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Nu Skin - Wholesale Distribution Agreement
Exhibit 10.9
AMENDED AND RESTATED
WHOLESALE DISTRIBUTION AGREEMENT
TABLE OF CONTENTS
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Page
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ARTICLE I DEFINITIONS.................................................. 1
1.1 "Agreement".................................................. 1
1.2 "NSJ Authorized Affiliate"................................... 1
1.3 "NSJ Independent Distributor"................................ 1
1.4 "NSJ"........................................................ 1
1.5 "Products"................................................... 1
1.6 "Territory".................................................. 1
1.7 "Sales Aids"................................................. 2
1.8 "Trademarks"................................................. 2
ARTICLE II APPOINTMENT AS EXCLUSIVE WHOLESALE DISTRIBUTOR............... 2
2.1 Scope........................................................ 2
2.2 Sub-distributors............................................. 2
2.3 Sales of Products and Sales Aids............................. 2
2.4 NSJ Sales in the Territory................................... 2
2.5 Sales Outside the Territory.................................. 2
2.6 Territory Orders and Inquiries............................... 3
ARTICLE III GOVERNMENTAL APPROVALS AND REGISTRATIONS..................... 3
ARTICLE IV OBLIGATIONS OF NSJ AS EXCLUSIVE WHOLESALE
DISTRIBUTOR IN THE TERRITORY............................... 3
4.1 Marketing and Distribution................................... 3
4.2 NSJ Operations............................................... 4
4.3 Pricing Information.......................................... 5
4.4 NSJ Claims and Representations............................... 5
4.5 Capitalization............................................... 5
4.6 Customer Support............................................. 5
4.7 Allocation of Expenses....................................... 5
ARTICLE V PURCHASE, SALE AND DELIVERY OF PRODUCTS AND SALES AIDS....... 6
5.1 Agreement to Purchase........................................ 6
5.2 Product Shipment............................................. 7
5.3 Payment Due Date............................................. 7
5.4 Passage of Title and Risk of Loss............................ 7
5.5 Inspection................................................... 7
ARTICLE VI PRODUCT AND SALES AIDS PURCHASE PRICES
AND TERMS OF PAYMENT....................................... 8
6.1 Product Availability and Pricing............................. 8
6.2 Payment Method............................................... 8
ARTICLE VII OBLIGATIONS OF NSJ AS SUPPLIER OF PRODUCTS
AND SALES AIDS............................................. 8
7.1 Product Quality.............................................. 8
7.2 Warranty..................................................... 9
7.3 Delivery..................................................... 9
7.4 Allocation of Expenses....................................... 9
ARTICLE VIII SALE AND MANUFACTURE OF PRODUCTS............................. 10
8.1 Non-Competing Products....................................... 10
8.2 Competing Products........................................... 10
8.3 Discontinued Products........................................ 10
ARTICLE IX NATURE OF RELATIONSHIP....................................... 11
ARTICLE X TERM......................................................... 11
ARTICLE XI TERMINATION.................................................. 11
ARTICLE XII EFFECT OF TERMINATION........................................ 12
ARTICLE XIII CONFIDENTIALITY.............................................. 13
ARTICLE XIV INDEMNIFICATION AND INSURANCE................................ 14
ARTICLE XV MISCELLANEOUS................................................ 15
15.1 Assignment................................................... 15
15.2 Notices...................................................... 15
15.3 Waiver and Delay............................................. 15
15.4 Force Majeure................................................ 16
15.5 Governing Law and Dispute Resolution......................... 16
15.6 Applicability of Post-Effective Laws......................... 17
15.7 Integrated Contract.......................................... 17
15.8 Modifications and Amendments................................. 17
15.9 Severability................................................. 17
15.10 Counterparts and Headings.................................... 17
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AMENDED AND RESTATED WHOLESALE DISTRIBUTION AGREEMENT
THIS AMENDED AND RESTATED WHOLESALE DISTRIBUTION AGREEMENT is made and entered this ____ day of November, 1996, by and between Nu Skin Japan, Inc., a corporation a company dually incorporated, organized and existing under the laws of Japan and the State of Delaware, U.S.A., (hereinafter "NSJ") and Nu Skin Hong Kong, Inc., a foreign branch of a corporation a company duly incorporated, organized and existing under the laws of Japan and the State of Delaware, U.S.A., (hereinafter "NSHK"). Hereinafter, NSJ and NSHK collectively shall be referred to as the "Parties. "
W I T N E S S E T H
