NSI - NSK
LICENSING AND SALES AGREEMENT
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-6
1.1 Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Bonus Payments . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 Commission Expense . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 Copyrights . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.5 Distributor Lists. . . . . . . . . . . . . . . . . . . . . . . . . 3
1.6 Downline Organization. . . . . . . . . . . . . . . . . . . . . . 3
1.7 Independent Distribution Network . . . . . . . . . . . . . . . . . 3
1.8 Introductory Kits. . . . . . . . . . . . . . . . . . . . . . . . . 3
1.9 Know-How . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.10 Licensed Property. . . . . . . . . . . . . . . . . . . . . . . . . 4
1.11 NSI Independent Distributor. . . . . . . . . . . . . . . . . . . . 4
1.12 NON-RESIDENT INDEPENDENT DISTRIBUTOR . . . . . . . . . . . . . . 4
1.13 Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.14 Proprietary Information. . . . . . . . . . . . . . . . . . . . 4,5
1.15 Resident NSI Independent Distributor . . . . . . . . . . . . . . 5
1.16 Sales and Compensation Plan. . . . . . . . . . . . . . . . . . 5,6
1.17 Sales Aids . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.18 Territory. . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE II
GRANT OF EXCLUSIVE LICENSE . . . . . . . . . . . . . . . . . . . . . . . 6-10
2.1 Grant of EXCLUSIVE License . . . . . . . . . . . . . . . . . . . 6
2.2 Term of License Granted. . . . . . . . . . . . . . . . . . . . . 6
2.3 NSI's Interest in Licensed Property. . . . . . . . . . . . . . . . 7
2.4 Recitals of Value of Licensed Property . . . . . . . . . . . . 7,8
2.5 MAINTENANCE AND FURTHER DEVELOPMENT. . . . . . . . . . . . . . . . 8
2.6 LICENSE FEE. . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.7 COMPUTATION AND PAYMENT TERMS. . . . . . . . . . . . . . . . . . 8,9
2.8 Warranty of Title; DEFENSE OF CLAIMS . . . . . . . . . . . . . . .10
2.9 Modifications. . . . . . . . . . . . . . . . . . . . . . . . . . .10
2.10 RESERVATION OF RIGHTS TO TERMINATE LICENSE . . . . . . . . . . . .10
ARTICLE III
OBLIGATIONS OF THE PARTIES UNDER THE AGREEMENT . . . . . . . . . . . . . 11-15
3.1 OBLIGATIONS, RIGHTS, AND DUTIES. . . . . . . . . . . .11,12,13,14,15
ARTICLE IV
INTRODUCTORY KIT SALES. . . . . . . . . . . . . . . . . . . . . . . . . . 15-16
4.1 Agreement to Purchase Introductory Kits. . . . . . . . . . . . . .15
4.2 Pricing. . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,16
4.3 Payment Method . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.4 Quantities . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.5 Quality of Introductory Kits . . . . . . . . . . . . . . . . . . .16
4.6 INSURANCE. . . . . . . . . . . . . . . . . . . . . . . . . . . 16,17
4.7 Merchantability. . . . . . . . . . . . . . . . . . . . . . . . . .17
ARTICLE V
GOVERNMENTAL APPROVALS, LAWS AND REGULATIONS . . . . . . . . . . . . . . 17-18
5.1 Obligations of NSK . . . . . . . . . . . . . . . . . . . . . . . 17
5.2 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . 17
5.3 Protection of NSI. . . . . . . . . . . . . . . . . . . . . . . . 18
5.4 COMPLIANCE OF NSK OPERATION. . . . . . . . . . . . . . . . . . . 18
ARTICLE VI
TERM AND TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . 18-20
6.1 Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
6.2 BREACH AND NOTICE. . . . . . . . . . . . . . . . . . . . . . . 18,19
6.3 EXAMPLES OF MATERIAL BREACH. . . . . . . . . . . . . . . . . . . 19
6.4 OBLIGATION OF NSK UPON TERMINATION . . . . . . . . . . . . . . . 20
6.5 DAMAGES NOT ALLOWABLE. . . . . . . . . . . . . . . . . . . . . . 20
6.6 Survival of Obligations. . . . . . . . . . . . . . . . . . . . . 20
6.7 WAIVER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.8 Reversion of Rights. . . . . . . . . . . . . . . . . . . . . . 20,21
ARTICLE VII
RELATIONSHIP OF NSI AND NSK. . . . . . . . . . . . . . . . . . . . . . . 21-22
7.1 NSI AND INDEPENDENT CONTRACTS. . . . . . . . . . . . . . . . . . .21
7.2 NSI CONDUCTS NO BUSINESS ACTIVITY IN TERRITORY . . . . . . . . . 21
7.3 CROSS DEFAULT. . . . . . . . . . . . . . . . . . . . . . . . . 21,22
7.4 ACCEPTANCE OF REGISTRATION AGREEMENT FROM NSI INDEPENDENT
DISTRIBUTORS . . . . . . . . . . . . . . . . . . . . . . . . . . .22
ARTICLE VIII
CONFIDENTIALITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22-23
8.1 OBLIGATION TO KEEP CONFIDENTIAL. . . . . . . . . . . . . . . . . 22
8.2 SURVIVAL OF OBLIGATION . . . . . . . . . . . . . . . . . . . . 22,23
8.3 INFORMATION THE EXCLUSIVE PROPERTY OF NSI. . . . . . . . . . . . .23
ARTICLE IX
ASSIGNMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
TABLE OF CONTENTS
-CONTINUED-
ARTICLE X
