EXHIBIT 10.6
PURCHASE AND SALE AGREEMENT
BY AND BETWEEN
NU SKIN INTERNATIONAL, INC.
AND
NU SKIN HONG KONG, INC.
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS................................................ 1
1.1 "Agreement"................................................ 1
1.2 "Amended and Restated Distribution Agreement".............. 1
1.3 "AP Region"................................................ 2
1.4 "Closing Date"............................................. 2
1.5 "Existing Distribution Agreement".......................... 2
1.6 "Extended AP Region"....................................... 2
1.7 "NSAP"..................................................... 2
1.8 "Products"................................................. 2
1.9 "Sales Aids"............................................... 2
ARTICLE II PURCHASE AND SALE.......................................... 2
2.1 Grant of License........................................... 2
2.2 License Price.............................................. 2
2.3 Scope of Sale.............................................. 3
2.4 Representations and Warranties of NSI...................... 3
2.5 Limitations on Representations and Warranties.............. 3
ARTICLE III CONDITIONS TO CLOSING...................................... 3
3.1 Conditions to Obligations of NSI........................... 3
(a) License Price.......................................... 3
(b) Amended and Restated Distribution Agreement............ 3
(c) Indemnification Agreement.............................. 3
3.2 Conditions to Obligations of NSHK.......................... 4
(a) Representations and Warranties of NSI.................. 4
(b) Amended and Restated Distribution Agreement............ 4
(c) Indemnification Agreement.............................. 4
(d) Receipt for License Price.............................. 4
ARTICLE IV TERMINATION................................................ 4
4.1 Termination................................................ 4
4.2 Effects of Termination..................................... 4
ARTICLE V CONFIDENTIALITY............................................ 5
ARTICLE VI MISCELLANEOUS.............................................. 5
6.1 Assignment................................................. 5
6.2 Notices.................................................... 5
6.3 Waiver and Delay........................................... 6
6.4 Governing Law and Dispute Resolution....................... 6
6.5 Integrated Contract........................................ 6
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6.6 Modifications and Amendments............................... 7
6.7 Severability............................................... 7
6.8 Counterparts and Headings.................................. 7
6.9 Specific Performance....................................... 7
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This PURCHASE AND SALE AGREEMENT is made this___ day of November, 1996
between Nu Skin International, Inc., a corporation organized under the laws of
the State of Utah, U.S.A. (hereinafter "NSI"), and Nu Skin Hong Kong, Inc., a
corporation organized under the laws of the State of Utah, U.S.A. (hereinafter
"NSHK"). NSI and NSHK shall hereinafter be collectively referred to as the
"Parties."
WITNESSETH
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WHEREAS, NSI owns the exclusive right to distribute Products and Sales Aids
(each as hereinafter defined) in the countries of Japan, the Republic of Korea
(Korea), the Republic of China (Taiwan) and Hong Kong (including Macau),
(hereinafter the "AP Region"), which right it licenses to NSHK pursuant to a
Regional Distribution Agreement dated October 1, 1993 and amended on July 12,
1994 (the "Existing Distribution Agreement"); and
WHEREAS, NSI also owns the exclusive right to distribute Products and Sales Aids
in the countries of Thailand, the Philippines, Malaysia, the People's Republic
of China (China), Indonesia, Vietnam and Singapore (hereinafter the "Extended AP
Region"); and
WHEREAS, NSI is willing to sell, and NSHK is willing to purchase, said exclusive
rights to distribute Products and Sales Aids in the Extended AP Region;
NOW THEREFORE, in consideration of the premises, the mutual covenants herein
contained and other good and valuable consideration, the Parties hereto agree as
follows:
ARTICLE I
DEFINITIONS
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As used in this Agreement, the following terms shall have the following
meanings (such meanings to be equally applicable to the singular and plural
forms of the terms defined):
1.1 "AGREEMENT" shall mean this Purchase and Sale Agreement between NSI
and NSHK, as the same may be modified, amended or supplemented from time to
time.
1.2 "AMENDED AND RESTATED DISTRIBUTION AGREEMENT" shall mean the Existing
Distribution Agreement, as amended and restated to reflect the increase in
territory for which
NSHK is granted exclusive rights to distribute Products and Sales Aids to
include the Extended AP Region and to incorporate such other matters to which
the Parties may agree.
1.3 "AP REGION" shall have the meaning assigned thereto in the recitals to
this Agreement.
1.4 "CLOSING DATE" shall mean such date as shall be mutually agreed upon
by NSI and NSHK following the satisfaction or waiver of all conditions to the
obligations of the parties set forth in Article III.
1.5 "EXISTING DISTRIBUTION AGREEMENT" shall have the meaning assigned
thereto in the recitals to this Agreement.
1.6 "EXTENDED AP REGION" shall have the meaning assigned thereto in the
recitals to this Agreement.