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WHEREAS, NSI (as hereinafter defined) is engaged in the design, production and marketing of Products and Sales Aids (as hereinafter defined) for distribution in international markets through a network of independent distributors; and,
WHEREAS, NSI has authorized and appointed NSHK as its exclusive regional distributor of Products and Sales Aids in certain countries in the Asia/Pacific region (including the Territory (as hereinafter defined)) and desires to appoint subdistributors in certain of such countries pursuant to Section 2.2 of its Regional Distribution Agreement with NSI, dated as of the date hereof (the "Regional Distribution Agreement"); and,
WHEREAS, NSJ desires, on the terms and conditions hereinafter set forth, to act as the exclusive distributor of NSHK of Products and Sales Aids in the Territory; and,
WHEREAS, NSHK is willing, on the terms and conditions hereinafter set forth, to grant to NSJ the exclusive right to so distribute Products and Sales Aids; and,
WHEREAS, the Parties entered into a Wholesale Distribution Agreement on November 11, 1993 and an Amendment to said agreement on July 12, 1993 (the "Prior Distribution Agreement"); and,
WHEREAS, the Parties wish to amend and restate the Prior 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
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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 Amended and Restated Wholesale Distribution Agreement between NSHK and NSJ (together with any exhibits and schedules hereto), as the same may be modified, amended or supplemented from time to time).
1.2 "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 distribution contract.
1.3 "NSI" shall mean Nu Skin International, Inc., a U.S. corporation, duly organized and existing under the laws of the State of Utah, U.S.A.
1.4 "Products" shall mean those products, including without limitation, 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, subject to unavailability due to local regulatory requirements in the Territory.
1.5 "Territory" shall mean the country of Japan.
1.6 "Sales Aids" shall mean materials, in whatever form, designed, approved and produced by NSJ to assist in the marketing of the Products in the Territory.
1.7 "Trademarks" shall mean those words, symbols, devices, logos, trade names and company names or a combination thereof used in relation to all Products and Sales Aids covered by the existing or eventual registrations thereof in the Territory.
ARTICLE II
APPOINTMENT AS EXCLUSIVE WHOLESALE DISTRIBUTOR
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2.1 Scope. NSHK hereby appoints and authorizes NSJ as NSHK'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 NSJ hereby accepts such appointment and authorization.
2.2 Sub-distributors. NSJ shall not, without the prior written approval of NSHK, 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) NSJ agrees that any distribution of Products or Sales Aids in the
Territory shall be made only to an NSI Independent Distributor.
2.3(b) To facilitate sales to NSI Independent Distributors, NSJ shall have
the right to access information regarding such NSI Independent Distributors
in the Territory as provided by NSI to NSHK pursuant to the Regional
Distribution Agreement.
2.4 NSHK Sales in the Territory. NSHK agrees not to sell Products or Sales Aids to any party within the Territory or to any party outside the Territory for delivery within the Territory, except to NSJ pursuant to the terms and conditions of this Agreement, unless NSHK has received the written consent of NSJ.
2.5 Sales Outside the Territory. NSJ agrees that it will not sell Products or Sales Aids outside the Territory. Further, NSJ shall not promote or solicit customers for Product or Sales Aids sales outside the Territory. NSJ 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 NSHK'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 NSHK receives any order or inquiry concerning the sale of Products or Sales Aids in the Territory, NSHK agrees to give prompt notice of such inquiry or order to NSJ, 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 NSJ shall reasonably request. If NSJ receives any order or inquiry concerning the sale of Products or Sales Aids outside the Territory, NSJ agrees to give NSHK 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 NSHK shall reasonably request.
ARTICLE III
GOVERNMENTAL APPROVALS AND REGISTRATIONS
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NSJ 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 sold in the Territory (except as otherwise provided herein) or to enable any payment pursuant to the provisions of this Agreement to be made. NSJ agrees to keep NSHK informed of the progress in obtaining all such government approvals.
ARTICLE IV
OBLIGATIONS OF NSJ AS EXCLUSIVE WHOLESALE DISTRIBUTOR IN THE
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4.1 Marketing and Distribution. NSJ 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 in each
country within the Territory.
4.1(c) To ensure that all inquiries by sub-distributors, NSI Independent
Distributors and customers, including complaints are responded to promptly.
To ensure that all orders are processed and all shipments of Products and
Sales Aids are made within the Territory in a timely fashion.
