EX-10.46
CONTRIBUTION AND DISTRIBUTION AGREEMENT
THIS CONTRIBUTION AND DISTRIBUTION AGREEMENT (the "Agreement") is made
and entered into effective as of December 31, 1997 (the "Effective Date"), by
and between NU SKIN INTERNATIONAL, INC., a Utah corporation ("NSI"), and 252nd
Shelf Corporation, a recently formed Delaware corporation and a wholly-owned
subsidiary of NSI, which is in the process of changing its name to Nu Skin USA,
Inc. ("NUSA").
Recitals
A. NSI has determined it is appropriate and desirable to separate NSI
into two companies by contributing certain assets to, and providing for an
assumption of certain liabilities by, NUSA, and by distributing to the
stockholders of NSI all of the outstanding shares of NUSA. These transactions
are are intended to qualify as a reorganization and distribution under Sections
368(a)(1)(D) and 355 of the Code (as defined).
B. The assets to be contributed to NUSA are to include those associated
with the sale and distribution of Nu Skin products within the United States.
C. The separation and contribution described above are intended to
permit NSI to combine its global business operations (i.e., distribution rights
for areas outside of the United States) with Nu Skin Asia Pacific, Inc.
("NSAP"). NSI understands that NSAP will not consider an acquisition of NSI's
United States business operations, so the transactions described herein are
necessary to facilitate a possible sale of NSI's global business operations to
NSAP. It is anticipated that the acquisition by NSAP, if consummated, will be
structured as a transfer of all outstanding shares of NSI and the other Acquired
Entities (as defined) to NSAP (the "Stock Acquisitions"), intended to qualify,
at least in part, as a tax-free exchange under Section 351 of the Code.
D. NSI and NUSA have determined that it is appropriate and desirable to
set forth in this Agreement the agreement and understanding between the parties
with respect to the subject matter hereof, to provide for the corporate
transactions required to effect the above-referenced separation and
reorganization, and to establish the terms of such contribution, assumption and
distribution.
Agreement
NOW, THEREFORE, in consideration of the mutual agreements, provisions
and covenants contained in this Agreement, the parties hereby agree as follows:
ARTICLE I.
DEFINITIONS
Section 1.1 General Definitions. Capitalized terms as used in this
Agreement and not defined elsewhere herein shall have the following meanings
(such meanings to be equally applicable to both the singular and plural forms of
the terms defined):
"Acquired Entities" shall mean NSI and all other affiliated Nu Skin
entities around the world, including Nu Skin International Management Group,
Inc., but excluding NUSA, Scrub Oak, Ltd., Aspen Investments, Ltd. and the Nu
Skin affiliates operating in Canada, Mexico, Guatemala and Puerto Rico.
"Assumption" shall mean the assumption by NUSA of the NUSA Assumed
Liabilities.
"Assumption of Liabilities and Indemnification Agreement" or
"Indemnification Agreement" shall mean the Assumption of Liabilities and
Indemnification Agreement in the form attached hereto as Exhibit A, to be
executed by NSI and NUSA concurrently with the execution of this Agreement and
dated as of the Effective Date.
"Benefits Agreement" shall mean the Employee Benefits Allocation
Agreement in the form attached hereto as Exhibit B to be executed by NSI and
NUSA and dated as of the Effective Date. The Benefits Agreement relates to the
NUSA Employees who are to become employees of NUSA in connection wtih the
Contribution, Assumption and Distribution, and NUSA's obligations with respect
to the accrued and ongoing benefits payable to the NUSA employees.
"Code" shall mean the Internal Revenue Code of 1986, as amended, or any
successor legislation.
"Contribution" shall mean NSI's contribution of the NUSA Acquired
Assets to NUSA.
"Conveyancing and Assumption Instruments" shall mean, collectively,
such instruments of transfer, assignment and assumption as may be mutually
agreed upon by NSI and NUSA to effect the transfer of the NUSA Acquired Assets
to NUSA and the assumption of the NUSA Assumed Liabilities by NUSA in the manner
contemplated by this Agreement and the other Transaction Documents.
"Distribution" shall mean the distribution of all NUSA Shares to the
NSI Stockholders as provided in Section 2.4 hereof.
"Effective Date" shall mean December 31, 1997.