FORCE MAJEURE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
ARTICLE XI
GOVERNMENTAL APPROVAL. . . . . . . . . . . . . . . . . . . . . . . . . . 24-25
ARTICLE XII
RECORDING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25
ARTICLE XIII
GOVERNING LAW AND DISPUTE RESOLUTION . . . . . . . . . . . . . . . . . . 25-26
ARTICLE XIV
APPLICABILITY OF POST-EFFECTIVE LAW. . . . . . . . . . . . . . . . . . . . 26
ARTICLE XV
WAIVER AND DELAY . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26-27
ARTICLE XVI
NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE XVII
INTEGRATED CONTRACT. . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE XVIII
MODIFICATION AND AMENDMENTS. . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE XIX
NONDISCLOSURE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE XX
SEVERABILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28,29
ARTICLE XXI
COUNTERPARTS AND HEADINGS. . . . . . . . . . . . . . . . . . . . . . . . . 29
LICENSING AND SALES AGREEMENT
THIS LICENSING AND SALES AGREEMENT (hereinafter the "Agreement") is made
and entered into pursuant to the terms of Article VI , between Nu Skin
International, Inc. a corporation organized and existing under the laws of the
State of Utah, U.S.A., (hereinafter referred to as "NSI") and Nu Skin Korea, a
corporation duly organized and existing under the laws of the country of Korea,
(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 distribution in the international markets of
the Asia-Pacific Region through a network of independent distributors; and,
WHEREAS, NSK desires to act as the exclusive wholesale distributor of NSI
products in Korea, having entered a separate written Wholesale Distribution
Agreement with Nu Skin Hong Kong, respecting such Products and Sales Aids in the
Asia-Pacific region; and,
WHEREAS, NSI and NSK mutually recognize that such Product and Sales Aid
sales will be maximized through NSK's use of NSI's Independent Distribution
Network; and,
WHEREAS, NSI desires to further develop and enlarge its Independent
Distribution Network in the country of South Korea with the assistance of NSK,
for their mutual benefit, in accordance with the terms and conditions
hereinafter provided;
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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.
1.2 "BONUS PAYMENTS" shall mean all monetary obligations due to NSI
Independent Distributors accrued under the terms of the point accumulation
system of the Sales and Compensation Plan portion of their contract with NSI.
1.3 "COMMISSION EXPENSE" shall mean all direct expenses incurred by the
affiliated Nu Skin companies in operating, managing, and executing the Sales
Compensation Plan. These expenses include, but are not limited to amounts paid
to Distributors as Bonus Payments as well as operational costs associated with
the calculation and generation of monthly payments.
1.4 "COPYRIGHTS" shall mean any and all protectible software, programs,
databases, photographs, transparencies, literature and other written material,
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 scope of this
Agreement.
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1.5 "DISTRIBUTOR LISTS" shall mean any and all individual and
accumulated name, address, identification number, sponsor name and/or similar
lists of all present or future NSI Independent Distributors expressed in any
medium.
1.6 "DOWNLINE ORGANIZATION" shall mean, with respect to any NSI
Independent Distributor, the sub-distributor or group of sub-distributors
directly or indirectly introduced to NSI by such NSI Independent Distributor(s)
who have likewise entered a contractual relationship to receive compensation
under the terms of the point accumulation system of the Sales and Compensation
Plan.
1.7 "INDEPENDENT DISTRIBUTION NETWORK" shall mean the network of all NSI
Independent Distributors having a contractual relationship with NSI to act as a
retail distributor.
1.8 "INTRODUCTORY KIT" shall mean those materials developed, maintained
and approved by NSI and intended for distribution and/or sale in conjunction
with the execution of the distribution contract to NSI Independent Distributors
in the Territory explaining the Nu Skin independent business opportunity, the
contractual relationship with NSI, and the marketing support programs for the
Territory.
1.9 "KNOW-HOW" shall mean any information, including, without
limitation, any commercial or business information, lists, marketing methods,
marketing surveys, processes, specifications, quality control reports, drawings,
photographs, or any other information owned by NSI, whether or not considered
proprietary, relating to the Independent Distribution Network, the Distributor
Lists, and the Sales and Compensation Plan.
