NSE 2002 10-K Amend 1 to Membership Interest Purchase Agree. and Mutual Release of Claims






AMENDMENT NO. 1

TO


MEMBERSHIP INTEREST PURCHASE AGREEMENT


AND


MUTUAL RELEASE OF CLAIMS


     This Amendment No. 1 to Membership Interest
Purchase Agreement and Mutual Release of Claims (the "Amendment and Release
") is entered into effective as of November 30, 2002, between Nu Skin Enterprises,
Inc. (the "Buyer"), and Frank L. Davis, Rogan Taylor, Tom Felt, David L.
Mitton, Daniel P. Wheeler, Kevin J. Sutterfield and Ronald Bassett, each individually a
"Seller" and together the "Sellers." 


RECITALS


     A.  
     The Sellers and the Buyer
previously entered into the Membership Interest Purchase Agreement dated as of
April 19, 2002 (the “Agreement”) pursuant to which the Sellers
sold all of the outstanding limited liability company membership interests
(“Company Shares”) of First Harvest International, LLC, a Utah
limited liability company (the “Company”) to Buyer. 


     B.   
    Following the execution of the
Agreement, there has arisen certain, including the final closing balance sheet
adjustments and the alleged lack of disclosure related to an investigation by the
Division of Consumer Protection of the State of Utah concerning the Company (the
“Utah Investigation”). 


     C.
       The Buyer and Sellers desire to amend
the Agreement to resolve such disputes and grant a release of claims. 


AMENDMENT


     Now, therefore, in consideration
of the premises and the mutual promises herein made contained, the Parties agree
as follows. 


     1.  
   Amendment to Royalty. The Agreement
parties hereby agree to amend the Agreement to reduce the maximum royalty payments that may be made
from $25 million to $17.5 million. Consequently, Section 2.6.3 is hereby amended to
read in its entirety as follows: 


	 	     “2.6.3.
Royalty Offset and Termination. The Royalty is subject to being offset as
provided in Section 6.7 below. The Buyer will not be obligated to pay any
Royalty after the earlier of (i) the end of a calendar year ending after 2002,
in which the Company generates less than $5,000,000 in sales of NTW Products, or
(ii) once cumulative Royalty payments paid by the Buyer to the Sellers exceed
$17,500,000. Notwithstanding the foregoing, if the Royalty obligation terminates
pursuant to clause (i) of this Section 2.6, Buyer’s obligation to pay the
Royalty will recommence if within either of the two calendar years following
such termination the Company generates more than $10,000,000 in sales of NTW









Amendment No. 1
 Page 1 







	 	
Products. If, after recommencement of the Royalty obligation, the Company
generates in any calendar year after such recommencement less than $5,000,000 in
sales of NTW Products, the Buyer’s obligation to pay the Royalty will
terminate and the Royalty will not under any circumstances recommence
thereafter. The Buyer’s obligation to pay the Royalty will in any event
terminate pursuant to Clause (ii) of this Section 2.6.3.” 







     2. Closing Date Balance
Sheet. The Closing Balance Sheet as attached hereto as Exhibit A is hereby
accepted and approved by the Buyer and each of the Sellers as the final Closing
Date Balance Sheet. Based on such Closing Date Balance Sheet the net purchase
price to be paid to the Sellers in accordance with the provisions of Section 2
shall be as set forth below: 




	Initial Valuation	 	$  3,500,000	 	 	 
	 	 	 	 	 	 
	Less:	 	($  1,861,721	)	Total Liabilities as of the Closing Date	 
	 	 	 	 	 	 
	 	 	($    606,080	)	Closing Balance Sheet Adjustment

(the amount by which $825,000 exceeds the book value of the Company’s current assets and those assets
included on the Company’s Audited Closing Date Balance Sheet
under the classifications Property, Equipment, Furniture and
Fixtures, Computer Equipment, and Building Improvements as
reflected on the Audited Closing Date Balance Sheet net of
depreciation)
	 
	 	 	 	 	 	 
	Final Purchase Price	 	$  1,032,199	 
	 	 	 	 	 	 




Buyer agrees to distributor and Sellers hereby instruct Buyers to
distribute the purchase price as follows: 



