Exhibit 10.3
 
PURCHASE AND SALE AGREEMENT
 
This Purchase and Sale Agreement (this “Agreement”) is made and entered into as
of September 27 , 2002, by and between Carme Cosmeceutical Sciences, Inc., a
Delaware corporation with offices located at 620 Airpark Road, Napa, California
94558 (“Senetek”), and U.S. International Trading Corporation, a Nevada
corporation with offices located at 879 West 190th Street, Los Angeles,
California 90248 (“USITC”).
 
BACKGROUND
 
A. Senetek and USITC are parties to a Manufacturing License Agreement dated as
of May 15, 1999 (the “License Agreement”) pursuant to which Senetek sold and
USITC purchased the Product Lines, as defined therein, and Senetek granted USITC
licenses under the Product Designs, the Licensed Patents, the Licensed
Trademarks and the Product Documentation, all as defined therein (the “Licensed
Rights”).
 
B. Pursuant to Section 6.1 of the License Agreement, USITC was granted an option
to purchase the Product Lines and the Licensed Rights.
 
C. USITC wishes to purchase, and Senetek wishes to sell, the Product Lines and
the Licensed Rights on the terms and conditions set forth in this Agreement.
 
Accordingly, in consideration of the mutual promises, covenants, and conditions
set forth below, the parties agree as follows (terms defined in the License
Agreement and not otherwise defined herein being used herein with the meanings
ascribed to them in the License Agreement):
 
1. DEFINITIONS
 
When used in this Agreement, each of the following capitalized terms shall have
the respective meaning set forth in this Article.

1

--------------------------------------------------------------------------------

 
1.1    “Affiliate” means any corporation, partnership, proprietorship or other
legal entity directly or indirectly controlled by, controlling, or under common
control with another legal entity, “control” meaning, for purposes hereof, the
effective power to elect at least a majority of the Board or Directors or other
management body of a legal entity or to effectively direct the management and
affairs of a legal entity, through ownership of voting securities, by contract,
or otherwise. “Agreement Date” means the date of this Agreement first set forth
above. “Confidential Information” means marketing, sales, financial, scientific,
and other non-public and/or proprietary information concerning the products,
projects, businesses and operations of a party or its Affiliates disclosed by
such party to the other party or its Affiliates or of which the other party or
its Affiliates gained knowledge in performing the License Agreement. “Final
Adjudication” means any decision by a Governmental Entity of competent
jurisdiction if either (a) any and all appeals (including to other Governmental
Entities of competent jurisdiction) in connection with the adjudication are
exhausted or (b) the time for any such appeal shall have passed without such
appeal having been perfected.
 
1.5    “Intellectual Property Rights” means (a) any right, title and interest in
and to any letters patent and applications for letters patent, and any other
government-issued or –granted indicia of invention ownership, including any
reissue, division, terms extensions, continuations or continuations-in-part
applications, (b) all copyrights and all other literary property and author
rights, and all right, title and interest in and to all copyrights, copyrights
registrations, certificates of copyrights and copyright interests, (c) all
trademarks, trade names and service marks, and all rights, title and interest in
and to all applications, certifications and registrations therefor, and (d) all
licenses or license rights with respect to the foregoing.
 
1.6    “Product Designs and Product Documentation” means all original
formulations, technical know-how, materials lists, specifications, quality and
reliability specifications, vendor lists, designs, drawings, techniques,
discoveries, schematics, artwork, graphics and methods that relate in any manner
to the Product Lines.
 
1.7    “Product Lines” means all products ever manufactured and/or marketed by
Senetek and its Affiliates under the trademarks Mill Creek, Sleepy Hollow or
Silver Fox,

2

--------------------------------------------------------------------------------

excluding the Age Defiant product line. The Product Lines are set forth in
Schedule 1.7A and 1.7B.
 
1.8    “Purchased Assets” means all of Senetek’s and its Affiliates’ rights,
title and interest in and related to, without duplication, the Millcreek Line,
the Silver Fox Line, the Sleepy Hollow Line, the Carme Intellectual Property,
the Product Lines, the Intellectual Property Rights, and the Product Designs and
Product Documentation, each as defined in this Agreement.
 
