U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1996.
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to _________
Commission File Number 01-8929
SANITARY ENVIRONMENTAL MONITORING LABS, INC.
__________________________________________________
(Exact name of small business issuer as specified in its charter)
Nevada 13-3432594
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1408 Pawnee Drive, Las Vegas, Nevada 89102
(Address of principal executive offices) (Zip Code)
(888) 355-8805
(Issuer's telephone number, including area code)
INTERNATIONAL SEMICONDUCTOR CORP.
2950 31st Street, Santa Monica, California 90405
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the Issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the past
12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes No X
The issuer's revenues for its most recent fiscal year were
$0.00. The aggregate market value of the voting stock held by
non-affiliates of the issuer was $3,385,666 as of October 1,
2000.
The aggregate number of shares outstanding of the Issuer's Common
Stock, its sole class of common equity, was 11,604,118 as of
September 5, 2000.
This report consists of 37 pages, without exhibits.
<PAGE>
PART I
Item 1. Description of Business
(a) Business Development
Sanitary Environmental Monitoring Labs, Inc. (formerly
International Semiconductor Corporation), is a development stage
corporation (the "Company"). The Company was incorporated on
March 13, 1987, under the name "Lewis Resources, Inc." On
September 28, 1993, the Company acquired from Lema Investments,
Ltd. all of the issued and outstanding shares of Gallium Arsenide
Industries, Ltd. ("Gallium Industries" or "GAI"), a development
stage Israeli company, by issuing 3,982,190 shares of its common
stock (after giving effect to the one-to-six reverse split
described below) to Lema Investments, Ltd. in exchange for the
stock of GAI. After sustaining large losses, GAI was
subsequently sold back to its former shareholders on July 1,
1995, primarily for assumption of existing debt. In connection
with the GAI and GAD acquisitions, the board of directors of the
Company increased the number of authorized common shares to
26,000,000, and changed the Company's name from Lewis Resources
to Israel Semiconductor Corp. (effective December 21, 1993), and
later to International Semiconductor Corporation (effective July,
1994). A reverse stock split (6 for 1) was effective for
shareholders of record as of November 30, 1993.
Also in September, 1993, the Company committed to invest in
shares of a newly-founded Israeli development stage company, GAD
Semiconductors, Ltd. ("GAD"). The commitment was in an amount of
up to $1,000,000 and the Company undertook to raise additional
funds by means of commercial banking loans, grants and special
loans which GAD was qualified to receive as a recognized Approved
Enterprise under the Israeli Encouragement of Capital
Investment-1959 Law. Together with the initial investment, the
total investment would aggregate approximately $3,100,000. In
return, GAD issued to the Company 60% of its common stock, par
value $2,033. The major part of the investment, up to the amount
which the Company invested in GAD's shares, was considered as
premium on the shares. In January, 1994, GAD was granted the
status of "Approved Enterprise" by the Israeli Investment Center
in accordance with the Law for the Encouragement of Capital
Investments - 1959. Under the approved capital investment
program, GAD received, during 1994, State guaranteed loans in the
amount of $1,172,962. During, 1995, the Company invested
approximately $860,000 in GAD, primarily in the form of share
capital, with an additional $182,000 tendered during the first
quarter of 1996. The total cumulative Company investment in GAD
was over $1,675,000. Based upon a failure of the minority
shareholders of GAD to meet their investment commitments, the
Company then took control of 80% of the shareholdings of GAD.
However, because of adverse business circumstances during
1996, revenues were not realized sufficient to continue to
operate GAD and to fill orders for the Gallium Arsenide diodes,
resulting in a closing of the business in May, 1997. GAD was
placed in liquidation, in Israel, by the relevant authorities,
and all ownership interests of the parent company (its sole
remaining shareholder) were reduced to zero. This has been
accounted for as a relief from liability and caused the company
to record a profit on discontinued operations in fiscal 1997.
In 1997, the company settled with its largest then-existing
creditor, Tweed Investments, by issuing 11,300,000 shares of
restricted common stock. Subsequently, in March, 1999, the
company effected a 1-for-10 reverse of its issued and outstanding
common stock, and in September, 1999, increased its authorized
share capital to 50,000,000 shares and amended its articles of
incorporation to change the company's name. In April, 2000, the
company filed an amendment to effect the change of its name to
"Sanitary Environmental Monitoring Labs, Inc.", the current
corporate name.
After a two-year period of inactivity, lasting until the
summer of 1999, the company's directors identified an opportunity
in the measuring and monitoring of bacterial presence in retail
food service establishments, utilizing testing equipment
manufactured by Merck Kga, of Darmstadt, Germany. This
equipment, marketed under the "Hy-Lite 1" and "Hy-Lite 2"
tradenames, utilizes the ATP (Adenosine TriphosPhate) measurement
technology to quantify the cleanliness of surfaces coming into
contact with food and food services equipment.
The company acquired the rights to the use of the tradename
"SemcoLABs" from a Florida corporation in exchange for 2,650,000
shares of its common stock, issued in February of 2000, and the
assumption of $200,000 in investor debt. The company then
acquired, in May, 2000, an exclusive license from Monaco Trading,
the sole licensee under Merck's United States distributor, EM
Sciences, in exchange for a minimum sales commitment during the
ensuing 4-year period and the issuance of 4,000,000 shares of
restricted stock.
Interim funding was acquired in two private placements, the
first, for $62,500 from Mesa, Inc. in February, 2000, in payment
for 250,000 shares of restricted stock ($0.25 per share), and the
second, for $500,000, occurring June 23, 2000, with Girardi
Financial, for 2,000,000 shares of restricted stock ($0.25 per
share).
Technology Concept:
Existing Product
Equipment for the preparation and processing of foods should
be as clean as possible. If this is not the case, quality
problems or complaints may occur. Beyond this, statutory
requirements, such as the HACCP concept in the United States
("Hazardous Analysis of Critical Control Points"), invented for
the NASA Space Program, or the European directive 93/43/EEC, are
also applicable in many countries. These regulations may include
a requirement for a method which allows a rapid examination and
which can verify and document the cleanliness of the equipment
(or the working surface) before the start of food production.
Visual examination may be insufficient because invisible food
residues are not detected. Classical microbiological methods
only provide evidence of micro-organisms and are too slow to
allow a reaction before the start of production or processing.
The Hy-Lite equipment invented by Merck was the first portable
ATP system with a single-shot pen test format. The Hy-Lite 2 is
the latest generation of this system. Measurements, with
results, can be taken in approximately 20 seconds, allowing the
monitoring system (human operator) to assess the cleanliness or
bacterial presence of the surface, utensil, liquid (such as iced
tea), or other test subjects in sufficient time to preclude high
levels of foodborne contamination if the problems are treated
immediately. Common measuring points may be filling equipment,
storage tanks, cutting tables, conveyor belts, rinse water
samples and all points of any equipment with which the food
product has direct contact.
Evaluation of Measurements
The acceptable level of ATP (bacterial indicator) is
dependant on many factors, such as types of raw materials,
processes applied, material of the surfaces measured and the
"risk" associated with the product (will it be eaten "as is" or
cooked/reheated prior to eating). Will the consumers be healthy
adults or babies, geriatrics or immuno-compromised. Limits for
these various combinations have been determined by Merck and are
continually improved by assimilation of data at the customer's
facility and in other processing applications. The Hy-Lite has
programmed within it "Trend 2" data mining software to allow for
on-site regression analysis of statistical results achieved in
the field.