"Intercompany Agreements" shall mean the Intercompany Agreements in the
form attached hereto as Exhibit C, to be executed by NSI, NUSA and certain
affiliated entities and dated as of the Effective Date. The Intercompany
Agreements relate to the provision of rights, licenses and services to NUSA in
connection with NUSA's conduct of the NUSA Acquired Business, including: access
to the NSI distribution network; management services to be provided to NUSA;
licensing of the right to use the Nu Skin trademarks and trade names; and
agreements relating to licensing, sales, and pricing of products to be offered
by NUSA through the NUSA Acquired Business.
"Lease Agreement" shall mean the Lease Agreement in the form attached
hereto as Exhibit D, to be executed by NSI and NUSA and certain affiliated
entities and dated as of the Effective Date.
"Liabilities" of any party hereto shall mean all losses, debts,
liabilities, damages, obligations, claims, demands, judgments, or settlements of
any nature or kind owed by such party, whether accrued or contingent, and
including all penalties, costs and expenses (legal, accounting or otherwise)
associated therewith.
"NSAP" shall mean Nu Skin Asia Pacific, Inc., a Delaware corporation.
"NSI Board" shall mean the Board of Directors of NSI.
"NSI Common Stock" or "NSI Shares" shall mean the 1,000,000 currently
outstanding shares of NSI Common Stock, $0.01 par value per share.
"NSI Continuing Business" shall mean the business to be conducted by
NSI immediately after giving effect to the Distribution, utilizing the NSI
Retained Assets, and including: the business of marketing and distributing of Nu
Skin products; managing and licensing the Nu Skin Global Compensation Plan;
licensing of the right to use the Nu Skin trademarks and trade names, products
and distributor lists; providing management services to local Nu Skin entities;
developing new formulas and ingredients for Nu Skin products; and all other
businesses conducted by NSI prior to the Effective Date, other than the NUSA
Acquired Business.
"NSI Employees" shall mean all individuals who immediately prior to the
Effective Date were employed by NSI and who, after giving effect to the
Contribution, Assumption and Distribution, are intended to remain employed by
NSI or in the NSI Continuing Business.
"NSI Retained Assets" shall mean, collectively, all assets of NSI,
other than the NUSA Acquired Assets.
"NSI Retained Liabilities" shall mean each of the Liabilities of NSI,
other than the NUSA Assumed Liabilities, all as further described in the
Assumption of Liabilities and Indemnification Agreement.
"NSI Stockholders" shall mean ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇, R. ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇ ▇.
▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇ and ▇▇▇▇▇ ▇. Halls.
"NUSA Acquired Assets" shall mean, collectively, those assets of NSI
which are to be transferred to and acquired by NUSA pursuant to the terms of
this Agreement, as identified in Exhibit E attached hereto.
"NUSA Acquired Business" shall mean the business to be conducted by
NUSA immediately after giving effect to the Contribution, Assumption and
Distribution, utilizing the NUSA Acquired Assets, including the marketing and
distribution of Nu Skin products in the United States as permitted by the
Intercompany Agreements.
"NUSA Assumed Liabilities" shall mean each of the Liabilities of NSI
that are to be assumed by NUSA as of the Effective Date, including NUSA's
portion of Liabilities that will be jointly assumed by NSI and NUSA, all as
provided in the Assumption of Liabilities and Indemnification Agreement.
"NUSA Board" shall mean the Board of Directors of NUSA.
"NUSA Common Stock" or "NUSA Shares" shall mean the ten (10) currently
outstanding shares of NUSA Common Stock, $100 par value per share. Upon the
filing of the NUSA Restated Certificate with the Delaware Secretary of State, a
100,000 for 1 stock split will be implemented, thereby increasing the number of
NUSA Shares outstanding to 1,000,000.
"NUSA Employees" shall mean all individuals who immediately prior to
the Effective Date were employed by NSI and who, after giving effect to the
Contribution, Assumption and Distribution, are intended to be employed by NUSA,
as referenced in the Benefits Agreement.
"NUSA Restated Certificate" shall mean the Restated Certificate of
Incorporation of NUSA, in the form attached hereto as Exhibit F.
"NUSA Stockholders" shall, immediately after giving effect to the
Distribution, mean ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, R.
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇
and ▇▇▇▇▇ ▇. Halls, and any permitted designees thereof.
"Stock Acquisitions" has the meaning set forth in the Recitals to this
Agreement.
"Tax Sharing and Indemnification Agreement" shall mean the Tax Sharing
and Indemnification Agreement to be executed by NSI and NUSA concurrently with
the execution of this Agreement, in the form attached hereto as Exhibit G.