	To Equity Labs:	 	$  144,696	 
	 	 	 	 
	To Kevin Sutterfield, Trust Account	 
	For Attorneys fees:	 	$      8,000	 
	 	 	 	 
	Balance to be paid as herein	 
	Provided:	 	$  879,503	 







The Buyer and Sellers hereby confirm and agree to the Final
Purchase Price as set forth above. The Balance of the Final Purchase Price
 shall be allocated among the Sellers in accordance
with the provisions of the Agreement. The Sellers may elect to take the payment
in cash or shares of the Class A Common Stock of the Company as originally
contemplated by the Agreement. If the Seller elects to take shares, the Seller
must sign the investment representation letter attached hereto as Exhibit B.
Buyer shall deliver



Amendment No. 1
 Page 2 









the purchase price to each seller within five business days after
receipt of each Seller’s election as to whether to take cash or stock. 


     3.    Release of Claims.


	 	     (a)
    
Definitions. For purposes of this Amendment and Release, the following terms shall have the meanings set forth: 








	 	     “Affiliate”
means any person (as such term is defined in Rule 144 under the Securities Act
of 1933, as amended) that directly, or indirectly through one or more
intermediaries, controls, is controlled by, or is under common control with
another person. 






	 	     “Claims”
means any and all claims, demands, causes of actions, controversies, offsets,
obligations, losses, damages, expenses (including attorneys’ fees) and
liabilities of every kind and character whatsoever, whether at law or in equity,
whether known or unknown. 









	 	     “NSE
Parties” means NSE, the NSE Related Persons and each of their
respective predecessors, assigns, successors and heirs. 






	 	     “NSE
Related Persons” means the Company and the other Affiliates of NSE and
the directors, officers, agents, employees, representatives and stockholders of
NSE, the Company and the other Affiliates of NSE. 






	 	     (b)
Seller Release. In consideration of (i) the full payments to be made by
NSE as set forth in Section 2 of this Amendment and Release, (ii) the release of
Claims by NSE set forth in Section 3(c) below, and (iv) NSE’s covenant not
to sue set forth in Section 4(b) below, each of the Sellers does hereby fully
and forever remise, release and discharge each of the NSE Parties (and their
respective attorneys and accountants) from any and all Claims that each Seller
may have against any of the NSE Parties up to and including the date of this
Agreement, including, without limitation, any and all Claims in any way relating
to or arising out of the preparation of the Closing Date Balance Sheet, the
obligation to pay the Purchase Price (excluding the obligation set forth in
Section 2 above), and any and all Claims related to or arising out of the
Agreement or the transactions contemplated thereby; provided, however,
that the foregoing release shall not apply to or affect (i) any obligations,
duties or rights arising under this Amendment and Release, (ii) any obligation
of Nu Skin to make royalty payments under the Agreement (as modified by this
Agreement) that, by the respective terms of Agreement, are to be performed
following the date of this Agreement. 






	 	     (c)
NSE Release. In consideration of the release of Claims set forth in
Section 3(b) above, the covenant not to sue set forth in Section 4(a) below, and
the reduction in the maximum Royalty set forth in Section 1 above, NSE, on
behalf of itself and each of the NSE Parties, does hereby fully and forever
remise, 






Amendment No. 1
 Page 3 






	 	release and discharge each of the Sellers from any Claims that NSE may
have against such Accepting Holders relating to the Sellers’ failure to
disclose the Utah Investigation and any breach of the representations and
warranites set forth in the Agreement related to such non-disclosure;
provided, however, that the foregoing release shall not apply to or
affect (i) any obligations, duties or rights arising under this Agreement, (ii)
any breach of the representations and warranties unrelated to the non-disclosure
of the Utah Investigation. 









	 	     (d)
The releases set forth in this Section 3 are entered into by the Sellers and NSE
without any admission of liability to any other, but solely for the purpose of
avoiding costly litigation, further uncertainty, controversy, and legal expense.
Without limiting the foregoing, nothing contained herein shall be taken or
construed to be an inference or admission by any party or as evidencing or
indicating in any degree the truth or correctness of any claims or defense
asserted by any party. 