Manufacturing
The company does not manufacture any of the equipment or the
test tubes utilized in the tests. These are all purchased from
EM Sciences, Merck's distributor in the United States.
Marketing, Sales and Distribution
Business Concept. The marketing program for the company is
based on the concept of providing a service to the retail food
distribution industry. The service is the analysis or "audit" of
a client's bacterial safety, measured at various critical control
points established in concert with the client/customer, or in
compliance with existing monitoring programs already established
by regulatory agencies or self-initiated internal customer
programs.
Marketplace. Proposed national standards, such as the HACCP
program enacted by the Federal Government and "suggested" for
implementation by the states, require that food business
proprietors comply with the following obligations:
* have a written food safety program;
* ensure that all food handlers have skills and
competencies in food hygiene matters commensurate with
work activities;
* develop appropriate sanitation programs; and
* provide for the recall of unsafe food as appropriate
These requirements provide the framework for the basic
services which the company provides: an analysis and testing of
compliance with these requirements. As necessary, the company
will also provide to a client the basic support and consulting
services to establish a program that will satisfy all four of the
requirements outlined above.
The initial target market for the company will be
restaurants, or food service facilities, but the identification
of the presence of bacteria can be of utility to other industries
and applications, such as monitoring cleaning operations for a
"before" and "after" measurement of results. The company has
received proposals, which are under study, to provide services to
firms working in the dairy clean-up market and to carpet cleaning
facilities.
Patent Applications
The company holds no patents and operates the equipment and
the test tube analyses under a license through EM Sciences/Merck.
The company does own the registered trademark "Semcolabs", and
several other uses of the word "Semco" in restaurant testing.
Employees
The company currently has 5 employees and 3 consultants.
Competition
The competition for food service industry compliance
documentation, such as establishment of a HACCP Plan, is intense,
and is not thought to be lucrative by the company's management.
There are numerous individuals and companies offering services in
this area and they are quite capable of timely and cost-effective
rendering of these services.
However, the competition for on-site testing and analysis of
compliance once the HACCP Plans are established, is not as well
entrenched. The company is not aware of any other company
offering monitoring services identical to the Hy-Lite 2 ATP
measurement program, although similar technologies will doubtless
be developed in the coming months and years. Current measurement
technologies generally require a several hour or even several day
delay in provision of results, since these technologies rely upon
laboratory tests at an off-site facility. This on-site, real-
time testing market is the primary target of the company.
Research and Development
The company is not and will not be conducting any research
on improvement of the Hy-Lite ATP technology, but is entitled, by
license, to any improvements made by EM Sciences or Merck, and
has already benefitted by the introduction of the Series 2
machine in replacement of the Series 1 units in the third quarter
of 2000.
Item 2. Description of Properties
The company leases facilities in Boca Raton, Florida, paying
$550.00 per month, on a month-to-month basis. The company also
leases approximately 1800 feet in Las Vegas, Nevada for its
corporate headquarters. As clients or customers are engaged in
certain central geographic areas, the company will lease
additional office space to be located in the vicinity of those
customers.
Item 3. Legal Proceedings
As of December 31, 1996, the Company was not involved in any
direct proceedings, however, GAD, its subsidiary, was in arrears
on its rent, which ultimately resulted in a receivership being
imposed, on GAD, in Israel. This receivership resulted in total
liquidation of GAD, finally concluded on November 17, 1998.
As of October 24, 2000, the company was involved in a claim
filed by New Directions International, Inc. in Florida, in which
the Company disputed the plaintiff's claim for sums of money
invested in GAD, to be paid by the company (as parent). This is
vigorously disputed nd is against the liquidated subsidiary. The
Company recently prevailed on an appealed procedural matter, and
won, forcing the dispute to a trial. The primary exposure is
attorney's fees.
Item 4. Submission of Matters to a Vote of Security Holders
During the year 1996, no matters were submitted to a vote of
the security holders.
Subsequently, in October of 1997, a majority of the then-
existing shareholders voted to accept a compromise of debts with
Tweed Investments, issuing 11,300,000 (pre-reverse) shares in
total satisfaction of all claims, at the time amounting to in
excess of $400,000 of funds loaned to the company.
In August of 1999, a majority of the shareholders
tentatively approved a corporate combination with SemcoLABs of
Florida, contemplating a reverse merger, which was later
rescinded for lack of adequate consideration supplied by the
Florida company. In compliance with the terms of this agreement,
the shareholders approved an increase of the authorized share
capital to 50,000,000, which was not rescinded with the reversal
of the merger transaction.
PART II
Item 5. Market for Common Equity and Related Stockholder Matters
(a) Market Information
Since trading was activated in September, 1993, the
Company's common shares have been traded in the over-the-counter
market and have, until 1999, been quoted in the NASDAQ OTC
Bulletin Board under the symbol "ISSM", commencing October 13,
1993, and changing to "SLBI" on October 5, 1999. The Company's
shares currently trade on the National Quotation Board "pink
sheets", pending filing of current information. The Company's
securities are not publicly traded on any other market.
Set forth below are the high and low "bid" prices for the
Common Stock of the Company for each quarterly period commencing
January 1, 1995 through September 30, 2000:
Fiscal 1995: Low High
First Quarter $1.25 $2.875
Second Quarter $0.625 $2.12
Third Quarter $0.563 $1.625
Fourth Quarter $0.563 $1.312
Fiscal 1996:
First Quarter $0.563 $2.188
Second Quarter $1.125 $3.906
Third Quarter $1.375 $2,625
Fourth Quarter $0.375 $1.875
Fiscal 1997:
First Quarter $0.25 $0.563
Second Quarter $0.02 $0.437
Third Quarter $0.035 $0.16
Fourth Quarter $0.045 $0.145
Fiscal 1998:
First Quarter $0.04 $0.075
Second Quarter $0.03 $0.075
Third Quarter $0.025 $0.08
Fourth Quarter $0.0175 $0.09
Fiscal 1999:
***Reverse effective March 11, 1999 (1-for-10), is reflected
in Second Quarter prices
First Quarter $0.02 $0.02
Second Quarter $0.1875 $0.5625
Third Quarter $0.25 $1.11
Fourth Quarter $0.718 $0.75
Fiscal 2000:
First Quarter $0.125 $0.875
Second Quarter $0.125 $1.60
Third Quarter $0.25 $0.80
Such quotations reflect inter-dealer prices, without retail
mark-up, mark-down or commissions and may not necessarily
represent actual transactions.
(b) Holders
As of September 1, 2000 there were 596 holders of record and
an estimated 750 additional holders who were beneficial
shareholders of the Company's Common Stock.
(c) Dividends
The Company has not paid any dividends since its inception
and presently anticipates that no dividends will be declared in
the foreseeable future.
Item 6. MANAGEMENT DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The Company
The Company, during the years 1993 through 1997, primarily
operated through two subsidiaries, GAI and GAD, both of which
were either sold or liquidated as of second quarter, 1997.
Thereafter, there were no active operations of the company until
1999.