"Transaction Documents" shall mean this Agreement, the Benefits
Agreement, the Conveyancing and Assumption Instruments, the Assumption of
Liabilities and Indemnification Agreement, the Intercompany Agreements, the
Lease Agreement and the Tax Sharing and Indemnification Agreement.
Section 1.2 Exhibits, Etc. References to an "Exhibit" or to a
"Schedule" are, unless otherwise specified, to one of the Exhibits or Schedules
attached to this Agreement, and references to a "Section" are, unless otherwise
specified, to one of the Sections of this Agreement.
ARTICLE II.
CONTRIBUTION, ASSUMPTION, DISTRIBUTION AND RELATED TRANSACTIONS
Section 2.1 General Description of Transactions.
(a) Pursuant to the terms of this Agreement, the Contribution,
Assumption and Distribution will be consummated as of the Effective
Date, subject to such actions as are to be taken after the Effective
Date, as provided herein. Pursuant to the terms and conditions of this
Agreement, NSI's entire right, title and interest in and to the NUSA
Acquired Assets will be transferred to NUSA, NUSA will assume the NUSA
Assumed Liabilities and will indemnify NSI from such Liabilities, and
the NUSA Shares will be distributed to the NSI Stockholders. These
transactions will result in the separation of NSI's current assets and
business into two entities, with NSI continuing to hold the NSI
Retained Assets and to conduct the NSI Continuing Business, and with
NUSA acquiring the NUSA Acquired Assets, assuming the NUSA Assumed
Liabilities, and being entitled to conduct the NUSA Acquired Business.
The reorganization and separation contemplated by this Agreement as
described above (the "Reorganization") are being effected to facilitate
the potential Stock Acquisitions, in a transaction intended to qualify,
in part, for United States federal income tax purposes as a tax-free
exchange under Section 351 of the Code, while retaining the NUSA
Acquired Business for the benefit of the NSI Stockholders. The
Reorganization is intended to qualify as a reorganization and
disposition within the meaning of Sections 368(a)(1)(D) and 355 of the
Code.
(b) To facilitate the transactions described above, each of
NSI and NUSA will, concurrently with the execution of this Agreement
(or promptly thereafter, as requested by the other party), execute and
deliver all of the other Transaction Documents (and/or, where
applicable, cause its respective subsidiaries or affiliates to do so).
Section 2.2 The Contribution.
(a) Concurrently with the execution of this Agreement, NSI
agrees to, and does hereby, transfer, assign, and contribute to the
capital of NUSA, NSI's entire right, title and interest in and to all
of the NUSA Acquired Assets, subject to the NUSA Assumed Liabilities.
(b) Concurrently with the execution of this Agreement, NSI
shall deliver, or undertake to deliver, to NUSA possession of all of
the NUSA Acquired Assets.
(c) To the extent that NSI has established and maintains
separate cash management systems, and maintains separate bank accounts,
lock boxes, cash balances and other investments with respect to the NSI
Continuing Business and the NUSA Acquired Business, from and after the
date hereof, NSI shall be entitled to all such accounts, lock boxes,
balances and investments related to the NSI Continuing Business and
NUSA shall be entitled to all such accounts, lock boxes, balances and
investments related to the NUSA Acquired Business. Following the date
hereof, (i) NSI shall, and shall cause its affiliates to, remit to
NUSA, no less frequently than weekly, any amounts (net of returned
checks and similar items) received by any of them on or after the
Distribution which constitute NUSA Acquired Assets and (ii) NUSA shall,
and shall cause its affiliates to, remit to NSI, no less frequently
than weekly, any amounts (net of returned checks and similar items)
received by any of them on or after the date hereof which constitute
NSI Retained Assets.
Section 2.3 The Assumption and Related Matters.
(a) In consideration for the transfer to NUSA of the NUSA
Acquired Assets, NUSA agrees to, and does hereby, assume the NUSA
Assumed Liabilities and indemnify NSI from obligations relating
thereto, in accordance with the terms of this Agreement and the
Assumption of Liabilities and Indemnification Agreement.
(b) NSI and NUSA shall use their reasonable best efforts to
cause all rights and obligations of NSI in respect of the NUSA Assumed
Liabilities to be assigned to and assumed by NUSA effective as of the
Effective Date.
(c) From and after the Effective Date, NSI and NUSA shall use
their reasonable best efforts to obtain from each holder or obligee of
such NUSA Assumed Liabilities a full release of NSI from any liability
or obligation in respect of such NUSA Assumed Liabilities, effective as
of the date hereof or as of the earliest possible date.