2. PURCHASE AND SALE
 
2.1    Conveyance. Effective as of the Agreement Date, Senetek, on its own
behalf and on behalf of its Affiliates, hereby unconditionally and irrevocably
transfers and sells to USITC, and USITC hereby unconditionally and irrevocably
purchases and assumes from Senetek, all of Senetek’s and its Affiliates’ right,
title and interest in and obligations related to the Purchased Assets. Senetek
hereby delivers to USITC a General Assignment and Bill of Sale and a Trademark
Assignment in the forms annexed hereto as Schedule 2.1 (the “Assignments”), duly
executed on behalf of Senetek or its Affiliates, as appropriate, to effect such
transfer, assignment and assumption.
 
2.2    Purchase Price. In consideration of the transfer and sale of the
Purchased Assets, USITC hereby pays to Senetek, by official bank or certified
check to the order of Senetek, the sum of Four Hundred Thousand Dollars
($400,000) and delivers to Senetek a Secured Promissory Note to the order of
Senetek in the principal amount of Two Million Three Hundred Thousand Dollars
($2,300,000) in the form annexed hereto as Schedule 2.2A (the “Note”), duly
executed on behalf of USITC. As security for the due and timely payment in full
of the principal of and accrued interest on the Note, USITC further hereby
delivers to Senetek instruments granting to Senetek security interests in the
Purchased Assets, in the forms annexed hereto as Schedule 2.2B (the “Security
Instruments”).

3

--------------------------------------------------------------------------------

 
2.3    Further Assurances. Senetek hereby agrees to execute or cause to be
executed and to deliver from time to time such other and further assignments and
other instruments as USITC may reasonably request to further perfect and
evidence the transfer and sale provided for in Section 2.1. USITC hereby agrees
to execute and deliver from time to time such other and further agreements and
other instruments as Senetek may reasonably request to perfect and evidence the
security interest provided for in Section 2.2.
 
2.4    No Other Rights. It is expressly understood that this Agreement grants no
rights to USITC except those express rights set forth in this Agreement. Without
limiting the foregoing, it is understood and agreed that USITC acquires and
shall have no right pursuant to this Agreement to any patents, patent
applications, trademarks, trademark applications, common law trademarks or trade
names, copyrights, designs, trade secrets or other proprietary rights or
Confidential Information of Senetek or its Affiliates other than the Purchased
Assets.
 
3. TERMINATION OF LICENSE AGREEMENT.
 
3.1    Termination of License Agreement. Senetek and USITC hereby terminate the
License Agreement effective as of midnight, Pacific Daylight Time, on the
Agreement Date, with the effect specified in Section 10.3 of the License
Agreement, provided, however, that in addition to Sections 5, 7, 8, 9 and 11 of
the License Agreement, which shall survive as provided in said Section 10.3,
Section 4.6 of the License Agreement also shall survive termination of the
License Agreement.
 
4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PARTIES
 
4.1    Representations and Warranties and Covenants of Senetek. Senetek
represents, warrants and covenants as follows:
 
4.1.1.    Qualifications and Authorization. Senetek is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, with full corporate power and authority to conduct its business as it
is now conducted and to enter into and perform this Agreement. Senetek is duly
licensed or qualified to do business and is in good standing in California and
each other jurisdiction in which its operations

4

--------------------------------------------------------------------------------

or ownership of assets in connection with this Agreement requires such licensing
or qualification.
 
4.1.2    No Conflict or Violation. Neither the execution, delivery or
performance of this Agreement and the Assignments, nor compliance by Senetek
with any of the provisions hereof or thereof, will (i) violate or conflict with
any provision of the Certificate of Incorporation or Bylaws of Senetek, (ii)
violate, conflict with, or result in a breach of any provision of, or constitute
a default (or an event which, with notice or lapse of time or both, would
constitute a default) under, or result in the creation of any encumbrance upon
any of Senetek’s or its Affiliates’ assets (including the Purchased Assets)
under, any of the terms, conditions or provisions of any material contract,
indebtedness, note, bond, indenture, security or pledge agreement, commitment,
license, lease, franchise, permit, agreement, or other instrument or obligation
to which Senetek or an Affiliate is a party, or (iii) violate any statute, rule,
regulation, ordinance, code, order, judgment, ruling, writ, injunction, decree
or award applicable to Senetek or any Affiliate, except, in the case of each of
clauses (i), (ii) and (iii) above, for such violations, conflicts, breaches,
defaults or creations of encumbrances which, in the aggregate, would not have
material adverse effect on the business of Senetek and its Affiliates taken as a
whole or on its ability to perform this Agreement.
 