4.1(d) To diligently investigate or cause to be investigated all leads
with potential customers referred to it by NSHK.
4.1(e) To permit NSHK to visit NSJ and its sub-distributors and to visit
NSJ'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 all laws, ordinances and regulations applicable within
the Territory.
4.1(g) To provide, at the request of NSHK, a business plan for the term
and in the form and detail reasonably requested by NSHK and to update such
business plan as reasonably requested by NSHK.
4.1(h) To provide, at the request of NSHK, 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 NSHK may reasonably require.
4.2 NSJ Operations. NSJ 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. NSJ 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 NSHK, NSJ agrees to advise NSHK of the distribution prices of the Products or Sales Aids to be sold to NSI Independent Distributors within the Territory.
4.4 NSJ Claims and Representations. NSJ shall not make any promises, representations, warranties or guarantees respecting the Products, Sales Aids or the 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. NSJ 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. NSJ agrees to cooperate with NSHK in dealing with any NSI Independent Distributor or customer complaints concerning the Products and the Sales Aids and to take any action requested by NSHK to solve such complaints. NSJ also agrees to assist NSHK in arranging for any customer warranty service required by law or required pursuant to the judgment of NSHK.
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, NSJ
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. NSJ 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) Freight. NSJ shall be liable for all freight charges not allocated
to NSHK pursuant to Section 7.4(c) hereof.
4.7(d) Other Expenses. In addition to the costs and expenses described in
clauses (a), (b) and (c) above, NSJ 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 company documentation,
Sales Aids, and other literature such as product catalogs as well as
contracts such as local product purchase agreements; (d) fees and costs
incurred in determining the requirements for, and in actually formulating,
and registering Products, including ascertaining and complying with
labeling 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; (g) expenses of monitoring, supervising and
disciplining NSJ Independent Distributors; provided that such fees, costs
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or expenses are not allocated to NSJ under Section 7.4(d)
ARTICLE V
PURCHASE, SALE AND DELIVERY OF PRODUCTS AND SALES AIDS
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5.1 Agreement to Purchase. NSJ shall order such quantities of Products and Sales Aids as it deems necessary to meet its sales requirements within the Territory.
5.1(a) Each order shall be in the form of a written and signed Purchase
Order appearing on the official letterhead of NSJ. Each Purchase order
shall be forwarded directly to NSI with a copy to be forwarded
simultaneously therewith to NSHK. NSHK shall review such Purchase Order
for compliance with the terms of the Regional Distribution Agreement and
for reasonableness of the quantities ordered with forecasted sales of
Products by NSJ. Unless earlier waived, NSHK shall have the right, within
ten (10) days after placement of such Purchase Order, to rescind such
Purchase Order and shall notify NSJ and NSI in writing of its decision to
exercise such rescission rights prior to the expiration of such ten-day
5.1(b) Each Purchase Order shall identify the Product(s) or Sales Aids to
be purchased, the country to which such Products or Sales Aids shall be
distributed to ensure shipment and receipt of Products or Sales Aids which
comply with such country's laws and regulation, the quantities thereof, and
the shipment dates therefor.
5.1(c) NSI shall accept each Purchase Order for Products or Sales Aids
placed by NSJ pursuant to this Article and subject to:
5.1.(c).(i) The availability in NSI's current inventory of the
Product(s) or Sales Aid(s) ordered by NSJ; and,
5.1.(c).(ii) The inability of NSI to perform by reason of force
majeure as defined in Section 15.4 hereof; and,
5.1.(c).(iii) NSHK's ability to rescind such Purchase Order pursuant to Section 5.1(a) hereof. NSI shall have up to ten (10) days after receipt of any Purchase Order to accept such Purchase order. Acceptance by NSI shall be in writing, signed by a duly authorized representative of NSI, and effective upon execution.
5.1(d) NSI , in determining whether it has sufficient inventory to fill each Purchase Order, will treat such Purchase Order on a parity basis with the orders of all other NSI affiliates.
5.2 Product Shipment. NSI shall ship all Product(s) and Sales Aids sold by NSHK to NSJ hereunder as NSJ may designate in writing on the Purchase Order. NSJ shall transmit all commercial invoices for the Products and Sales Aids directly to NSI and NSHK by registered airmail, postage prepaid, or any other method mutually acceptable to the Parties.
5.3 Payment Due Date. NSJ shall pay for each shipment of Products and Sales Aids within sixty (60) days after the date of arrival or the date of ...
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