(d) Each of NSI and NUSA shall cooperate with the other and
execute such instruments and documents as may be necessary or
reasonably requested by the other party in connection with the
assignment, assumption and release of any NUSA Assumed liabilities
contemplated by this Section 2.3.
(e) If and to the extent that NSI and NUSA are unable to
obtain the assignment, assumption and release of any NUSA Assumed
Liabilities as contemplated by this Section 2.3, as between NSI and
NUSA, effective as of the Effectuve Date, NUSA agrees to pay and
perform as and when due all liabilities and obligations of NSI in
respect of such NUSA Assumed Liabilities, whether arising prior to, on
or after the date hereof, and, in the event that for any reason NUSA
does not make any such payment or perform any such obligation as and
when due or NSI makes any such payment or performs any such obligation,
NUSA shall promptly reimburse NSI for all costs and expenses incurred
by NSI in connection therewith.
(f) Concurrently with the execution of this Agreement, the Tax
Sharing and Indemnification Agreement will be executed by the parties
named therein in order to implement an allocation of Liabilities for
Taxes as provided therein.
Section 2.4 Distribution of NUSA Shares. Upon the Effective Date, and
concurrently with the Contribution and Assumption, the NSI Stockholders shall be
entitled to a pro-rata distribution of the NUSA Shares, in accordance with the
number of NSI Shares held by each of them. On the Effective Date, NSI shall
deliver to ▇▇▇▇▇▇ ▇. ▇▇▇▇ or ▇▇▇▇▇ ▇. Halls, as the representative of the NSI
Stockholders, the certificate representing the NUSA Shares. NUSA agrees to
promptly file the NUSA Restated Certificate with the Delaware Secretary of
State. The filing of the NUSA Restated Certificate will effect a 100,000 for 1
split of the outstanding NUSA Shares. Promptly upon such filing, and against the
surrender and cancellation of the originally issued certificate representing the
pre-split NUSA Shares, NUSA will deliver to each of the NSI Stockholders a
certificate representing such NSI Stockholder's proportionate share of the
post-split NUSA Common Stock, based on the number of NSI Shares held by such NSI
Stockholder. This Distribution will result in one (1) post-split share of NUSA
Common Stock being distributed with respect to each outstanding share of NSI
Common Stock, as reflected on Exhibit H. As a condition to the delivery of
certificates to the NSI Stockholders representing the NUSA Common Stock to which
they are entitled as a result of the Distribution, NUSA may require that the NSI
Stockholders execute representations regarding the restricted status of the
shares being distributed, their investment intent, and otherwise as reasonably
requested to establish that the Distribution is conducted in compliance with
applicable state and federal securities laws.
Section 2.5 Businesses to be Conducted.
(a) From and after the Effective Date, and after giving effect
to the Contribution, Assumption and Distribution, NUSA shall be
authorized to carry out and conduct the NUSA Acquired Business, in
accordance with the terms of the Intercompany Agreements and the Lease
Agreement.
(b) From and after the Effective Date, NSI shall continue to
conduct the NSI Continuing Business.
(c) Except as otherwise specifically provided herein or in any
of the Transaction Documents, neither party hereto shall be required to
conduct any particular business for any particular period of time, or
be restricted from engaging in any line of business in the future.
(d) As described in the Benefits Agreement, upon the Effective
Date the NUSA Employees shall become employees of NUSA, and NUSA will
assume all obligations arising from such employment relationship.
Section 2.6 Transfers Not Effectuated on Effective Date; Transfers
Deemed Effective as of the Effective Date. To the extent that any transfers
contemplated by this Article II shall not have been consummated on the Effective
Date, the parties shall cooperate to effectuate such transfers as promptly
following the Effective Date as shall be practicable. Nothing herein shall be
deemed to require the transfer of any assets which by their terms or operation
of law cannot be transferred; provided, however, that NSI shall cooperate with
NUSA to seek to obtain any necessary consents or approvals for the transfer of
all NUSA Acquired Assets contemplated to be transferred pursuant to this Article
II. In the event that the transfer of any NUSA Acquired Assets has not been
consummated, from and after the Effective Date, NSI, as the party retaining such
NUSA Acquired Assets shall hold such assets in trust for the use and benefit of
NUSA (at the expense of NUSA), and take such other action as may be reasonably
requested by NUSA, in order to place NUSA, insofar as is reasonably possible, in
the same position as would have existed had NSI's interests in such assets been
transferred to NUSA as contemplated hereby. As and when any such asset becomes
transferable, such transfer shall be effectuated forthwith. The parties agree
that, as of the Effective Date, NUSA shall be deemed to have acquired NSI's
entire rights, title and interests in and to all of the NUSA Acquired Assets,
together with all powers and privileges incident thereto and all duties,
obligations and responsibilities incident thereto, which NUSA is entitled to
acquire or required to assume pursuant to the terms of this Agreement.