4.1.3    Purchased Assets. Senetek and its Affiliates own free and clear of any
lien or encumbrance all right, title and interest in and to the Purchased Assets
and have the full and unrestricted right to sell, transfer and assign the
Purchased Assets to USITC. There were no patents or patent applications included
in the Carme Intellectual Property when the same was licensed to USITC pursuant
to the License Agreement, and there are not patents or patent applications
included in the Purchased Assets. Annexed hereto as Schedule 4.1.3 is a list of
all of the Licensed Trademarks, each of which is validly subsisting and in good
standing as of the Agreement Date. Senetek or its Affiliates have made all
payments and filings required as of the Agreement Date to maintain the Licensed
Trademarks in full force and effect
 
4.1.4    No Other Representations, Warranties or Covenants. EXCEPT THOSE
REPRESENTATIONS, WARRANTIES AND COVENANTS EXPRESSLY SET FORTH IN SECTIONS 4.1.1,
4.1.2 AND 4.1.3, SENTEK MAKES NO REPRESENTATIONS OR WARRANTIES REGARDING THE
PURCHASED ASSETS, AND EXPRESSLY DISCLAIMS ANY AND ALL WARRANTIES AND
REPRESENTATIONS, EXPRESS, IMPLIED IN FACT OR IMPLIED IN LAW, INCLUDING THOSE OF
NON-INFRINGEMENT, MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.

5

--------------------------------------------------------------------------------

USITC, BY EXECUTION HEREOF, EXPRESSLY ACKNOWLEDGES AND ACCEPTS SUCH DISCLAIMER.)
 
4.2    Representations, Warranties and Covenants of USITC. USITC represents,
warrants and covenants as follows:
 
4.2.1    Qualifications and Authorization. USITC is a corporation duly formed,
validly existing and in good standing under the laws of the State of Nevada,
with full corporate power and authority to conduct its business as it is now
conducted and to enter into and perform this Agreement. USITC is duly licensed
or qualified to do business and is in good standing in each jurisdiction in
which its operations or ownership of assets requires such licensing or
qualification.
 
4.2.2    No Conflict or Violation. Neither the execution, delivery or
performance of this Agreement and the Note, nor the granting of the Security
Interests, nor compliance by USITC with any of the provisions of this Agreement,
the Note or any of the instruments executed and delivered by USITC herewith,
will (i) violate or conflict with any provision of the Certificate or Articles
of Incorporation or Bylaws of USITC, (ii) violate, conflict with, or result in a
breach of any provision of, or constitute a default (or an event which, with
notice or lapse of time or both, would constitute a default) under, or result in
the creation of any encumbrance upon any of USITC’s assets (including the
Purchased Assets) under, any of the terms, conditions or provisions of any
material contract, indebtedness, note, bond, indenture, security or pledge
agreement, commitment, license, lease, franchise, permit, agreement, or other
instrument or obligation to which USITC is a party, or (iii) violate any
statute, rule, regulation, ordinance, code, order, judgment, ruling, writ,
injunction, decree or award applicable to USITC, except, in the case of each of
clauses (i), (ii) and (iii) above, for such violations, conflicts, breaches,
defaults or creations of encumbrances which, in the aggregate, would not have a
material adverse effect on the business of USITC taken as a whole or on its
ability to perform this Agreement or the Note or to grant the security interest
provided for in Section 2.2 or create any encumbrance, security interest or
other rights in the Purchased Assets which are superior to or pari passu with
the security interests provided for in Section 2.2.
 