GAD Semiconductors, Ltd.:
The Company's only remaining subsidiary as of December 31,
1996 (date of this filing period) was GAD Semiconductors,
Ltd. ("GAD"), which was incorporated in August, 1993, by a
scientist and his associates who had developed a proprietary
technology for a GaAs diode manufacturing process. Under the
agreement with ISC (the Company), this process was transferred to
GAD for certain financial assurances. Semtech, Ltd., initially
retained ownership of 40%, later reduced to 10%, of GAD as a
result of this transaction.
GAD was qualified for the Approved Enterprise program by the
Israeli Investment Center, in early 1994. An investment program
in the amount of $2.45 million was approved in favor of GAD by
the Israeli Investment Center in the combined grant and loan
program. GAD applied to the Chief Scientist's office of the MCI
for the qualification of its research and development program for
which the Company would be entitled to up to 60% in grants.
GAD began construction of its manufacturing plant in Migdal
Haemek in mid-1994, completing the facilities construction in
November, and the machinery installation and testing in late
December. When the company was unable to pay its debts in late
1996, the facilities landlord commenced action to have the
company placed in receivership. The on-site management of the
company, in anticipation of this dispute, surrendered the
facilities to the landlord, tendered all keys, and shut the
facilities down, pending distribution of any assets through the
liquidation process.
RESULTS OF OPERATIONS
Sanitary Environmental Monitoring Labs, Inc. (formerly ISC) has
been a development stage Company since its inception and
has incurred general and administrative, financing, marketing and
start-up expenses in increasing amounts as GAI was attempting to
enter its production and selling phase prior to its sale in 1995,
and during GAD's construction of its production facility, test
runs and initial attempts to deliver product. Through December
of 1995 GAD had gross sales of $69,617, and in fiscal 1996, GAD
delivered an additional $21,906 in product.
During 1996, the Company incurred a loss of $3,271,877 ($0.39 per
share), compared to $2,203,878 ($0.26 per share), during the
operating period of 1995. From the date of its inception to the
end of 1996, the Company had an accumulated loss of $8,988,692,
causing a capital deficit of the same amount.
CAPITAL RESOURCES AND LIQUIDITY
During the fourth quarter of 1996, funds were obtained entirely
from investment by shareholders in the amount of $160,000,
generally through the issuance of convertible promissory notes.
These borrowings raised the total outstanding liability to Tweed
Investments to $399,273.94. This debt was ultimately converted
into equity on October 1, 1997.
During the first quarter of 1997, Karlin Investments converted
$100,000 of its credit into 425,755 shares of common stock of the
company, and loaned the company an additional $100,000 on
February 20, 1997. This subsequent loan was converted into
2,640,956 shares of common stock in the second quarter of 1997,
and a final $43,000 of Karlin's investment was converted into
1,448,224 shares during the third quarter of 1997. No Karlin
debt remained.
On May 15, 1997, the Company formally adopted a plan to
discontinue its operations in Israel (the GAD activities), and
surrendered all assets, which consisted primarily of property and
equipment, to creditors. Based on the company's estimates, the
estimated gain on the disposal of GAD was $975,019, measured as
the balance of outstanding liabilities removed in excess of asset
values carried on the company's books.
During the period from January 1, 1997 through cessation of
operations on May 15, 1997, the Company had $0.00 in revenues.
The company reported income from discontinued operations after
writing off all operating assets and liabilities related to GAD
and expensing all advances made by the company on behalf of GAD.
Subsequent Events:
On March 11, 1999, a reverse stock split of 1-for-10 was
effected and all subsequent issuances of shares reflect that
change.
On February 8, 2000, the company issued 150,000 shares of
common stock to the company's attorney in settlement of
outstanding payables of $15,000. On February 10, 2000, the
company issued 2,650,000 shares of common stock in exchange for
all of the outstanding stock of Semco Bio-Vision, Inc. This
transaction was recorded using the purchase method of accounting.
On February 12, 2000, the company issued 500,000 option
rights for $0.25 per share, expiring in February 12, 2003, to
officers of the company. The company approved a private
placement offering for $250,000, ultimately raising only $62,500
by issuance of 250,000 shares ($0.25 per share) and 250,000
warrants to acquire further shares, exercisable at $1.00 per
share and expiring 3 years hence.
On February 12, 2000, the company entered into a deferred
compensation agreement with an officer of the company. The
agreement was a two-year contract for $12,000 per month in
compensation. The company modified this agreement on September
15, 2000 and the new agreement stipulates that the officer is to
receive $85,000 a year, $5,000 payable monthly and the remaining
$25,000 deferred to subsequent periods.
On February 15, 2000, the company agreed to a sub-license
agreement with Monaco Investment Group, Ltd., in exchange for
4,000,000 restricted common shares, for the exclusive U.S.
distribution rights to Hy-Lite 2 equipment. The agreement
requires the company to purchase a minimum dollar amount of Hy-
Lite machines and/or test tubes on an annual basis: in Year 1
the company is required to purchase $115,200; in Year 2,
$384,000; in Year 3, $768,000 and in Year 4, $1,536,000.
On February 24, 2000, the company granted an officer
1,000,000 option rights to purchase shares at $0.25 per share.
The vesting schedule permits the officer to acquire 40,000 shares
a month and the options expire after three years.
On June 23, 2000, the company entered into a subscription
agreement for 2,000,000 shares of common stock at $0.25 per
share. The agreement was tendered in the form of $150,000 cash
and $350,000 in secured promissory notes receivable which became
payable upon the completion of due diligence. That period
expired on October 15, 2000, at which point the company had
received all of the sums due.
CONTINGENCIES AND COMMITMENTS
The recent placement of $350,000 provided sufficient funding
for the company to act on its business plan for the foreseeable
12-month period. During September of 2000, the company entered
into contracts with WalMart for training of up to 1200 of its
management employees in SafeServe food safety certification.
Revenues from this contract should exceed the expenses incurred
for the remainder of the fourth quarter of 2000.
Item 7. Financial Statements
SANITARY ENVIRONMENTAL MONITORING LABS, INC.
(Formerly International Semiconductor Corp.)
A DEVELOPMENT STAGE COMPANY
CONSOLIDATED FINANCIAL STATEMENTS
As at December 31, 1996
CONTENTS
Balance Sheet
Statement of Operations
Statement of Changes in Shareholders' Equity
Statement of Cash Flows
Notes to the Financial Statements
Schedules of Form 10KSB
<PAGE>
SANITARY ENVIRONMENTAL MONITORING LABS, INC.
(Formerly International Semiconductors Corp)
(A Development Stage Company)
UNAUDITED
CONSOLIDATED BALANCE SHEET
December 31 December 31
1996 1995
Note US Dollars
ASSETS
Current Assets
Cash and cash equivalents 207 0
Short-term bank deposits 0 0
Related parties (ITG) 29,869 0
Accounts Receivable 6 19,630 28,023
Inventories 15,000 15,000
Pre-paid expenses 1,990 0
Fixed Assets 8 1,699,745 1,613,878
(accumulated depreciation) ( 387,352) (217,379)
Total Assets: 1,379,089 1,439,522
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current Liabilities
Short-term credit from banks 611,424 318,068
Short-term loans from
related parties (Karlin) 9 100,000 0
Suppliers 184,272 749,205
Other accounts payable 10 88,601 398,044
984,297 1,465,317
Long-term Liabilities
Long-term loans 11 1,675,988 1,176,029
Accrued expenses (Tweed) 389,274 0
Liability for Severance pay 12 76,049 55,365
Commitments and Contingencies 2,141,311 0
(Notes 1,15,17,19)
Ordinary Shares - $.001 par value;
authorized - 26,000,000 shares and
25,000,000; issued and outstanding
10,062,511 shares and
8,464,267 shares 9,723 8,464
Premium on Shares 7,232,450 4,451,142
Accumulated loss during
development stage (8,988,692) (5,716,815)
Total Liabilities and Equity 1,379,089 1,439,522
<PAGE>
SANITARY ENVIRONMENTAL MONITORING LABS, INC.