1.7 "NSAP" shall mean Nu Skin Asia Pacific, Inc., a Delaware corporation
and the sole stockholder of NSHK.
1.8 "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.
1.9 "SALES AIDS" shall mean materials, in whatever form, designed,
approved and produced by NSI to assist in the marketing of the Products.
ARTICLE II
PURCHASE AND SALE
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2.1 GRANT OF LICENSE. Upon the terms and subject to the conditions
contained in this Agreement, on the Closing Date, NSI shall grant to NSHK, and
NSHK shall accept from NSI, a license (the "License") to act as the exclusive
distributor of products and Sales Aids in the Extended AP Region, on the terms
and conditions, for the term and together with the associated rights and
obligations as set forth in the Amended and Restated Distribution Agreement.
2.2 LICENSE PRICE. NSHK hereby agrees to pay to NSI, and NSI agrees to
accept as payment and consideration for the License, the amount of TWENTY-FIVE
MILLION DOLLARS ($25,000,000) which consists of a $5 million cash payment on the
Closing Date (the "Initial Cash Payment"), a $10 million payment pursuant to a
short-term note due on January 15, 1997 (the "Short Term Note") and a $10
million payment pursuant to a long-term note due on January 15, 1998 (the "Long
Term Note").
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2.3 SCOPE OF SALE. The Parties further understand and agree that by this
grant and acceptance NSHK does not acquire any claim to, or interest in, NSI's
network of independent distributors, distributor lists, sales compensation plan,
copyrights, trademarks, associated know-how, or any other right or interest
owned by NSI and/or which NSI licenses to NSHK, Nu Skin Japan Company, Limited,
Nu Skin Taiwan, Inc. and Nu Skin Korea, Inc. under its Licensing and Sales
Agreements and Trademark/Tradename License Agreement with such entities.
2.4 REPRESENTATIONS AND WARRANTIES OF NSI. As an inducement to NSHK to
enter into this Agreement, NSI hereby represents and warrants to NSHK that it
has not granted, sold conveyed or otherwise transferred to any party any rights
to distribute Products or Sales Aids in the Extended AP Region, except to NSHK
as contemplated by this Agreement and the Amended and Restated Distribution
Agreement. The representations and warranties of NSI contained in this Section
2.4 shall survive the termination of the Agreement.
2.5 LIMITATIONS ON REPRESENTATIONS AND WARRANTIES. Nothing in this
Agreement shall be construed as a representation or warranty by NSI as to the
ability of NSHK to operate in or to otherwise exercise its rights under this
Agreement or the Amended and Restated Distribution Agreement in any country in
the Extended AP Region, pursuant to the laws, regulations and ordinances of such
country.
ARTICLE III
CONDITIONS TO CLOSING
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3.1 CONDITIONS TO OBLIGATIONS OF NSI. The obligation of NSI to consummate
the transactions contemplated by this Agreement shall be subject to the
fulfillment, at or prior to the Closing Date, of each of the following
conditions:
(a) License Price. NSHK shall have paid, or caused to be paid, the
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Initial Cash Payment and shall have executed and delivered the Short Term
Note and the Long Term Note, each of which shall be in form and substance
satisfactory to NSI.
(b) Amended and Restated Distribution Agreement. NSHK shall have
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entered into the Amended and Restated Distribution Agreement with NSI,
which shall be in form and substance satisfactory to NSI.
(c) Indemnification Agreement. NSA shall have entered into a mutual
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indemnification agreement with NSI, which shall be in form in substance
satisfactory NSI.
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3.2 CONDITIONS TO OBLIGATIONS OF NSHK. The obligations of NSHK to
consummate the transactions contemplated by this Agreement shall be subject to
the fulfillment, at or prior to the Closing Date, of each of the following
conditions:
(a) Representations and Warranties of NSI. The representations and
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warranties of NSI contained in Section 2.4 of this Agreement shall have
been true and correct when made and shall be true and correct as of the
Closing Date with the same force and effect as if made as of the Closing
Date.
(b) Amended and Restated Distribution Agreement. NSI shall have
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entered into the Amended and Restated Distribution Agreement with NSHK,
which shall be in form and substance satisfactory to NSHK.
(c) Indemnification Agreement. NSI shall have entered into a mutual
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indemnification agreement with NSA, which shall be in form and substance
satisfactory to NSHK.
(d) Receipt for License Price. NSHK shall have received a receipt
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from NSI for payment of the Initial Cash Payment.
ARTICLE IV
TERMINATION
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4.1 TERMINATION. This Agreement may be terminated at any time prior to
the Closing Date:
(a) by either NSI or NSHK if an initial public offering by NSA of
shares of its Class A Common Stock shall not have occurred by December 31,
1996; or
(b) by the mutual written consent of NSI and NSHK.