6

--------------------------------------------------------------------------------

4.2.3    Maintenance of Licensed Trademarks. USITC shall at all times until the
Note has been paid in full maintain the Licensed Trademarks in good standing
including without limitation by payment of all renewal fees and filing of
affidavits of use or other documentation required therefor, and furnish to
Senetek upon its request evidence of such actions.
 
4.2.4    Financial Statements. Annexed hereto as Schedule 4.2.4 are the balance
sheets of USITC for the years ended December 31, 2001 and 2000 and the
statements of operations, stockholders’ equity and cash flows of USITC for the
years then ended, together with the notes thereto and report of independent
certified public accountants thereon (the “Financial Statements”). The Financial
Statements fairly present the financial position, results of operations,
stockholders’ equity and cash flows of USITC as of the dates and for the periods
presented therein in accordance with generally accepted accounting principles
consistently applied, except as otherwise set forth in the notes thereto.
 
4.2.5    Insurance. USITC shall, for a period of six (6) years from the
Agreement Date, at all times maintain at its expense commercial general
liability insurance (including products liability coverage) with an insurance
company or companies rated at least Best AA in a principal amount of not less
than Two Million Dollars (US$2,000,000) per occurrence and Ten Million Dollars
(US$10,000,000) in the annual aggregate. Such policy shall name Senetek as an
additional insured as its interest may appear under the Note and under Article 7
hereof. Within thirty (30) calendar days after the Agreement Date, USITC shall
furnish to Senetek a certificate evidencing such insurance.
 
4.3    Survival. The representations, warranties and covenants of the parties
made in this Agreement shall survive for the full period prescribed by the
statute of limitations applicable to claims for the breach of such
representation, warranty or covenant.
 
5. CONFIDENTIAL INFORMATION AND ANNOUNCEMENTS
 
5.1    Senetek Confidential Information. USITC shall not disclose Senetek
Confidential Information to any Person (except to its employees and agents who
reasonably require same and

7

--------------------------------------------------------------------------------

who are bound to USITC by the same obligations as to confidentiality) without
the express written permission of Senetek, unless such disclosure is required by
order of a court of competent jurisdiction, provided that for purposes hereof
“Senetek Confidential Information” shall not include any of the Carme
Intellectual Property or other Purchased Assets.
 
5.2    USITC Confidential Information. Senetek shall not (a) use USITC
Confidential Information except to enforce USITC’s obligations under this
Agreement, or (b) disclose USITC Confidential Information to any Person (except
to its employees and agents who reasonably require same for such purpose and who
are bound to Senetek by the same obligations as to confidentiality) without the
express written permission of USITC, unless such disclosure is required by order
of a court of competent jurisdiction.
 
5.3    Announcements. The parties will issue an agreed upon press release upon
the execution of this Agreement in the Form set forth in Schedule 5.3. Except
for such release and except as may otherwise be required by law or the listing
rules of any exchange on which either party’s securities may be listed or
quoted, for which the releasing party shall provide prior notice to the other
party and the opportunity to comment on any required disclosure, neither party
will disclose the terms of this Agreement to any other Person; provided,
however, that each party may make such disclosure of the terms of this Agreement
to its employees and agents as is necessary to permit such party to perform its
obligations under this Agreement; provided further that any such employee or
agent agrees to maintain the confidentiality of this Agreement; and provided
further that either party may make such disclosures of the terms of this
Agreement as are necessary to enter into license and other agreements that do
not conflict with the terms of this Agreement. USITC acknowledges that this
Agreement may be deemed to be a “material contract” as that term is defined by
Item 601(b)(10) of Regulation S-K, and that Senetek may therefore be required to
file such document as an exhibit to reports or registration statements filed
under the United States Securities Act or Securities Exchange Act, provided that
Senetek shall redact commercial terms and file for confidential treatment to the
extent permitted by applicable rules of the United States Securities and
Exchange Commission.
 

8

--------------------------------------------------------------------------------

 
5.4    Release from Restrictions. The restrictions set forth in Sections 5.1 and
5.2 shall not apply to USITC or Senetek Confidential Information disclosed to
the other party (i) that a party rightfully possessed before it received the
information from the other as evidenced by written documentation; (ii) that
subsequently becomes publicly available through no fault of that party; (iii)
that is subsequently furnished rightfully to that party by a third party that is
not an Affiliate and which is not known to be under restrictions on such
disclosure; or (iv) that is independently developed by an employee, agent or
contractor of such party.
 
