Wholesale Distribution Agreement

NSHK - NSPCT
WHOLESALE DISTRIBUTION AGREEMENT


TABLE OF CONTENTS


Page


ARTICLE I DEFINITIONS.............................................2
1.1 "Agreement".............................................2
1.2 "NSI Independent Distributor"...........................2
1.3 "NSI"...................................................2
1.4 "Products"..............................................2
1.5 "Territory".............................................2
1.6 "Sales Aids"............................................3
1.7 "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 NSHK 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 NSPCT AS EXCLUSIVE WHOLESALE DISTRIBUTOR
IN THE TERRITORY........................................5
4.1 Marketing and Distribution..............................6
4.2 NSPCT Operations........................................6
4.3 Pricing Information.....................................7
4.4 NSPCT Claims and Representations........................7
4.5 Capitalization..........................................7
4.6 Customer Support........................................7
4.7 Allocation of Expenses..................................8


ARTICLE V PURCHASE, SALE AND DELIVERY OF PRODUCTS AND SALES AIDS..9
5.1 Agreement to Purchase...................................9
5.2 Payment Due Date.......................................10
5.3 Passage of Title and Risk of Loss......................10
5.4 Inspection.............................................10
5.5 Inventory Obsolescence.................................11


ARTICLE VI PRODUCT AND SALES AIDS PURCHASE PRICES AND TERMS OF
PAYMENT................................................11
6.1 Product Availability and Pricing.......................11
6.2 Payment Method.........................................12


ARTICLE VII OBLIGATIONS OF NSPCT AS SUPPLIER OF PRODUCTS AND SALES
AIDS...................................................12
7.1 Product Formulation....................................12
7.2 Warranty...............................................12
7.3 Delivery...............................................13
7.4 Allocation of Expenses.................................13


ARTICLE VIII SALE AND MANUFACTURE OF PRODUCTS.......................14
8.1 Non-Competing Products.................................14
8.2 Competing Products.....................................14
8.3 Discontinued Products..................................14


ARTICLE IX NATURE OF RELATIONSHIP.................................15


ARTICLE X TERM...................................................15


ARTICLE XI TERMINATION............................................16


ARTICLE XII EFFECT OF TERMINATION..................................17


ARTICLE XIII CONFIDENTIALITY........................................18


ARTICLE XIV INDEMNIFICATION AND INSURANCE..........................19


ARTICLE XV MISCELLANEOUS..........................................20
15.1 Assignment.............................................20
15.2 Notices................................................20
15.3 Waiver and Delay.......................................21
15.4 Force Majeure..........................................22
15.5 Governing Law and Dispute Resolution...................22
15.6 Applicability of Post-Effective Laws...................23
15.7 Integrated Contract....................................23
15.8 Modifications and Amendments...........................23
15.9 Severability...........................................23
15.10 Counterparts and Headings..............................24


WHOLESALE DISTRIBUTION AGREEMENT


THIS WHOLESALE DISTRIBUTION AGREEMENT (hereinafter "Agreement") is made and entered this 12th day of March, 1997, by and between Nu Skin Personal Care (Thailand) Ltd., a corporation organized under the laws of Thailand and the State of Delaware, U.S.A., (hereinafter "NSPCT"), and Nu Skin Hong Kong, Inc., a corporation organized under the laws the State of Utah, U.S.A., (hereinafter "NSHK"). Hereinafter, NSPCT and NSHK collectively shall be referred to as the "Parties."


W I T N E S S E T H


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 November 21, 1996 (the "Regional Distribution Agreement"); and,


WHEREAS, NSPCT 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 NSPCT the exclusive right to so distribute Products and Sales Aids; 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
DEFINITIONS


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 NSHK and NSPCT (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 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 Thailand.


1.6 "Sales Aids" shall mean materials, in whatever form, designed, approved and produced by NSPCT 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 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. NSHK hereby appoints NSPCT 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 NSPCT hereby accepts such appointment and authorization.


2.2 Sub-distributors. Except for the sale of Products and Sales Aids to NSI Independent Distributors, NSPCT 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) NSPCT agrees that any distribution of Products or Sales Aids in the
Territory shall be made only to NSI Independent Distributors.


2.3(b) To facilitate sales to NSI Independent Distributors, NSPCT 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 NSPCT pursuant to the terms and conditions of this Agreement, unless NSHK has received the written consent of NSPCT.


2.5 Sales Outside the Territory. NSPCT agrees that it will not sell Products or Sales Aids outside the Territory. Further, NSPCT shall not promote or solicit customers for Product or Sales Aids sales outside the Territory. NSPCT 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 NSPCT, 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 NSPCT shall reasonably request. If NSPCT receives any order or inquiry concerning the sale of Products or Sales Aids outside the Territory, NSPCT 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


NSPCT 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. NSPCT agrees to keep NSHK informed of the progress in obtaining all such government approvals.


ARTICLE IV
OBLIGATIONS OF NSPCT AS EXCLUSIVE WHOLESALE DISTRIBUTOR IN THE
TERRITORY


4.1 Marketing and Distribution. NSPCT 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 fashion.


4.1(d) To diligently investigate or cause to be investigated all leads with
potential customers referred to it by NSHK or NSI, or their affiliates.


4.1(e) To permit NSHK to visit NSPCT and to visit NSPCT'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 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 NSPCT Operations. NSPCT 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. NSPCT further agrees to bear all costs and expenses it incurs in the negotiation, memorialization, execution and performance of all leases, rentals, equipment, salaries, ta ...