4.2 EFFECTS OF TERMINATION. In the event of termination of this Agreement
as provided in Section 4.1, this Agreement shall forthwith become void and there
shall be no liability on the part of either party hereto except (a) as set forth
in Section 2.4 and Article V and (b) that nothing in this Section 4.2 shall
relieve a Party from liability for any breach of this Agreement.
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ARTICLE V
CONFIDENTIALITY
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All trade secrets, proprietary technology, know-how or other non-public or
proprietary business or technical information owned or used by NSI or NSHK and
supplied to or acquired by the other whether in oral or documentary form (the
"Confidential Information") shall be supplied and acquired in confidence and
shall be solely for the use of the receiving party pursuant to this Agreement
and such party shall keep the Confidential Information confidential and shall
not disclose the same, at any time during the term of this Agreement or after
its termination, except to its employees, or to its affiliates, or its
affiliates' employees for the purposes of its business in accordance with this
Agreement and except as may be required by law; provided that if the receiving
party determines that a disclosure is required by law, the receiving party shall
notify the disclosing party in order to give the disclosing party an opportunity
to seek an injunction or otherwise attempt to keep the Confidential Information
confidential. The receiving party shall, at the request of the disclosing party,
destroy or return the Confidential Information without retaining copies if, as
and when this Agreement is terminated or expires. For purposes of this
Agreement, the term "Confidential Information" shall not include information or
documents that (i) become generally available to the public other than as a
result of a disclosure by the receiving party, (ii) was otherwise lawfully
available to the receiving party, or (iii) was generated independently by the
receiving party. The provisions of this Article shall survive termination of
this Agreement.
ARTICLE VI
MISCELLANEOUS
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6.1 ASSIGNMENT. This Agreement shall be binding on and inure to the
benefit of the heirs, successors, assigns and beneficiaries of the Parties;
provided that neither Party may assign this Agreement or any rights or
obligations hereunder, whether by operation of law or otherwise, without the
prior written consent of the other Party's authorized representative. Any such
attempted assignment, without the written consent provided herein, shall be void
and unenforceable.
6.2 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, postage prepaid,
from any post office addressed as follows:
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If to NSI: Attn: Chief Operating Officer
Nu Skin International, Inc.
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▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to NSHK: Attn: Regional Legal Counsel
Nu Skin Hong Kong, Inc.
25th ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
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.
6.3 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 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.
6.4 GOVERNING LAW AND DISPUTE RESOLUTION. This Agreement shall be
governed by and construed in accordance with the laws of the State of Utah,
applicable to contracts made and to be wholly performed within such State. Any
dispute arising out of this Agreement, if not resolved by mutual agreement of
NSI and NSHK within 30 days after written notice of such dispute is given by
NSHK or NSI, as the case may be, shall be resolved through arbitration with the
Utah office and division of the American Arbitration Association ("AAA"). If the
dispute is not resolved within such 30-day period, the Parties shall petition
the AAA to promptly appoint a competent, disinterested person to act as such
arbitrator. Within 30 days after the designation or appointment of such
arbitrator, such arbitrator shall be required to commence the arbitration
proceeding in the state of Utah at a time and place to be fixed by the
arbitrator, who shall so notify NSI and NSHK. Such arbitration proceeding shall
be conducted in accordance with the applicable rules and procedures of the AAA,
and/or as otherwise may be agreed by NSI and NSHK. The decision of the
arbitrator shall be final and binding upon NSI and NSHK and may be enforced in
any court of competent jurisdiction. The expenses and costs of such arbitration
shall be divided and borne equally by NSI and NSHK; provided, that each of NSI
and NSHK shall pay all fees and expenses incurred by it in presenting or
defending against such claim, right or cause of action.
6.5 INTEGRATED CONTRACT. This Agreement constitutes the entire agreement
between the Parties relating to the subject matter hereof and supersedes all
prior or
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contemporaneous negotiations, representations, agreements and understandings
(both oral and written) of the Parties.
6.6 MODIFICATIONS AND AMENDMENTS. No supplement, modification or
amendment of this Agreement shall be binding unless it is in writing and
executed by both of the Parties.
6.7 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 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.
6.8 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.
6.9 SPECIFIC PERFORMANCE. The parties acknowledge that it will be
impossible to measure in money the damages to the parties of any failure to
comply with any of the restrictions or obligations imposed by this Agreement,
that every such restriction and obligation is material, an that in the event of
any such failure, the parties will not have an adequate remedy at law or in
damages. Therefore, each party consents to the issuance of an injunction or the
enforcement of other equitable remedies against it at the suit of an aggrieved
party, to compel performance of all the terms of this Agreement, and waives any
defenses to an equitable remedy, including without limitation the defenses of
failure of consideration, breach of any other provision of this Agreement, and
availability of relief in damages.
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed
by their authorized representatives.
NU SKIN INTERNATIONAL, INC. NU SKIN HONG KONG, INC.
_________________________ _________________________
Name: Name:
Title: Title:
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