Section 2.7 Further Actions to Facilitate Transactions.
(a) From and after the date hereof, each party hereto shall
execute all other documents and take all other actions as may be
reasonably requested by the other party to fully effect and confirm the
transfer and assignment of NSI's rights, title and interests in and to
the NUSA Acquired Assets to NUSA, to carry out and perform their
respective obligations under the Transaction Documents, and to effect
the transactions contemplated by the Transaction Documents. All such
actions shall be at the expense of the requesting party. As provided
elsewhere herein, the parties understand and acknowledge that the NUSA
Acquired Assets are being transferred to NUSA "as is, where is,"
without representation or warranty. Furthermore, NUSA shall bear the
economic and legal risk that any conveyances of such assets shall prove
to be insufficient or that NUSA's title to any such assets shall be
other than good and marketable and free from encumbrances.
(b) NUSA will promptly file the NUSA Restated Certificate with
the Delaware Secretary of State, to effect the change of NUSA's name to
NU Skin USA, Inc., to increase the number of shares NUSA is authorized
to issue, to include language limiting the liability of NUSA directors,
and to provide for a 100,000 for 1 stock split, all as reflected in
Exhibit F. As a result of such stock split, which will be implemented
effective upon the filing of the NUSA Restated Certificate, the number
of NUSA Shares outstanding will be increased to a total of 1,000,000,
thereby facilitating the pro-rata Distribution to NSI Stockholders as
described in Section 2.4 above. As a result of the Distribution, the
post-split NUSA Shares will be held by the NSI Stockholders as set
forth in Exhibit H.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.1 Representations of NSI. NSI hereby represents and warrants
to NUSA as follows:
(a) NSI has all requisite corporate power and authority to
execute and deliver this Agreement and perform its obligations
hereunder. The execution, delivery and performance of this Agreement
and the other Transaction Documents by NSI have been or will be duly
and validly approved or ratified by the requisite vote of the NSI Board
and NSI Shareholders, and authorized by all other necessary action on
the part of NSI. This Agreement has been duly and validly executed and
delivered by NSI, and is the valid and binding obligation of NSI,
enforceable against NSI in accordance with its terms, except as
enforceability may be affected by bankruptcy, insolvency, moratorium,
reorganization, fraudulent conveyance and other laws affecting the
rights of creditors generally, and by general equitable principles,
whether enforcement is sought in an action at law or in equity.
(b) No consent, approval or authorization of, or filing of any
certificate, notice, application, report or other document with, any
governmental authority or person is required on the part of NSI in
connection with the valid execution and delivery of this Agreement or
the consummation of the transactions contemplated hereby, except as
otherwise specifically referenced herein.
(c) The execution and delivery of this Agreement by NSI and
the performance by NSI of its obligations hereunder do not and will
not: (i) conflict with, violate, result in a breach of, or default
under NSI's Certificate of Incorporation or Bylaws; (ii) violate any
provision of any applicable laws, rules, regulations, or orders
applicable to NSI, the violation of which would be reasonably likely to
result in a material adverse effect on the business or financial
condition of NUSA, or (iii) conflict with, violate, result in a breach
of, constitute a default under (without regard to requirements of
notice, lapse of time or elections of any third parties, or any
combination thereof), or accelerate or permit the acceleration of a
material performance required by, any order, instrument or agreement to
which NSI is a party, the conflict, violation, breach, default or
acceleration of which would be reasonably likely to result in a
material adverse effect on the business or financial condition of NUSA.
(d) The NSI Shares constitute all of the issued and
outstanding securities of NSI, and the NSI Shares are held by the NSI
Stockholders in the amounts indicated on Exhibit H attached hereto.