(Formerly International Semiconductors Corp)
(A Development Stage Company)
UNAUDITED
CONSOLIDATED STATEMENTS OF INCOME AND ACCUMULATED DEFICIT
FOR THE YEARS ENDED
DECEMBER 31, 1996 AND 1995
Year Year
Ended Ended
December 31 December 31
1996 1995
Revenues
Sales $ 21,906 $ 0
Expenses
Start-up Expenses $ 0 $ 0
Research and Development 133,540 158,936
Marketing Expenses 301,604 130,863
General and Administrative 835,256 917,702
Financing and Expenses 101,356 208,432
Loss from Sale of Subsidiary 0 1,316,392
Total Expenses 1,371,756 2,732,325
Extraordinary Item:
Loss on Conversion of Debt (1,922,027) 0
Net Income (loss) (3,271,877) (2,732,325)
Accumulated Deficit, Begin (5,716,815) (2,984,490)
Accumulated Deficit, Ending (8,988,692) (5,716,815)
<PAGE>
SANITARY ENVIRONMENTAL MONITORING LABS, INC.
(Formerly International Semiconductors Corp)
(A Development Stage Company)
UNAUDITED
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS EQUITY
Share-
Ordinary shares Premium Accumulated Holders
Number Amount On Shares Loss Equity
US Dollars
Balance as of
December 31, 1994 5573911 5574 2915907 (2984490) ( 63009)
Issue of shares
in 1995 2890000 2890 1535235 0 1538125
Net loss for the
year ended
Dec 31, 1995 0 0 0 (2732325) (2732325)
Balance as of
December 31, 1995 8142390 8142 4451142 (5716815) (1257209)
Total for issue of
shares in 1996 1580943 1581 1310557 0 2782567
Net loss for year
ended 31 Dec 96 0 0 0 (3271877) (3271877)
Balance as of
December 31, 1996 9723333 9723 7232450 (8988692) (1746519)
======= ==== ======= ======= =======
<PAGE>
SANITARY ENVIRONMENTAL MONITORING LABS, INC.
(Formerly International Semiconductors Corp)
(A Development Stage Company)
UNAUDITED
CONSOLIDATED STATEMENT OF CASH FLOWS
Year Year
Ended Ended
December 31 December 31
1996 1995
Cash Flows from Operating Activities
Net (loss) $ (3,291,899) $(2,732,325)
Reconciliation of Net Loss to
Net Cash Used by Operating
Activities 1,269,176 2,009,473
Net Cash Used by Operating Activities (2,022,723) ( 722,852)
Cash Flows From Investing Activities
Investment in Fixed Assets ( 85,867) ( 404,350)
Proceeds from Sale of Fixed Assets 0 0
Investment Grants Received 0 78,921
Decrease (increase in Short-Term
Bank Deposit 0 0
Cash of Acquired Parties 0 0
Loans to Related Parties 0 ( 170)
Net Cash Used by Investing Activities ( 85,867) ( 325,599)
Cash Flows from Financing Activities
Issue of Shares 382,000 827,266
Receipt of Long-Term Loans 1,524,668 137,879
Repayment of Long-Term Loans ( 7,145) ( 174,917)
Receipt of Loans from Related Parties 209,274 158,396
Increase in Short-Term Credit (other) 0 14,792
Increase in Short-Term Credit (banks) 0 0
Net Cash Provided by Financing Activities 2,108,797 963,416
Net increase (Decrease) in Cash and
Cash Equivalents 207 ( 85,035)
Cash and Cash Equivalents at
Beginning of period 0 85,035
Cash and Cash Equivalents at End
of Period 207 0
<PAGE>
SANITARY ENVIRONMENTAL MONITORING LABS, INC.
(Formerly International Semiconductors Corp)
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS AT DECEMBER 31, 1996
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
-------------------------------------------
Company Organization
--------------------
Sanitary Environmental Monitoring Labs, Inc. (Formerly
International Semiconductor Corp.) hereinafter referred to
as (the "Company") was organized in 1987, initially as an
inactive publicly held corporation pursuing business
acquisitions. The Company continues to pursue business
acquisitions. On February 10, 2000 the Company executed an
acquisition agreement to acquire 100% of the outstanding
common stock of Biovision in exchange for 2,650,000 shares
of International Semiconductor Corp. common stock. (See Note
14 - Subsequent Events).
On September 10, 1999 the Company changed its name to
"SemcoLabs, Inc." and on April 10, 2000 the Company changed
its name again to "Sanitary Environmental Monitoring Labs,
Inc." The effects of these changes were reflected in these
financial statements.
Accounting Method
-----------------
The Company maintains its books and records utilizing
accrual accounting. The accrual method recognizes income
when earned and expenses when incurred.
Principles of Consolidation
---------------------------
The Company consolidates its financial statements with
subsidiaries if the Company owns 50% or more of the
subsidiary's outstanding voting stock. The Company will
prepare its financial statements on the equity method when
the interest is between 20% and 50%, or when the interest
exceeds 50%, but expectation for maintaining a controlling
interest is temporary. On investments of less than 20% the
Company will present the investment at cost.
Cash and Cash Equivalents
-------------------------
The Company considers all highly liquid investments
purchased with original maturities of three months or less
to be cash equivalents.
Inventories
-----------
Raw material inventories are included at the lower of
cost or market value, Cost is calculated by the "first-
in, first-out" method.
Use of Estimates
----------------
The preparation of financial statements in conformity with
generally accepted accounting principles requires the
Company to make estimates and assumptions that affect the
reported amounts of assets and liabilities at the date of
the financial statements and the reported revenues and
expenses during the reporting period. Actual results may
differ from those estimates.
Loss Per Share
--------------
Loss per share were computed by dividing loss available to
common stockholders by the weighted-average number of shares
outstanding during the year.
Fixed Assets
------------
1. Fixed assets are stated at cost, less Government
investment grants, which were granted to finance
fixed assets acquisition. Interest costs incurred
on debts used to acquire fixed assets and other
costs relating directly to the acquisition and
construction of assets - in the period required to
get the assets ready for their intended use - are
included in the cost of fixed assets.
2. Depreciation of plant and equipment began again in
1995 because production activities were resumed
during 1995. The assets were depreciated according
to the straight-line method over the estimated
useful lives of the assets, at the following annual
rates:
Machinery and equipment 10
Leasehold improvements 10 - 25
3. Motor vehicles and office furniture are
depreciated by the straight-line method at the
following annual rates:
Motor vehicles 15
Office furniture 7 - 20
SANITARY ENVIRONMENTAL MONITORING LABS, INC.
