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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10SB
GENERAL FORM FOR REGISTRATION OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
SKINVISIBLE, INC.
(Exact name of Company as specified in its charter)
NEVADA 88-0344219
- ------ ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3095 East Patrick Lane, Suite 1,
Las Vegas, Nevada 89120
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 702-433-7154
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Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
None None
Securities to be registered pursuant to Section 12(g) of the Act:
100,000,000 Shares of Common Stock
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(Title of class)
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TABLE OF CONTENTS
Page
----
COVER PAGE ................................................. 1
TABLE OF CONTENTS .......................................... 2
PART I ..................................................... 3
DESCRIPTION OF BUSINESS .................................... 3
DESCRIPTION OF PROPERTY .................................... 18
DIRECTORS, EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES .... 19
REMUNERATION OF DIRECTORS AND OFFICERS ..................... 21
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN
SECURITYHOLDERS ....................................... 22
INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN
TRANSACTIONS .......................................... 23
SECURITIES BEING OFFERED ................................... 23
PART II .................................................... 25
MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S
COMMON EQUITY AND OTHER STOCKHOLDER MATTERS ........... 25
LEGAL PROCEEDINGS .......................................... 25
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS .............. 25
RECENT SALES OF UNREGISTERED SECURITIES .................... 25
INDEMNIFICATION OF DIRECTORS AND OFFICERS .................. 26
PART F/S ................................................... 28
FINANCIAL STATEMENTS ....................................... 28
PART III ................................................... 29
INDEX TO EXHIBITS .......................................... 29
SIGNATURES ................................................. 30
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PART I
The issuer has elected to follow Form 10-SB, Disclosure
Alternative 2.
Item 6. Description of Business
General
Skinvisible, Inc. (the "Company") is in the business of developing,
manufacturing and selling antimicrobial skin protection products
designed to control the effects of occupational hand disease, as
well as prevent the cross contamination of pathogens. The Company
has completed the development of its products and is commencing
production and sales. The Company continues to research and
develop potential additional products.
Corporate History and Subsidiaries
The Company is a Nevada corporation that was incorporated on March
6, 1998 under the name "Microbial Solutions, Inc.". On February
26, 1999, the Company filed an amendment to its articles of
incorporation changing its corporate name to "Skinvisible, Inc."
The Company carries on its business through three wholly owned
subsidiaries, as described below:
Jurisdiction of
Name of Subsidiary Date of Incorporation Incorporation
- ------------------ --------------------- ----------------
Skinvisible
Pharmaceuticals, Inc. June 30, 1995 Nevada
(formerly Manloe
Labs Inc.)
Skinvisible
International, Inc. February 22, 1999 Nevada
Skinvisible
Pharmaceuticals
(Canada) Inc. October 20, 1998 Canada (federal)
The Company's primary business activities, including all research,
development and manufacturing of its products, are carried on
through Skinvisible Pharmaceuticals, Inc. ("SVP"). The name of
this subsidiary company was changed from "Manloe Labs Inc." to
"Skinvisible Pharmaceuticals, Inc." effective February 22, 1999.
Marketing of the Company's products is performed by Skinvisible
International, Inc. ("SVI") in the United States and Skinvisible
Pharmaceuticals (Canada) Inc. ("SPI Canada") in Canada.
Acquisition of Skinvisible Pharmaceuticals
The Company acquired SVP pursuant to a share purchase and sale
agreement between the Company and Roger Hocking ("Hocking") (the
"SVP Acquisition Agreement"). The Company acquired all of
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the issued and outstanding shares of SVP from Hocking in exchange
for the payment to Hocking of $200,000 in cash and 275,000
restricted common shares of the Company. The closing of the
acquisition of SVP was completed on March 31, 1998. Note that the
terms of the SVP Acquisition Agreement can be found in the full
agreement which is attached hereto as an exhibit. There was no
affiliation between Hocking and the Company or any of the directors
or officers of the Company prior to the Company and Hocking
entering into the SVP Agreement.
Manufacturing and Marketing License Agreement
On March 19, 1998, SVP entered into a Manufacturing and Marketing
License Agreement with Jazor Laboratory Group, Inc. ("Jazor") and
Bruce Jezior ("Jezior") (the "Manufacturing Agreement") whereby
Jazor granted to SVP the exclusive right and license to
manufacture, distribute, market and sell the products developed by
Jazor (the "License Rights"). The products included a proprietary
polymer base developed by Jazor and known as "Jatex" (the "Polymer
Base") and the Viro Shield and Work Gluv products developed by
Jazor using the Polymer Base (together, the "Licensed Products").
The Licensed Products included any products superceding or
replacing Viro Shield, Work Gluv or the Polymer Base, together with
any modification to or products superceding Viro Shield, Work Gluv
or the Polymer Base and any future products developed by Jazor
using the Polymer Base. Pursuant to the Manufacturing Agreement,
SVP agreed to pay to Jazor a license fee equal to $50,000 upon
execution of the Agreement and a royalty fee equal to the greater
of $6,000 per month or 1.5% of the net revenues realized by SVP
from the sales of the Licensed Products (the "Royalty Fees").
There was no affiliation between Jazor or Jezior and the Company,
SVP or any of the officers, directors principals or shareholders of
the Company or SVP prior to SVP entering into the Manufacturing
Agreement with Jazor and Jezior.
The Manufacturing Agreement provided that upon aggregate Royalty
Fees equal to $2,000,000 having been paid by SVP to Jazor, SVP
would have no further obligations to make any additional payments
on account of the Royalty fees and Jazor would deliver to SVP all
confidential information, including formulae, technical data,
engineering specifications, and trade secrets necessary to enable
SVP to manufacture all products that are the subject of the
Manufacturing Agreement independently of Jazor.
Note that the terms of the Manufacturing Agreement can be found in
the full agreement which is attached hereto as an exhibit.
On February 2, 1999, SVP entered into an amendment to the
Manufacturing Agreement with Jazor and Jezior whereby the Company
issued 500,000 restricted common shares at a deemed price of $2.00
per share to Jezior in consideration for the release of the
proprietary polymer process and technology information licensed to
the Company. The proprietary polymer process and technology
information has been released to the Company and the shares have
been issued to Jezior. In consideration for the issuance of the
500,000 shares pursuant to the amendment to the Manufacturing
Agreement, Jazor and Jezior also agreed to reduce the maximum
amount of Royalty Fees payable by the Company from $2,000,000 to
$1,000,000. As of April 5, 1999, the Company had paid a total of
$72,000 on account of the Royalty Fees.
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Note that the terms of the amendment to the Manufacturing Agreement
can be found in the full agreement which is attached hereto as an
exhibit.
History of Product Development
At the time of its acquisition by the Company, SVP manufactured and
distributed two proprietary products. The products incorporated
the proprietary polymer technology developed by Jazor and marketed
under the name of Jatex. The products themselves were marketed
under the names Viro Shield and Work Gluv and included the chemical
Benzalkonium Chloride as the active ingredient. SVP manufactured
and distributed Viro Shield and Work Gluv from 1997 to 1998. Sales
of Viro Shield and Work Gluv were handled through dealers, with a
focus on developing business with hospitals and emergency service
providers particularly in Florida. SVP experienced limited sales
of Viro Shield and Work Gluv due, at least in part, to a lack of
research and development support materials for its products and a
limited amount of sales and marketing literature.
At the time of the Company's acquisition of SVP, SVP had no
research and development facilities and had completed only minimal
documented research on its products. The Company recognized that
the lack of documented research was an impediment to establishing
the credibility necessary to achieve market acceptance and to
making claims regarding the performance of the Company's products.
The Company through SVP undertook to: (1) examine the claims made
on the existing two products and the proprietary Jatex polymers; (2)
research whether better products could be made utilizing the
proprietary Jatex polymers; and (3) conduct all necessary research
and development trials for such new products. The Company selected
the active ingredient Triclosan as the basis for new product
development and undertook ten months of clinical trials with six
Federal Food and Drug Administration (FDA) approved laboratories to
obtain reports on the polymer products incorporating Triclosan as
the active ingredient. The Company completed these research and
development efforts as of February 11, 1999.
Scientific Advisory Committee
The Company has formed a Scientific Advisory Committee to advise
its Board of Directors on the research and development of new
products and on the scientific issues regarding claims made by the
Company regarding its products. The Company's Scientific Advisory
Committee consists of Professor Christaan Barnard, M.D., Dr. Mark
Frobb, M.D., Dr. Jim Roszell, Ph.D., Dr. Claude Paul, L.D.S.,
D.M.D. and Bruce Jezior. Dr. Barnard is a world renowned heart
transplant specialist from South Africa who performed the world's
first human heart transplant. Dr. Frobb is a medical doctor who
practices medicine in the Province of British Columbia, Canada.
Dr. Roszell is a chemist who works full time for the Company, and
has experience in dealing with regulatory bodies such as the FDA.
Bruce Jezior is the inventor of the proprietary Jatex polymers.
Dr. Paul is a retired dental surgeon and periodontist who received
his graduate and doctorate degrees from Geneva University in
Switzerland.
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Each member of the Scientific Advisory Committee spends a small
portion of their business time on the Company's research and
development. Members of the Scientific Advisory Committee are
consulted by the Company on an as needed basis to provide direction
on the research and development of the Company's products. Members
of the Scientific Advisory Committee do not conduct any research or
development activity for the Company's products. Research and
development of the Company's products is carried on by the Company
itself and through independent laboratories, as discussed below in
"Item 6. Description of Business - Results of Research on the
Skinvisible Products"
Skinvisible Products
The Company is marketing its polymer based skin protection products
under the tradename "Skinvisible" (the "Skinvisible Products").
The Company is marketing the Skinvisible Products in five separate
and distinct markets under five distinct brand names. All
Skinvisible Products incorporate Triclosan as the active ingredient
and offer the same degree of protection from occupational hand
disease. All Skinvisible Products are identical in composition.
The five markets to which the Company markets its Skinvisible
Products are described below:
1. Medical Market
The Company markets the Skinvisible Products to the medical and
hospital industry using the brand name "Skinvisible - Medical
Formula". The Company markets the Medical Formula to hospitals,
nursing homes, doctors, nurses, dentists, hygienists, fire
departments, police ambulance and ancillary services as an
additional measure to prevent the transmission of disease, to
protect from harmful chemicals and to protect from the rigors of
extensive hand washing protocols. The Company also markets the
Medical Formula as a safe and effective alternative to protect
people from latex contact, which can cause allergic reactions to
some users.
2. Industrial Market
The Company markets the Skinvisible Products to the industrial
marketplace using the brand name "Skinvisible - Industrial
Formula". The Company markets the Industrial Formula to mechanics,
painters, auto-body workers, chemical handlers, construction
trades, gardeners, mill workers and garbage/ sanitation workers as
a measure to protect the user's skin from exposure to harsh
chemicals and skin irritants.
3. Food Service Market
The Company markets the Skinvisible Products to the food service
marketplace using the brand name "Skinvisible - Food Service
Formula". The Company markets the Food Service Formula to the
restaurant, hospitality, food service and food processing
industries as a measure to prevent against the transmission of
infectious pathogens and disease-causing bacteria associated with
food products, handling and processing.
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4. Salon Market
The Company markets the Skinvisible Products to the salon
marketplace using the brand name "Skinvisible - Salon Formula".
The Company markets the Salon Formula to hairdressers, nail
technicians, beauticians, massage therapists and tanning salons as
a measure to protect the user from exposure to disease transmission
and exposure of the user's skin to harsh chemicals and skin
irritants which are prevalent in these occupations.
5. Personal Market
The Company markets the Skinvisible Products to the personal
marketplace using the brand name "Skinvisible - Personal Formula".
The Company markets the Personal Formula to individual consumers
for their personal use as a measure to protect the user from
exposure to disease transmission resulting from day to day
activities.
The prices for the Skinvisible Products are presently the same for
all brand name formulations. The Company's present retail prices
for the Skinvisible Products are as follows:
Product Size Price
- ------------ ------
2 oz bottle $16.00
4 oz bottle $24.00
8 oz bottle $38.00
16 oz bottle $64.00
32 oz bottle $80.00
Results of Research on the Skinvisible Products
The Company has conducted independent research of the Company's
Skinvisible Products at independent laboratories. Research at
independent laboratories follows the Company's own internal
research and development activities and is used by the Company to
obtain independent verification of the properties of the
Skinvisible Products.
The Company's research and development focus has been directed at
analyzing the original antimicrobial lotion, validating its
properties, researching a new formulation, and conducting internal
and external laboratory and clinical tests. Tests have included
analysis of the skin adherence of the polymer based lotions. Known
as "substantivity", the polymer achieves skin adherence by creating
a dynamic chemical bonding that capitalizes on the characteristics
of the outer layer of the skin, known as the stratum corneum. The
polymer formula is non-occlusive, allowing the skin to breathe,
maintaining the skin's natural moisture in addition to absorbing
moisture from the air. The invisible polymer base lotion gradually
deteriorates as the natural turnover of the stratum corneum occurs
(a gradual, natural process culminating in a total shedding and
regeneration every 24 hours).
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The polymers act as a delivery system for pathogen killing agents.
The Company combines the polymer with antimicrobial agents allowed
under the tentative FDA monograph for over-the-counter ("OTC")
antimicrobial lotions. The polymers, when combined with the active
antimicrobial agent, create Skinvisible's proprietary product.
Triclosan 1% was chosen as the active antimicrobial agent as it
gives the lotion the broadest spectrum of pathogen coverage and has
the advantage of a long history of safe usage with a benign
toxicological profile.
The Skinvisible product line has been registered with the Food &
Drug Administration ("FDA") and meets Occupational Safety & Health
("OSHA") bloodborne pathogen standards. Skinvisible has also been
issued a Drug Identification Number ("DIN") required for the sale
of its antimicrobial skin protection product line in Canada.
Skinvisible has contracted with six major independent U.S.
laboratories, all FDA-recognized facilities with extensive
qualifications for carrying out investigative studies on the
product, utilizing protocols incorporating Good Laboratory Practice
and Good Clinical Practice ("GLP/GCP") standards. The studies
undertaken were directed at demonstrating the effective bonding of
the polymer lotion to skin dermal structures; demonstrating the
long term substantivity (ability to adhere to the skin) of the
polymer lotion when applied to skin; demonstrating the
imperviousness ("not affording passage") of the lotion to a
significant number of noxious chemical agents over the four hour
period of time proven for substantivity; and the effective
antimicrobial action of the lotion to bacterial pathogens at the
time of application and over the same four hour period.
Synopses of the studies carried out by the independent laboratories
under contract with the Company appear below:
1. APPLIED CONSUMER SERVICES, INC.
95th NW Thea Ave. Bay 5, Hialeah Garden, FL 33016.
Applied Consumer Services, Inc. performed in vitro studies on
the rates of desorption of Skinvisible Antimicrobial Skin
Protector from fritted glass filters in the presence of 5%
Ammonium Hydroxide. ACS also conducted studies to demonstrate
>99% of 28 challenge liquids, ranging from 10% HCL to Paint
Stripper, failed to penetrate a barrier of Skinvisible
Antimicrobial Skin Protector. ACS performed accelerated stability
studies on Skinvisible Antimicrobial Skin Protector,
determining the product stability in excess of 59 months.
2. CALIFORNIA SKIN RESEARCH INSTITUTE (CSRI)
15222 - B Avenue of Science, San Diego, CA 92128.
CSRI repeated the desorption studies on human subjects. CSRI
also performed skin sensitivity studies on Skinvisible Anti-
microbial Skin Protector and Electron Microscopy Study showing
adherence of Skinvisible Antimicrobial Skin Protector to
human skin for four hours.
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3. ADVANCED SURFACE MICROSCOPY, INC.
6009 Knyghton Rd., Indianapolis, IN 46220
Advanced Surface Microscopy performed Atomic Force Microscopy
studies on the nature of the bonding of Skinvisible
Antimicrobial Skin Protector to human skin. The results of its
study showed that the Product bonded to the skin for a period
of four (4) hours.
4. BIOSCIENCE LABORATORIES, INC.
P.O. Box 190, Bozeman, Montana 59771-0190
Bioscience Laboratories performed in vivo and in vitro studies
to demonstrate the efficacy of Skinvisible Antimicrobial Skin
Protector as a long-term antimicrobial, killing a wide
variety of micro-organisms. Bioscience Labs also performed
studies on the efficacy of Skinvisible Antimicrobial Skin
Protector to prevent Transepidermal Water Loss during daily
repetitive handwishing. The results of this study showed that
the Product prevented moisture loss during frequent hand
washings.
5. VIROMED BIOSAFETY LABORATORIES
6101 Blue Circle Drive, Minneapolis, MN 55343
Viromed Laboratories performed in vivo and in vitro tests on
Skinvisible Antimicrobial Skin Protector's efficacy as an
antiviral agent. The results of this study showed that the
Product was effective against envelope viruses with minimal
effect on non-envelope viruses.
6. NORTHVIEW BIOSCIENCES, INC.
2800 7th St., Berkeley, CA 94710
Northview Biosciences performed toxicity studies of
Skinvisible Antimicrobial Skin Protector, demonstrating that
a dose of 5g/kg of Skinvisible was non-toxic and had no ill
effects on laboratory rats.