(e) EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED IN ANY
TRANSACTION DOCUMENT, NSI'S RIGHT, TITLE AND INTEREST IN AND TO THE
NUSA ACQUIRED ASSETS ARE BEING TRANSFERRED TO NUSA HEREUNDER "AS IS,
WHERE IS," WITHOUT REPRESENTATION OR WARRANTY AS TO CONDITION,
MERCHANTABILITY, OR FITNESS FOR ANY PARTICULAR PURPOSE. EXCEPT AS
EXPRESSLY PROVIDED TO THE CONTRARY IN ANY OTHER TRANSACTION DOCUMENT,
NSI IS NOT REPRESENTING OR WARRANTING IN ANY WAY (A) AS TO THE VALUE OR
FREEDOM FROM ENCUMBRANCE OF, OR ANY OTHER MATTER CONCERNING, ANY OF THE
NUSA ACQUIRED ASSETS, OR (B) AS TO THE LEGAL SUFFICIENCY OF THE
EXECUTION, DELIVERY AND FILING OF THIS AGREEMENT OR ANY OTHER
TRANSACTION DOCUMENT TO CONVEY TITLE TO ANY PARTICULAR ASSET,
INCLUDING, WITHOUT LIMITATION, ANY CONVEYANCING AND ASSUMPTION
INSTRUMENTS.
Section 3.2 Representations of NUSA. NUSA hereby represents and
warrants to NSI as follows:
(a) NUSA has all requisite corporate power and authority to
execute and deliver this Agreement and perform its obligations
hereunder. The execution, delivery and performance of this Agreement
and the other Transaction Documents by NUSA have been or will be duly
and validly approved or authorized by the NUSA Board and authorized by
all other necessary action on the part of NUSA. This Agreement has been
duly and validly executed and delivered by NUSA, and is the valid and
binding obligation of NUSA, enforceable against NUSA in accordance with
its terms, except as enforceability may be affected by bankruptcy,
insolvency, moratorium, reorganization, fraudulent conveyance and other
laws affecting the rights of creditors generally, and by general
equitable principles, whether enforcement is sought in an action at law
or in equity.
(b) No consent, approval or authorization of, or filing of any
certificate, notice, application, report or other document with, any
governmental authority or person is required on the part of NUSA in
connection with the valid execution and delivery of this Agreement or
the consummation of the transactions contemplated hereby, except as
otherwise specifically referenced herein.
(c) The execution and delivery of this Agreement by NUSA and
the performance by NUSA of its obligations hereunder do not and will
not: (i) conflict with, violate, result in a breach of, or default
under NUSA's Certificate of Incorporation or Bylaws; (ii) violate any
provision of any applicable laws, rules, regulations, or orders
applicable to NUSA, the violation of which would be reasonably likely
to result in a material adverse effect on the business or financial
condition of NSI, or (iii) conflict with, violate, result in a breach
of, constitute a default under (without regard to requirements of
notice, lapse of time or elections of any third parties, or any
combination thereof), or accelerate or permit the acceleration of a
material performance required by, any order, instrument or agreement to
which NUSA is a party, the conflict, violation, breach, default or
acceleration of which would be reasonably likely to result in a
material adverse effect on the business or financial condition of NSI.
(d) The NUSA Shares constitute all of the issued and
outstanding securities of NUSA. Immediately prior to the Effective
Date, all of the NUSA Shares were held by NSI. Upon the filing of the
NUSA Restated Certificate, 1,000,000 NUSA shares will be issued and
outstanding.
ARTICLE IV
ACCESS TO INFORMATION AND SERVICES
Section 4.1 Provision of Corporate Records.
(a) As soon as practicable following the Effective Date, NSI
shall arrange for the delivery, at NUSA's cost, to NUSA of existing
corporate records in NSI's possession relating to the NUSA Acquired
Business, including all licenses, leases, agreements, litigation files
and filings with federal, state, local or foreign governments or
governmental or regulatory agencies or authorities, except to the
extent such items are already in the possession of NUSA or on premises
included in the NUSA Acquired Assets. Such records shall be the
property of NUSA, but shall be available to NSI for review and
duplication until NSI shall notify NUSA in writing that such records
are no longer of use to NSI. NSI may also retain copies of any of such
records relating to actions commenced against NSI. To the extent such
documents relate both to the NUSA Acquired Business and the NSI
Continuing Business, NSI shall deliver, at NUSA's cost, copies of such
documents to NUSA.
(b) The originals of any other documents containing
information with respect to NSI (including accounting, tax and
financial records) shall be retained by NSI. Copies of any such
documents shall be delivered to NUSA, at NUSA's request, in accordance
with paragraph (a) hereof. Costs of duplicating such documents shall be
allocated 50% to NUSA and 50% to NSI.