(FORMERLY INTERNATIONAL SEMICONDUCTOR CORP.)
(A Nevada Corporation)
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
NOTE 2 GOING CONCERN
-------------
The Company's continued existence is in doubt. The Company
had no operating revenues in 1998 or 1999 and as of December
31, 1999 the Company did not own any assets that would
generate operating revenues.
Subsequent to the balance sheet date, the Company acquired
100% of the outstanding stock of Semco Biovision, Inc. (See
Note 14 - Subsequent Events). Management's plans for
continuing as a going concern rely on the acquisition and
further funding through loans and private placements.
NOTE 3 INCOME TAXES
------------
The Company files its tax returns using the same accounting
method as it does for financial statement reporting. The
Company has unused net operating losses carried forward from
inception estimated at $9,000,000. Based on estimated future
income tax rates (30%) these NOL's would result in a
deferred tax benefit of $2,700,000. Management established a
valuation allowance equal to the potential benefit of NOL's
based on the likelihood that the carryforwards would expire
prior to utilization. Based on these assumptions a
provision of $0 for 1998 and 1999 would be in included in
these statements.
NOTE 4 SUPPLEMENTAL CASH FLOW INFORMATION
----------------------------------
Supplemental cash flow information: 1999 1998
------------------------------------ ---- ----
Cash paid for income taxes $ 0 $ 0
==== ====
Cash paid for interest expense $ 0 $ 0
==== ====
NOTE 5 RELATED PARTY TRANSACTIONS
--------------------------
The Company in 1999 and 1998 had accrued expenses of $90,235
and $26,956, respectively, due to ITG, a related entity in
which a shareholder and officer of the Company holds a 30%
interest. The Company leased office space from ITG during
1999 and 1998 on a month-to-month basis. Monthly rent
expense is $2,250 plus additional expenses for overhead.
Total office and overhead expenses charged by ITG during
1999 and 1998 were $27,000 each year. Future minimum lease
payments as of December 31, 1999 for each of the next five
years is $27,000 each year.
NOTE 6 - OTHER ACCOUNTS RECEIVABLE
-------------------------
December 31, December 31,
1 9 9 6 1 9 9 5
U.S. dollars
Taxes receivable 0 18,245
Other accounts receivable 19,630 9,779
19,630 28,023
======= =======
NOTE 7 STOCKHOLDERS' DEFICIT (Subsequent Event)
---------------------
The Company's board of directors authorized, on March 11,
1999, a reverse stock split of 10 for 1. The affect of this
change was not recorded in these financial statements.
On August 23, 1999 the Company entered into a business
combination agreement with Semco (FL) and issued 19,400,000
shares of common stock in exchange for all the outstanding
shares of Semco (FL). On February 3, 2000 the agreement was
rescinded and the issued shares were cancelled.
NOTE 8 - FIXED ASSETS
Machinery
And Motor Office Leasehold Totals
Equipment Vehicles furniture improvements
Balance at
Jan 1, 1996 1074576 43948 46518 448836 1613878
Additions 85867 0 0 0 85867
Disposals 0 0 0 0 0
Accumulated
Dep to 1995 141469 15983 7963 51964 217379
Provision ('96) 116044 4395 4652 44882 169973
Cumulative 257513 20378 12615 96846 387352
Balance at
Dec 31, 1996 1160443 43948 46518 448836 1699745
------- ----- ----- ------ -------
SUPPLIERS
---------
These are amounts due to suppliers mainly in connection with
the acquisition of fixed assets and leasehold improvements.
NOTE 9 - SHORT TERM LOANS FROM RELATED PARTIES
Karlin Investment Corp. loaned the company $100,000 during
the fourth quarter, which amount is convertible at the
market price upon date of issuance, or upon date of
conversion, whichever is lowest, less a discount of 20%.
Tweed Investments Ltd., in a series of 5 separate loans,
advanced the company a total of $399,273.94 during the
fourth quarter, also convertible at the market price on date
of issuance or on date of conversion whichever is lowest,
with no discount involved.
NOTE 10 - OTHER ACCOUNTS PAYABLE
December 31, December 31,
1 9 9 6 1 9 9 5
U.S. Dollars
Taxes Payable 2,370 2,370
Employees and provisions
for salary-related expenses 66,406 75,849
Other accounts payable 19,825 319,825
88,601 398,044
======= =======
NOTE 11 - LONG TERM LOANS
All items characterized as long term loans are from Israeli
banks, and are payable by GAD, not by the Company, and have
subsequently been eliminated with the liquidation of GAD by
the Israeli insolvency laws.
NOTE 12 - LIABILITY FOR SEVERANCE PAY
The liability of the Company and its subsidiaries for
severance pay to their employees, calculated at one month
salary per year of service, pursuant to Israeli laws, is
covered partly by premiums paid to an insurance company and
partly by accrual. The amounts maintained with the
insurance company are not under the control of the Company
and, accordingly, such amounts, and the liability they
cover, are not reflected in the financial statements.
<PAGE>
SANITARY ENVIRONMENTAL MONITORING LABS, INC.
(FORMERLY INTERNATIONAL SEMICONDUCTOR CORP.)
(A Nevada Corporation)
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
NOTE 13 EXTRAORDINARY ITEM -LITIGATION SETTLEMENT PAYABLE
-------------------------------------------------
In 1999 the Company lost a lawsuit with a creditor resulting
from a note payment default. The estimated loss including
attorney's fees and interest expense is $65,000. As of
August 18, 2000 the matter was not settled.
NOTE 14 SUBSEQUENT EVENTS
-----------------
On February 8, 2000 the Company issued 150,000 shares of
common stock to the Company's attorney in settlement of
outstanding payables of $15,000.
On February 10, 2000 the Company issued 2,650,000 shares of
common stock in exchange for all the outstanding stock of
Semco Biovision, Inc. ("Biovision"). The transaction will
be recorded using the purchase method of accounting.
On February 12, 2000 the Company issued 500,000 option
rights for $0.25 per share, expiring on February 12, 2003 to
officers of the Company.
On February 12, 2000 the Company approved a private
placement offering for $250,000 by issuance of 1,000,000
shares of restricted stock with warrants to purchase an
additional 1,000,000 shares at $1.00 pr share. The warrants
expire three years from the date of issue. As of August 18,
2000 only 250,000 shares for $62,500 were issued, and the
Company has closed the offering.
On February 12, 2000 the Company made a deferred
compensation agreement with an officer of the Company. The
agreement was for two years and specified that the officer
was to receive $12,000 a month. The agreement was modified
on September 15, 2000 and is retroactive to February 12,
2000. The agreement now specifies that the salary is
$85,000 per year, $5,000 is payable monthly with the
remaining $25,000 deferred and payable in subsequent
periods.
On February 15, 2000 the Company agreed to a sub-license
agreement with Monaco Investments Group, Ltd. in exchange
for 4,000,000 restricted common shares for the distribution
rights to Hy-Liter II, a environmental testing machine. The
agreement requires the Company to purchase a minimum amount
of Hy-Liters on an annual basis. In Year 1 the Company is
required to purchase $115,200, $384,000 in Year 2, $768,000
in Year 3, and $1,536,000 in Year 4.
