EX-10.53
TERMINATION AGREEMENT
BY AND BETWEEN
NU SKIN INTERNATIONAL, INC.
AND
NU SKIN USA, INC.
March 8, 1999
TERMINATION AGREEMENT
This Termination Agreement (the "Agreement") is entered into effective
as of March 8, 1999 by and between Nu Skin International, Inc., a Utah
corporation ("Nu Skin International"), and Nu Skin USA, Inc., a Delaware
corporation ("Nu Skin USA"). Nu Skin International and Nu Skin USA are referred
to herein, collectively, as the "Parties" and, individually, as a "Party."
RECITALS
A. WHEREAS, Nu Skin International previously entered into certain
licenses and agreements with Nu Skin USA (which agreements are referred to
herein, collectively, as the Terminated Agreements (as that term is defined in
Section 1.5 below)), which Terminated Agreements are each identified in Section
1 below;
B. WHEREAS, the respective parties to each of the Terminated Agreements
now desire to terminate each of the Terminated Agreements, as set forth herein
and in exchange for the Termination Fee (as that term is defined in Section 2.1
below); and
C. WHEREAS, in connection with this Agreement and the termination of
the Terminated Agreements as set forth in and contemplated by this Agreement,
simultaneously with the execution of this Agreement Nu Skin International will
pay the Termination Fee to Nu Skin USA in exchange for the termination of the
Terminated Agreements, as set forth in and contemplated by this Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual promises and agreements set forth herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Parties agree as follows:
1. Terminated Agreements. The following licenses and agreements have
previously been entered into by and between the respective Parties thereto, as
indicated below:
1.1 Sublease Agreement. A Sublease Agreement dated effective as of
January 1, 1998 entered into by and between Nu Skin International and Nu Skin
USA (the "Sublease Agreement"), a copy of which is attached as Exhibit "A"
hereto.
1.2 Licensing and Sales Agreement. A Licensing and Sales Agreement
dated effective as of December 31, 1997 entered into by and between Nu Skin
International and Nu Skin USA (the "Licensing and Sales Agreement"), a copy of
which is attached as Exhibit "B" hereto.
1.3 Trademark/Tradename Agreement. A Trademark/Tradename Licensing
Agreement dated effective as of December 31, 1997 entered into by and between Nu
Skin International and Nu Skin USA (the "Trademark/Tradename Agreement"), a copy
of which is attached as Exhibit "C" hereto.
1.4 Distribution Agreement. A Wholesale Distribution Agreement dated
effective as of December 31, 1997 entered into by and between Nu Skin
International and Nu Skin USA (the "Distribution Agreement"), a copy of which is
attached as Exhibit "D" hereto.
1.5 The Terminated Agreements; Termination. The Sublease Agreement, the
Licensing and Sales Agreement, the Trademark/Tradename Agreement, and the
Distribution Agreement are, collectively, referred to herein as the "Terminated
Agreements" and, individually, as a "Terminated Agreement." The respective
parties to each of the Terminated Agreements hereby terminate each of the
Terminated Agreements to which they are a party effective as of the effective
date of this Agreement (as first above written), and in so doing agree to cause
each of the respective parties to each of the Terminated Agreements to become
subject to any and all rights and obligations provided under each of the
respective Terminated Agreements upon the termination thereof, if any. The
rights and obligations of each of the parties under each Terminated Agreement
following the termination thereof shall be governed by the terms of the
respective Terminated Agreement as if such Terminated Agreement had been
terminated in accordance with its terms. This Agreement shall in no way limit
any rights or obligations, if any, that any Terminated Agreement provides or
contemplates shall continue following the termination of such Terminated
Agreement, except as otherwise expressly set forth herein.
1.5.1 Reaffirmation of Existing Agreements. Notwithstanding
the provisions of Section 1.5 above, the Parties hereby acknowledge and
reaffirm (a) the Tax Sharing and Indemnification Agreement dated
December 31, 1997 entered into by and among Nu Skin International, Nu
Skin USA, and their respective shareholders, (b) the Assumption of
Liabilities and Indemnification Agreement dated effective as of
December 31, 1997 entered into by and between Nu Skin International and
252nd Shelf Corporation, a Delaware corporation (now known as "Nu Skin
USA, Inc."), and (c) the Employee Benefits Allocation Agreement
(undated) entered into by and between Nu Skin International and Nu Skin
USA (collectively, the "Existing Agreements"). The Existing Agreements
shall remain in full force and effect as originally executed and are
not being terminated, modified, or amended in any manner or respect by
this Agreement or any of the transactions contemplated hereby.