Section 4.2 Access to Information. From and after the Effective Date,
NSI shall afford to NUSA and its authorized accountants, counsel and other
designated representatives reasonable access and duplicating rights during
normal business hours to all records, books, contracts, instruments, computer
data and other data and information (collectively, `Information') within NSI's
possession and shall use reasonable efforts to give to NUSA and its authorized
accountants, counsel and other designated representatives access to persons or
firms possessing Information, insofar as such access is reasonably required by
NUSA and subject to appropriate restrictions for confidential Information.
Similarly, NUSA shall afford to NSI and its authorized accountants, counsel and
other designated representatives reasonable access and duplicating rights during
normal business hours to Information within NUSA's possession and shall use
reasonable efforts to give to NSI and its authorized accountants, counsel and
other designated representatives access to persons or firms possessing
Information, insofar as such access is reasonably required by NSI and subject to
appropriate restrictions for confidential Information. Information may be
requested under this Article IV for, without limitation, audit, accounting,
claims, litigation and tax purposes, as well as for purposes of fulfilling
disclosure and reporting obligations and for performing this Agreement and the
transactions contemplated hereby.
Section 4.3 Reimbursement. Except to the extent otherwise contemplated
herein or by any other Transaction Agreement, a party providing Information to
the other party under this Article IV shall be entitled to receive from the
recipient, upon the presentation of invoices therefor, payments for such
amounts, relating to supplies, disbursements and other direct out-of-pocket
expenses as may be reasonably incurred in providing such Information.
Section 4.4 Retention of Records. Except as otherwise required by law
or agreed to in writing, each of NSI and NUSA may destroy or otherwise dispose
of any of the Information at any time after the tenth anniversary of this
Agreement, provided that, prior to such destruction or disposal, (a) it shall
provide no less than 90 days' prior written notice to the other, specifying in
reasonable detail the Information proposed to be destroyed or disposed of, and
(b) if a recipient of such notice shall request in writing prior to the
scheduled date for such destruction or disposal that any of the requesting
party, the party proposing the destruction or disposal shall promptly arrange
for the delivery of such of the Information as was requested at the expense of
the party requesting such Information.
Section 4.5 Confidentiality. Each of NSI and NUSA shall hold, and shall
cause its directors, employees, agents, consultants and advisors to hold, in
strict confidence, all Information concerning the other in its possession or
furnished by the other or the other's representatives pursuant to this Agreement
(except to the extent that such Information has been (a) in the public domain
through no fault of such party or (b) lawfully acquired from other sources by
such party), and each party shall not release or disclose such Information to
any other person, except its auditors, attorneys, financial advisors, bankers
and other consultants and advisors, unless compelled to disclose by judicial or
administrative process or, as advised by its counsel, by other requirements of
law.
ARTICLE V
MISCELLANEOUS
Section 5.1 Complete Agreement; Construction. This Agreement, including
the Schedules and Exhibits and the other Transaction Documents and other
agreements and documents referred to herein, shall constitute the entire
agreement between the parties with respect to the subject matter hereof and
shall supersede all previous negotiations, commitments and writings with respect
to such subject matter.
Section 5.2 Survival of Agreements. Except as otherwise contemplated by
this Agreement, all covenants and agreements of the parties contained in this
Agreement shall survive the Effective Date.
Section 5.3 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Utah, without regard to
the principles of conflicts of law thereof.
Section 5.4 Dispute Resolution. In the event of any controversy or
dispute between the parties hereto arising out of or in connection with this
Agreement, the parties shall attempt, promptly and in good faith, to resolve any
such dispute. If the parties are unable to resolve any such dispute within a
reasonable time (not to exceed 90 days), all unresolved disputes arising under
this Agreement shall be submitted to mandatory and binding arbitration in Provo,
Utah under the then applicable rules of the America Arbitration Association or
any successor organization.
Section 5.5 Attorneys' Fees. The prevailing party in any arbitral
proceeding brought by one party against the other(s) and arising out of this
Agreement shall be entitled, in addition to any other rights and remedies it may
have, to reimbursement for its expenses, including its costs and attorneys' fees
and arbitral costs.