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1.10 "LICENSED PROPERTY" shall mean the Independent Distribution Network,
the Distributor Lists, the Sales and Compensation Plan, the Copyrights, the
Proprietary Information, and the associated Know-How.
1.11 "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 purchased from an authorized Nu Skin distribution center
in accordance with the terms of such distribution contract.
1.12 "NON-RESIDENT INDEPENDENT DISTRIBUTOR" shall mean any NSI
Independent Distributor whose resident country as shown on the records of NSI is
outside the Territory, but whose Downline Organization is comprised of one or
more Resident Independent Distributors, having a right under contract to earn
Bonus Payments completed based at least partly on the sale of Products and Sales
Aids within the Territory.
1.13 "PRODUCTS" shall mean those goods which carry a point value within
the Sales Compensation Plan, including without limitation, cosmetics,
nutritional products, dietary supplements, vitamins, over-the-counter drugs,
quasi-drugs, drugs and pharmaceutical products designed and produced for the
Territory's market purchased at wholesale by NSI Independent Distributors.
1.14 "PROPRIETARY INFORMATION" shall mean, without limitation, all
information other than information in published form or expressly designated by
either party in writing as non-confidential, which is directly or indirectly
disclosed to the other party, regardless of the form in which it is disclosed,
relating in any way to the following property owned by the Parties or which the
Parties have been licensed to use or sub-license: (1) proprietary technical
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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, product formulas, contracts,
copyrights, computer programs, applications, technical data, licensed
technology, patents, inventions, procedures, methods, designs, strategies,
plans, liabilities, assets, cost revenues, sales costs, production costs, raw
material sources and other market information; (4) other sales and marketing
plans, programs and strategies; (5) trade secrets, Know-How, designs and
proprietary commercial and technical information, methods, practices,
procedures, processes, formulae with respect to manufacturing, assembly, design
or processing products subject to this Agreement and any component, part or
manufacture thereof; (7) profits, organization, employees, agents, distributors,
suppliers, trademarks, trade names and services; (8) other business and
commercial practices in general relating directly or indirectly to the
foregoing; and, (9) computer disks or other records or documents, originals or
copies, containing in whole or in part any of the foregoing.
1.15 "RESIDENT NSI INDEPENDENT DISTRIBUTOR" shall mean any NSI
Independent Distributor whose country of residence as shown on the records of
NSI is in the Territory and who may have a Downline Organization comprised of
Resident and Non-Resident NSI Independent Distributors.
1.16 "SALES AND COMPENSATION PLAN" shall mean the method and expression
designed and employed by NSI defining the relationship between NSI and a NSI
Independent Distributor, respecting the distribution of the Products and
compensation derived therefrom.
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All such compensation paid in the AP Region, including the Territory, shall be
calculated in accordance with a common point accumulation system associated with
Product volumes purchased for sale by NSI Independent Distributors and taking
into account different currency rates of exchange in each of the countries in
the AP Region, including the Territory.
1.17 "SALES AIDS" shall mean the materials, in whatever form and/or
design produced for the Territory to assist in the marketing of the Products in
the Territory.
1.18 "TERRITORY" shall mean the entire area and jurisdiction comprising
the country of the Republic of Korea. The Territory defined in this Agreement
may be modified from time to time by written amendment, signed by the Parties.
ARTICLE II,
GRANT OF EXCLUSIVE LICENSE
2.1 GRANT OF EXCLUSIVE LICENSE. NSI hereby grants to NSK an exclusive
license and right to use in the Territory the Licensed Property and transfers to
NSK the financial and other obligations that are received by Resident NSI
Distributors under the Distributor Contract. NSI grants to NSK the right and
duty to prevent all third parties from using, reproducing, distributing, and
disclosing to the public the Licensed Property. NSK does not have the right to
grant sub-licenses, convey or otherwise share the Licensed Property.
2.2 TERM OF LICENSE GRANTED. The licenses granted in this Agreement
shall remain in full force until the termination of this Agreement in accordance
with its terms.
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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. NSK agrees to assist NSI in any
manner to protect NSI's rights in the Licensed Property which NSI may reasonably
request.
2.3(a) NSK shall review regularly the Territory's market for
unauthorized users of the Licensed Property and unfair competition
affecting the status, channels of commerce or scope of the Licensed
Property, and agrees to inform NSI promptly of any possible infringement
of, or unfair competition affecting, the Licensed Property which comes to
the attention of NSK. In the event NSI decides to take affirmative action
against any such possible infringement or act of unfair competition, NSK
agrees to assist NSI, in whatever manner NSI may direct, and at the
expense of NSI. NSI claims, in its sole discretion, the exclusive right
to direct any such action. Recovery of damages resulting from any such
action shall be solely for the accounts of NSI. Should either party
hereto be involved as a defendant in any judicial action under the laws of
the Territory respecting the subject matter of this Agreement, the Parties
hereto agree to cooperate in such defense with each other to the greatest
possible extent. Any liability of NSK in such action shall be limited to
the amount of the license fees due to NSI from NSK under the terms of this
Agreement.