2. Termination Fee; Payment of Termination Fee.
2.1 Termination Fee; Payment of Termination Fee. Upon the execution of
this Agreement by each of the Parties, and in exchange for the termination of
the Terminated Agreements as set forth in and contemplated by this Agreement, Nu
Skin International will pay to Nu Skin USA Ten Million Dollars ($10,000,000)
(the "Termination Fee"). The Termination Fee shall be paid by Nu Skin
International on the date this Agreement becomes effective (the "Closing Date")
in cash by wire transfer or delivery of other immediately available funds.
2.1.1 Tax Consequences. The Parties agree that the Termination
Fee is income to Nu Skin USA and is amortizable by Nu Skin
International. The Parties also agree not to take any position contrary
to or inconsistent with the treatment of the Termination Fee as set
forth in the immediately preceding sentence.
3. Representations and Warranties of Nu Skin USA. Nu Skin USA represents and
warrants to Nu Skin International that the statements contained in this Section
3 are correct and complete as of the Closing Date.
3.1 Organization. Nu Skin USA is a corporation duly organized, validly
existing, and in good standing under the laws of the jurisdiction of its
incorporation.
3.2 Authorization of Transaction. Nu Skin USA has full power and
authority (including full corporate power and authority) to execute and deliver
this Agreement and to perform its obligations hereunder. Without limiting the
generality of the foregoing, the Board of Directors of Nu Skin USA, and, if
required, Nu Skin USA's stockholders, have duly authorized the execution,
delivery, and performance of this Agreement by Nu Skin USA. This Agreement
constitutes the valid and legally binding obligation of Nu Skin USA, enforceable
in accordance with its terms and conditions.
3.3 Non-contravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby will (i)
violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which Nu Skin USA is subject or any provision
of the charter or bylaws of Nu Skin USA or (ii) conflict with, result in a
breach of, constitute a default under, result in the acceleration of, create in
any party the right to accelerate, terminate, modify, or cancel, or require any
notice under any agreement, contract, lease, license, instrument, or other
arrangement to which Nu Skin USA is a party or by which it is bound or to which
any of its assets is subject. Nu Skin USA is not required to give any notice to,
make any filing with, or obtain any authorization, consent, or approval of any
government or governmental agency in order for the Parties to consummate the
transactions contemplated by this Agreement.
3.4 Financial Statements. Attached hereto as Exhibit "E" are the
following financial statements of Nu Skin USA (collectively the "Financial
Statements"): (i) the unaudited balance sheet and statements of income as of and
for the fiscal year ended December 31, 1998 (the "Most Recent Fiscal Year End").
The Financial Statements (including the notes thereto) have been prepared in
accordance with generally accepted accounting principles applied on a consistent
basis throughout the period covered thereby, present fairly the financial
condition of Nu Skin USA as of the Most Recent Fiscal Year End and the results
of operations of Nu Skin USA for the fiscal year ended December 31, 1998, are
correct and complete, and are consistent with the books and records of Nu Skin
USA (which books and records are correct and complete).
4. Representations and Warranties of Nu Skin International. Nu Skin
International represents and warrants to Nu Skin USA that the statements
contained in this Section 4 are correct and complete as of the Closing Date.
4.1 Organization. Nu Skin International is a corporation duly
organized, validly existing, and in good standing under the laws of the
jurisdiction of its incorporation.
4.2 Authorization of Transaction. Nu Skin International has full power
and authority (including full corporate power and authority) to execute and
deliver this Agreement and to perform its obligations hereunder. Without
limiting the generality of the foregoing, the Board of Directors of Nu Skin
International, and, if required, Nu Skin International's stockholders, have duly
authorized the execution, delivery, and performance of this Agreement by Nu Skin
International. This Agreement constitutes the valid and legally binding
obligation of Nu Skin International, enforceable in accordance with its terms
and conditions.
4.3 Non-contravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby will (i)
violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which Nu Skin International is subject or any
provision of the charter or bylaws of Nu Skin International or (ii) conflict
with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate, modify,
or cancel, or require any notice under any agreement, contract, lease, license,
instrument, or other arrangement to which Nu Skin International is a party or by
which it is bound or to which any of its assets is subject. Nu Skin
International is not required to give any notice to, make any filing with, or
obtain any authorization, consent, or approval of any government or governmental
agency in order for the Parties to consummate the transactions contemplated by
this Agreement.
5. Indemnification.
5.1 Indemnification Obligation; Indemnification Limitation Agreement.
Nu Skin USA hereby agrees to indemnify and hold harmless Nu Skin International
and its affiliated (other than Nu Skin USA), shareholders, officers, directors,
employees, agents, heirs, representatives, successors, and assigns
(collectively, the "Indemnitees") at all times from and after the Closing Date
against and in respect of any and all Damages (as that term is defined in
Section 5.2 below), subject, however, to the limitations and restrictions set
forth in the Indemnification Limitation Agreement (a copy of which is attached
hereto as Exhibit "F".).