Section 5.6 Notices. All notices and other communications hereunder
shall be in writing and shall be delivered by hand or mailed by registered or
certified mail (return receipt requested) to the parties at the following
addresses (or at such other addresses for a party as shall be specified by like
notice) and shall be deemed given on the date on which such notice is received:
To NSI:
Nu Skin International, Inc.
▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Mr. M. ▇▇▇▇▇▇ ▇▇▇▇
To NUSA:
Nu Skin USA, Inc.
▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
With a copy to:
Holland & ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Section 5.7 Amendments. This Agreement may not be modified or amended
except by an agreement in writing signed by the parties.
Section 5.8 Successors and Assigns. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the parties
and their respective successors and permitted assigns.
Section 5.9 No Third Party Beneficiaries. This Agreement is solely for
the benefit of the parties hereto and shall not be deemed to confer upon third
parties any remedy, claim, right of reimbursement or other right.
Section 5.10 Titles and Headings. Titles and headings to sections
herein are inserted for the convenience of reference only and are not intended
to be a part of or to affect the meaning or interpretation of this Agreement.
Section 5.11 Exhibits and Schedules. The Exhibits and Schedules shall
be construed with and as an integral part of this Agreement to the same extent
as if the same had been set forth verbatim herein.
Section 5.12 Legal Enforceability. Any provision of this Agreement
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof. Any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction. Without prejudice
to any rights or remedies otherwise available to any party hereto, each party
hereto acknowledges that damages would be an inadequate remedy for any breach of
the provisions of this Agreement and agrees that the obligations of the parties
hereunder shall be specifically enforceable.
Section 5.13 Counterparts. This Agreement may be executed in
counterparts and each taken together shall constitute one and the same document.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the day and year first above written.
NU SKIN INTERNATIONAL, INC.
By:
Its:
NU SKIN USA, INC.
By:
Its:
EXHIBIT A
ASSUMPTION OF LIABILITIES AND INDEMNIFICATION AGREEMENT
EXHIBIT B
EMPLOYEE BENEFITS ALLOCATION AGREEMENT
EXHIBIT C
INTERCOMPANY AGREEMENTS
EXHIBIT D
LEASE AGREEMENT
EXHIBIT E
ASSETS TO BE ACQUIRED BY NUSA FROM NSI
Estimated
Amount
----------
1. All cash, except $2,750,000 which will be retained
to pay interest on the S-Notes 38,518,015
2. Related party receivables 1,381,054
3. Amounts due from employees 377,206
4. Interest receivable 119,689
5. Other receivables 84,911
6. Inventory 2,042,251
7. Investment in Aspen partnership 540,921
8. Investment in Scrub Oak partnership 344,514
9. 679,000 shares of NSAP Stock valued at $18.25 per share
as of 12/31/97 12,391,872
10. Investment in Mountain Pictures venture
(▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇) 75,000
11. Investment in Global Airwaves venture
(▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇) 275,000
12. Note receivable from Scrub Oak 5,128,666
13. Note receivable from ▇▇▇▇▇ ▇▇▇▇▇ 100,000
14. Other Notes 159,523
----------
Total Assets to be transferred to Nu Skin USA 61,538,622
==========
Note: This list reflects assets recorded in the financial records at historical
cost. A copy of the financial statements reflecting these assets is attached
hereto as Schedule E-1. NUSA will also obtain the rights and licenses required
to carry out the NUSA Acquired Business, pursuant to the terms of the
Intercompany Agreements.
EXHIBIT F
NUSA RESTATED CERTIFICATE OF INCORPORATION
EXHIBIT G
TAX SHARING AND INDEMNIFICATION AGREEMENT
EXHIBIT H
NSI SHAREHOLDER LISTING
NAME NUMBER OF NSI PERCENTAGE NUMBER OF POST-SPLIT
SHARES HELD INTEREST NUSA SHARES TO BE ISSUED
IN DISTRIBUTION
------------- ---------- -------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇ 303,334 30.3334 303,334
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ 253,333 25.3333 253,333
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ 141,667 14.1667 141,667
▇▇▇▇▇ ▇▇▇▇▇▇ 70,833 7.0833 70,833
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ 70,833 7.0833 70,833
▇▇▇▇▇▇ ▇. ▇▇▇▇ 50,000 5.0000 50,000
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 50,000 5.0000 50,000
▇▇▇▇ ▇. ▇▇▇▇▇ 50,000 5.0000 50,000
▇▇▇▇▇ ▇. Halls 10,000 1.0000 10,000
------------- ---------- -------------------------
TOTALS 1,000,000 100% 1,000,000