On February 24, 2000 the Company granted an officer
1,000,000 option rights to purchase shares at $0.25 per
share. The vesting schedule permits the officer to acquire
40,000 shares a month and the options expire after three
years.
On June 23, 2000 the Company entered into a subscription
agreement for 2,000,000 shares of common stock at $0.25 per
share. The agreement was tendered in the form of $150,000
cash and a $350,000 note receivable which will become
payable upon the completion of due diligence. If the
Company does not meet the covenants of the agreement then
the note receivable will be cancelled and the issued shares
will remain issued and outstanding. As of August 18, 2000
the transaction is still pending.
The Company's unaudited proforma financial statements are
presented below and reflect the consolidated balance sheet
and the Monaco license purchase as if the transactions
occurred on December 31, 1999 and statement of operations as
if the companies were consolidated for the year then ended.
Item 8. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
There are no current disagreements with the accountants
concerning the presentation of the financial information required
under U.S. financial reporting standards. The board of directors
selected the firm of Skeehan & Co. on September 24, 1996,
replacing BDO Bavly Milner & Co. (an Israeli firm), to be its
auditing firm, which was duly reported on Form 8-K. There were
no disagreements with the previous firm.
PART III
Item 9. Directors, Executive Officers, Promoters and Control
Persons; Compliance with Section 16(a) of the Exchange Act
(a) Directors and Executive Officers of the Company
The following table provides information concerning each
executive officer and director of the Company:
Name Age Title
Robert M. Terry 70 Chairman of the Board/CEO
Toni Gales 54 Secretary
Thomas Hanson 68 President/Director
Gary Rosen 54 COO, Director
David Goldstein 54 Director
Meredith Russell 55 Director
Don Karas 60 Exec Vice President/Director
Paul McCann 65 CFO/Director
All directors hold office until their successors have been
elected.
Set forth below is certain information about the named
individuals.
Robert M. Terry, 70, has been Chairman of the Board of the
Company since January 1994, and Chief Executive Officer of the
Company since February 24, 1995. He has over 35 years of
finance, engineering-development and construction experience.
He has held the position of CEO of several private entities and
is listed in Who's Who in American Business, Who's Who in
Aviation and is a member of the President's Council of the
American Institute of Management as well as several other
professional organizations. Mr. Terry received his engineering
degree from New York University, School of Engineering, with
graduate studies at Columbia University.
Thomas Hanson, 68, is a director of the Company and has held
that position since June of 1999. He has also served as a
director during that same period. He has previously held
positions as Chief Deputy and Chief of Staff for a Los Angeles
City Council member, and as the Executive Director for the
Republican Party of Los Angeles. Prior to these activities, he
was the Director of Marketing at the Los Angeles Ambassador
Hotel, the President and CEO of Flash-R-Lite Corporation, the
Director of Government & Regulatory Relations for Pacific Air
Transport and the Executive Vice President and Chief
Administrative Officer of Intercontinental Technology Group.
Gary Rosen, 50, has been the Chief Operating Officer or
Treasurer of the Company since February 12, 2000. During the
year prior to that, he was an officer of Semcolabs, Inc., a
Florida corporation, that engaged in the early developmental
research leading to the sanitary monitoring business concept.
Mr. Rosen served for 17 years with the New York Police Department
as a detective in the fraud, homicide, organized crime and
special services bureaus. Following his retirement from the
NYPD, he worked for Aero Industries, Inc. as its director of
Security, and performed a similar function for Intercontinental
Technologies Group. Mr. Rosen oversees the day-to-day operations
of the Company and is directly involved in all personnel, sales,
purchase and human resources decisions.
Toni Gales, 54, corporate Secretary, has been office manager
for law firms for the past 15 years, and prior to that was the
operations manager for King Aviation Services, a 70-plane flight
school located on the Van Nuys, California airport. Ms. Gales
has also managed cellular phone and paging services.
David Goldstein, 54, is a director of the Company, having
held that position since March 1, 2000. Mr. Goldstein currently
owns and operates several healthcare facilities in New York and
Florida. Prior to these operations, he collaborated with Shelby
Williams Industries in designing and developing over 200
hospitals, nursing homes and psychiatric institutions located in
New York and Louisiana. Mr. Goldstein is currently a Branch and
Production Manager at CTX Mortgage Corporation and has held that
position for the previous 5 years.
Meredith Russell, 55, is a director of the Company, a
position which he has held since October 11, 2000. Mr. Russell
has spent over three decades as a commercial banker with major
lending institutions: Beverly Hills Bank, Capitstrano National
Bank and most recently, from 1995 through 1999, Comerica Bank (as
Senior Vice President). Since August, 1999, Mr. Russell has
served as the Chief Executive Officer of the Bicycle Casino in
Los Angeles, California.
Paul McCann, 60, is the Chief Financial Officer and a
director of the Company, and has primary experience in
international banking, corporate finance, marketing and business
development. He has previously served at the Inter-American Bank
as a loan officer, special projects evaluator and President of
the Loan Committee and was the President of the Liberian Bank for
Industrial Development and In vestment. As President of the
Korea Capital Corporation, he was instrumental in restoring
profitability to the company, which led to a profitable purchase
thereof by Daewoo Industries. Mr. McCann has also held the
position of Managing Director and Chairman of the Executive
committee of the Asian Euro-American Merchant Bank, where he was
able to implement measures which caused it to become a major
regional lender for industry and trade.
Don Karas, 68, has been engaged by the Company as Executive
Vice President, and director, responsible for expanding the
Company's marketing scope and development of the Company's client
base. He previously served as Chairman and CEO of Aldon
Communications, Klondike Ice Cream and Restaurant Business, Inc.
He was the founder and publisher of several magazines, including
Restaurant Business, Restaurant & Hotel Design, Food Service
Executive, Institutional Distribution and the Karas Executive
Report. Mr. Karas was the founder of ACA Joe, a popular line of
clothing and retail stores, which he sold at a profit to
concentrate on the food services arena. He currently serves on
the Board of Directors of Wolfgang Puck Company and A&B Gourmet
Bakery. He is also the Chairman of the Santa Fe Steakhouse
company.
(b) Significant Employees
Set forth below is certain information for the individual
expected to make a significant contribution to the Company's
business: none.
(c) Family Relationships
There are no family relationships among the Company's
directors, executive officers or any of the named significant
persons.
(d) Involvement in Certain Legal Proceedings. None of the
Company's directors, executive officers or named significant
persons, and none of its promoters or control persons, during the
past five years:
(1) has had any bankruptcy petition filed by or
against any business of which such person was a general partner
or executive officer either at the time of the bankruptcy or
within two years prior to that time;
(2) has had any conviction in a criminal proceeding or
was subject to a pending criminal proceeding (excluding traffic
violations and other minor offenses);
(3) has been subject to any order, judgment or decree
of any court of competent jurisdiction, permanently or
temporarily enjoining, barring, suspending or otherwise limiting
such person's involvement in any type of business, securities or
banking activities; nor
(4) has been found by a court of competent
jurisdiction (in a civil action), the Securities and Exchange
Commission or the Commodities Futures Trading Commission to have
violated a federal or state securities or commodities law, and
the judgment has not been reversed, suspended or vacated.