4.    Covenant Not to Sue. 


	 	     (a)
Sellers. Each of the Sellers hereby expressly agrees and covenants not to
file, commence, finance or prosecute, or cause or encourage to be filed,
commenced, financed or prosecuted, either directly or indirectly, any lawsuit
against any of the NSE Parties (and their respective attorneys and accountants)
related to the Claims released by such Sellers pursuant to Section 3(b) above. 







	 	     (b)
NSE. NSE, on behalf of itself and each of the other NSE Parties, hereby
expressly agrees not to file, commence, finance or prosecute, or cause or
encourage to be filed, commenced, financed or prosecuted, either directly or
indirectly, any lawsuit against any of the Sellers related to the Claims
released by NSE pursuant to Section 3(c) above. 






     5.     Joint Drafting. This Amendment and
Release shall be deemed to have been jointly drafted by both NSE and each of the Sellers
and shall not be construed against any party in favor of any other party hereto. 


     6.     Governing Law. This Amendment and
Release, and all matters relating hereto, shall be governed by, and construed in
accordance with the internal laws of the State of Utah. 



     7.     Entire Agreement. Except
as modified by this Amendment and Release, the Agreement remains unaffected and
shall remain in full force and effect. This Amendment and Release (including
each of the Exhibits attached hereto, which are incorporated herein by this
reference) together with the Agreement constitute the entire agreement between
the parties and supersedes all prior agreements and understandings, both written
and oral, between the parties, or any of them, with respect to the subject
matter hereof. 



Amendment No. 1
 Page 4 









     8.     Cooperation. Each party agrees to
cooperate with the other and to take all action reasonably necessary to give full effect
to the provisions and intent of this Amendment and Release. 


     9.     Confidentiality. Each of
the Sellers hereby expressly agree to keep in strict confidence, and to not
disclose to any other party, the terms of this Amendment and Release except (a)
as may be required by applicable law or regulation and/or (b) for appropriate
disclosures by the parties hereto to their accountants, attorneys, financial
advisors and immediate family members. 


     10.     Counterparts. This Amendment and
Release may be executed in any number of counterparts, and by different parties hereto
in separate counterparts, each of which when executed shall be deemed to be an original
but all of which when taken together shall constitute one and facsimile signatures shall
be valid provided the original signature is later added to this Amendment and Release. 


     11.     Severability. If any
term or other provision of this Amendment and Release is invalid, illegal or
incapable of being enforced by any rule of law or public policy, all other
conditions and provisions of this Amendment and Release shall nevertheless
remain in full force and effect so long as the economic and legal substance of
the transactions contemplated by this Amendment and Release are not affected in
any manner materially adverse to any party. Upon such determination that any
term or other provisions is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Amendment and
Release so as to effect the original intent of the parties as closely as
possible in a mutually acceptable manner in order that the transactions
contemplated by this Amendment and Release be consummated as originally
contemplated to the fullest extent possible. 


     12.     Successors and Assigns. This
Amendment and Release shall be binding upon, inure to the benefit of and be enforceable
by the parties hereto and their respective successors and assigns. 














     IN WITNESS WHEREOF, this Amendment
and Release has been duly executed and delivered by the parties hereto as of the
date first written above. 


	  	NU SKIN
ENTERPRISES, INC.




By:  /s/  Truman Hunt
              
               
     

        Name:  Truman Hunt

        Title:  General Counsel






SELLERS



/s/  Frank L. Davis
              
               
     

Frank L. Davis











Amendment No. 1
 Page 5 









	  	
/s/  Rogan Taylor
              
               
     

Rogan Taylor




/s/  Tom Felt
              
               
     

Tom Felt




/s/  David L. Mitton
              
               
     

David L. Mitton




/s/  Daniel P. Wheeler
              
               
     

Daniel P. Wheeler




/s/  Kevin J. Sutterfield
              
               
     

Kevin J. Sutterfield




/s/  Ronald Bassett
              
               
     

Ronald Bassett









Amendment No. 1
 Page 6