The results were conclusive in proving that Skinvisible's
proprietary formulation demonstrated exceptional substantivity
under practical user conditions during a four hour period,
excellent maintenance of its impervious shield and blockage of
penetration or passage to the broad range of noxious chemicals
tested, and excellent kill patterns to the broad spectrum of
pathogens tested during the four hour test period.
Skinvisible Pharmaceuticals, Inc. is in the process of researching
the development of the following potential products:
- - Sun Screen/Protector - sunscreen that
filters harmful UV radiation; stays on for up to four
hours and will not wash off even after repeated entries
into the water;
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- - Skin Care - antimicrobial skin care for the control of
facial acne;
- - Foot Cream - anti-fungal cream for general care and
protection, as well as prevention and protection against
athletes foot;
- - Liquid Diaper - antimicrobial skin care for protection
against diaper rash; ideal for babies and incontinent
patients.
Finalization of these products will be subject to completion of
research and development and clinical testing at independent
laboratories. This is a forward-looking statement and development
of these products may not be completed.
Manufacturing of the Skinvisible Products
The Skinvisible Products are manufactured by SVP at the Company's
facility at 6320 S. Sandhill Road, Unit #10, Las Vegas, Nevada
89120. The manufacturing process consists of the manufacture of
the polymer base of the Skinvisible Products and the addition of
the active Triclosan ingredient. The manufacturing process starts
with the combination of the base ingredients in accordance with the
amounts and the process prescribed by the proprietary formula. The
combined ingredients are heated to critical temperatures as
required to complete manufacture of the final polymer complex. The
product is ready for bottling once the final polymer complex has
cooled. Once manufactured, the Skinvisible Products are stored on
site pending shipment.
The Company has the capacity to produce approximately 100 gallons
of Skinvisible Product per day. The Company anticipates expanding
production capacity to over 300 gallons of Skinvisible Product per
day with the installation of a new, higher capacity mixing tank.
The ingredients for the Skinvisible Products are supplied by a
number of different chemical manufacturers. The Company does not
have any long term contractual arrangements with any of its
suppliers. Ingredients are available from alternate suppliers in
the event that the Company is not able to obtain ingredients from
its current suppliers.
Government Regulation
The Skinvisible Product line has been formulated under the
tentative over-the-counter monograph for antimicrobial skin lotions
in the United States (the "Monograph"). No specific application or
formulary approval procedure is necessary for marketing a product
in the United States, provided the product fits under the formulary
guidelines of the Monograph. The official procedure is to file
with the FDA which then affixes a National Drug Code (NDC) number
to the product. The NDC numbers applied to the Skinvisibile
Products are as follows:
Skinvisible Product Brand Name NDC Number
- ------------------------------ ----------
Medical Formula NDC#63034-025
Food Service Formula NDC#63034-035
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Industrial Formula NDC#63034-055
Salon Formula NDC#63034-045
Personal Formula NDC#63034-065.
In Canada, the Skinvisible Products are regulated by the Health
Protection Branch (HPB) of the Canada Ministry of Health and
Welfare. Under the Canadian regulatory scheme a company submits an
application to the HPB who reviews the application and the product
through a review panel and issues a Drug Identification Number
(DIN) upon approval. The HPB has assigned the following DIN to the
Company: 02240020.
Marketing
The Company originally commenced marketing of the Skinvisible
Products exclusively through a network marketing program known as
the "Net/Direct, Dual Compensation Plan" (Net/Direct Plan) run by
SVI in the United States and SPI(Canada) in Canada. The Net/Direct
Plan had been structured by the Company to provide various
incentives to encourage independent businesses and individuals to
sell and to buy the Skinvisible Products and/or to make customer
referrals. The Net/Direct Plan contemplated that independent
businesses and individuals would earn commissions off their own
sales and the sales of others they brought into the marketing
program.
The Company decided to abandon this network marketing program in
June, 1999 and to market the Skinvisible Products through, (1)
distribution agreements entered into by the Company and its
subsidiaries, and (2) direct marketing efforts undertaken by the
Company itself. This decision was based on the Company perception
that it could not attain sufficient market penetration and
acceptance through its network marketing program. The Company does
not have any independent businesses or individuals marketing the
Skinvisible Products through the network marketing program at this
time.
The Company entered into an agreement with Aquastel Pacific
Environmental Technology Limited of Hong Kong ("Aquastel") for the
commercial sale and distribution of the product in Hong Kong,
Taiwan, Singapore, Malaysia and Thailand (the "Aquastel
Agreement"). The Company has granted Aquastel exclusive rights to
these countries for the term of the Aquastel Agreement. The
Aquastel Agreement is for a term of three years, subject to an
eight month cancellation clause in favor of each party during the
first three year term and subject to Aquastel meeting certain
minimum purchase requirements. Aquastel is required to purchase
$30,000 of Skinvisible Products in the first eight months and
$30,000 in the following four months of the initial year. Aquastel
must purchase a minimum of $100,000 of Skinvisible Products in the
second and third years of the term of the Aquastel Agreement. The
sales prices of the Skinvisible Products at which Aquastel is
required to purchase are set forth in the Aquastel Agreement and
are subject to review after six months. The Company received an
order from Aquastel for approximately $30,000 of Skinvisible
Products in the third quarter of 1999. A copy of the Aquastel
Agreement is attached as an exhibit. The discussion herein
regarding the agreement between the Company and Aquastel is
qualified in its entirety by reference to the agreement.
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The Company's subsidiary, Skinvisible Pharmaceuticals, Inc.
("SVP"), has entered into an agreement dated July 28, 1999 with
Essentially Yours Industries Corp. of Surrey, British Columbia,
Canada ("Essentially Yours") for the exclusive distribution of
Skinvisible's proprietary family of skin protection products to the
retail marketplace within Canada and the United States (the "EYI
North American Agreement"). Additionally, SVP signed an agreement
dated July 28, 1999 with EYI International Limited ("EYI
International") under similar terms and conditions for the
exclusive distribution of its product line internationally in the
retail market within the fourteen countries in which EYI
International presently operates (the "EYI International
Agreement").
The EYI North American Agreement gives Essentially Yours the
exclusive right to market the Skinvisible name and its existing
product line in North America. The EYI North American Agreement
also gives EYI a right of first refusal on new products developed
under the Skinvisible label for the retail marketplace.
Essentially Yours is obligated to purchase a minimum of 50,000 oz
of Skinvisible Product by December 31, 1999. Essentially Yours is
also obligated to purchase a minimum of 1,000,000 oz for the year
ending December 31, 2000, 1,250,000 oz for the year ending December
31, 2001, and 1,560,000 oz for the year ending December 31, 2002.
Failure of Essentially Yours to meet these minimum purchase
requirements will give the Company the right to terminate both the
North American Agreement and the International Agreement. The
Company received an order from EYI for 60,000 ounces of product in
third quarter of 1999.
The EYI International Agreement gives EYI International the
exclusive right to market Skinvisible's existing product line and
the same right of first refusal on new Skinvisible label products
to the retail marketplace in the following fourteen countries in
which EYI International presently operates: Brazil, United Kingdom,
Israel, Lebanon, Egypt, Jordan, Palestinian Authority Region,
Indonesia, Thailand, Hong Kong, Singapore, Philippines, Mexico, and Taiwan.
The EYI International Agreement also gives EYI International a
right of first refusal for other international countries outside of
North America. EYI International also has the option to expand the
territory for the international market to include additional
countries by purchasing 25,000 oz of product for each additional
country and paying the Company's cost of achieving regulatory
approvals for sales of products in the additional country.
A copy of each of the EYI North American Agreement and the EYI
International Agreement is attached hereto as exhibits. The
discussion herein regarding the EYI North American Agreement and
the EYI International Agreement is qualified in its entirety by
reference to the copies of the attached agreement.
The Company will continue to market directly, or through other
distribution channels, to the corporate, commercial and industrial
marketplace in North American and international markets not covered
by any distribution agreement.
The Company has been advised by Boston Pizza International of its
intention to use the Company's Skinvisible Products at its 120
Boston Pizza restaurants across Canada as part of Boston Pizza
International's regular hygiene program. Boston Pizza
International has advised the Company that the Company's
Skinvisible Products will be part of its national employee hygiene
program
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commencing January 1, 2000. The Company has not entered into any
written agreement with Boston Pizza International but has
received a few orders from the franchisees of Boston Pizza
International.
Company Web Site
The Company maintains a web site on the Internet at
"www.skinvisible.com" ("Web Site") as part of its marketing
strategy. The Web Site provides viewers with information regarding
the Company and the Skinvisible Products. Persons who want to
contact the Company directly regarding purchases of Skinvisible
Products may do so via e-mail. The Company refers all inquiries
for purchases in the retail market to EYI in accordance with the
EYI North American Agreement. The Company also maintains a
hyperlink to EYI's web site in order that potential purchasers may
contact EYI directly.
Competition
The Company's Skinvisible Products have been developed to compete
against the following products:
* products which prevent occupational hand disease; and
* products which can prevent the cross-contamination and
transfer of pathogens.
The Company has developed its brand name formulations to target the
different markets which consume these products. The Company's
competition in each of these markets is summarized below:
1. Barrier Products for Occupational Hand Disease
----------------------------------------------
The Company's Skinvisible Products prevent against
occupational hand disease as a result of the properties of the
polymer base of the Skinvisible Products. The Company is
marketing the Skinvisible Products as a barrier to occupation
hand disease to the industrial markets and the salon markets.
The Company is coupling the occupational hand disease
properties of the Skinvisible Products with the antimicrobial
properties of the Skinvisible Products in marketing the
Skinvisible Products to the medical and food markets.
The Company faces competition from a number of products which
claim to combat occupational hand disease and which fall under
the FDA monograph for barrier products. All of these
products, to the knowledge of the Company, establish a barrier
between the skin and the outside elements using a compound
which is not favorable to the user's skin. These compounds
are usually made up of a variety of waxes, including dimethicone
(silicone) and alcohol. All of these compounds clog a user's
skin. Barrier products have been used for years and are not
accepted in the medical or food industries due to the fact
that skin which cannot breathe becomes hot and moist and
creates a breeding ground for bacteria. Additional problems
associated with barrier products are that they may wash off
when coming in contact with moisture or water and may go into
open cavities, in the case of the medical industry, or into
food products, in the case of the food industry.
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Key competitors who produce barrier products for occupational
hand disease include the following:
Product Manufacturer
- ------- ------------
Gloves in a Bottle 1998 Glovesina Bottle, Inc.
GloveCote Fibre Glass-Evercote, Co., Inc.
Invisible Glove Blue Magic, Inc.
2. Antimicrobial Products
----------------------
The Company also markets Skinvisible Products as antimicrobial
products which prevent the cross-contamination of pathogens on
the hands. The FDA requires all products claiming to be
antimicrobial to meet the FDA tentative monograph for antimicrobial
products.
The number one selling products for the cross-contamination of
pathogens on the skin are instant hand sanitizers. These
products are available in both the professional market and in
the retail market. The instant hand sanitizers have an
alcohol content of at least 67% with added skin emollients for
skin protection. Instant hand sanitizers have a 100% instant
kill rate against pathogens; however, the instant hand
sanitizers do not offer the user any long term protection. A
user's skin will become contaminated with pathogens as soon as
the user touches a pathogen after using an instant hand
sanitizer. An additional problem associated with instant hand
sanitizers is that prolonged usage will dry out a user's skin.
There are other antimicrobial skin protection products with
which the Company will compete within this market. Most other
products use waxes or dimethicone (silicone) mixed with off the
shelf polymers. Additional competitors are entering this
market with polymer based products. The Company believes that
its proprietary polymer formulation is unique in the market as
it will not wash off and has the ability to kill pathogens
both on contact and up to four hours on a user's skin. The
Company plans to use these characteristics of the Skinvisible
Products to market its products against those introduced by
competitors.
The following companies currently manufacture products which
are competitive with the Skinvisible Products in the
antimicrobial product market:
Product Manufacturer
- ------- ------------
ViraShield Genomic Actives, LLC
Dermal Defense LMG Dermal Defense
Unique Skin Unique Laboratories, Inc.
14
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As discussed above, the current market for skin care products is
highly competitive, and there are currently a number of products in
the marketplace that make claims similar to those made by the
Company and its subsidiaries. In some cases, these products are
offered by companies with established distribution channels and
greater financial resources than the Company, posing a strong
competitive threat and creating a formidable barrier to entry by
the Company into the market.
The Company has developed its competitive strategy based on its
belief that none of these competitors can offer skin protection
products with the same benefits as those of the Company. Given the
potential for skin protectants in the marketplace, however, it is
anticipated that other products may be developed in the future by
competitors with greater resources and established distribution
channels that may be able to meet or exceed this benefit and
negatively effect the Company's sales and market share. Thus, it
is part of the Company's plan of operation to obtain as wide a
market recognition as rapidly as possible based on its current
advantages to ensure on-going long-term success. Acceptance within
the medical/hospital environments as part of this plan, if
obtained, would supply support in this regard. It should be noted,
however, that no such acceptance has, as yet, been achieved and no
assurance can be given that it ever will.
Twelve Month Plan of Operation
The Company currently intends to pursue the following plan of
operations during the next twelve months:
1. The Company will continue to attempt to enter into
distribution agreements for distribution of the Skinvisible
Products to the commercial and industrial markets. Specific
attention will be given to sales in those industries where
individuals are subject to frequent hand washing, such as the
food service and heath care industries. The Company
anticipates it will spend approximately $300,000 on this
marketing expense over the next twelve month period;
2. The Company will continue to market the Skinvisible Products
with EYI and EYI International to the retail market. The
Company anticipates it will spend approximately $100,000 on
this marketing expense over the next twelve month period;
3. The Company will continue its efforts to market the
Skinvisible Products to the commercial and industrial markets
directly. The Company anticipates it will spend
approximately $600,000 on this marketing expense over the next
twelve month period.
4. The Company will continue research and development of new
products, including a sun-screen product. The Company
anticipates it will spend approximately $300,000 on additional
research and development activities over the next twelve month
period;
The Company had cash of $63,310 and accounts payable of $381,786 as
of June 30, 1999. The Company has a loan outstanding in the amount
of $715,000 as of June 30, 1999. This loan is an unsecured loan
from Mr. Harold C. Moll, a shareholder of the Company, which is
payable on demand and remains outstanding.
15
<PAGE>
The Company anticipates that the Company will spend approximately
$1,500,000 over the next twelve month period in pursuing the
Company's stated plan of operations. Of these anticipated
expenditures, the Company anticipates that approximately $900,000
will be required to be spent on the Company's plan of operations in
the next six months. Of this amount, the Company anticipates that
$400,000 will be realized from operating revenues generated by the
Company, after deduction of costs of goods sold, and $500,000 will
be raised by additional debt or equity financings of the Company.
The Company is presently undertaking a search for additional debt
or equity financing to cover these anticipated expenses and to
repay the Company's accounts payable and the unsecured demand loan
owed to Mr. Moll. The Company, however, has not, as yet, formalized
or entered into any such arrangements, and no assurance can be
given that it will be able to find any such additional financing in
time to cover its costs and expenses as they come due. A failure
by the Company to obtain such financing would have a significantly
negative effect on the Company's future operations and may result
in the Company's being shut down as an operating entity.
The actual expenditures and business plan of the Company may differ
from that stated in the above Plan of Operations. The Board of
Directors of the Company may decide not to pursue the stated
Business Plan of Operations. In addition, the Company may modify
the stated Plan of Operations based on the available amounts of
financing in the event that the Company cannot achieve the required
financings to complete the stated Plan of Operations. The Company
does not have any financing arrangement in place to enable the
Company to meet the Stated Plan of Operations.
In the event the Company is not successful in obtaining any further
debt or equity financing, the Company anticipates that it could not
sustain its business operations based on the Company's current cash
position and revenues.
The Company believes the above statements may be forward-looking
statements. Actual results of the Company and the Company's actual
plan of operations may differ materially from what is stated above.
Factors which may cause the actual results of the Company or its
actual plan of operations to vary include, among other things,
decisions of the board of directors not to pursue a specific course
of action based on its re-assessment of the facts or new facts,
changes in the Internet business or general economic conditions and
those other factors identified herein. The Company relies upon the
protection afforded forward-looking statements provided by the laws
and regulations provided under the United States Securities Act of
1933 and the Securities and Exchange Act of 1934.
Distinctive Characteristics of the Business that may have a
Material Impact on Future Financial Performance
A number of factors distinctive to the Company's business may have
a material impact on future financial performance, including:
16
<PAGE>
Competition. As noted above, competition among skin care products
is strong and presents a significant barrier to entry. In
addition, it is a reasonable possibility that existing or new
competitors could develop product lines that provide similar or
greater levels of skin protection to that provided by the
Skinvisible Products. If these factors were to occur, they would
have a significant negative impact on the future financial results
of the Company.
Marketing. The Company's marketing plan is completely dependent
upon sales and referrals of outside independent contractors. A
failure to attract a sufficient number of independent contractors
or to keep them actively involved in selling the product would have
a significant negative impact on the future financial results of
the Company.
Product. The Skinvisible Products are new and to some extent
unique in the skin care marketplace. Whenever such a new product is
offered, there is a chance that it will not be accepted by a
sufficient number of consumers to support and grow the business.
Such lackluster consumer demand for the product may be the result
of a perception that the product is not necessary, does not perform
in a significant enough manner, or is inferior to other products,
among other things. The failure to attract enough consumer demand
will have a significant negative impact on the future financial
results of the Company.