2.4 RECITALS OF VALUE OF LICENSED PROPERTY. NSK recognizes and agrees
that NSI has expended considerable time, effort and resources to develop and
maintain the Licensed Property. NSK further agrees it will derive a
considerable benefit from its use of the
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Licensed Property in the Territory and from NSI's efforts and expenditures
respecting the Licensed Property.
2.5 MAINTENANCE OF LICENSED PROPERTY. 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 and further develop 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.
NSK shall, from its own accounts and at its own expense, likewise use its best
efforts to maintain the Licensed Property in the Territory as it deems
appropriate.
2.6 LICENSE FEE. Starting and beginning on the date when NSK commences
operations in the Territory and thereafter, and as compensation for the
exclusive licenses granted pursuant to the terms of this Agreement, NSK shall
pay to NSI a license fee equal to four percent (4%) of its sales, net of VAT, of
Products and Sales Aids and other items (exclusive of Introductory Kits and
goods sold on consignment) sold to NSI Independent Distributors during the
entire term of this Agreement.
2.7 COMPUTATION AND PAYMENT TERMS. The computation and payment terms
of amounts to be paid pursuant to this Agreement shall be as follows:
2.7(a) NSK shall give to NSI, at the end of each month, a written
statement of the sales volume achieved during such period in the
Territory. This statement shall be certified as to its correctness by
NSK's principal financial officer and dispatched to NSI within twenty (20)
days following the close of each such period.
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2.7(b) The license fee shall be due and payable as of the last day of
each fiscal quarter based upon sales through the last day of said quarter.
2.7(c) 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.
2.7(d) The Parties agree that the license fee shall remain competitive
within the market and shall be determined by negotiated arm's length
standards.
2.7(e) NSK shall keep complete and accurate records of its activities
under this Agreement which shall be open to inspection by authorized
representatives of NSI at any reasonable time. NSI may also appoint a CPA
or equivalent of NSI's choice in the Territory for the purpose of auditing
NSK's relevant records.
2.7(f) Payments made by NSK to NSI under this Agreement shall be payable
in Korean Won or the U.S. Dollar equivalent as of the date of the
settlement. Payments shall be made either directly to NSI in immediately
available funds by wire transfer to Zion's First National Bank, Provo
Branch, Provo, Utah, U.S.A. -- account number 00000000, or by such other
means of payment designated by NSI.
2.7(g) Without limiting any of NSI's other rights and remedies under to
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 U.S. prime interest
rate (as reported in the Wall Street Journal) plus two percent (2%) for
the full period outstanding. Whether or not interest charges are actually
levied is at the discretion of NSI.
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2.8 WARRANTY OF TITLE; DEFENSE OF CLAIMS. NSI hereby warrants and
represents that it is the sole and exclusive owner of the Licensed Property;
that all NSI Proprietary Information related to the Licensed Property is
confidential, giving NSI a competitive advantage in its worldwide markets; 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; and that NSK's use
of the Licensed Property in the Territory will not constitute an infringement of
the right of any third party. NSI shall indemnify and hold harmless NSK for any
loss, damage or claim, including reasonable attorneys' fees, arising from or
relating to any breach of the warranties contained herein. NSI reserves the
right to control the defense of any litigation including, without limitation,
the right to choose counsel and to settle and dispose of any such litigation or
claim as it deems appropriate in its sole discretion.
2.9 MODIFICATIONS. NSI hereby retains legal title to the Licensed
Property and any modifications, enhancements and improvements to any of the
Licensed Property used or made by NSK pursuant to this Agreement; NSK will
promptly disclose to NSI all such modifications, enhancements and improvements.
2.10 RESERVATION OF RIGHTS TO TERMINATE LICENSE. NSI hereby retains the
right to terminate any of the licenses granted as part of the Licensed Property
or this Agreement for any of the reasons set forth in this Agreement.
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ARTICLE III
OBLIGATIONS OF THE PARTIES UNDER THE AGREEMENT
3.1 OBLIGATIONS, RIGHTS, AND DUTIES. For the consideration received and
outlined within the Agreement, the Parties agree that the obligations of each of
them are as outlined below.
