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Nu Skin - Form Of Wholesale Distribution Agreement
(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.
Nu Skin USA, Inc.
WHOLESALE DISTRIBUTION AGREEMENT
TABLE OF CONTENTS
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
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
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:
ARTICLE I
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.
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
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.
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.
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
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.
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.
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 custommport requirements; (e) expenses and costs
related to locating and establishing office, warehouse and other
physical facilities, including build out, furnishings and equipment, as
well as negotiation and securing of necessary leases and permits; (f)
all costs and expenses related to hiring a general manager and staff,
and compliance with local labor laws and requirements.
ARTICLE V
PURCHASE, SALE AND DELIVERY OF PRODUCTS AND SALES AIDS
5.1 Agreement to Purchase. NSUSA shall order such quantities of Products and Sales Aids as it deems necessary to meet its sales requirements within the Territory.
5.1(a) NSI shall use its best effort to supply and deliver
Products and Sales Aids to NSUSA in a timely and productive manner,
subject to Section 15.4 hereof and the availability of NSI's current
inventory of the Product(s) or Sales aids requested by NSUSA.
5.1(b) NSUSA shall source Products and Sales Aid(s)
exclusively from NSI; provided however that, if NSI cannot deliver such
Product(s) or Sales Aid(s) in a timely fashion, NSUSA may source any
such Product(s) or Sales Aid(s) from any other Nu Skin affiliate. 5.2
Payment Due Date. NSUSA shall pay for each delivery of Products and
Sales Aids within sixty (60) days after the date of arrival or the date
of dispatch of a commercial shipping invoice, whichever is later, and
shall make payment for such Products and Sales Aids as provided in
Section 6.2 of this Agreement.
5.3 Passage of Title and Risk of Loss. Title to and risk of loss for any Product(s) or Sales Aid(s) ordered and supplied pursuant to this Agreement shall pass to NSUSA upon delivery of the goods unless otherwise indicated in writing. Delivery shall be made in a commercially reasonable manner in accordance with standards applicable in the trade and industry. Delivery and passage of title shall be effected within the confines of the NSI distribution/warehousing facility as NSUSA personnel pick Products and/or Sales Aids from inventory set for shipping to Independent Distributors.
5.4 Product Returns/Exchanges Inspection. If any Products or Sales Aids are returned to NSUSA because of defect, NSUSA shall within forty-five (45) days following actual receipt, return such Products or Sales Aids to NSI. In the event of such a return, NSI shall make appropriate arrangements, acceptable to NSUSA, to replace any such defective Products or Sales Aids at NSI's sole cost and expense or, failing such replacement, shall, at the option of NSI, either credit the purchase price of the defective Products or Sales Aids to NSUSA's account or promptly grant NSUSA a cash refund for such purchase price. If NSI is not notified in writing of any defective Products or Sales Aids within forty-five (45) days after actual receipt thereof by NSUSA, then NSUSA shall be deemed to have waived its right to claim any defect in the Products or Sales Aids; provided that for any latent or other defect not reasonably discernible upon inspection of the Products or Sales Aids under the prevailing circumstances NSUSA shall have until forty-five (45) days after discovery of such defect to exercise its rights under this Section 5.4.
ARTICLE VI
PRODUCT AND SALES AIDS PURCHASE PRICES AND TERMS OF PAYMENT
6.1 Product Availability and Pricing. Prices to be paid by NSUSA to NSI for Products and Sales Aids purchased hereunder shall be negotiated and determined on an arm's length basis and be adjusted from time to time as agreed by the Parties in writing, provided that the purchase and price terms shall be based upon the terms offered by NSI to its other Nu Skin af...
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