Employees
The Company has 2 employees, including its President and SVP
employs 14 individuals, including its President. All employees of
the Company and SVP are full-time employees.
Mr. Terry Howlett, President of the Company, is paid a salary of
$10,000 per month. The Company also reimburses Mr. Howlett for
expenses incurred in connection with his duties as President of the
Company. The Company and Mr. Howlett have not entered into any
written employment agreement.
The services of Mr. Gerald Gauthier, Chief Operating Officer of
SVP, are provided to the Company pursuant to a written employment
agreement between Mr. Gauthier and the Company dated April 1, 1999.
A copy of this employment agreement is attached hereto as an
exhibit. The Company pays to Mr. Gauthier a salary of $100,000 per
year plus an expense allowance of $1,400 per month. The term of
Mr. Gauthier's employment agreement is for a one year period
expiring April 1, 2000. In addition, Mr. Gauthier has been granted
an option to purchase 30,000 shares of the Company's common stock
at a price of $3.50 per share under the Company's Employee Stock
Option Plan.
SVP has entered into an employment agreement dated March 31, 1998
with Mr. Roger Hocking (the "Hocking Agreement") whereby the
services of Mr. Hocking as manager of manufacturing are provided to
SVP. The Hocking Agreement has a three year term expiring March
31, 2001. The Company pays to Hocking a salary of $6,000 per
month, plus an automobile allowance of $400 per month.
17
<PAGE>
The Company has entered into a talent license and marketing
agreement dated April 1, 1999 with Mr. Randall Cunningham, a
quarterback with the Minnesota Vikings football team (the
"Cunningham Agreement"). Mr. Cunningham has agreed to permit the
Company to use his name, image, likeness, picture and position as
quarterback of the Minnesota Vikings in the Company's marketing
efforts for the Skinvisible Products. Mr. Cunningham has also
agreed to make himself available for personal appearances and as a
spokesman at the direction of the Company during the months of
February through June of each year, which appearances will include
a minimum of ten cities within the United States and Canada in each
year. The Cunningham Agreement has a term of three years and
obligates the Company to grant to Cunningham options to purchase
120,000 shares of the Company's common stock at a price of $3.50
per share. The options are required to be issued over a period of
nine months, with 40,000 options granted by July 1, 1999, an
additional 40,000 options granted by October 1, 1999 and an
additional 40,000 options granted by January 1, 2000. The Company
is also obligated to reimburse Mr. Cunningham for any expenses
incurred with his appearing at Company functions. The Company has
completed the grant of options to purchase 120,000 shares of the
Company's common stock to Mr. Cunningham, as required by the
Cunningham Agreement.
A copy of each of the Hocking Agreement, the Gauthier Agreement and
the Cunningham Agreement are attached hereto as exhibits. The
discussion herein regarding the Hocking Agreement, the Gauthier
Agreement and the Cunningham Agreement is qualified in its entirety
by reference to the copies of the attached agreements.
Any growth in the number of employees will be largely dependent on
the success of the Company's sales efforts.
None of the employees of the Company or its subsidiaries are
subject to collective bargaining agreements, nor have they been on
strike, or threatened to strike, within the past three years.
Research and Development Expenditures
During the past fiscal year, SVP spent approximately $384,550 on
research and development activities for the Company. As the
Company was formed in 1998, there were no research and development
expenditures from years prior to 1998.
Item 7. Description of Property
The Company's head office and administration activities are carried
at leased premises located at 3095 E. Patrick Lane, Suite 1, Las
Vegas, Nevada 89120. The premises are comprised of 4000 square
feet and are leased for a term of 2 years expiring on June 30, 2001
at a lease rate of $3,590 per month.
The Company's research and development and manufacturing activities
are carried on through SVP at leased premises located at 6320 South
Sandhill Road, Suite 10, Las Vegas, Nevada 89120. The premises are
comprised of a 6000 square feet mixed office and industrial
facility, and are leased for a
18
<PAGE>
term of 4 years expiring on April 14, 2002. The obligations under
the lease for this property are $59,368 for the period from
July 1,1999 to December 31, 1999, $121,032 for the year 2000,
$101,832 for the year 2001 and $24,122 for the period from January 1,
2002 to April 14, 2002. The Company is presently seeking additional
financing and more product sales necessary in order to allow the
Company to meet this and its other obligations.
The Company does not lease or own any property, however, SVP owns a
number of personal property items, including certain manufacturing
equipment, computers and fax machines and office furniture and
furnishings. SVP also leases a telephone system.
Item 8. Directors, Executive Officers and Significant Employees
The following information sets forth the names of the officers and
directors of the Company and its subsidiaries, their present
positions with the Company and its subsidiaries, and their
biographical information.
Skinvisible, Inc.
- -----------------
Name Office(s) Held
- ---- --------------
Terry Howlett Director, President
Howard Thomson Director, Secretary, Treasurer
Jerry Hodge Director
Lord Anthony St. John Director
Jost Steinbruchel Director
Skinvisible Pharmaceuticals, Inc.
- ---------------------------------
Name Office(s) Held
- ---- --------------
Terry Howlett Director, President & Secretary
Jerry Hodge Director
Gerald Gauthier Chief Operating Officer
Skinvisible International, Inc.
- -------------------------------
Name Office(s) Held
- ---- --------------
Terry Howlett President
Jerry Hodge Director
Roger Hocking Secretary, Treasurer
19
<PAGE>
Skinvisible Pharmaceuticals (Canada) Inc.
- -----------------------------------------
Name Office(s) Held
- ---- --------------
Terry Howlett President
Howard Thomson Director, Secretary, Treasurer
Mr. Terry H. Howlett (Age 51), President & Director, Skinvisible,
Inc. Mr. Howlett has a diversified background in market
initialization and development, sales and venture capital financing
for emerging growth companies. He has held senior management,
marketing and sales positions with various companies, including the
Canadian Federation of Independent Business, Family Life Insurance,
and Avacare of Canada and founded Presley Laboratories, Inc. which
marketed cosmetic and skin care products on a direct sales basis.
For the ten years prior to becoming President of the Company, Mr.
Howlett was the President and CEO of Voice-it Solutions, Inc., a
publicly traded company on the Vancouver Stock exchange that made
voice response software for order entry systems.
Mr. Howard Thomson (Age 51), Director, Treasurer and Secretary,
Skinvisible, Inc. Mr. Thomson has recently retired after 17 years
in senior management positions with the Bank of Montreal, including
5 years as Branch Manager, 4 years as Regional Marketing Manager
and 5 years as Senior Private Banker. He previously resided in
London, England and was employed by the National Westminster Bank
for 13 years.
M. Jerry Hodge (Age 54), Director, Skinvisible, Inc. For over the
past five years, Mr. Hodge has been the President & CEO of
Hospitality Network, the largest provider of in-room video
entertainment to the hotel/casino industry, and has professional
management expertise in the areas of business development, finance,
operations, and corporate strategic planning.
Roger J. Hocking (Age 45), Secretary & Treasurer, Skinvisible
International, Inc. Mr. Hocking attended the University of
California where he studied marketing and sales. He worked in the
retail sales field for various companies, starting his first
company, Applied Marketing in 1981, which sold waterbed
conditioners (including chemical disinfectants) and accessories.
He sold this business in 1991, thereafter focusing on sales of
houseware products, and moving in 1992 to Las Vegas, Nevada. Mr.
Hocking formed Manloe Laboratories Inc. (now Skinvisible
Pharmaceuticals, Inc.) in March 1992 and was President of that
company until its acquisition in 1998.
Lord Anthony St. John (Age 41), Director, Skinvisible, Inc. Lord
Anthony St. John has been a member of the House of Lords in England
since 1978. In 1998, he was appointed Extra Lord-in-Waiting to her
Majesty the Queen. He has been a consultant to Merrill Lynch
International since 1991 and serves as a Director on other publicly
traded companies. Since graduating with a law degree in 1979 from
Capetown, South Africa, Lord St. John has spent a number of years
in the commercial field as auditor and legal counsel for
international companies.
20
<PAGE>
Jost Steinbruchel (Age 58), Director, Skinvisible, Inc. Since
1984, Mr. Steinbruchel has operated his own company in Geneva
Switzerland specializing in financial engineering in international
trade throughout a wide network of banking relations, principally
in Europe, China, Australia and Africa. Previously, he spent 20
years of his professional career as an executive in international
banking with Lloyds of London, Citicorp and Credit Suisse. Mr.
Steinbruchel has a law degree from Sorboure, Paris.
Gerald Gauthier (Age 62) is Chief Operating Officer of SVP. Mr.
Gauthier received his Bachelor of Commerce degree from the
University of Montreal in 1970. Mr. Gauthier was controller of
Wilson Oilfield Supply of Calgary, Alberta from 1983 to 1990. Mr.
Gauthier was a self-employed management consultant from 1990 to
1992, during which time he gained experience in multi-level
marketing operations. Mr. Gauthier was vice-president of Pure Life
International/ Royal Bodycare Canada Inc., a multi-level marketing
company retailing natural health care products, from 1992 to 1993.
Mr. Gauthier was business manager of Guisachan Family Medicine, a
medical office in Kelowna, British Columbia from 1994 to 1999. Mr.
Gauthier joined SVP as Chief Operating Officer in 1999.
Terms of Office
Directors of the Company are appointed for one year terms to hold
office until the next annual general meeting of the holders of the
Company's Common Stock or until removed from office in accordance
with the Company's by-laws. Officers of the Company are appointed
by the Company's board of directors and hold office until removed
by the Company's board of directors.
Item 9. Remuneration of Directors and Officers
The following table sets forth certain information as to the
Company's three highest paid executive officers and directors for
the fiscal year ended December 31, 1998.
Summary Compensation Table
- -----------------------------------------------------------------
Name and principal position | Year | Salary
- -----------------------------------------------------------------
| |
Terry Howlett, Director, President | 1998 | $ 90,000
Howard Thomson, Director, Sec/Treas. | 1998 | $ 9,000
Jerry Hodge, Director | 1998 | $ 9,000
| |
Aggregate of three Highest Paid | |
Officers and Directors | | $108,000
- -------------------------------------------------------------------
In addition, certain of the officers are provided an automobile
allowance for use of their vehicles for Company business and have
and/or will receive stock options to purchase shares of the
Company.
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<PAGE>
Cash compensation of $114,000, in the aggregate, was paid to
executive officers and directors for services in fiscal year 1998.
The Company pays a fee of $1,000 per month to its directors, other
than Terry Howlett, in consideration for each director acting as a
director of the Company. The Company pays to Mr. Terry Howlett a
salary of $10,000 per month and does not pay Mr. Howlett any
separate fee for acting as a director of the Company. See Item 6.
"Description of Business - Employees".
Item 10. Security Ownership of Management and Certain Security
Holders
The following table sets forth, as of August 15, 1999, the
beneficial ownership of the Company's Common Stock by each person
known by the Company to beneficially own more than 10% of the
Company's Common Stock outstanding as of such date and by the
officers and directors of the Company individually and as a group.
Except as otherwise indicated, all shares are owned directly.
Name and address Amount of Percent
Title of class of beneficial owner beneficial ownership of class
- -------------- ------------------- -------------------- --------
Common Terry Howlett 1,000,000 9.80%
Director, President
Common Howard Thomson 156,000 1.53%
Director,
Sec./Treas.
Common Anthony St. John 150,000 1.47%
Director
Common Jost Steinbruchel 550,000 5.39%
Director
Common Jerry Hodge 250,000* 2.45%
Director
Common All Officers and 2,106,000 20.65%
Directors as a
Group ( 5 persons)
* Includes shares owned by D. Hodge in the amount of 50,000 shares.
The following table shows the issued and outstanding stock options
held by the officers and directors of the Company, and by each
person known by the Company to beneficially own more than 10% of
the Company's Common Stock as of August 1, 1999. Each of the
following options was granted by the Company on January 8, 1999.
22
<PAGE>
Name Exercise Price No. of Options Term of Option
- ---- -------------- -------------- --------------
Terry Howlett $1.65 300,000 5 years
Jerry Hodge $1.50 50,000 5 years
Howard Thomson $1.50 50,000 5 years
Anthony St. John $1.50 50,000 5 years
Jost Steinbruchel $1.50 50,000 5 years
Item 11. Interest of Management and Others in Certain Transactions
None of the directors or officers of the Company, nor any proposed
nominee for election as a director of the Company, nor any person
who beneficially owns, directly or indirectly, shares carrying more
than 10% of the voting rights attached to all outstanding shares of
the Company, nor any promoter of the Company, nor any relative or
spouse of any of the foregoing persons has any material interest,
direct or indirect, in any transaction since the date of the
Company's incorporation or in any presently proposed transaction
which, in either case, has or will materially affect the Company.
The Company's policy regarding related transactions requires that
any director or officer who has an interest in any transaction to
be approved by the board of directors of the Company disclose the
presence and the nature of the interest to the board of directors
prior to any approval of the transaction by the board of directors.
The transaction may then be approved by a majority of the
disinterested directors, provided that an interested director may
be counted in determining the presence of a quorum at the meeting
of the board of directors to approve the transaction. The
Company's policy regarding compensation for directors and officers
is that the board of directors may, without regard to personal
interest, establish the compensation of directors for services in
any capacity.
Item 12. Securities Being Registered
The securities being registered are the shares of the Company's
common stock, par value $0.001 per share. Under the Company's
Articles of Incorporation, the total number of shares of all
classes of stock that the Company has authority to issue is
100,000,000 shares of common stock, par value $0.001 per share (the
"Company Common Stock"). As of August 15, 1999 a total of
10,206,000 shares of the Company's Common Stock were issued and
outstanding.
Common Stock
Holders of the Company's Common Stock are entitled to one vote for
each share on all matters voted on by the shareholders. They do not
have cumulative voting rights in the election of directors or for
any other purpose. The first annual meeting of shareholders has not
as yet been scheduled.
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<PAGE>
Moreover, holders of the Company Common Stock do not have pre-
emptive rights, or any subscription, redemption or conversion
privileges; but they are entitled to participate ratably in
dividends as declared by the Board of Directors, and in the
distribution of assets in the event of liquidation or dissolution
of the Company.
Transfer Agent
The transfer agent for the Common Shares is National Stock
Transfer, 3098 South Highland Drive, Suite 485, Salt Lake City,
Utah 84106.
Share Purchase Warrants
The Company has not issued and does not have outstanding any
warrants to purchase shares of the Company Common Stock.
Options
The Board of Directors and Shareholders of the Company have
approved the Company's Incentive Stock Option Plan. The Company has
granted options to purchase 300,000 shares of Company Common Stock
to Mr. Terry Howlett, a director and president of the Company,
exercisable at a price of $1.65 per share effective January 8,
1999. The Company also granted options to purchase 644,500 shares
of Company Common Stock to other officers, directors, employees and
consultants of the Company exercisable at a price of $1.50 per
share effective January 8, 1999.
The Company has subsequently granted additional options to purchase
511,000 shares of the Company's Common Stock to the Company's
employees and consultants at prices ranging from $3.00 per share to
$4.00 per share.
24
<PAGE>
PART II
Item 1. Market Price of and Dividends on the Registrant's Common
Equity and Other Stockholder Matters
The shares of the Company's common stock are traded on the OTC
Bulletin Board under the symbol "SKVI". The first day in which the
Company's shares traded was January 8, 1999. The high and the low
bids for the Company's shares for each quarter of actual trading
were:
Quarter High Low
- ------- ---- ----
1st Quarter 1999 $5.25 $1.50
2nd Quarter 1999 $5.59 $4.00
3rd Quarter 1999 (to date) $5.25 $2.50
The quotations reflect inter-dealer prices, without retail mark-up,
mark-down or commission and may not represent actual transactions.
As of April 15, 1999, there were approximately 49 registered
shareholders in the Company. The Company has never issued any
dividends and is not likely to do so in the near future. There are
no legal restrictions on the Company that limit its ability to pay
dividends on its common stock.
Item 2. Legal Proceedings
There are no legal proceedings pending or threatened against the
Corporation.
Item 3. Changes in and Disagreements with Accountants
The Company has had no changes in or disagreements with its
accountants since its inception in March, 1998.
Item 4. Recent Sales of Unregistered Securities
The Company completed the issuance of 5,225,000 shares of the
Company's common stock to eighteen (18) persons at a deemed price
of $0.001 per share on March 20, 1998 pursuant to Section 4(2) of
the Securities Act of 1933 (the "1933 Act") for services in
connection with the formation of the Company's business. All
shares were issued to persons who were close friends and business
associates of Mr. Terry Howlett, the sole director and officer of
the Company as at March 20, 1998. Each shareholder provided
services in connection with identifying, reviewing and evaluating a
business opportunity of the Company and negotiating the acquisition
of the Company's business. Each shareholder was either a
sophisticated investor or an accredited investor. Each shareholder
was given the opportunity to review the information available to
the Company on SVP and its antimicrobial hand lotion business
prior to the Company's agreement to acquire SVP. All shares issued
to the shareholders were "restricted securities", as defined in the
1933 Act.
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<PAGE>
The Company completed the issuance of 275,000 shares of the
Company's common stock to Mr. Roger Hocking on March 27, 1998
pursuant to Section 4(2) of the1933 Act. The shares were issued to
Mr. Hocking in consideration of the acquisition by the Company of
SVP. All shares issued to Mr. Hocking were "restricted
securities", as defined in the 1933 Act.