3.1(a) NSI agrees to maintain and provide support for the Sales and
Compensation Plan within the Territory. This includes the efforts made in
further developing and maintaining the Sales and Compensation Plan and
providing the necessary support to NSK to implement the details of the
Sales and Compensation Plan as directed by NSI. This includes, but is not
limited to, the following:
(1) to maintain an adequate computer system, including necessary
hardware, software, data links, computer peripherals, printers,
etc. to properly fulfill NSI's obligations under the Sales and
Compensation Plan;
(2) to provide the necessary training and support to NSK relating
to NSI's Independent Distributors, including information relating
to training methods, motivational strategies, convention and
event planning, technical policies and procedure knowledge, etc;
(3) to receive and use NSK's sales information to compute the
correct and appropriate payments to NSI's Independent
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Distributors in the Territory, such that the Independent
Distributors within the Territory are fully compensated under and
in accordance with the Sales and Compensation Plan;
(4) to receive NSK's information relating to wrongful conduct and
behavior of NSI's Independent Distributors in the Territory and
to act in a responsible manner to help insure the reputation of
NSI;
(5) to maintain a record of the contracts entered into by NSI
Independent Distributors and provide such information to NSK, as
reasonably requested;
(6) to maintain appropriate insurance coverage such that the
assets and financial stability of NSI is insured; and
(7) to perform any other function or provide the necessary
support to comply with the intended provisions of this article
such that NSI uses its best efforts to maintain an Independent
Distribution Network within the Territory.
3.1(b) NSK agrees to timely perform the following functions and
responsibilities in fulfilling its duties and obligations under this
Agreement and recognizes that performance of such activities are in NSK's
best interests in furthering its development in the Territory:
(1) to maintain, at its sole cost and expense, such facilities
and other places of business within the Territory necessary to
effect
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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 the company is not damaged;
(3) to sell and/or distribute Introductory Kits to potential NSI
Independent Distributors in accordance with all applicable laws
and industry standards (See Article IV);
(4) to collect, but not accept, distribution contracts,
(Distributor Agreements*) from potential NSI Independent
Distributors and forward these contracts to NSI in a timely
fashion, such that the agreements are accepted or rejected by NSI
in the United States of America;
(5) to train and lend assistance to NSI Independent Distributors
in the Territory;
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(6) to only accept Registration Agreements* from those
distributors previously or currently registered with NSI as
Independent Distributors.
(7) to transmit to NSI necessary information regarding sales to
NSI Independent Distributors, such that NSI can fulfill its
obligations to the Independent Distributors under the Sales
and Compensation Plan;
(8) to maintain appropriate insurance coverage such that the
assets and financial stability of NSK are insured; and
(9) to satisfy the local commission obligations owed to Resident
NSI Independent Distributors on a monthly basis, in accordance
with and pursuant to the Sales Compensation Plan. Pursuant to
Article 2.1 of this Agreement NSK agrees to pay all obligations
which it assumes hereunder and to which Resident NSI Independent
Distributors are entitled under the Distribution Contract in a
timely and efficient manner;
(10) to pay NSI a consulting fee based upon the efforts expended
by NSI in training, motivating, instructing and supervising
Resident NSI Independent Distributors during the initial start-up
*A person may become an Independent Distributor in Korea only if he/she signs a
Registration Agreement with NSK and is registered with the NSK as a Multilevel
Seller under the DDSA.
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phase of NSK's operations in Korea. NSK agrees and understands
that such consulting is to its benefit in generating initial
revenue in Korea. NSI agrees to invoice NSK on a monthly basis
for this service. NSI further agrees that its method of computing
the consulting fee will be on a cost basis;
(11) to monitor and supervise the activities of NSI Independent
Distributors within the Territory, enforcing the Distributor
Contract and their own Registration Agreement (see * on page 13)
to ensure compliance with the Distributor Contract and Policies
and Procedures, suggesting and helping pursue any necessary
action against NSI Distributors who violate any of the terms and
conditions of the Distributor Contract, including the Policies
and Procedures, or any other rules and regulations of NSI or NSK;
(12) to perform any other function or provide support such that
NSI can fully perform its obligations to the Independent
Distributors under the Sales and Compensation Plan and
Distributor Contract.
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ARTICLE IV
INTRODUCTORY KIT SALES
4.1 AGREEMENT TO PURCHASE INTRODUCTORY KITS. The Parties acknowledge
that pursuant to this Agreement NSK is being granted an exclusive license to use
the Licensed Property, including the Independent Distribution Network, in the
Territory. NSK agrees to use its best efforts in furthering the development of
the Independent Distribution Network in the Territory by purchasing from NSI and
selling or otherwise distributing Introductory Kits to potential NSI Independent
Distributors in the Territory. Alternatively, the Parties agree that NSK shall
have the right to locally produce Introductory Kits under the Nu Skin registered
trademarks. Such production of Introductory Kits will be governed by a separate
Trademark-Tradename Licensing Agreement entered into by NSK and NSI.
4.2 PRICING. In order to determine and set the prices to be paid by
NSK to NSI for Introductory Kits purchased or locally produced hereunder, the
Parties shall use those factors and circumstances relevant to prevailing market
conditions and shall negotiate in good faith. However, under no circumstance is
the sale price of the Introductory Kits to exceed 10% of NSI's manufacture
and/or purchase price.