6. DISPUTE RESOLUTION.
 
6.1    Disputes. Any disputes between the parties with respect to the
interpretation or performance of this Agreement, the Assignments, the Note, or
the Security Instruments shall be subject to and resolved in accordance with the
terms of Schedule 6.1, which shall be binding on the parties.
 
7. INDEMNIFICATION AND LIMITATIONS ON REMEDIES
 
7.1    Indemnification by USITC. USITC shall defend, indemnify, and hold
harmless Senetek, its officers, agents, employees and Affiliates from any loss,
claim, action, damage, expense or liability (including defense costs and
attorneys’ fees) (collectively, “Claims”) arising out of or related to (i) any
breach or alleged breach of any representation, warranty or covenant made by
USITC herein or in the Note, or (ii) the manufacture, storage, marketing,
distribution, sale or use of any products within the Product Lines.
 
7.2    Indemnification by Senetek. Senetek shall defend, indemnify, and hold
harmless USITC, its officers, agents, employees and affiliates from any Claims
arising out of or related to any breach or alleged breach of any representation,
warranty, or covenant made by Senetek herein or in the Assignments.

9

--------------------------------------------------------------------------------

 
7.3    Limitation of Remedies. IN NO EVENT SHALL SENETEK BE LIABLE FOR ANY LOSS
OF PROFITS, LOSS OF BUSINESS, LOSS OF USE OF DATA, INTERRUPTION OF BUSINESS, OR
INDIRECT, SPECIAL, INCIDENTAL, PUNITIVE OR CONSEQUENTIAL DAMAGES OF ANY KIND,
EVEN IF SENETEK HAS KNOWLEDGE OR NOTICE OF THE POSSIBILITY OF SUCH DAMAGES AND
NOTWITHSTANDING ANY FAILURE OF ESSENTIAL PURPOSE OF ANY LIMITED REMEDY. IN NO
EVENT SHALL SENETEK BE LIABLE FOR ANY REPRESENTATION OR WARRANTY MADE BY USITC
TO ANY THIRD PARTY. USITC ACKNOWLEDGES THAT IT IS PURCHASING THE PURCHASED
ASSETS “AS IS” WITH NO REPRESENTATION OR WARRANTY EXCEPT THOSE SPECIFICALLY SET
FORTH IN SECTION 4.1 HEREOF, THAT SUCH PURCHASE IS UNCONDITIONAL AND IRREVOCABLE
NOTWITHSTANDING ANY BREACH OF ANY REPRESENTATION OR WARRANTY SET FORTH IN
SECTION 4.1 HEREOF, THAT USITC SHALL NOT SEEK TO SET ASIDE OR ANNUL THIS
AGREEMENT FOR ANY CAUSE WHATSOEVER, AND THAT USITC’S SOLE AND EXCLUSIVE REMEDY
SHALL BE MONEY DAMAGES, SUBJECT TO THE LIMITATIONS SET FORTH ABOVE. USITC
ACNOWLEDGES THAT SENETEK WOULD NOT HAVE ENTERED INTO THIS AGREEMENT BUT FOR THE
LIMITATIONS SET FORTH IN THIS SECTION 7.3 AND THAT SUCH LIMITATIONS ARE A
MATERIAL TERM OF THIS AGREEMENT.
 
7.4    Interest. All amounts due pursuant to this Article 7 shall bear interest
at the rate of 1.5% per month (or the maximum amount permitted by law, if less)
from the date any loss was incurred by the party entitled to be indemnified
until the date indemnification is paid.
 
8. MISCELLANEOUS
 
8.1    Method of Payments. All payments due under this Agreement, the Note or
otherwise shall be paid in U.S. Dollars in cash by a check drawn on a United
States bank or by wire transfer of immediately available funds to the order of
the payee in the United States.
 