The Company completed an offering of 2,000,000 common shares at a
price of $0.15 per share on April 30, 1998. The offering was
completed pursuant to Rule 504 of Regulation D of the Securities
Act.
The Company completed an offering of 700,000 common shares at a
price of $1.00 per share on May 29, 1998 pursuant to Rule 504 of
Regulation D of the Securities Act. The Company paid commissions
totaling $50,000 to three parties in connection with the completion
of this offering: ISG Capital Markets of Frankfurt, Germany,
Hartford Securities of Grand Cayman, British West Indies and Jost
Steinbruchel of Geneva, Switzerland.
The Company completed an offering of 1,500,000 common shares at a
price of $1.00 per share on March 8, 1999 to a total of four
accredited investors pursuant to Rule 506 of Regulation D of the
Securities Act. All shares issued pursuant to this offering were
"restricted securities", as defined in the 1933 Act.
The Company completed the issuance of 500,000 shares of the
Company's common stock to Mr. Bruce Jezior on February 2, 1999
pursuant to Section 4(2) of the1933 Act. The shares were issued to
Mr. Jezior upon execution of the amendment to the Manufacturing
Agreement . See Item 6. "Description of Business - Manufacturing
and Marketing License Agreement". All shares issued to Mr. Jezior
were "restricted securities", as defined in the 1933 Act.
Item 5. Indemnification of Directors and Officers
The officers and directors of the Company are indemnified as
provided under the Nevada Revised Statutes (the "NRS") and the
Bylaws of the Company.
Under the NRS, director immunity from liability to a corporation or
its shareholders for monetary liabilities applies automatically
unless it is specifically limited by a corporation's articles of
incorporation (which is not the case with the Company's Articles of
Incorporation). Excepted from that immunity are: (i) a willful
failure to deal fairly with the corporation or its shareholders in
connection with a matter in which the director has a material
conflict of interest; (ii) a violation of criminal law (unless the
director had reasonable cause to believe that his or her conduct
was lawful or no reasonable cause to believe that his or her
conduct was unlawful); (iii) a transaction from which the director
derived an improper personal profit; and (iv) willful misconduct.
The By-laws of the Company provide that the Company will indemnify
its directors and officers to the fullest extent not prohibited by
the Nevada General Corporation Law; provided, however, that the
Company may modify the extent of such indemnification by individual
contracts with its directors and officers; and, provided, further,
that the Company shall not be required to indemnify
26
<PAGE>
any director or officer in connection with any proceeding (or part
thereof) initiated by such person unless (i) such indemnification is
expressly required to be made by law, (ii) the proceeding was
authorized by the Board of Directors of the corporation, (iii) such
indemnification is provided by the Company, in its sole discretion,
pursuant to the powers vested in the corporation under the Nevada
General Corporation Law or (iv) such indemnification is required to
be made pursuant to the By-laws.
The By-laws of the Company provide that the Company will advance to
any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that he is or was a director
or officer, of the corporation, or is or was serving at the request
of the corporation as a director or executive officer of another
corporation, partnership, joint venture, trust or other enterprise,
prior to the final disposition of the proceeding, promptly
following request therefor, all expenses incurred by any director
or officer in connection with such proceeding upon receipt of an
undertaking by or on behalf of such person to repay said amounts if
it should be determined ultimately that such person is not entitled
to be indemnified under the By-laws of the Company or otherwise.
The By-laws of the Company provide that no advance shall be made by
the Company to an officer of the Company (except by reason of the
fact that such officer is or was a director of the Company in which
event this paragraph shall not apply) in any action, suit or
proceeding, whether civil, criminal, administrative or
investigative, if a determination is reasonably and promptly made
(i) by the Board of Directors by a majority vote of a quorum
consisting of directors who were not parties to the proceeding, or
(ii) if such quorum is not obtainable, or, even if obtainable, a
quorum of disinterested directors so directs, by independent legal
counsel in a written opinion, that the facts known to the decision-
making party at the time such determination is made demonstrate
clearly and convincingly that such person acted in bad faith or in
a manner that such person did not believe to be in or not opposed
to the best interests of the Company.
27
<PAGE>
PART F/S
FINANCIAL STATEMENTS
The Company's audited Financial Statements, as described below, are
attached hereto.
1. Audited Financial Statements for the period ending December
31, 1998, including:
(a) Independent Auditors' Report;
(b) Consolidated Balance Sheet;
(c) Consolidated Statement of Operations and Accumulated
Deficit;
(d) Consolidated Statement of Changes in Stockholders'
Deficit;
(e) Consolidated Statement of Cash Flows;
(f) Notes to Consolidated Financial Statements;
(g) Supplemental Information.
2. Consent by Auditor to use of Audited Financial Statements
28
<PAGE>
PART III
INDEX TO EXHIBITS
Exhibit 1: Articles of Incorporation
Exhibit 2: Amendments to Articles of Incorporation: 3-19-98 &
2-26-99
Exhibit 3: Bylaws
Exhibit 4: Manufacturing and Marketing License Agreement
Exhibit 5: Letter Agreement Modifying the Manufacturing and
Marketing License Agreement
Exhibit 6: Acquisition Agreement of Manloe Labs
Exhibit 7: Letter Agreement Amending the Agreement for
Acquisition of Manloe Labs
Exhibit 8: Agreement between the Company and Aquastel Pacific
Environmental Technology of Hong Kong
Exhibit 9: Distribution Agreement between SVP and Essentially
Yours Industries Corp.
Exhibit 10: Distribution Agreement between SVP and EYI
International Limited
Exhibit 11: Agreement between the Company and Gerald Gauthier
Exhibit 12: Agreement between the Company and Roger Hocking
Exhibit 13: Agreement between the Company and Randall
Cunningham
Exhibit 14: Financial Data Schedule
29
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of
1934, the Registrant caused this Form 10-SB Registration Statement
to be signed on its behalf by the undersigned, thereunto duly
authorized.
SKINVISIBLE, INC.
Date: September 13, 1999
By: \S\ Terry Howlett
__________________________________
TERRY HOWLETT Director, President
and Chief Executive Officer
30
<PAGE>
EXCLUSIVE DISTRIBUTION - CONTRACT/AGREEMENT
BETWEEN
Aquastel Pacific Environmental Technology Limited
Hereinafter called and referred to as the "Contractee".
AND
Skinvisible Pharmaceuticals, Inc.
Herein after called and referred to as the "Contractor".
1. The Contractee receives the full and exclusive rights
for the sale and distribution within the following
territory:
Hong Kong, China, Taiwan, Singapore, Malaysia and
Thailand. (Above named countries hereinafter as
"territories" )
The Contractor hereby grants to the Contractee the
full and every rights to purchase the products, as
define hereinafter, from the Contractor in order to
re-sell, market and promote said products.
2. Products: Skinvisible Anti-microbial Skin Protector,
Sun-screen and Sun-tan Skinvisible Protector.
Hereinafter called the "product"; which includes any
and every skin protection affiliate, connected,
substituted, modified product of the named product
during the term of agreement.
3. The Contractee agrees this right will be limited to a
term of three years. The term will begin from the
date of the signing of this contract. In its first
term, there is 8-month cancellation clause by either
party. After first term, Contractee has the right to
renew every 3-year term automatically if meets
mutually agreedable sales volume stated in Clause 10.
4. The Contractor will pass to the Contractee, relevant
data, advertising material, technical documentation,
sale support materials, brochures, promotional
material and material and documents connected and/or
related with the products. The Contractee is
responsible for supplying the above mentioned
materials in the language of the respective
territories.
5. The Contractee agrees to purchase the said product at
the following pricing. Any order placed will be on
the basis of time of delivery shall be approximately
3(three) weeks.
Pricing: Size FOB/Las Vegas, Nevada
2 oz. US$ 1.94
4 oz. US$ 2.78
8 oz. US$ 4.46
16 oz. US$ 7.85
32 oz. US$14.57
6. The sales price fixed in agreements between the two
parties shall have a validity of 6 months and shall be
reviewed at the end automatically.
<PAGE>
7. The Contractor will not appoint during the terms of
this agreement other distributors and/or agents
and/or representative of any kind for the
terms of this contract to sell and/or distribute the
products, directly and/or indirectly whatsoever to end-users
and customers within the territories.
8. The only exception will be in the special case of
recommendation. If Contractee of a certain territory
recommends to end-user to another territory in which
there exists already another Contractee, the
recommending Contractee, will receive 5% commission of
the profit from a successful sale from the Contractee
of this other territory. If in this order territory
exists no Contractee. Contractee from another
territory must inform and consult Contractor for
advice and instruction before taking any action.
9. The Contractor will use his best ability to strictly
observe and/or survey the distribution network within
the territories.
This includes an exclusive distribution being
fulfilled and/or granted by the Contractor towards the
Contractee, the Contractor expressly undertakes to
observe Contractee's exclusive right and to prevent
any and all sale of product from third parties within
the territory.
10. The Contractee agrees to purchase US $30,000 mentioned
products in the first 8-month and another US $30,000
in the following 4-month. Then after shall be a
minimum order of US $100,000 per year, with the first
order US $30,000 placed within 7 days of signing the
agreement and the second order US $30,000 placed
within 7 days of the beginning of the 4-month period.
11. The Contractor's warranty to the Contractee as to the
products is as follows:
The Contractor warrants to the Contractee that each
producer will be free from defects in materials and
workmanship for a period of thirty six (36) months
from the date of manufacture in respect of the
relevant products. The Contractor's sole
responsibility under this warranty will be to replace
at his option and cost.
The Contractee will forward the bacterial testing report
when shipment has arrived.
12. The parties agree herewith that the governing law as
well as situs of court and/or arbitration shall be
Nevada USA law.
All changes and/or modifications must be in written
form and countersigned by both sides.
Signed and accepted this day of May 24th 1999.
Contractor Contractee
For and on behalf of
AQUASTEL Pacific Environmental
Technology Ltd.
/s/ Terry Howlett /s/ Alan Wen
- ----------------- -----------------------------
Authorized Signature
Skinvisible Pharmaceuticals, Inc. Aquastel Pacific Environmental
Technology Limited
Seal and Signature Seal and Signature
2
<PAGE>
DISTRIBUTION AGREEMENT
This Distribution Agreement (the "Agreement") dated for reference
the 28th day of July, 1999
BETWEEN:
SKINVISIBLE PHARMACEUTICALS, INC.,
a Nevada Corporation having its head office
at 3095 E. Patrick Lane, Suite 1
Las Vegas, Nevada, USA 89120
Fax # (702) 433-7192
(the "Company")
OF THE FIRST PART
AND:
ESSENTIALLY YOURS INDUSTRIES CORP., a
British Columbia Company having its head office at
Suite 201, 8322 - 130th Street
Surrey, British Columbia, Canada V3W 8J9
Fax # (604) 502-5119
(the "Distributor")
OF THE SECOND PART
WHEREAS:
1. The Company has developed a line of hand lotion products
which are marketed under the name "Skinvisible".
2. The Distributor wishes to acquire the North American rights to
market and distribute the Company's Skinvisible hand lotion
products on a sole and exclusive basis throughout North
America on the terms and conditions contained herein.
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the
mutual covenants and agreements contained herein, the parties
hereto agree as follows:
1. DEFINITIONS
In this Agreement, the following words and phrases shall have the
following meanings:
(A) "Confidential Information of the Company" means all
business plans, trade secrets, design concepts,
knowledge, information, production technology, processes,
know how, business projections, customer lists and
intellectual property concerning or relating to the
business of the Company and the Products, including the
<Page >
-2-
Manufacturing Information, which may be communicated to,
acquired by, or learned of by the Distributor from the
Company, whether or not such information is subject to
proprietary protection at law;
(B) "Confidential Information of the Distributor" means all
customer lists, independent sales agent lists, direct
sales marketing contacts and information, business plans,
trade secrets, knowledge, information, know how,
business projections, computer software programs and
intellectual property concerning or relating to the
business of the Distributor which may be communicated to,
acquired by, or learned of by the Company from the
Distributor, whether or not such information is subject
to proprietary protection at law;
(C) "Direct Selling Market" means that portion of the Retail
Market characterized by person-to-person, multi-level or
network marketing;
(D) "Future Products" means any future products developed by
the Company marketed under the name "Skinvisible" and
using the same polymer base as the Products;
(E) "Industrial Market" means the commercial, institutional
and industrial market for the Products;
(F) "Manufacturing Information" means all information,
technology, data and trade secrets relating to the
manufacture of the Products;
(G) "Patents" means any patents underlying the Products
which are owned or may be owned by the Company or
licensed or which may be licensed to the Company;
(H) "Products" means the following hand lotion products
marketed by the Company under the trade name
"Skinvisible":
(i) Skinvisible Medical Formula;
(ii) Skinvisible Food Service Formula;
(iii) Skinvisible Personal Formula;
(iv) Skinvisible Industrial Formula;
(v) Skinvisible Salon Formula.
(I) "Retail Market" means the retail market for the Products
whereby the Products are sold to the public or to re-
sellers for sale to the public and is deemed to exclude
the Industrial Market;
(J) "Term" has the term described in Section 12.1 of this
Agreement;
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-3-
(K) Territory" means North America. North America shall mean
Canada, the United States and Mexico;
(L) "Trade Name" means the tradename "Skinvisible" and the
trademark "Skinvisible" in the event that the Company is
granted trademark protection by the United States Patent
and Trademark Office.
2. Grant of Exclusive Distribution Rights
2.1 Subject to the terms and conditions of this Agreement, the
Company hereby grants to the Distributor the exclusive right to
market, distribute and sell the Products to the Retail Market
within the Territory for the Term of this Agreement (the
"Distribution Rights"). The Distribution Rights will include the
following rights:
(A) the right to market, distribute and sell the Products;
(B) the right and license to use the Trade Name in connection
with the marketing, distribution and sale of the
Products.
2.2 The Distributor will have the right to market, distribute and
sell Products through the Distributor's independent business
associates who have entered into the Distributor's standard
application and form of agreement. It is expressly acknowledged
and agreed that sales by independent business associates do not
constitute the grant of distribution, marketing or sales rights to
sub-distributors within the meaning of Section 5.1 of this
Agreement.
2.3 The Distribution Rights will extend to the right and license
to use the trademark "Skinvisible" in the event that the Company's
application to the United States Patent and Trademark Office for
the registration of "Skinvisible" as a trademark is approved. The
Distributor acknowledges that there is no assurance that trademark
protection will be granted by the United States Patent and
Trademark Office.
3. Minimum Purchase Requirements and Product Prices
3.1 As a condition of maintaining the Distribution Rights, the
Distributor must purchase the following minimum purchase amounts of
Products for the Retail Market (the "Minimum Purchase
Requirements"):
(A) during the period from the Effective Date of this
Agreement to December 31, 1999, the Distributor must
purchase from the Company a minimum of 50,000 ounces of
the Products at the prices provided for by this
Agreement; and
(B) during the balance of the Term, the Distributor must
purchase from the Company not less than the minimum
purchase requirements set forth in the table below at the
prices provided for by this Agreement:
<Page >
-4-
Year Minimum Purchase Requirement
January 1, 2000 to
December 31, 2000 1,000,000 ounces
January 1, 2001 to
December 31, 2001 1,250,000 ounces
January 1, 2002 to
December 31, 2002 1,560,000 ounces
Purchases by Distributor shall be cumulative so that purchases in
excess of the Minimum Purchase Requirements in any applicable
period will count toward Minimum Purchase Requirements in
subsequent periods. The failure of the Distributor to achieve the
Minimum Purchase Requirements in any applicable period will be
deemed to be a default of this Agreement entitling the Company to
terminate in accordance with Section 12.2 of this Agreement. It is
understood and agreed that the only remedy of the Company against
the Distributor for failure to meet Minimum Purchase Requirements
will be to terminate this Agreement in accordance with Section 12.2
herein. The Company shall not have any claim or demand against the
Distributor to make or make payment for any Minimum Purchase
Requirements.
3.2 The prices to be paid by the Distributor to the Company for
the Products are as follows, subject to adjustment as provided in
Section 3.3 (the "Product Prices"):
Product Size Price
2-oz bottle $1.94 US
4-oz bottle $2.78 US
8-oz bottle $4.46 US
16-oz bottle $7.85 US
3.3 The Product Prices will be fixed for the 1999 calendar year.
Such prices shall be exclusive of all city, state and federal
taxes, including, without limitation, manufacture, value added,
sales, use, receipts, gross income, excise, occupation or similar
taxes, which obligations attributable to the manufacture and sale
to the Distributor are the obligations of the Distributor.
Following the initial 1999 period, unless agreed otherwise by the
parties in writing, the Company shall have the right to adjust
prices not more than once per year and then only to the extent
necessary to cover increased costs and expenses. In the event of
such a price increase, the Company will supply the Distributor
written notice of the price increases. Price increases shall take
effect on the date designated by the Company, but in no event
earlier than one hundred twenty (120) days following receipt of
notice of such increase by the Distributor. Any purchase order
placed by the Distributor prior to the expiration of said one
hundred twenty (120) day period shall by filled by the Company at
the pre-increase price.