Compliance with Section 16(a) of the Securities Exchange Act of
1934
Section 16(a) of the Securities Exchange Act of 1934
requires the Company's officers and directors, and persons who
own more than ten percent of a registered class of the Company's
equity securities, to file reports of ownership and changes in
ownership with the Securities and Exchange Commission. Officers,
directors and greater than ten-percent shareholders are required
by SEC regulation to furnish the Company with copies of all
Section 16(a) forms they file.
Based solely on review of the copies of such forms furnished
to the Company, or written representations that no Form 5 filings
were required, the Company believes that during the year ended
December 31, 1996, all Section 16(a) filing requirements
applicable to its officers, directors and
greater-than-ten-percent beneficial owners were complied with.
At the end of fiscal 1999, Tweed Investments, Ltd., owning
approximately 42% of the company at that time, would have shown
as a greater-than-10% shareholder were the filings by the company
made in a timely manner.
Item 10. Executive Compensation
In respect of services rendered to the Company in 1996,
1997, 1998 and 1999, the Company did not pay to any executive
officer of the Company, GAD or GAI total annual salary and bonus
aggregating in excess of $60,000. Set forth below is information
regarding the compensation of Robert M. Terry, the only officer
to earn deferred compensation during those years.
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
Name and Principal Position Year Salary
Robert M. Terry, Chairman 1995 $60,000 -0-
1996 $60,000 -0-
1997 $60,000 Deferred
1998 $60,000 Deferred
1999 $60,000 Deferred
Mr. Terry has fully vested options to acquire 150,000 shares of
the Company's stock at an exercise price of $0.25 per share. The
salary compensation due Mr. Terry has been deferred until
suitable financial resources allow for its payment.
Compensation of Directors
Non-employee directors of the Company do not receive any
compensation for attending meetings of the Board of Directors.
In the years 1995 through 1999, none of the Company's
directors received any compensation for services provided as a
director, whether pursuant to any consulting contracts, business
agreements or otherwise.
Item 11. Security Ownership of Certain Beneficial Owners and
Management
The following table sets forth certain information regarding
the number and percentage of shares of Common Stock beneficially
owned by each named executive officer and director, any person
(including any "group" as that term is used in Section 13(d)(3)
of the Securities Exchange Act of 1934) known by the Company to
own 5% or more of the Common Stock of the Company, and all
officers and directors as a group, as of the date of this Form
10-KSB:
Name and Address Amount and Nature of
of Beneficial Owners Beneficial Owners1 Percent of
Class
Robert M. Terry 150,000* 1.29
5374 Village Road
Long Beach, California 90808
Gary Rosen 1,150,000* 9.91
9045 La Fontana, C-7A
Boca Raton, Florida 33434
Thomas Hanson 150,000* 1.29
5374 Village Road
Long Beach, California 90808
Toni Gales 20,000* 0.17
11300 W. Olympic, #800
Los Angeles, California 90064
Paul McCann 100,000* 0.86
5374 Village Road
Long Beach, California 90808
Don Karas 150,000** 1.29
3651 Turtle Run Boulevard #824
Coral Springs, Florida 88067
All Executive Officers and
Directors as a group 1,720,000* 13.53
(4 persons)
Tweed Investments, Ltd. 1,130,000 9.74
71-73 Regent Street
London, England
Monaco Investment Group, Ltd. 4,000,000 34.47
Parliament Street
Nassau, Bahamas
Girardi Financial, Inc. 2,000,000 17.24
10100 Santa Monica Blvd, #1600
Los Angeles, California
_____________________________
Unless otherwise indicated, the Company has been advised
that all holders listed have the sole power to vote and dispose
of the number of shares set forth opposite their names.
* all of the asterisked securities are options, having similar
terms, such that all are exercisable at $0.25 per share, and all
are vested, except for Rosen's, of which 1,000,000 are vesting
over a 24-month period, at the rate of 1/24 per month.
** the Karas options are at $0.50 per share, and are conditioned
upon achieving certain sales goals.
Item 12. Certain Relationships and Related Transactions
The Company has not directly or indirectly acquired any
assets from any of its directors, or the executive officers,
significant employees or security holders named in Items 9 or 11
above.
Item 13. Exhibits and Reports on Form 8-K
(a) Exhibits
Number Description
2 Agreement, dated September 28, 1993, with Lema
Investments Ltd.(1)
3.1 Certificate of Incorporation, as amended(2)
3.2 By-Laws(2)
3.3 Amendment to Articles of Incorporation (Change of
Name), July 5, 1994(3)
3.4 Amendment to Articles of Incorporation (Reverse of 1-
for-10), dated March 4, 1999
3.5 Amendment to Articles of Incorporation (Change of
Name), and increase authorized capital to
50,000,000 shares, dated September 28, 1999 (4)
3.6 Amendment to Articles of Incorporation (Change of Name
to Sanitary Environmental Monitoring Labs, Inc.),
filed April 10, 2000 (4)
10.1 Agreement, dated July 5, 1992, with Electroterm
Electric & Metal Industries Ltd. and Mesana SA(2)
10.2 Memorandum of Understanding, dated December 23, 1993,
with Jaber Corporation and Spanish Dagger, Inc.(2)
10.3 Guarantee Agreement, dated November 17, 1993, with
Messrs. Younisian and Korman(2)
10.4 Loan Agreement, dated November 23, 1993, with Kaner
Sherotei Geviya, Ltd.(2)
10.5 Loan Agreement, dated November 10, 1993, with GAD
Semiconductors, Ltd.(2)
10.6 Agreement between GAD, Semtech Ltd. and Messers,
Aschkenazi, Gerschfeld, Nathan and Slonim(2)
10.7 Stock Sale and Purchase Agreement with Tweed
International, dated October 3, 1994(3)
10.8 Agreement for Acquisition of Semco Bio-Vision, dated
February 12, 2000 (4)
10.9 License and Distributorship Agreement between Monaco
Investment, Ltd. and the Company, dated May 24,
2000 (4)
10.10 Subscription Agreement and Promissory Note between
Company and Girardi Financial, dated June 23, 2000
(4)
21 Subsidiaries of the Registrant(1), Semco Bio-Vision
_____________
(1) Incorporated by Reference to Registrant's Form
8-KSB dated October 5, 1993.
(2) Incorporated by Reference to Registrant's Form
10-KSB dated May 3, 1994.
(3) Incorporated by Reference to Registrant's Form
10-KSB dated March 31, 1995.
(4) Filed with this Report on Form 10-KSB
(b) Reports on Form 8-K
September 24, 1996 notice of change of accountants
SIGNATURES
IN ACCORDANCE WITH SECTION 13 OR 15(d) OF THE EXCHANGE ACT,
THE REGISTRANT CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY
THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED.
SANITARY ENVIRONMENTAL MONITORING LABS, INC.
By: /s/ Robert Terry
Robert M. Terry, Chairman
Date: October 24, 2000
IN ACCORDANCE WITH THE EXCHANGE ACT, THIS REPORT HAS BEEN
SIGNED BY THE FOLLOWING PERSONS ON BEHALF OF THE REGISTRANT AND
IN THE CAPACITIES AND ON THE DATES INDICATED.