4.3 PAYMENT METHOD. NSK shall pay the commercial invoices for
Introductory Kits sold or locally produced under this Agreement in immediately
available funds by wire transfer to a bank or banks designated by NSI, or by
such other means of payment agreed to by NSI. All purchases of Introductory
Kits will be payable in Korean Won with any exchange rate risks relating to
currency fluctuation being borne by NSI. Without limiting any of NSI's other
rights and remedies pursuant to provisions to this Agreement, amounts not paid
within the time set forth in the payment provisions herein shall be subject to
an interest charge equal to two percent (2%) over the prime rate (as reported in
the Wall Street Journal) for the entire
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period such amounts remain unpaid. Whether or not interest charges are actually
levied is at the discretion of NSI.
4.4 QUANTITIES. NSK agrees to purchase or locally produce sufficient
quantities of the Introductory Kit to fill orders, in a timely fashion, received
from potential NSI Independent Distributors in the Territory.
4.5 QUALITY OF INTRODUCTORY KITS. NSI shall use its best efforts to
maintain and augment the quality, image and value of the Introductory Kits such
that Introductory Kits sold or locally produced in the Territory are consistent
with the quality of those sold in other Nu Skin markets.
4.6 INSURANCE. NSI covenants it will maintain a current insurance
policy covering product and business claims found in the Introductory Kit in an
amount consistent with normal and commercially reasonable standards in the
industry. NSI agrees to provide NSK with any certificate of insurance which NSK
may reasonably request.
4.7 MERCHANTABILITY. NSI warrants that Introductory Kits sold or
locally produced to NSK pursuant to this Agreement will be merchantable and of
sufficient quality for sales within Korea. If NSK determines that certain
Introductory Kits supplied under this Agreement are not merchantable, a claim
for a refund of the price paid can be made with 45 days from the day the
Introductory Kits are received in Korea. NSI agrees to refund, or credit the
account of NSK, for the purchase price of such non-merchantable Introductory
Kits.
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ARTICLE V
GOVERNMENTAL APPROVALS, LAWS AND REGULATIONS
5.1 OBLIGATIONS OF NSK. NSK agrees it will obtain any governmental
approval required 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, or any other obligation hereunder to be observed or performed. NSK agrees
to keep NSI informed of its progress in obtaining all such governmental
approvals.
5.2 COMPLIANCE WITH LAWS. NSK shall comply with and make all necessary
filings and notifications under all applicable laws, regulations and ordinances
in the Territory, including without limitation, any requirement for the
registration or recording of this Agreement, if necessary, with any applicable
or responsible governmental entities and authorities.
5.3 PROTECTION OF NSI. NSK shall refrain from any action that will
cause NSI to be in violation of any applicable law, regulation, or ordinance of
the Territory, the United States, or elsewhere, or of any international
convention, bilateral, or multilateral treaty to which 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.
5.4 COMPLIANCE OF NSK OPERATION. NSK shall capitalize itself adequately
and maintain its operations on a financially sound basis and in compliance with
all applicable laws, regulations and ordinances covering the operation of such
business entities in the Territory.
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ARTICLE VI
TERM AND TERMINATION
6.1 TERM. This Agreement shall be effective as of the date of NSK's
commencement of operations in the Territory. The initial term of the Agreement
shall expire in five (5) years from the date of said commencement, but shall
automatically be renewed for successive five (5) year terms unless either party
gives three (3) months written notice to the other of its intent to terminate
this Agreement prior to the expiration of the term then in effect.
6.2 BREACH AND NOTICE. In case either party breaches any provision of
this Agreement, the other party may immediately give notice of its intention to
terminate within ninety (90) days thereof and, unless the breaching party
notifies the other of the cure of such breach within said period, this Agreement
shall automatically terminate at the expiration of the ninety day period.
Should any such breach consist of the failure of NSK to pay any amount owing to
NSI hereunder, the period of notice of intention to terminate this Agreement
shall be thirty (30) days.
6.3 EXAMPLES OF MATERIAL BREACH. Either party may terminate this
Agreement upon the occurrence of any of the following:
6.3(a) the filing by or against the other party hereto of a
petition in bankruptcy or judicial or administrative declaration of
insolvency, the dissolution, liquidation, or re-organization of, and
the loss of clearinghouse privileges by, one party as circumstances
justifying termination of the Licensing and Sales Agreement by the
other party, by giving notice to the latter party of
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its intention to so terminate. NSI may terminate this Agreement by giving
notice thereof to NSK in the event of government expropriation of any of
the assets of NSI or NSK which relate to the activities of NSK
contemplated by this Agreement;
6.3(b) if NSK causes or allows a judgment to be entered against it or
causes or allows a lien, security interest or other encumbrance to be
place upon its assets or the assets of NSI;
6.3(c) if NSK undergoes a substantial change in ownership or
control. Upon any of the foregoing events, such termination shall
be immediately effective.