3.4 The Distributor will pay to the Company 25% of the aggregate
price for all Products at the Product Price ordered (the "Order
Price") upon submission of an order for Products to the Company.
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-5-
3.5 The Company will invoice the Distributor for all Products sold
to the Distributor at the Product Prices. The Distributor will pay
the balance of the Order Price to the Company for all orders of
Products within thirty (30) days of the date of delivery FOB Las
Vegas, Nevada.
3.6 The Distributor shall have the right to establish its own
selling prices for Products to the Retail Market within the
Territory.
3.7 The determination of sales, marketing strategies, and selling
prices for the Products to the Retail Market within the Territory
will be the sole responsibility of the Distributor.
3.8 All references to money or currency herein contained shall
mean lawful money of the United States of America.
3.9 Each order placed by the Distributor for the purchase of any
Products shall be subject to the terms and conditions of this
Agreement.
3.10 All purchases of Products will be in units of 2 ounce, 4
ounce, 8 ounce or 16 ounce bottles.
3.11 The Company will deliver all Products to the Distributor FOB
Las Vegas, Nevada within 42 days of the date of receipt of an order
for Products by the Distributor.
4. Limitations on the Distribution Rights
4.1 The Distributor will use its reasonable best efforts to ensure
that the Distributor does not distribute or sell any Products for
re-sale to any person or Company in the Industrial Market within
the Territory or in any market outside the Territory.
4.2 The Distributor will not, directly or indirectly, sell, assign
or grant to any other person, firm or corporation, the right to
sell, or distribute the Products to the Industrial Market within
the Territory.
4.3 The Distribution Rights do not extend to any products
manufactured by the Company and marketed under the "Skinvisible"
name other than the Products.
4.4 The Distributor will not market, distribute or sell any
products similar to or competitive with the Products during the
Term of this Agreement, save and except those products already part
of Distributor's existing Product line.
4.5 Nothing in this Agreement shall be deemed in any way to
constitute any transfer or assignment by the Company of any Patents
or Confidential Information to the Distributor or to give the
Distributor any right, title or interest in or to any Patents or
Confidential Information. The Distributor acknowledges that all
patents pertaining to the Products or Confidential Information are
and shall remain the exclusive property of the Company.
<Page >
-6-
4.6 The Distributor will not purchase Products from any person
other than the Company.
4.7 Nothing in this Agreement shall limit the right of the Company
to market, distribute and sell products with the same or similar
formulations under different product names and labels, not to be
confusing with the name "Skinvisible", with the express exclusion
of the Direct Selling Market.
5. Sub-Distributors
5.1 The Distributor will have the right to appoint sub-
distributors within the Territory, provided that each sub-
distributor is appointed on the following terms and conditions:
(A) each sub-distributor will enter into a sub-
distributorship agreement with the Distributor on terms
and conditions acceptable to the Company and which will
bind the sub-distributor to the terms and conditions set
forth in this Agreement;
(B) the Distributor shall provide the Company a copy of each
executed sub-distributorship agreement within 30 days of
execution in order that the Company can verify compliance
of the sub-distributorship agreement with the terms and
conditions of this Agreement.
(C) each sub-distributor must be an affiliate of the
Distributor, as the term "affiliate" is defined by the
Company Act (British Columbia), or a person with whom the
Distributor has an existing distributorship relationship,
or a person to whom the Company has consented to in
writing as a sub-distributor acceptable to the Company.
In determining whether a person is an acceptable sub-
distributor, the Company will not unreasonably withhold
its consent and will evaluate the potential sub-
distributor based on the business experience and
financial resources of the potential sub-distributor.
Any request by the Distributor for approval for a
potential sub-distributor will be in writing and will
include such written information as is reasonably
necessary for the Company to determine whether or not to
withhold its consent. The Company will advise the
Distributor of its determination in writing within 14
days of the receipt of the written request of the
Distributor and the required information.
5.2 The Distributor will not have any right to assign, sub-license
or otherwise transfer any of the rights granted to the Distributor
in this Agreement except as set forth in this Article 5. Provided
however, in the event of restructuring of the Distributor so that
separate companies are used to sell Products in Canada and in the
United States such separate companies shall collectively be
considered to be parties to this Agreement in place and stead of
the Distributor named herein, without the necessity of any further
documentation.
6. Additional Covenants of the Distributor
6.1 The Distributor will throughout the term of this Agreement:
<Page >
-7-
(A) refer to the Company all queries, orders and requests
relating to the purchase of Products intended for the
Industrial Market within the Territory;
(B) purchase and maintain a sufficient liability insurance
policy with reputable insurance companies in those
jurisdictions in which the Distributor markets,
distributes and sells the Products;
(C) ensure that any advertising or promotional efforts
undertaken by the Distributor will be conducted in
compliance with advertising and marketing guidelines
established by the Company in order to ensure a
consistent marketing and brand recognition of the
Products.
(D) not make any claims with regards to the Products other
than those made by the Company; and
(E) comply with all applicable laws and regulations
regarding the distribution, marketing and sale of
the Products within the Territory.
<Page >
-8-
7. Additional Covenants of the Company
7.1 The Company will during the term of this Agreement:
(A) refer to the Distributor all queries, orders and requests
relating to the purchase of Products intended for the
Retail Market within the Territory;
(B) provide the Distributor with such information as the
Company considers appropriate in order to assist the
Distributor in the preparation of sales promotion
material and shall provide the Distributor with its sales
promotional material relating to the Products in order to
facilitate advertising of the Products within the
Territory;
(C) ensure all the Products meet the Company's specifications
for the applicable Products;
(D) In addition to any warranty requirements pursuant to the
terms of this Agreement, all Products supplied by the
Company and its manufacturers shall be of merchantable
quality and shall meet any and all U.S. governmental
standards applicable to such Products. The Distributor
shall have the right, through its duly appointed
representative, to examine, inspect and/or test any and
all of the Products supplied by the Company, and the
production lines, production facilities and storage
facilities. Without limiting the forgoing, the Company
shall not alter or substitute any ingredients used in
production of the Products without the prior written
consent of Distributor and without compliance with U.S.
governmental standards applicable to such products. The
Company warrants that the goods delivered in accordance
with this Agreement shall measure up to the same standard
and analysis as the sample Products previously submitted
to Distributor. The Distributor may, but is not required
to do so, from time to time, conduct laboratory tests on
the Products to verify that the content (if applicable)
of the Products conform to a Certificate of Analysis (the
"Certificate") which must be provided to Distributor
within 14 days following each shipment of Product(s).
Such testing shall be conducted to assure quality
control, and any material deviation from the Certificate
shall be deemed a breach of this Agreement, or, at the
election of the Distributor, the Company shall be
required to immediately comply with supplying the
Products in accordance with the criteria in the
Certificate.
(E) permit the Distributor and its independent business
associates to hold themselves out as authorized
distributors of the Products for the Retail Market within
the Territory;
(F) maintain comprehensive product liability insurance
coverage on all Products sold to the Distributor and will
ensure that the Distributor is named as an additional
insured on such product liability insurance. Such
insurance shall have combined single occurrence limit of
not less than One Million Dollars ($1,000,000). Such
insurance
<Page >
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shall not only provide for consumer physical
injury but also consumer property damage as well.
(G) obtain all applicable permits and product identification
numbers in order that the Products can be distributed in
the Territory.
(H) Company agrees to furnish to the Distributor in a timely
manner Product Information regarding the Products, which
Product Information shall accurately describe the nature,
character and prescribed use of the Products, which
information shall be appropriate for distribution to
Consumers and Associates of Distributor in the discretion
of the Distributor. The Product Information shall not
misrepresent or in any way internationally mislead
Distributor, its Associates or consumers with respect to
the products. Distributor may incorporate such Product
Information in its sales and advertising and promotional
literature and materials (the "Sales Materials") Said
Product Information utilized shall not be deemed as
Confidential Information as set forth in this Agreement.
(I) Company has the right to supply and distribute the
Products and all components thereof, and the Products
shall not and do not, constitute any known infringement
of any license, trademark, copyright, patent or similar
proprietary interest of any third party.
(J) Company represents it has the capability to supply the
Products necessary to meet the anticipated sales of the
Distributor for the duration of this Agreement.
(K) Execution and delivery of this Agreement by the Company
has been duly authorized. The person executing this
Agreement on behalf of the Company has full and proper
authorization to execute same, and this Agreement is the
valid and binding agreement of the Company and is
enforceable against the Company in accordance with its
terms.
(L) The Company warrants that it will provide delivery within
forty two (42) days, or less, of receipt of Distributor
orders except in the case of disruption of transportation
systems by "force majeure" or other factors in or other
factors beyond the control of the Company
8. Indemnification
8.1 Each of the parties agrees to indemnify and hold harmless the
other party from any liability arising out of the act or omission
of the indemnifying party, its servants, agents and
representatives.
9. Right of First Refusal for Future Products
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9.1 The Distributor will have a right of first refusal to acquire
the marketing, distribution and sales rights for Future Products
for the Retail Market within the Territory on the following basis:
(A) Upon the Company intending to market any Future Product
or upon the receipt by the Company from a third party of
a written offer to enter into an agreement for the
marketing, distribution and sale of any Future Product
(the "Third Party Proposal") and the determination of the
Company to accept the Third Party Proposal, subject to
compliance with the terms and conditions of this
Agreement, then the Company will deliver to the
Distributor notice of the Distributor's right to enter
into an agreement with the Company for the marketing,
distribution and sale of the Future Product on the terms
and subject to the conditions of the Company's proposal
or the Third Party Proposal as the case may be (a "Right
of First Refusal Notice");
(B) Upon delivery of a Right of First Refusal Notice, the
Distributor will have a period of thirty (30) days in
which to accept or reject the offer to enter into an
agreement with the Company for the marketing,
distribution and sale of the Future Product on the terms
and subject to the conditions of the Company proposal or
Third Party Proposal; as the case may be;
(C) In the event of acceptance by the Distributor of the
Right of First Refusal Notice, then the Distributor and
the Company will enter into an agreement with the Company
for the marketing, distribution and sale of the Future
Product on the terms and subject to the conditions of the
Company Proposal or Third Party Proposal as the case
maybe;
(D) In the event that the Distributor does not accept the
Company's offer, then the Company will have the right to
commence marketing or to enter into an agreement with the
third party for the marketing, distribution and sale of
the Future Product on the terms and subject to the
conditions of the Third Party Proposal, as the case maybe
In the event the Company does not commence marketing
within six (6) months on the terms of its proposal or the
Company not enter into the agreement with the Third Party
on the terms of the Third Party Proposal, then the terms
and conditions of this Section 9.1 will apply to any new
proposal by the Company or any new proposal or counter-
proposal from the third party or a new Third Party.
10. Confidential Information
10.1 The Company acknowledges that the Confidential Information of
the Distributor is the property of the Distributor and the success,
profitability and competitive position of the Distributor requires
that the Confidential Information of the Distributor be maintained
in
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confidence by the Company. Accordingly, the Company covenants
and agrees with the Distributor, subject to Sections 10.2 and 10.3
of this Agreement, that:
(A) the Company will at all times keep all Confidential
Information in the strictest confidence;
(B) the Company will not use the Confidential Information for
any purpose other than for performing its obligations
pursuant to this Agreement;
(C) the Company will not at any time publish or in any way
participate or assist in the publishing of any
Confidential Information;
(D) the Company will not disclose or assist in the disclosure
of any Confidential Information to any person, firm,
corporation or other entity;
(E) the Company will not contact the Distributor's
independent sales associates directly without the consent
of the Distributor.
10.2 The Company may disclose the Confidential Information of the
Distributor in confidence to its lawyers, accountants and other
professional advisors in connection with the performance of the
business arrangements between the Company and the Distributor, each
of whom shall be advised of the confidential nature of such
confidential information.
10.3 The Company may disclose the Confidential Information of the
Distributor only to the extent necessary in order that the Company
may comply with all applicable laws and regulations, including
compliance with the Company's obligations as a reporting issuer
under the United States Securities Exchange Act of 1934.
10.4 The Distributor acknowledges that the Confidential Information
of the Company is the property of the Company and the success,
profitability and competitive position of the Company requires that
the Confidential Information of the Company be maintained in
confidence by the Distributor. Accordingly, the Distributor
covenants and agrees with the Company, subject to Sections 10.5 and
10.6 of this Agreement, that:
(A) the Distributor will at all times keep all Confidential
Information in the strictest confidence;
(B) the Distributor will not use the Confidential Information
for any purpose other than for performing its obligations
pursuant to this Agreement;
(C) the Distributor will not at any time publish or in any
way participate or assist in the publishing of any
Confidential Information;
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(D) the Distributor will not disclose or assist in the
disclosure of any Confidential Information to any person,
firm, corporation or other entity.
10.5 The Distributor may disclose the Confidential Information of
the Company in confidence to its lawyers, accountants and other
professional advisors in connection with the performance of the
business arrangements between the Company and the Distributor.
10.6 The Distributor may disclose the Confidential Information of
the Company only to the extent necessary in order that the
Distributor may comply with all applicable laws and regulations,
provided that this disclosure will not relate to any Manufacturing
Information.
10.7 No waiver by either party of its rights pursuant to the
confidentiality agreements or any consent to any release of
confidential information shall be effective unless expressed in
writing, and no such waiver or consent shall apply beyond the
specific facts in respect of which the waiver of consent was given.
10.8 This Confidentiality Agreements of each party do not apply to
information which is or becomes publicly available or is lawfully
received by the other party other than by breach of this
Confidentiality Agreement.
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11. Modifications
11.1 The Distributor will not make any modifications to any
Products or in any way vary or change the specifications or content
of the Products purchased from the Company. The Distributor will
use its reasonable efforts to ensure that its sub-distributors,
independent business associates, dealers, agents, or customers do
not make any modifications to, or in any way vary, the
specifications or content of any Products.
12. Term and Termination
12.1 The term of this Agreement (the "Term") will commence on the
Effective Date of this Agreement and will continue until the
earlier of December 31, 2002 or until the date on which this
Agreement is terminated in accordance with the provisions of this
Agreement. The Term of this Agreement will automatically renew from
year to year after the initial Term until December 31, 2099
provided:
(A) Distributor has met the Minimum Purchase Requirements set
out and in each year thereafter on the basis that the
Minimum Purchase Requirements for the year Jan 1, 2003 to
December 31, 2003 will be ten (10%) per cent greater than
for the prior year and shall increase by the same
percentage in each subsequent year; and
(B) Distributor has not provided written notice at least
sixty (60) days prior to the end of the initial Term or
any renewal year thereafter of its intention to terminate
this Agreement.
12.2 Each of the Distributor and the Company, as the case may be,
shall have the right to terminate this Agreement upon the
occurrence of any of the following events, such termination to be
effective immediately upon the receipt or deemed receipt by the
other party of notice to that effect and the expiry of any
applicable period for remedy of the default:
(A) if a party is in default of any of the material terms or
conditions of this Agreement, including a breach by the
Distributor of the Minimum Purchase Requirements and
shall fail to remedy such default within 60 days of
written notice thereof from the other party, provided
that if the default is the non-payment of any monetary
amount, the defaulting party will have a period of 30
days from receipt of notice in which to remedy the
default;
(B) if the other party becomes bankrupt or insolvent, makes
an assignment for the benefit of its creditors or
attempts to avail itself of any applicable statute
relating to insolvent debtors;
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(C) if the other party winds-up, dissolves, liquidates or
takes steps to do so or otherwise ceases to function as a
going concern or is prevented from reasonable performing
its duties hereunder; or
(D) if a receiver or other custodian (interim or permanent of
any of the assets of the other party is appointed by
private instrument or by court order or if any execution
or other similar process of any court becomes enforceable
against the other party or its assets or if distress is
made against the other party's assets or any part
thereof.
12.3 Subject to Section 12.4, upon termination of this Agreement
for any reason whatsoever, the following shall apply:
(A) those rights and obligations of each of the Company and
the Distributor which are expressly stated to survive
termination of this Agreement will survive termination
and will continue in full force and effect;
(B) all rights and privileges granted by the Company to the
Distributor pursuant to this Agreement, including the
rights to market, distribute and sell Products, will
immediately terminate and be relinquished by the
Distributor, and thereafter the Distributor shall take no
action that would make it appear to the public that the
Distributor is still supplying Products;
(C) the Distributor shall return to the Company all
advertising, informational or technical material given to
the Distributor by the Company;
(D) the Distributor shall cease using the Trade Names and
thereafter refrain from holding itself out as an
authorized distributor of the Products;
(E) the Distributor will retain in confidence all information
regarding the business and property of the Company and
the Products;
(F) all sub-distributorship agreements entered into by the
Distributor will terminate.
The provisions of this Section 12.3 will survive the termination of
this Agreement.
12.4 In the event of termination of this Agreement by the Company
for failure of the Distributor to meet the Minimum Purchase
Requirements, then the Distribution Rights will continue on a non-
exclusive basis for a period of six months on the terms and
conditions of this Agreement.
13. Assignment
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13.1 Except as provided by Section 5 of this Agreement, the rights
granted by this Agreement may not be sold, assigned, sub-licensed
or otherwise transferred by the Distributor without the prior
written consent of the Company, which consent may be unreasonably
withheld by the Company at its sole discretion.
13.2 The Company will have the right to assign this Agreement
without the consent of the Distributor.