5.2 Damages. "Damages" shall include any claims, actions, demands,
losses, costs, expenses, liabilities (whether joint or several), penalties, and
damages, including counsel fees and expenses, incurred in investigating or in
attempting to avoid the same or oppose the imposition thereof resulting to any
of the Indemnitees from any of the following: (i) any misrepresentation or
breach of any representation or warranty made by Nu Skin USA in or under this
Agreement or any other agreement executed in connection with the transactions
contemplated hereby; (ii) any breach or default in the performance by Nu Skin
USA of any of the covenants to be performed by it under this Agreement or any
agreement executed in connection with the transactions contemplated hereby;
(iii) any debts, liabilities, or obligations of Nu Skin USA, whether accrued,
absolute, contingent, or otherwise, due or to become due; or (iv) any claim
involving any of the Terminated Agreements or any expense that is allowable
against or incurred by any Indemnitee because of Nu Skin USA's non-compliance
with any provision of any of the Terminated Agreements.
6. Miscellaneous.
6.1 Press Releases and Public Announcements. Nu Skin International may
issue any press releases or make any public announcements relating to the
subject matter of this Agreement after the Closing without the prior written
approval of the other Parties. Nu Skin USA shall not issue any press releases or
make any public announcements relating to the subject matter of this Agreement
without the prior written approval of the other Parties.
6.2 Entire Agreement. Subject to Section 1.5 above, which provides that
the terms of the Terminated Agreements shall govern the rights and obligations
of the respective parties thereto following the termination of the Terminated
Agreements, this Agreement (including the documents referred to herein)
constitutes the entire agreement between the Parties and supersedes any prior
understandings, agreements, or representations by or between the Parties,
whether written or oral, to the extent they related in any way to the subject
matter hereof.
6.3 Counterparts. This Agreement may be executed by facsimile and in
one or more counterparts, each of which shall be deemed an original, but all of
which, when taken together, shall constitute one and the same instrument.
6.4 Headings. The Section and subsection headings contained in this
Agreement are inserted for convenience only and shall not affect in any way the
meaning or interpretation of this Agreement.
6.5 Governing Law. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of Utah without giving effect to
any choice or conflict of law provision or rule (whether of the State of Utah or
any other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of Utah.
6.6 Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
6.7 Construction. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement. The word "including" shall mean including
without limitation.
6.8 Incorporation of Recitals and Exhibits. The above Recitals and all
Exhibits attached to this Agreement are deemed to be incorporated herein by
reference and made a part hereof.
6.9 Submission to Jurisdiction. Each of the Parties submits to the
exclusive jurisdiction of any state or federal court sitting in Salt Lake City
or Provo, Utah, in any action or proceeding arising out of or relating to this
Agreement and agrees that all claims in respect of the action or proceeding
shall be heard and determined only in any such court. Each Party also agrees not
to bring any action or proceeding arising out of or relating to this Agreement
in any other court. Each of the Parties waives any defense of inconvenient forum
to the maintenance of any action or proceeding so brought and waives any bond,
surety, or other security that might be required of any other Party with respect
thereto. Each Party agrees that a final judgment in any action or proceeding so
brought shall be conclusive and may be enforced by suit on the judgment or in
any other manner provided by law or in equity.
6.10 Assignment. Except as provided below, no Party may assign (by
operation of law, merger, or otherwise), license, sublicense, or otherwise
transfer any of its rights or obligations under this Agreement to any other
person or entity without obtaining the prior written consent of the other
Parties; provided, however, that either Nu Skin Enterprise or Nu Skin
International shall be allowed to assign this Agreement or its rights and
obligations hereunder without any prior consent of the other Parties.
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IN WITNESS WHEREOF, the Parties have caused this Termination Agreement
to be duly executed as of the day and year first above written.
NU SKIN INTERNATIONAL, INC.
By: /s/ Xxxxx X. Xxxxxxx
Its Vice President
NU SKIN USA, INC.
By: /s/ Xxxxx X. Xxxx
Its President
ATTACHED EXHIBITS:
EXHIBIT "A" -- SUBLEASE AGREEMENT
EXHIBIT "B" -- LICENSING AND SALES AGREEMENT
EXHIBIT "C" -- TRADEMARK/TRADENAME AGREEMENT
EXHIBIT "D" -- DISTRIBUTION AGREEMENT
EXHIBIT "E" -- FINANCIAL STATEMENTS
EXHIBIT "F" -- INDEMNIFICATION LIMITATION AGREEMENT
--- Agreements provided upon request ---
