects with
the terms of this Agreement and; provided further that
NSUSA 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
NSUSA its obligations to make Bonus Payments to Resident Independent
Distributors under
their Distributor
Contracts and NSUSA
hereby accepts
such
transfer and assignment and assumes such obligations. NSUSA shall be obligated
to make such Bonus Payments earned on a monthly basis, and shall bear
responsibilities and financial obligations associated with any exceptions
NSUSA
may grant under the terms of the Sales Compensation Plan (hereafter the
"Exceptions").
<PAGE>
2.3 NSI's Interest in Licensed Property. NSI hereby retains legal
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. NSUSA agrees to assist NSI in any
manner to protect NSI's rights in the Licensed Property which NSI
may reasonably
request. NSI shall
reimburse NSUSA for
any third party costs incurred by NSUSA
in providing such assistance.
2.4 Recitals of Value of Licensed Property. NSUSA recognizes and
agrees
that NSI has expended
considerable
time, effort and resources to develop,
maintain and enhance the Licensed Property. NSUSA 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.
2.5 Warranty of Title.
NSI hereby warrants
and represents that it
is
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.
NSUSA shall make no
modification
to the Licensed
Property without the express, prior written consent of NSI.
2.7
License Fee. As compensation for the licenses granted pursuant to
the terms of this
Agreement, NSUSA shall
pay to NSI a license fee equal to two
percent (2%) of its Net Sales of Products, Sales Aids and other
items (exclusive
of Introductory
Kits and goods sold on
consignment)
sold to NSI
Independent
Distributors (the "License Fee").
ARTICLE III
COMPUTATION AND PAYMENT TERMS
3.1 Bonus Payments.
Pursuant to Section
2.2 hereof, NSUSA
agrees to
make Bonus Payments to Resident NSI Independent Distributors to which they are
entitled pursuant to their Distributor Contracts. The Parties further agree to
settle the difference between the amount of such Bonus Payments
paid by NSUSA in
each month (excluding the Exceptions) and the Fixed Commission Expense in such
month. The procedures for such payment and settlement are as
follows:
<PAGE>
3.1(a) Within eight (8) days following the close of each month,
NSUSA
shall deliver to NSI, by electronic transmission or such other medium
as the Parties shall agree to from time to time, a statement of
NSUSA's
Net Sales during such
month (including
a detail of sales to
each NSI
Independent
Distributor to which sales were made during such month and
any Exceptions
granted ) 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
Sales Report or twenty (20) days after the end of such month, NSI
shall
deliver to NSUSA, 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 NSUSA 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,
NSUSA shall
pay Bonus Payments due to the. Resident Independent Distributors.
Concurrently with or promptly after such payment NSUSA shall
deliver to
NSI (i) if the aggregate Monthly Bonus Amounts excluding any
Exceptions
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 he