6.3(d) if either party violates a term, condition, covenant, warranty or
promise under this Agreement.
6.4 OBLIGATION OF NSK UPON TERMINATION. Upon termination of this
Agreement by either Party, NSK agrees to the following;
6.4(a) to furnish NSI with a current list of all potential NSI
Independent Distributors from whom NSK has collected distribution
contracts or to whom NSK has sold Products or Sales Aids;
6.4(b) to dispose of any unused Introductory Kits or related materials
in accordance with the instructions of NSI;
6.5 DAMAGES NOT ALLOWABLE. Should this Agreement be terminated for any
reason, NSK shall not be able to claim from NSI any damages or compensation for
losses or expenses incurred, or for lost profits.
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6.6 SURVIVAL OF OBLIGATIONS. Termination of this Agreement shall not
affect (1) any of the obligations, covenants and warranties made hereunder,
including the payment of any fees or other costs which have accrued as of the
date of termination; (2) any obligation which from the provision of this
Agreement is intended to survive the termination of said Agreement.
6.7 WAIVER. Any waiver by either party of a breach of any term or
condition of this Agreement shall not be considered as a waiver of a subsequent
breach of the Agreement or any other term or condition thereof.
6.8 REVERSION OF RIGHTS. Upon termination of this Agreement, all rights
and licenses herein granted to NSK shall immediately cease and shall revert to
NSI, and NSK shall not represent to any third party that it has any right to
use, assign, convey or otherwise transfer the Licensed Property.
ARTICLE VII
RELATIONSHIP OF NSI AND NSK
7.1 NSK AND INDEPENDENT CONTRACTS. 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 NSK as the legal representative or agent of NSI or to
constitute or construe the parties as partners, joint venturers, co-owners or
otherwise as participants in a joint or common undertaking.
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NSK shall not conclude any contract or agreement or make any commitment,
representation or warranty that binds NSI or otherwise act in the name of or on
behalf of NSI.
7.2 NSI CONDUCTS NO BUSINESS ACTIVITY IN TERRITORY. Nothing contained
in this Agreement shall 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. In fact, the Parties understand and
agree that NSI will refrain from conducting business or engaging in any activity
in the Territory which could be construed, under the applicable laws and tax
regulations, as doing or conducting business in the Territory.
7.3 CROSS DEFAULT. The Parties agree that in the event NSI terminates,
or imposes disciplinary action on any NSI distributor due to the Distributor's
violation of the Distributor Agreement between NSI and the Distributor, that
such termination or disciplinary action shall provide sufficient grounds for NSK
to terminate or impose disciplinary action on the Distributor with respect to
the Registration Agreement with NSK. Likewise, the Parties agree that in the
event NSK terminates, or imposes disciplinary action on any NSK distributor due
to the Distributor's violation of the Registration Agreement between NSK and the
Distributor, that such termination or disciplinary action shall provide
sufficient grounds for NSI to terminate or impose disciplinary action on the
Distributor with respect to the Distributor Agreement with NSI.
7.4 ACCEPTANCE OF REGISTRATION AGREEMENT FROM NSI INDEPENDENT
DISTRIBUTORS. The Parties understand and agree that NSK will accept no
Registration Agreement with any person or entity unless that person or entity
has first signed a Distributor
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Agreement with NSI and been accepted as a distributor of NSI under the sole
discretion and judgement of NSI.
ARTICLE VIII
CONFIDENTIALITY
8.1 OBLIGATION TO KEEP CONFIDENTIAL. NSI and NSK agree to hold
confidential any Proprietary Information disclosed by the other party or
otherwise obtained, directly or indirectly. NSK agrees that should it have
access to any Proprietary Information during the course of its relationship with
NSI, it will make no changes to or copies of such materials without the prior,
express written consent of NSI's authorized representative. Neither party will
use, divulge, or disclose any Proprietary Information, directly or indirectly,
for its own benefit or for the benefit of any third party.
8.2 SURVIVAL OF OBLIGATION. NSI and NSK agree to keep confidential the
terms of this Article until such time as: (a) either party releases the other
party, in writing, from its terms; or (b) the Proprietary Information becomes
known to the general public by means other than through a breach of this
Agreement; provided that the obligations of the Parties shall cease only with
respect to that portion of Proprietary Information identified in a written
release or generally known to the public. The confidentiality provisions of
this Article shall survive termination of this Agreement.
8.3 INFORMATION THE EXCLUSIVE PROPERTY OF NSI. NSK acknowledges that
all NSI Proprietary Information communicated to NSK by NSI, relating to the
Licensed
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Property, shall be deemed to be secret and confidential in character and, as
between the Parties, will be considered the exclusive property of NSI licensed
to NSK for use in the Territory. Such information is provided to NSK solely for
the benefit of NSK and to enable NSK to perform its obligations and rights
pursuant to the provisions of this Agreement. Such information is not available
to third parties, except to the extent that it may be absolutely necessary to
achieve the purposes of this Agreement. NSK further agrees to take all
reasonable measures to prevent its employees or agents from divulging such
information in any manner that may be contrary to the interest of NSI or NSK.