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14. Miscellaneous Provisions
14.1 Entire Agreement
This Agreement constitutes the entire agreement between the parties
with respect to all matters herein contained, and its execution has
not been induced by, nor do any of the parties hereto rely upon or
regard as material, any representations or writings whatsoever not
incorporated herein and made a part hereof. This Agreement shall
not be amended, altered or qualified except by an instrument in
writing, signed by all parties hereto and any amendments,
alterations or qualifications hereof shall not be binding upon or
affect the rights of any party who has not given its consent in
writing.
14.2 Interpretation
The division of this Agreement into articles and sections is for
convenience of reference only and shall not affect the
interpretation or construction of this Agreement.
14.3 Severability
In the event that any of the covenants herein contained shall be
held unenforceable or declared invalid for any reason whatsoever,
such unenforceability or invalidity shall not affect the
enforceability or validity of the remaining provisions of this
Agreement and such unenforceable or invalid portion shall be
severable from the remainder of this Agreement.
14.4 Force Majeure
In the event of an inability or failure by the Company to
manufacture, supply or ship any of the Products herein by reason of
any fire, explosion, war, riot, strike, walk-out, labour
controversy, flood, shortage of water, power, labour transportation
facilities or necessary materials or supplies, default or power
failure of carriers, breakdown in or the loss of production or
anticipated production from plant or equipment, act of God or
public enemy, any law, act or order of any court, board, government
or other authority of competent jurisdiction, or any other direct
cause (whether or not of the same character as the foregoing)
beyond the reasonable control of the Company, then the Company
shall not be liable to the Distributor and will not be deemed to be
in default during the period and to the extent of such inability or
failure. Deliveries omitted in whole or in part while such
inability remains in effect shall be canceled.
14.5 Notices
Any notice required or permitted to be given hereunder shall
be in writing and shall be effectively given if:
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(a) Delivered personally;
(b) Sent by prepaid courier service or mail; or
(c) Sent prepaid by telecopiers, fax, telex or other similar
means of electronic communication
(d) Addressed to the relevant Party at the address/fax number
shown for that Party at the beginning of this Agreement
or in the Definition section.
Any notice so given shall be deemed conclusively to have been
given and received when so personally delivered or, if sent by
telex, fax, telecopier or other electronic communication, on
the first business day thereafter, or if sent by mail on the
third business day thereafter. Any party may change any
particulars of its address/fax number for notice by notice to
the others in the manner above described.
14.6 Time of the Essence
Time shall be of the essence of this Agreement.
14.7 Further Assurances
The parties agree to sign such other instruments, cause such
meetings to be held, resolutions passed and by-laws enacted,
exercise their vote and influence, do and perform and cause to be
done and performed such further and other acts and things as may be
necessary or desirable in order to give full effect to this
Agreement.
14.8 Successors and Assigns
This Agreement shall enure to the benefit of and be binding upon
the parties hereto and their respective successors and permitted
assigns.
14.9 Non-Waiver
No waiver by any party of any breach by any other party of any of
its covenants, obligations and agreements hereunder shall be a
waiver of any subsequent breach of any other covenant, obligation
or agreement, nor shall any forbearance to seek a remedy for any
breach be a waiver of any rights and remedies with respect to such
or any subsequent breach.
14.10 Arbitration
All disputes in relation to this Agreement, other than a dispute
regarding the non-payment of any monetary amount required by this
Agreement, be referred to and finally resolved by Arbitration,
under the rules of the British Columbia International Commercial
Arbitration Center (the "Rules"), which Rules are deemed to be
incorporated by reference into this Article. The tribunal shall
consist of One (1) Arbitrator. The Parties will endeavor within
twenty-one (21) days of the matter being referred to Arbitration to
agree upon an Arbitrator, failing which the Arbitrator shall be
appointed in accordance with the Rules. The place of
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Arbitration shall be Surrey, British Columbia. The language of the
Arbitration shall be English. The parties agree that the Arbitrator
shall be requested to make his award within sixty (60) days following
the later of the conclusion of the Arbitration hearings or any
exchange of final written submissions by the Parties and further
agree that the word of the Arbitrator shall be final and binding and
without appeal.
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14.11 Relationship
The relationship between the Company and the Distributor is, and
during the term of this Agreement shall be that of independent
contractors. No party shall be deemed a legal representative or
agent of the other party for any purpose and shall have no right or
authority to assume or create in writing or otherwise, any
obligation of any kind, express or implied, with respect to any
commitments, in the name of the other party or on behalf of the
other party, unless given with the express written authority of
such party. Furthermore, the relationship among the Company and
the Distributor hereunder shall not constitute a joint venture,
general partnership or similar arrangement.
14.12 Governing Law
This Agreement shall be governed by and construed in accordance
with the laws of the Province of British Columbia.
IN WITNESS WHEREOF the parties hereto have executed this Agreement
and as of the date and year first above written.
SKINVISIBLE PHARMACEUTICALS, ESSENTIALLY YOURS INDUSTRIES
INC. CORP.
by its authorized signatory: by its authorized signatory
"Terry H. Howlett" "Brian Lavorato"
- ---------------------------- -----------------------------
Signature of Authorized Signature of Authorized
Signatory Signatory
TERRY H. HOWLETT BRIAN LAVORATO
- ---------------------------- -----------------------------
Name of Authorized Signatory Name of Authorized Signatory
PRESIDENT PRESIDENT & CEO
- ---------------------------- -----------------------------
Position of Authorized Position of Authorized
Signatory Signatory
<Page >
DISTRIBUTION AGREEMENT
This Distribution Agreement (the "Agreement") dated for reference
the 28th day of July, 1999
BETWEEN:
SKINVISIBLE PHARMACEUTICALS, INC.,
a Nevada Corporation having its head office
at 3095 E. Patrick Lane, Suite 1
Las Vegas, Nevada, USA 89120
Fax # (702) 433-7192
(the "Company")
OF THE FIRST PART
AND:
EYI INTERNATIONAL LIMITED
a Cayman Island Company having its head office at
PO Box 1320 GT George Town
Grand Cayman, Cayman Islands
Fax # (345) 94902135
(the "Distributor")
OF THE SECOND PART
WHEREAS:
A. The Company has developed a line of hand lotion products which
are marketed under the name "Skinvisible".
B. The Distributor wishes to acquire certain rights to market and
distribute the Company's Skinvisible hand lotion products outside
of North America on the terms and conditions contained herein.
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the
mutual covenants and agreements contained herein, the parties
hereto agree as follows:
1. DEFINITIONS
In this Agreement, the following words and phrases shall have the
following meanings:
(A) "Confidential Information of the Company" means all
business plans, trade secrets, design concepts,
knowledge, information, production technology, processes,
know how, business projections, customer lists and
intellectual property concerning or relating to the
business of the Company and the Products, including the
Manufacturing Information, which may be communicated to,
acquired by, or learned
<Page >
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of by the Distributor from the Company, whether or not such
information is subject to proprietary protection at law;
(B) "Confidential Information of the Distributor" means all
customer lists, independent sales agent lists, direct
sales marketing contacts and information, business plans,
trade secrets, knowledge, information, know how,
business projections, computer software programs and
intellectual property concerning or relating to the
business of the Distributor which may be communicated to,
acquired by, or learned of by the Company from the
Distributor, whether or not such information is subject
to proprietary protection at law;
(3 "Direct Selling Market" means that portion of the Retail
Market characterized by person-to-person, multi-level or
network marketing;
(4 "Future Products" means any future products developed by
the Company marketed under the name "Skinvisible" and
using the same polymer base as the Products;
(5 "Industrial Market" means the commercial, institutional
and industrial market for the Products;
(6 "Manufacturing Information" means all information,
technology, data and trade secrets relating to the
manufacture of the Products;
(7 "North America Distribution Agreement" means the
distribution agreement dated July 27, 1999 between the
Company and Essentially Yours Industries Limited for the
distribution of the Products in North America;
(8 "Patents" means any patents underlying the Products which
are owned or may be owned by the Company or licensed or
which may be licensed to the Company;
(9 "Products" means the following hand lotion products
marketed by the Company under the trade name
"Skinvisible":
(11 Skinvisible Medical Formula;
(12 Skinvisible Food Service Formula;
(13 Skinvisible Personal Formula;
(14 Skinvisible Industrial Formula;
(15 Skinvisible Salon Formula.
(10 "Retail Market" means the retail market for the Products
whereby the Products are sold to the public or to re-
sellers for sale to the public and is deemed to exclude
the Industrial Market;
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(11 "Schedule A Countries" means those countries listed in
Schedule A to this Agreement and those countries which
are deemed to be Schedule A Countries in accordance with
Section 3.1 of this Agreement;
(12 "Schedule B Countries" means those countries listed in
Schedule B to this Agreement and those countries which
are deemed to be Schedule B Countries in accordance with
Section 3.1 of this Agreement;
(13 "Term" has the meaning described in Section 14.1 of this
Agreement.
(14 "Territory" means the territory comprised of the Schedule
A Countries and the Schedule B Countries;
(15 "Trade Name" means the tradename "Skinvisible" and the
trademark "Skinvisible" in the event that the Company is
granted trademark protection by the United States Patent
and Trademark Office.
2. Grant of Distribution Rights
2.1 In consideration of the sum of One ($1.00) USD and other good
and valuable consideration, the receipt and sufficiency of which is
acknowledged by the Company and subject to the terms and conditions
of this Agreement, the Company hereby grants to the Distributor the
exclusive rights to market, distribute and sell the Products to the
Retail Market within the Territory for the Term of this Agreement
(the "Distribution Rights"). The Distribution Rights will include
the following rights:
(1 the right to market, distribute and sell the Products;
(2 the right and license to use the Trade Name in connection
with the marketing, distribution and sale of the
Products.
2.2 The Distributor will have the right to market, distribute and
sell the Products to the Retail Market using whatever methods/sales
programs it deems appropriate in the various countries in the
Territory, subject to the terms and conditions of this Agreement.
2.3 The Distribution Rights will extend to the right and license
to use the trademark "Skinvisible" in the event that the Company's
application to the United States Patent and Trademark Office for
the registration of "Skinvisible" as a trademark is approved. The
Distributor acknowledges that there is no assurance that trademark
protection will be granted by the United States Patent and
Trademark Office.
3. Option to Expand Territory
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3.1 The Company grants to the Distributor the option to expand the
Territory to include additional countries on the following
basis (the "Option"):
(20 the Option will be exercisable during the initial term of
this Agreement;
(21 the Option may be exercisable from time to time in
respect of any country not included within the Territory,
excluding Canada, the United States and Mexico;
(22 the Option will be exercisable with respect to a country
by the Distributor placing an order with the Company for
a minimum of 25,000 oz of Product for the country (to be
paid once approval is obtained) and by the Distributor
paying for the cost of obtaining applicable approvals and
registrations for sales in the country in accordance with
Section 5.1 of this Agreement;
(23 any order to be placed by the Distributor pursuant to
Section 3.1(c) would be subject to the Company obtaining
all applicable approvals and registrations for sales of
the Products in the country;
(24 the country will become a part of the Territory upon the
Company achieving all applicable permits for sales of the
Products in the country and the Distributor having
completed payment for the cost of obtaining the
applicable approvals and registrations;
(25 the country in respect of which the Option is exercised
will be deemed to be a Schedule A Country unless the laws
of the country prohibit direct sales marketing, in which
event the country will be deemed to be a Schedule B
Country.
3.2 The Distributor will have a right of first refusal to acquire
the Distribution Rights for those countries not within the
Territory, other than the countries of Canada, United States and
Mexico, on the following basis:
(1 Upon the receipt by the Company from a third party of a
written offer to enter into an agreement for the
marketing, distribution and sale of the Products for a
country or countries not within the Territory, other than
the countries of Canada, United States and Mexico, (the
"Third Party Proposal") and the determination of the
Company to accept the Third Party Proposal, subject to
compliance with the terms and conditions of this
Agreement, then the Company will deliver to the
Distributor notice of the Distributor's right to enter
into an agreement with the Company for the marketing,
distribution and sale of the Products within such country
on the terms and subject to the conditions of the Third
Party Proposal (a "Right of First Refusal Notice");
(2 Upon delivery of a Right of First Refusal Notice, the
Distributor will have a period of thirty days in which to
accept or reject the offer to enter into an agreement
with the
<Page >
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Company for the marketing, distribution and sale
of the Products on the terms and subject to the
conditions of the Third Party Proposal;
(3 In the event of acceptance by the Distributor of the
Right of First Refusal Notice, then the Distributor and
the Company will enter into an agreement with the Company
for the marketing, distribution and sale of the Products
on the terms and subject to the conditions of the Third
Party Proposal;
(4 In the event that the Distributor does not accept the
Company's offer, then the Company will have the right to
enter into an agreement with the third party for the
marketing, distribution and sale of Products within the
applicable country or countries on the terms and subject
to the conditions of the Third Party Proposal.
(5 In the event the Company does not enter into the
agreement with the third party on the terms of the Third
Party Proposal, then the terms and conditions of this
Section 3.2 will apply to any new proposal or counter-
proposal from the third party or a new third party.
4. Product Prices
4.1 The prices to be paid by the Distributor to the Company for
the Products are as follows, subject to adjustment as provided in
Section 4.2 (the "Product Prices"):
Product Size Price
- ------------ -----
2-oz bottle $1.94 US
4-oz bottle $2.78 US
8-oz bottle $4.46 US
16-oz bottle $7.85 US
4.2 The Product Prices will be fixed for the 1999 calendar year.
Such prices shall be exclusive of all city, state and federal
taxes, including, without limitation, manufacture, value added,
sales, use, receipts, gross income, excise, occupation or similar
taxes, which obligations attributable to the manufacture and sale
to the Distributor are the obligations of the Distributor.
Following the initial 1999 period, unless agreed otherwise by the
parties in writing, the Company shall have the right to adjust
prices not more than once per year and then only to the extent
necessary to cover increased costs and expenses. In the event of
such a price increase, the Company will supply the Distributor
written notice of the price increases. Price increases shall take
effect on the date designated by the Company, but in no event
earlier than one hundred twenty (120) days following receipt of
notice of such increase by the Distributor. Any purchase order
placed by the Distributor prior to the expiration of said one
hundred twenty (120) day period shall by filled by the Company at
the pre-increase price.
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4.3 The Distributor will pay to the Company 25% of the aggregate
price for all Products at the Product Price ordered (the "Order
Price") upon submission of an order for Products to the Company.
4.4 The Company will invoice the Distributor for all Products sold
to the Distributor at the Product Prices. The Distributor will pay
the balance of the Order Price to the Company for all orders of
Products within thirty (30) days of the date of delivery FOB Las
Vegas, Nevada.
4.5 The Distributor shall have the right to establish its own
selling prices for Products to the Retail Market within the
Territory.
4.6 The determination of sales, marketing strategies, and selling
prices for the Products to the Retail Market within the Territory
will be the sole responsibility of the Distributor.
4.7 All references to money or currency herein contained shall
mean lawful money of the United States of America.
4.8 Each order placed by the Distributor for the purchase of any
Products shall be subject to the terms and conditions of this
Agreement.
4.9 All purchases of Products will be in units of 2 ounce, 4
ounce, 8 ounce or 16 ounce bottles, unless the Parties agree
otherwise.
4.10 The Company will deliver all Products to the Distributor FOB
Las Vegas, Nevada within 42 days of the date of receipt of an order
for Products by the Distributor.
5. Approvals
5.1 In regard to obtaining registration of the Products and
approval for sale of the Products in each country within the
Territory the following terms shall govern:
a) the Distributor shall provide written notice to the Company
of its intention to commence sales/marketing activities in
a country;
b) the Company shall forthwith undertake to use its reasonable
best efforts to obtain the necessary approvals and
registrations for its Products in the countries indicated;
c) the out of pocket costs of the application for registration
and approval, excluding the Company's own internal costs
and expenses, shall be paid by the Distributor;
d) in the event that the Company chooses at a later date to
enter into the Industrial Market in that certain country
for which approvals and registrations have been received
and relies upon the approvals paid for by the Distributor
then:
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i) if the Distributor is still actively marketing in such
country the Company shall reimburse the Distributor 50%
of the costs and expenses paid by the Distributor in
regard to such approvals and registrations;
ii) if the Distributor has ceased actively marketing in
such country then the Company shall reimburse the
Distributor 100% of the costs and expenses paid by the
Distributor in regard to such approvals and registrations
if the Company continues to sell Products in the country.
6. Limitations on the Distribution Rights
6.1 The Distributor will use its reasonable best efforts to ensure
that the Distributor does not distribute or sell any Products for
re-sale to any person or Company in the Industrial Market within
the Territory or in any market outside the Territory.
6.2 The Distributor will not, directly or indirectly, sell, assign
or grant to any other person, firm or corporation, the right to
sell, or distribute the Products to the Industrial Market within
the Territory.
6.3 The Distribution Rights do not extend to any products
manufactured by the Company and marketed under the "Skinvisible"
name other than the Products.
6.4 The Distributor will not market, distribute or sell any
products similar to or competitive with the Products during the
Term of this Agreement, save and except those products already part
of Distributor's existing product line.
6.5 Nothing in this Agreement shall be deemed in any way to
constitute any transfer or assignment by the Company of any Patents
or Confidential Information to the Distributor or to give the
Distributor any right, title or interest in or to any Patents or
Confidential Information. The Distributor acknowledges that all
patents pertaining to the Products or Confidential Information are
and shall remain the exclusive property of the Company.