10

--------------------------------------------------------------------------------

 
8.2    Taxes. Any and all taxes or other imposts due with respect to the sale
and purchase of the Purchased Asset shall be paid by USITC except for taxes due
from and in respect of the income of Senetek (an “Income Tax”). If Senetek is
required to collect and remit any tax with respect to the sale and purchase of
the Purchased Assets other than an Income Tax, Senetek shall be entitled to
collect the amount of such tax from USITC within 30 days of the date any such
tax is so remitted. No Joint Venture. It is not the intent of the parties hereto
to form any partnership or joint venture. Each party shall, in relation to its
obligations hereunder, act as an independent contractor, and nothing in this
Agreement shall be construed to give either party the power or authority to act
for, bind or commit the other. Governing Law. This Agreement shall be governed
by and interpreted in accordance with the laws of the State of California
(regardless of that or any other jurisdiction’s choice of law principles). No
Assignment. Neither party to this Agreement may assign its rights or obligations
under this Agreement or any instrument delivered pursuant hereto, including the
Note, without the prior written consent of the other party to this Agreement;
provided, however, that USITC may assign such rights for good reason with
Senetek’s consent, not to be unreasonably withheld and either party may assign
any such rights to an Affiliate or to any successor by merger, consolidation,
sale of stock or the sale of substantially all of its assets; provided further,
that no such permitted assignment shall relieve the assigning party of its
obligations under this Agreement. Notices. Unless otherwise provided herein, any
notice required or permitted to be given hereunder (a “Notice”) shall be mailed
by certified mail or generally recognized express courier service with signature
required for delivery, postage prepaid, sent by facsimile transmission, or
delivered by hand to the party to whom such Notice is required or permitted to
be given hereunder to the party to receive such Notice at its address first set
forth above or at such other address as either party may designate to the other
by Notice pursuant hereto. If mailed, any such Notice shall be deemed to have
been given as of the date of receipt, as evidenced by the date appearing on the
delivery notice. If delivered by hand, any such Notice shall be deemed to have
been given when received by the party or agent of such party to whom such Notice
is given, as evidenced by written and dated receipt of the receiving party.
Captions. The captions in this Agreement are solely for convenience of reference
and shall not be used for purposes of interpreting or construing the provisions
hereof. Severability. Should any part or provision of this Agreement be held
unenforceable or in conflict with the applicable laws or regulations of any
jurisdiction, the

11

--------------------------------------------------------------------------------

invalid or unenforceable part or provision shall be replaced with a provision
which accomplishes, to the extent possible, the original business purpose of
such part or provision in a valid and enforceable manner, and the remainder of
this Agreement shall remain binding upon the parties hereto. Waiver. No failure
on the part of any party hereto to exercise, and no delay in exercising, any
right, privilege or power hereunder shall operate as a waiver or relinquishment
thereof; nor shall any single or partial exercise by any party hereto of any
right, privilege or power hereunder preclude any other or further exercise
thereof, or the exercise of any other right, privilege or power. Entire
Agreement. This Agreement, together with its Schedules, constitutes the entire
agreement and understanding between the parties hereto with respect to the
subject matter of this Agreement and shall supersede any prior agreements,
negotiations, understandings, representations, statements and writings relating
thereto. This Agreement may not be amended or modified except in a writing
signed by a duly authorized officer of the party against whom enforcement of
such amendment is sought. Counterparts. This Agreement may be executed in one or
more counterparts by exchange of facsimile copies of signature pages, each of
which will be deemed an original and all of which together will constitute one
and the same instrument. Document Preparation. The Parties acknowledge that this
Agreement is a product of extensive negotiations and that no inference should be
drawn regarding the preparation of this document.To evidence this Agreement, the
parties have caused their duly authorized representatives to execute this
Agreement as of the Agreement Date.

12

--------------------------------------------------------------------------------

 
U. S. INTERNATIONAL TRADING CORPORATION
By:
 
/s/    PANCH PRASAD        

--------------------------------------------------------------------------------

   
Name: Panch Prasad
   
Title: CEO

 
CARME COSMECEUTICAL SCIENCES, INC.
By:
 
/s/    FRANK J. MASSINO        

--------------------------------------------------------------------------------

   
Name: Frank J. Massino
   
Title: CEO

 

13