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ARTICLE IX
ASSIGNMENT
This Agreement shall be binding on and inure to the benefit of the heirs,
successors, assigns and beneficiaries of the Parties; provided that NSK may not
assign this Agreement or any rights or obligations hereunder, whether by
operation of law or otherwise, without the prior written consent of NSI through
its authorized representative (which consent may be granted or withheld by NSI
in its sole discretion). Any such attempted assignment shall be void and
unenforceable.
ARTICLE X
FORCE MAJEURE
Neither party shall be in default under the terms of this Agreement by
reason of its delay in the performance of or failure to perform any of its
obligations hereunder if such delay or failure is caused by strikes, acts of
God, the public enemy, riots, incendiaries, interference by military
authorities, compliance with governmental laws, rules and regulations, delays in
transit or delivery, inability to secure necessary governmental priorities for
materials or any fault beyond its control or without its fault or negligence.
ARTICLE XI
GOVERNMENTAL APPROVAL
Should government approval, filing or recording of this Agreement be
required or as provided in Article V herein, this Agreement shall not become
effective until the consent of
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said proper governmental authorities in the Territory has been obtained. If
such approval or filing is required by law, NSK is responsible, pursuant to the
provisions of Article V, for filing and notification of this Agreement with
appropriate authorities in the Territory.
ARTICLE XII
RECORDING
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.
ARTICLE XIII
GOVERNING LAW AND DISPUTE RESOLUTION
This Agreement shall be governed by and construed in accordance with the
laws of the State of Utah, United States of America, applicable to contracts
executed and performed therein. The Parties agree that the forum for any
arbitration, action, suit or proceeding arising out of this Agreement shall be
in the State of Utah. Each Party hereby submits to the jurisdiction in the
State of Utah for resolution of any conflict or litigation arising under or
purporting to interpret this Agreement. Any dispute arising out of this
Agreement or any of the responsibilities and obligations therein shall be
resolved through arbitration administered
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by the American Arbitration Association in accordance with its Commercial
Arbitration Rules as supplemented by the Procedures for International Commercial
Arbitration. The arbitration proceedings shall be conducted in Salt Lake City,
Utah, U.S.A. The findings and conclusions of said arbitration shall be binding
upon the Parties, their heirs, successors, assigns and beneficiaries.
ARTICLE XIV
APPLICABILITY OF POST-EFFECTIVE LAW
To the extent that the Vienna Convention on the International Sale of
Goods (the "Vienna Convention"), the United Nations Convention on contracts for
the International Sale of Goods (the "UN Convention") or some other such similar
law, treaty or act becomes effective during the term of this Agreement, the
Parties agree that neither the Vienna Convention, UN Convention nor any such
similar law, treaty or act shall be applicable to this Agreement or the
transactions contemplated hereunder.
ARTICLE XV
WAIVER AND DELAY
No waiver by either party of any breach or default in performance by the
other party, and no failure, refusal or neglect of either party to exercise any
right, power or option given to it hereunder or to insist upon strict compliance
with or performance of the other party's obligations under this Agreement, shall
constitute a waiver of the provisions of this Agreement
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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.
ARTICLE XVI
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 or courier, postage
prepaid, from any post office addressed as follows:
If to NSK: Nu Skin Korea
Dabong Tower
000-00 Xxxxxx-xxxx
Xxxxxxx-xx, Xxxxx
Xxxxx
Facsimile No.: 00-0-000-0000
If to NSI: Nu Skin International, Inc.
00 Xxxx Xxxxxx Xxxxxx,
Xxxxx, Xxxx 00000, X.X.X.
Facsimile No.: (000) 000-0000
Attn.: Senior International Legal Counsel
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.
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ARTICLE XVII
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.
ARTICLE XVIII
MODIFICATION AND AMENDMENTS
No supplement, modification or amendment of this Agreement shall be
binding unless it is in writing and executed by the Parties.
ARTICLE XIX
NONDISCLOSURE
The Parties agree that, except to the extent required by law, neither
party will disclose the existence of any of the terms of this Agreement to any
person that is not an affiliate of such party or an employee or agent of such
party or affiliate without the prior written consent of the other party.
ARTICLE XX
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
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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.
ARTICLE XXI
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.
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, LTD.
BY: /s/ XXXXX X. XXXXX BY: /s/ SUNG-XXX XXX
--------------------------- ------------------------------------
XXXXX X. XXXXX SUNG-XXX XXX
PRESIDENT AND CEO REPRESENTATIVE DIRECTOR
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