6.6 The Distributor will not purchase Products from any person
other than the Company.
6.7 Nothing in this Agreement shall limit the right of the Company
to market, distribute and sell products with the same or similar
formulations under different product names and labels, not to be
confusing with the name "Skinvisible", with the express exclusion
of the Direct Selling Market for Schedule A Countries and the
Retail Market for Schedule B Countries.
7. Sub-Distributors
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7.1 The Distributor will have the right to appoint sub-
distributors within the Territory, provided that each sub-
distributor is appointed on the following terms and conditions:
a) each sub-distributor will enter into a sub-
distributorship agreement with the Distributor on terms
and conditions acceptable to the Company and which will
bind the sub-distributor to the terms and conditions set
forth in this Agreement;
b) the Distributor shall provide the Company a copy of each
executed sub-distributorship agreement within 30 days of
execution in order that the Company can verify compliance
of the sub-distributorship agreement with the terms and
conditions of this Agreement.
c) each sub-distributor must be an affiliate of the
Distributor. The term "affiliate" is defined as a person
with whom the Distributor has entered into a
distributorship relationship for products other than the
Products in a country or state within the Territory or a
person to whom the Company has consented to in writing as a
sub-distributor acceptable to the Company. In determining
whether a person is an acceptable sub-distributor, the
Company will not unreasonably withhold its consent and will
evaluate the potential sub-distributor based on the
business experience and financial resources of the
potential sub-distributor. Any request by the Distributor
for approval for a potential sub-distributor will be in
writing and will include such written information as is
reasonably necessary for the Company to determine whether
or not to withhold its consent. The Company will advise
the Distributor of its determination in writing within 14
days of the receipt of the written request of the
Distributor and the required information.
7.2 The Distributor will not have any right to assign, sub-license
or otherwise transfer any of the rights granted to the Distributor
in this Agreement except as set forth in this Article 7.
8. Additional Covenants of the Distributor
8.1 The Distributor will throughout the term of this Agreement:
(A) refer to the Company all queries, orders and requests
relating to the purchase of Products intended for the
Industrial Market within the Territory;
(B) purchase and maintain a sufficient liability insurance
policy with reputable insurance companies in those
jurisdictions in which the Distributor markets, distributes
and sells the Products;
(C) ensure that any advertising or promotional efforts
undertaken by the Distributor will be conducted in
compliance with advertising and marketing guidelines
established by the Company in order to ensure a consistent
marketing and brand recognition of the Products;
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(D) not make any claims with regards to the Products other than
those made by the Company;
(E) comply with all applicable laws and regulations regarding
the distribution, marketing and sale of the Products within
the Territory.
9. Additional Covenants of the Company
9.1 The Company will during the term of this Agreement:
(A) refer to the Distributor all queries, orders and requests
relating to the purchase of Products intended for the
Retail Market within the Territory;
(B) provide the Distributor with such information as the
Company considers appropriate in order to assist the
Distributor in the preparation of sales promotion material
and shall provide the Distributor with its sales
promotional material relating to the Products in order to
facilitate advertising of the Products within the
Territory;
(C) ensure all the Products meet the Company's specifications
for the applicable Products;
(D) In addition to any warranty requirements pursuant to the
terms of this Agreement, all Products supplied by the
Company and its manufacturers shall be of merchantable
quality and shall meet any and all U.S. governmental
standards applicable to such Products. The Distributor
shall have the right, through its duly appointed
representative, to examine, inspect and/or test any and all
of the Products supplied by the Company, and the production
lines, production facilities and storage facilities.
Without limiting the forgoing, the Company shall not alter
or substitute any ingredients used in production of the
Products without the prior written consent of Distributor
and without compliance with U.S. governmental standards
applicable to such products. The Company warrants that the
goods delivered in accordance with this Agreement shall
measure up to the same standard and analysis as the sample
Products previously submitted to Distributor. The
Distributor may, but is not required to do so, from time to
time, conduct laboratory tests on the Products to verify
that the content (if applicable) of the Products conform to
a Certificate of Analysis (the "Certificate") which must be
provided to Distributor within 14 days following each
shipment of Products(s). Such testing shall be conducted
to assure quality control, and any material deviation from
the Certificate shall be deemed a breach of this Agreement,
or, at the election of the Distributor, the Company shall
be required to immediately comply with supplying the
Products in accordance with the criteria in the
Certificate;
(F) permit the Distributor and its affiliates to hold
themselves out as authorized distributors of the Products
for the Retail Market within the Territory;
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(G) Company agrees to furnish to the Distributor in a timely
manner Product Information (other than the composition of
the Company's proprietary polymers) regarding the Products,
which Product Information shall accurately describe the
nature, character and prescribed use of the Products. Such
information shall be appropriate for distribution to
Consumers and Associates of Distributor in the discretion
of the Distributor. The Product Information shall not
misrepresent or in any way intentionally mislead
Distributor, its Associates or consumers with respect to
the products. Distributor may incorporate such Product
Information in its sales and advertising and promotional
literature and materials (the "Sales Materials") Said
Product Information utilised shall not be deemed as
Confidential Information as set forth in this Agreement;
(H) Company has the right to supply and distribute the
Products and all components thereof, and the Products shall
not and do not, constitute any known infringement of any
license, trademark, copyright, patent or similar
proprietary interest of any third party;
(I) Company represents it has the capability to supply the
Products necessary to meet the anticipated sales of the
Distributor for the duration of this Agreement;
(J) Execution and delivery of this Agreement by the Company
has been duly authorized. The person executing this
Agreement on behalf of the Company has full and proper
authorization to execute same, and this Agreement is the
valid and binding agreement of the Company and is
enforceable against the Company in accordance with its
terms;
(K) The Company warrants that it will provide delivery within
forty two (42) days, or less, of receipt of Distributor
orders except in the case of disruption of transportation
systems by "force majeure" or other factors in or other
factors beyond the control of the Company.
<Page >
-11-
10. Indemnification
10.1 Each of the parties agrees to indemnify and hold harmless the
other party from any liability arising out of the act or omission
of the indemnifying party, its servants, agents and
representatives.
11. Right of First Refusal for Future Products
11.1 The Distributor will have a right of first refusal to acquire
the marketing, distribution and sales rights for Future Products
for the Retail Market within the Territory on the following basis:
(A) Upon the Company intending to market any Future Product
or upon the receipt by the Company from a third party of
a written offer to enter into an agreement for the
marketing, distribution and sale of any Future Product
(the "New Product Third Party Proposal") and the
determination of the Company to accept the New Product
Third Party Proposal, subject to compliance with the
terms and conditions of this Agreement, then the Company
will deliver to the Distributor notice of the
Distributor's right to enter into an agreement with the
Company for the marketing, distribution and sale of the
Future Product on the terms and subject to the conditions
of the Company's proposal or the New Product Third Party
Proposal as the case may be (a "New Product Right of
First Refusal Notice");
(B) Upon delivery of a New Product Right of First Refusal
Notice, the Distributor will have a period of thirty (30)
days in which to accept or reject the offer to enter into
an agreement with the Company for the marketing,
distribution and sale of the Future Product on the terms
and subject to the conditions of the Company proposal or
New Product Third Party Proposal; as the case may be;
(3 In the event of acceptance by the Distributor of the New
Product Right of First Refusal Notice, then the Distributor
and the Company will enter into an agreement with the
Company for the marketing, distribution and sale of the
Future Product on the terms and subject to the conditions
of the Company Proposal or New Product Third Party Proposal
as the case maybe;
(4 In the event that the Distributor does not accept the
Company's offer, then the Company will have the right to
commence marketing or to enter into an agreement with the
third party for the marketing, distribution and sale of the
Future Product on the terms and subject to the conditions
of the New Product Third Party Proposal, as the case may
be. In the event the Company does not commence marketing
within six (6) months on the terms of its proposal or the
Company not enter into the agreement with the Third Party
on the terms of the New Product Third Party Proposal, then
the terms and conditions of this
<Page >
-12-
Section 11.1 will apply to any new proposal by the Company
or any new proposal or counter-proposal from the third party
or a new Third Party.
<Page >
-13-
12. Confidential Information
12.1 The Company acknowledges that the Confidential Information of
the Distributor is the property of the Distributor and the success,
profitability and competitive position of the Distributor requires
that the Confidential Information of the Distributor be maintained
in confidence by the Company. Accordingly, the Company covenants
and agrees with the Distributor, subject to Sections 12.2 and 12.3
of this Agreement, that:
(A) the Company will at all times keep all Confidential
Information in the strictest confidence;
(B) the Company will not use the Confidential Information for
any purpose other than for performing its obligations
pursuant to this Agreement;
(C) the Company will not at any time publish or in any way
participate or assist in the publishing of any Confidential
Information;
(D) the Company will not disclose or assist in the disclosure
of any Confidential Information to any person, firm,
corporation or other entity;
(E) the Company will not contact the Distributor's independent
sales associates directly without the consent of the
Distributor.
12.2 The Company may disclose the Confidential Information of the
Distributor in confidence to its lawyers, accountants and other
professional advisors in connection with the performance of the
business arrangements between the Company and the Distributor, each
of whom shall be advised of the confidential nature of such
confidential information.
12.3 The Company may disclose the Confidential Information of the
Distributor only to the extent necessary in order that the Company
may comply with all applicable laws and regulations, including
compliance with the Company's obligations as a reporting issuer
under the United States Securities Exchange Act of 1934.
12.4 The Distributor acknowledges that the Confidential Information
of the Company is the property of the Company and the success,
profitability and competitive position of the Company requires that
the Confidential Information of the Company be maintained in
confidence by the Distributor. Accordingly, the Distributor
covenants and agrees with the Company, subject to Sections 12.5 and
12.6 of this Agreement, that:
(A) the Distributor will at all times keep all Confidential
Information in the strictest confidence;
(B) the Distributor will not use the Confidential Information
for any purpose other than for performing its obligations
pursuant to this Agreement;
<Page >
-14-
(C) the Distributor will not at any time publish or in any way
participate or assist in the publishing of any Confidential
Information;
(D) the Distributor will not disclose or assist in the
disclosure of any Confidential Information to any person,
firm, corporation or other entity.
12.5 The Distributor may disclose the Confidential Information of
the Company in confidence to its lawyers, accountants and other
professional advisors in connection with the performance of the
business arrangements between the Company and the Distributor.
12.6 The Distributor may disclose the Confidential Information of
the Company only to the extent necessary in order that the
Distributor may comply with all applicable laws and regulations,
provided that this disclosure will not relate to the composition of
the Company's proprietary polymers.
12.7 No waiver by either party of its rights pursuant to the
confidentiality agreements or any consent to any release of
confidential information shall be effective unless expressed in
writing, and no such waiver or consent shall apply beyond the
specific facts in respect of which the waiver of consent was given.
12.8 This confidentiality agreements of each party do not apply to
information which is or becomes publicly available or is lawfully
received by the other party other than by breach of this
Confidentiality Agreement.
13. Modifications
13.1 The Distributor will not make any modifications to any
Products or in any way vary or change the specifications or content
of the Products purchased from the Company. The Distributor will
use its reasonable efforts to ensure that its sub-distributors,
independent business associates, dealers, agents, or customers do
not make any modifications to, or in any way vary, the
specifications or content of any Products.
14. Term and Termination
14.1 The term of this Agreement (the "Term") will commence on the
Effective Date of this Agreement and will continue until the
earlier of December 31, 2002 or until the date on which this
Agreement is terminated in accordance with the provisions of this
Agreement. The Term of this Agreement will automatically renew from
year to year after the initial Term until December 31, 2099
provided the Distributor has commenced activities and continues
activities in at least three (3) countries within the Territory on
the basis that registrations and approvals for sale of the Products
has been obtained by the Company.
<Page >
-15-
14.2 Each of the Distributor or the Company, as the case may be,
shall have the right to terminate this Agreement upon the
occurrence of any of the following events, such termination to be
effective immediately upon the receipt or deemed receipt by the
other party of notice to that effect and the expiry of any
applicable period for remedy of the default:
(A) if a party is in default of any of the material terms or
conditions of this Agreement, and shall fail to remedy such
default within 60 days of written notice thereof from the
other party, provided that if the default is the non-
payment of any monetary amount, the defaulting party will
have a period of 30 days from receipt of notice in which
to remedy the default;
(B) if (i) the North America Distribution Agreement is
terminated due to a default by the Distributor under the
North American Distribution Agreement or the failure of the
Distributor under the North American Distribution Agreement
to meet the minimum purchase requirements under the North
America Distribution Agreement; and (ii) the Distributor
has failed to purchase in aggregate the volumes of Products
under this Agreement and the North America Distribution
Agreement which would meet or exceed the minimum volume
requirements set forth in the North America Distribution
Agreement;
(C) if the other party becomes bankrupt or insolvent, makes an
assignment for the benefit of its creditors or attempts to
avail itself of any applicable statute relating to
insolvent debtors;
(D) if the other party winds-up, dissolves, liquidates or takes
steps to do so or otherwise ceases to function as a going
concern or is prevented from reasonably performing its
duties hereunder; or
(E) if a receiver or other custodian (interim or permanent of
any of the assets of the other party is appointed by
private instrument or by court order or if any execution or
other similar process of any court becomes enforceable
against the other party or its assets or if distress is
made against the other party's assets or any part thereof.
14.3 Subject to Section 14.4, upon termination of this Agreement
for any reason whatsoever, the following shall apply:
(A) those rights and obligations of each of the Company and the
Distributor which are expressly stated to survive
termination of this Agreement will survive termination and
will continue in full force and effect;
(B) all rights and privileges granted by the Company to the
Distributor pursuant to this Agreement, including the
rights to market, distribute and sell Products, will
immediately terminate and be relinquished by the
Distributor, and thereafter the Distributor shall take no
action that would make it appear to the public that the
Distributor is still supplying Products;
<Page >
-16-
(C) the Distributor shall return to the Company all
advertising, informational or technical material given to
the Distributor by the Company;
(D) the Distributor shall cease using the Trade Names and
thereafter refrain from holding itself out as an authorized
distributor of the Products;
(E) the Distributor will retain in confidence all information
regarding the business and property of the Company and the
Products;
(F) all sub-distributorship agreements entered into by the
Distributor will terminate.
The provisions of this Section 14.3 will survive the termination of
this Agreement.
14.4 In the event of termination of this Agreement by the Company,
then the Distribution Rights will continue on a non-exclusive basis
for a period of six months with respect to this Agreement or with
respect to the deleted country, as the case may be, on the terms
and conditions of this Agreement.
15. Assignment
15.1 Except as provided by Section 7 of this Agreement, the rights
granted by this Agreement may not be sold, assigned, sub-licensed
or otherwise transferred by the Distributor without the prior
written consent of the Company, which consent may be unreasonably
withheld by the Company at its sole discretion.
15.2 The Company will have the right to assign this Agreement
without the consent of the Distributor.
16. Miscellaneous Provisions
16.1 Entire Agreement
This Agreement constitutes the entire agreement between the parties
with respect to all matters herein contained, and its execution has
not been induced by, nor do any of the parties hereto rely upon or
regard as material, any representations or writings whatsoever not
incorporated herein and made a part hereof. This Agreement shall
not be amended, altered or qualified except by an instrument in
writing, signed by all parties hereto and any amendments,
alterations or qualifications hereof shall not be binding upon or
affect the rights of any party who has not given its consent in
writing.
16.2 Interpretation
<Page >
-17-
The division of this Agreement into articles and sections is for
convenience of reference only and shall not affect the
interpretation or construction of this Agreement.
16.3 Severability
In the event that any of the covenants herein contained shall be
held unenforceable or declared invalid for any reason whatsoever,
such unenforceability or invalidity shall not affect the
enforceability or validity of the remaining provisions of this
Agreement and such unenforceable or invalid portion shall be
severable from the remainder of this Agreement.
16.4 Force Majeure
In the event of an inability or failure by the Company to
manufacture, supply or ship any of the Products herein by reason of
any fire, explosion, war, riot, strike, walk-out, labour
controversy, flood, shortage of water, power, labour transportation
facilities or necessary materials or supplies, default or power
failure of carriers, breakdown in or the loss of production or
anticipated production from plant or equipment, act of God or
public enemy, any law, act or order of any court, board, government
or other authority of competent jurisdiction, or any other direct
cause (whether or not of the same character as the foregoing)
beyond the reasonable control of the Company, then the Company
shall not be liable to the Distributor and will not be deemed to be
in default during the period and to the extent of such inability or
failure. Deliveries omitted in whole or in part while such
inability remains in effect shall be cancelled.
16.5 Notices
Any notice required or permitted to be given hereunder shall be in
writing and shall be effectively given if:
(a) Delivered personally;
(b) Sent by prepaid courier service or mail;or
(c) Sent prepaid by telecopiers, fax, telex or other similar
means of electronic communication
Addressed to the relevant Party at the address/fax number shown for
that Party at the beginning of this Agreement or in the Definition
section,
Any notice so given shall be deemed conclusively to have been given
and received when so personally delivered or, if sent by telex,
fax, telecopier or other electronic communication, on the first
business day thereafter, or if sent by mail on the third business
day thereafter. Any party may change any particulars of its
address/fax number for notice by notice to the others in the manner
above described.
16.6 Time of the Essence
<Page >
-18-
Time shall be of the essence.
16.7 Further Assurances
The parties agree to sign such other instruments, cause such
meetings to be held, resolutions passed and by-laws enacted,
exercise their vote and influence, do and perform and cause to be
done and performed such further and other acts and things as may be
necessary or desirable in order to give full effect to this
Agreement.
16.8 Successors and Assigns
This Agreement shall endure to the benefit of and be binding upon
the parties hereto and their respective successors and permitted
assigns.
16.9 Non-Waiver
No waiver by any party of any breach by any other party of any of
its covenants, obligations and agreements hereunder shall be a
waiver of any subsequent breach of any other covenant, obligation
or agreement, nor shall any forbearance to seek a remedy for any
breach be a waiver of any rights and remedies with respect to such
or any subsequent breach.
16.10 Arbitration
All disputes in relation to this Agreement, other than a dispute
regarding the non-payment of any monetary amount required by this
Agreement, be referred to and finally resolved by Arbitration,
under the rules of American Arbitration Association (the "Rules"),
which Rules are deemed to be incorporated by reference into this
Article. The tribunal shall consist of One (1) Arbitrator. The
Parties will endeavour within twenty-one (21) days of the matter
being referred to Arbitration to agree upon an Arbitrator, failing
which the Arbitrator shall be appointed in accordance with the
Rules. The place of Arbitration shall be in Las Vegas, Nevada.
The language of the Arbitration shall be English. The parties
agree that the Arbitrator shall be requested to make his award
within sixty (60) days following the later of the conclusion of the
Arbitration hearings or any exchange of final written submissions
by the Parties and further agree that the word of the Arbitrator
shall be final and binding and without appeal.
16.11 Relationship
The relationship between the Company and the Distributor is, and
during the term of this Agreement shall be that of independent
contractors. No party shall be deemed a legal representative or
agent of the other party for any purpose and shall have no right or
authority to assume or create in writing or otherwise, any
obligation of any kind, express or implied, with respect to any
commitments, in the name of the other party or on behalf of the
other party, unless given with the express written
<Page >
-19-
authority of such party. Furthermore, the relationship among
the Company and the Distributor hereunder shall not constitute a
joint venture, general partnership or similar arrangement.
[THE BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK]
<Page >
-20-
16.12 Governing Law
This Agreement shall be governed by and construed in accordance
with the laws of England
IN WITNESS WHEREOF the parties hereto have executed this Agreement
as of the date and year first above written.
SKINVISIBLE PHARMACEUTICALS,
INC.
by its authorized signatory
\s\ Terry H. Howlett
Signature of Authorized Signatory
Terry H. Howlett
Name of Authorized Signatory
President
Position of Authorized Signatory
EYI INTERNATIONAL LIMITED
by its authorized signatory
\s\ Thomas Viccars
Signature of Authorized Signatory
Thomas Viccars
Name of Authorized Signatory
Attorney & Agent
Position of Authorized Signatory
<PAGE>
THIS AGREEMENT made the 1 day of April , 1999.
----- -----
BETWEEN:
SKINVISIBLE INC.
6320 South Sandhill Road Suite 10
Las Vegas, Nevada
U.S.A. 89120
(hereinafter called the Company)
OF THE FIRST PART
AND:
GERRY GAUTHIER
426 - 550 Yates Road
Kelowna, British Columbia
V1V 1Z4 Canada
(hereinafter called Gauthier)
OF THE SECOND PART
WHEREAS SKINVISIBLE INC. is a company duly incorporated and
carrying on business in the United States of America and elsewhere;
AND WHEREAS SKINVISIBLE INC. has developed a revolutionary new
personal hygiene product for public consumption;
AND WHEREAS SKINVISIBLE INC. requires the services of talented
persons to market and sell this product;
AND WHEREAS GERRY GAUTHIER is anxious to become involved as an
active participant in the sales program of Skinvisible Inc.;
NOW THEREFORE THIS AGREEMENT WITNESSES THAT, in consideration
of the matters referred to, the parties agree as follows:
1. The company will employ Gauthier as its chief operating
officer. The duties and responsibilities of Gauthier
will be enumerated in a separate agreement and Gauthier
agrees to work exclusively for the company in this
capacity.
2. The agreement will be for a term of one (1) years, and
will commence on April 1, 1999; This agreement may be
renewed for a further one year term at that date
subject to the mutual of both parties.
<PAGE>
3. The company will pay Gauthier the sum of ONE HUNDRED
THOUSAND DOLLARS ($100,000) (U.S.) per annum as a base
salary payable in equal monthly payments.
4. The company will pay Gauthier a further ONE THOUSAND
FOUR HUNDRED DOLLARS ($1,400.00) (U.S.) per month as an
automobile\living allowance payable on the 1st day of
each and every month of the agreement.
5. The company also agrees to sell Gauthier THIRTY THOUSAND
SHARES (30,000) of the company each and every year of
this agreement (a total of NINETY THOUSAND SHARES
(90,000) (over three (3) years) at a price of no more than
THREE DOLLARS AND FIFTY CENTS ($3.50) (U.S.) per share in
any year.
IN WITNESS WHEREOF Gerry Gauthier has set his hand and seal,
and Skinvisible Inc. has affixed its corporate seal attested by the
hands of its duly authorized officers, this 1 day of April,
1999.
SIGNED, SEALED AND DELIVERED )
in the presence of: )
)
\s\ Janice R. Darrell ) \s\ Gerry Gauthier
- --------------------------- ) -------------------------
Witness ) Gerry Gauthier
)
- --------------------------- )
Address )
) \s\ Terry Howlett
- --------------------------- ) -------------------------
Skinvisible, Inc. ) authorized signatory
- --------------------------- )
Terry Howlett -Pres. )
- --------------------------- )
Occupation ) c\s
c\s
<PAGE>
EMPLOYMENT AGREEMENT
--------------------
THIS AGREEMENT made as of the 31st day of March, 1998
BETWEEN:
MANLOE LABS, INC.,
(the "Corporation")
OF THE FIRST PART
AND:
ROGER HOCKING, of
(the "Employee")
OF THE SECOND PART
WHEREAS:
A. The Corporation wishes to engage the services of the
Employee as President and manager of manufacturing of the
Corporation upon the terms and conditions of this Agreement.
B. The Employee has agreed to provide such services as a
Employee upon the terms and conditions hereinafter set forth.
NOW THIS AGREEMENT WITNESSES that in consideration of the mutual
promises, covenants and agreements herein contained, the parties
hereto agree as follows:
1. Engagement of Employee
----------------------
1.1 The Corporation hereby engages the Employee as President
and manager of manufacturing of the Corporation and the Employee
hereby accepts such employment.
1.2 The Employee shall perform all such acts and do all such
things as and when the same may be necessary to properly and
efficiently carry out the duties of President and manager of
manufacturing of the Corporation which duties shall include but
shall not be limited to:
<PAGE>
(a) exercising general direction and supervision over
manufacturing activities of the Corporation;
(b) performing such other duties and observing such
instructions as may be reasonably assigned to him from
time to time in his capacity of President and Manager of
Manufacturing by the Board of Directors; and
(c) generally at all times abiding by all lawful directions
given to him by the Board of Directors of the Corporation
and the Chief Executive Officer of the Company.
1.3 The Employee shall at all times use its best efforts to
advance the interests of the Corporation, and shall faithfully,
industriously, and to the best of its abilities, act as an employee
of the Corporation in accordance with the terms and conditions of
this Agreement.
1.4 The Employee warrants and represents to the Corporation
that the Employee is not party to any agreement or subject to any
court order which would prevent the Employee from providing the
Consulting Services.
2. Remuneration
------------
2.1 The Company shall pay the Employee a gross salary (before
standard deductions) of $6,000 per month (the "Salary") in
consideration of the duties performed by the Employee. The salary
will increase to $8,000 per month upon the Corporation recording an
aggregate net profit in any consecutive twelve month period. The
Company shall make all payments in respect of the Salary to the
Employee in equal instalments on a bi-weekly basis commencing on
the first payroll date of the Company after the date hereof. The
Employee's Salary shall be reviewed on an annual basis in each year
of this Agreement during the term of this Agreement.
2.2 The Company shall reimburse the Employee for reasonable
travelling and other expenses actually and properly incurred by the
Employee in carrying out his duties hereunder, provided that such
expenses are approved by the Chief Financial Officer of the Company
and are supported by proper receipts, invoices or vouchers supplied
to the Company within 30 days of the date any such expenses were
incurred. The Company will provide the Employee with a mid-size
automobile to be leased at a rate of not more than $400 per month
and the Company will reimburse the Employee for reasonable
automobile expenses.
2.3 The Employee agrees to perform his duties on a continuous
and fulltime basis, provided that the Employee shall be entitled on
reasonable prior written notice to 3 (three) weeks annual vacation
during the each year of the term of this Agreement.
2.4 The Employee will be entitled to performance based
options to purchase shares of the parent of the Company
to be granted at the discretion of the board of directors
of the parent of the Company.
<PAGE>
3
3. Term of Employment
------------------
3.1 The initial term of this Agreement shall be three (3)
years, commencing on the date of first written above, subject to
earlier termination as hereinafter provided.
4. Confidentiality and Non-Competition
-----------------------------------
4.1 The Employee shall not, either during the term of this
Agreement or at any time there-after, disclose to any person any
confidential information concerning the business or affairs of the
Corporation which the Employee may have acquired in the course of
or incidental to his employment hereunder or otherwise, and the
Employee shall not directly or indirectly use (whether for his own
benefit or the detriment or intended detriment of the Corporation)
any confidential information he may acquire with respect to the
business and affairs of the Corporation.
4.2 The Employee agrees with the Corporation that he will
not, either alone or in conjunction with any individual, firm,
Corporation, association or other entity, whether as principal,
agent, director, officer, Employee, shareholder or in any other
capacity whatsoever:
(a) during the term of this Agreement and for a one year
period from the termination of this Agreement, carry on,
or be engaged in, concerned with or interested in,
directly or indirectly, any business which is in whole or
in part competitive with the business of the Corporation;
(b) during the term of this Agreement and for a one year
period from the termination of this Agreement, attempt to
solicit any suppliers, customers or employees of the
business of the Corporation away from the Corporation;
(c) during the term of this Agreement and for a one year
period from the termination of this Agreement, knowingly
take any act as a result of which the relations between
the Corporation and the suppliers or customers of the
business of the Corporation may be impaired or which may
otherwise be detrimental to the business of the
Corporation.
5. Assignment of Inventions
------------------------
5.1 Any and all inventions and improvements on which the
Employee may conceive or make, during the term of this Agreement,
relating, or in any way, pertaining to or connected with any of the
matters which have been, are or may become the subject of the
Corporation's investigations, or in which the Corporation has been,
is, or may become interested, shall be the sole and exclusive
property of the Corporation, and the Employee will, whenever
requested by the
<PAGE>
4
Corporation, execute any and all applications, assignments and
other instruments which the Corporation shall deem necessary in
order to apply for and obtain letters of patent for U.S. or
foreign countries for the inventions or improvements and in
order to assign and convey to the Corporation the sole and
exclusive right, title and interest in and to the inventions or
improvements, all expenses in connection with them to be borne by
the Corporation. The Employee's obligations to execute the papers
referred to in this paragraph shall continue beyond the termination
of this Agreement with respect to any and all inventions or
improvements conceived or made by him during the term of this
Agreement, and the obligations shall be binding on the assigns,
executors, administrators or other legal representatives of the
Employee.
5.2 All inventions and discoveries relating to the business
of the Corporation and all knowledge and information which the
Employee may acquire during his engagement shall be held by the
Employee in trust for the benefit of the Corporation.
6. Termination
-----------
6.1 The Corporation may terminate this Agreement at any time
for just cause, provided that reasonable warning shall have been
first given by the Corporation to the Employee and provided that
those obligations of the Employee in this Agreement expressly
stated to continue on termination shall continue upon termination
and shall not terminate upon termination of this Agreement.
6.2 The Employee may terminate this Agreement at any time
upon three months written notice to the Corporation, provided that
those obligations of the Employee in this Agreement expressly
stated to continue on termination shall continue upon termination
and shall not terminate upon termination of this Agreement.
7. Notices
-------
7.1 Any notice required or permitted to be given under this
Agreement shall be in writing and may be delivered personally or by
telecopier, or by pre-paid registered post addressed to the parties
at the above-mentioned addresses or at such address of which notice
may be given by either of such parties. Any notice shall be deemed
to have been received if personally delivered or by telex or
telecopier, on the date of delivery and, if mailed as aforesaid,
then on the fourth business day after and excluding the day of
mailing.
8. Assignment
----------
8.1 This Agreement may not be assigned in whole or in part by
the Employee without the prior written consent of the Corporation.
8.2 This Agreement may not be assigned in whole or in part by
the Corporation without the prior written consent of the Employee.
<PAGE>
5
9. Interpretation
--------------
9.1 This Agreement shall be governed by and construed in
accordance with the laws of the State of Nevada.
9.2 All headings used in this Agreement are for convenience
of reference only and are not to be used as an aid in the
interpretation of this Agreement.
9.3 This Agreement replaces and supercedes all other
contracts, including consulting agreements and employment
agreements, between the Employee and the Corporation.
IN WITNESS WHEREOF the parties have executed this Agreement as of
the day and year first above written.
MANLOE LABS, INC.
by its authorized signatory:
/s/ Roger Hocking
_________________________________
Authorized Signatory
SIGNED, SEALED AND DELIVERED )
BY ROGER HOCKING in )
the presence of: )
)
)
/s/ Steven L. Waddle ) /s/ Roger Hocking
- --------------------------------- ) ------------------------
Signature ) ROGER HOCKING
)
STEVEN L. WADDLE )
- --------------------------------- )
Name )
)
6320 SANDHILL RD #10 )
- --------------------------------- )
Address )
LAS VEGAS NV 89120
<PAGE>
TALENT LICENSE AND MARKETING AGREEMENT
This AGREEMENT is made between Skinvisible International Inc.,
having its principal place of business at 6320 South Sandhill Rd.,
Suite 10, Las Vegas, NV 89120 (hereinafter referred to as
"Skinvisible"), and Randall Cunningham (hereinafter referred
to as "Cunningham").
WHEREAS, Skinvisible is in the business marketing and
selling and microbial skin protection products; and
WHEREAS, Skinvisible is interested in using Cunningham's
name, image, picture, reputation and position as the
quarterback of the Minnesota Vikings Football team in its
marketing efforts for its products.
NOW THEREFORE,
1. Cunningham agrees and hereby authorizes Skinvisible
to use his name, image, likeness, picture and position as the
quarterback of the Minnesota Vikings Football team (the "Uses")
in its marketing efforts for its products. Such Uses shall be
at the discretion of Skinvisible, subject only to the restrictions
contained herein. It is understood that Cunningham will not be
required to wear an official Minnesota Vikings Football uniform.
2. Cunningham will make himself available for personal
appearances and as a spokesman at the direction of Skinvisible
during the months of February through June of each year for the
term of this Agreement. Such personal appearances shall include
at a minimum 10 cities within the United States and Canada per
year.
3. Cunningham will make himself available for recording of
corporate videos and infomercials on behalf of Skinvisible and
its products during the year.
4. Cunningham shall not offer or permit the use of his name,
image or likeness to be used for any other skin care products
during the terms of this Agreement.
5. The term of this agreement shall be for three years
beginning April 1, 1999.
6. In consideration for the above, Skinvisible agrees to:
a. Pay all of Cunningham's expenses associated with appearances
at company functions including travel and accommodations.
b. Issue to Cunningham stock options in the shares of
Skinvisible, Inc. providing for the purchase of 120,000 shares
at an option price of $3.50 per share exercisable at a rate of 1/3
of the total shares every three months beginning three months
after execution of the stock option agreement.
c. Provide Cunningham with a distributorship in its Net/Direct
Marketing Program and include all prospects from his appearances
(Corporate or Consumer) into his down line.
IN WITNESS WHEREOF, the parties hereto have executed this
agreement this 1 day of April, 1999.
----- -----
SKINVISIBLE INTERNATIONAL, INC.
\s\ Terry Howlett \s\ Randall Cunningham
- -------------------------- ---------------------------
By: Terry Howlett Randall Cunningham
Its: President
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS CONTAINED IN
THE COMPANY'S QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED
JUNE 30, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 63,300
<SECURITIES> 0
<RECEIVABLES> 7,400
<ALLOWANCES> 0
<INVENTORY> 167,500
<CURRENT-ASSETS> 288,200
<PP&E> 398,900
<DEPRECIATION> 34,200
<TOTAL-ASSETS> 1,858,800<F1>
<CURRENT-LIABILITIES> 1,096,800
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 762,000
<TOTAL-LIABILITY-AND-EQUITY> 1,858,800
<SALES> 48,100
<TOTAL-REVENUES> 48,100
<CGS> 16,100
<TOTAL-COSTS> 16,100
<OTHER-EXPENSES> 1,453,600
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 29,500
<INCOME-PRETAX> (1,421,600)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,421,600)
<EPS-BASIC> (0.14)
<EPS-DILUTED> (0.14)
<FN>
<F1>This includes Pre-paids of $50,000 and Other-Assets $1,205,900.
</FN>
</TABLE>