Signature Title Date
/s/ Robert Terry Principal Executive October 24, 2000
Robert M. Terry Officer and Director
/s/ Thomas Hanson Director October 24, 2000
Thomas Hanson
/s/ Gary Rosen Operating Officer/ October 24, 2000
Gary Rosen and Director
/s/ Toni J. Gales Secretary October 24, 2000
Toni J. Gales
/s/ David Goldstein Director October 24, 2000
David Goldstein
/s/ Meredith Russell Director October 24, 2000
Meredith Russell
/s/ Paul McCann Chief Financial Officer October 24, 2000
Paul McCann Director
/s/ Don Karas Executive Vice President October 24, 2000
Don Karas Director
<PAGE>
Exhibit 3.4
CERTIFICATE OF AMENDMENT PURSUANT TO NRS 78.209 OF
ARTICLES OF INCORPORATION OF
INTERNATIONAL SEMICONDUCTOR CORP.
International Semiconductor Corporation, a corporation
organized and existing under the laws of the State of Nevada (the
"Company"), does hereby certify that:
The amendment set forth below to the Company's Articles of
Incorporation was duly adopted in accordance with the provisions
of the Nevada Revised Statutes Section 78.207 by unanimous vote
of the Board of Directors of the Company and shall be effective
upon filing.
Article FOURTH is amended by the addition of the following
provision:
Simultaneously with the effective date of this amendment
(the "Effective Date"), each share of the Company's Common
Stock, par value $0.001 per share, issued and outstanding
immediately prior to the Effective Date (the "Old Common
Stock") shall automatically and without any action on the
part of the record holder thereof be reclassified as and
changed into one-tenth (1/10) of a share (the "New Common
Stock"), subject to the treatment of fractional share
interests as described below. Each record holder of a
certificate or certificates which immediately prior to the
Effective Date represented outstanding shares of Old Common
Stock (the "Old Certificates", whether one or more) shall be
entitled to receive upon surrender of such Old Certificates
to the Company's Exchange Agent for cancellation, a
certificate or certificates (the "New Certificates", whether
one or more) representing the number of whole shares of the
New Common Stock into which and for which the shares of the
Old Common Stock formerly represented by such Old
Certificates so surrendered, are reclassified under the
terms hereof. From and after the Effective Date, Old
Certificates shall represent only the right to receive new
Certificates pursuant to the provisions hereof. A record
holder of Old Certificates shall receive, in lieu of any
fraction of a share of New Common Stock to which the record
holder would otherwise be entitled, one full share. If more
than one Old Certificate shall be surrendered at one time
for the account of the same record stockholder, the number
of full shares of New Common Stock for which new
Certificates shall be issued shall be computed on the basis
of the aggregate number of shares represented by the Old
Certificates so surrendered. In the event that the
Company's Exchange Agent determines that a record holder of
Old Certificates has not tendered all of his certificates
for exchange, the Exchange Agent shall carry forward any
fractional share until all certificates of that record
holder have been presented for exchange such that issuance
for fractional shares to any one person shall not exceed one
full share. If any new Certificate is to be issued in the
name other than that in which the Old
Certificates surrendered for exchange are issued, the Old
Certificates so surrendered shall be properly endorsed and
otherwise in proper form for transfer, and the person or
persons requesting such exchange shall affix any requisite
stock transfer tax stamps to the Old Certificates
surrendered, or provide funds for their purchase, or
establish to the satisfaction of the exchange Agent that
such taxes are not payable. From and after the Effective
Date the amount which the shares of the Old Common Stock are
reclassified under the terms hereof shall be the same as the
amount of capital represented by the shares of Old Common
Stock so reclassified, until thereafter reduced or increased
in accordance with applicable law.
IN WITNESS WHEREOF, International Semiconductor Corporation
has caused this Certificate to be signed and attested by its duly
authorized officers, this 4th day of March, 1999.
INTERNATIONAL SEMICONDUCTOR CORPORATION
By:___________________________________
Robert M. Terry, President
ATTEST:
By:______________________________
Christopher Dieterich
Assistant Secretary
<PAGE>
Exhibit 3.5
CERTIFICATE OF AMENDMENT
OF
ARTICLES OF INCORPORATION
OF
INTERNATIONAL SEMICONDUCTOR, INC.
The undersigned, being the President and Secretary of
International Semiconductor, Inc., a Nevada corporation, hereby
certify:
That the Board of Directors at a meeting held on August 24,
1999, adopted a resolution to amend the Articles of
Incorporation as follows:
ARTICLE ONE of the existing Articles of Incorporation, filed
August 8, 1999, is amended to read as follows:
"The name of the corporation is SEMCOLABS, INC."
ARTICLE FOUR of the existing Articles of Incorporation filed
on August 8, 1999, is amended to read as follows:
The total authorized shares of capital stock of the
corporation shall be 50,000,000 shares of common stock at
$0.001 par value per share. The capital stock, after the
amount of the subscription price is paid in, shall be and
remain non-assessable. The private property of the
stockholders shall not be liable for the debts or
liabilities of the corporation.
The number of shares of the corporation outstanding and entitled
to vote on an amendment to the Articles of Incorporation is
22,001,344; that the amendment has been consented to and approved
by a majority vote of the stockholders holding at least a
majority of each class of stock outstanding and entitled to vote
thereon.
______________________
Gary Kaplan, President
______________________
Gary Rosen, Secretary
<PAGE>
Exhibit 3.6
CERTIFICATE OF AMENDMENT
OF
ARTICLES OF INCORPORATION
OF
SEMCOLABS, INC.
The undersigned, being the President and Secretary of
SemcoLABS, Inc., a Nevada corporation, hereby certify:
That the Board of Directors at a meeting held on April 3,
2000, adopted a resolution to amend the Articles of
Incorporation as follows:
ARTICLE ONE of the existing Articles of Incorporation, filed
September 28, 1999, is amended to read as follows:
"The name of the corporation is SANITARY ENVIRONMENTAL
MONITORING LABS, INC."
The number of shares of the corporation outstanding and entitled
to vote on an amendment to the Articles of Incorporation is
9,401,344; that the amendment has been consented to and approved
by a majority vote of the stockholders holding at least a
majority of each class of stock outstanding and entitled to vote
thereon.
____________________________
Thomas E. Hanson, President
____________________________
Toni Gales, Secretary
<PAGE>
Exhibit 10.8
CORPORATE COMBINATION AGREEMENT
This agreement and plan of Merger (the "Agreement")
effective February 10, 2000, is by and between SemcoLABS, Inc.
(formerly International Semiconductor Corp., a Nevada corporation
("SLBI")), having its principal offices at 11300 W. Olympic
Boulevard, Suite 800, Los Angeles, California 90064 and the
shareholders of Semco BioVision, Inc., a Florida corporation
("BioVision"), all of which are listed on Exhibit A (the
"Shareholders") to this Agreement, and BioVision as an entity.
RECITALS:
A. SLBI desires to acquire all of the issued and
outstanding capital stock of BioVision and the Shareholders of
BioVision desire to exchange the assets listed on Exhibit A for
shares of SLBI's authorized but unissued shares of stock as
hereinafter provided.
B. It is the intention of the parties hereto that: (i)
SLBI shall acquire all of the scheduled assets identified on
Exhibit A in exchange solely for the number of shares of SLBI's
authorized but unissued shares of Common Stock, par value $.001
("Common Stock"), set forth below (the "Exchange"); (ii) the
Exchange shall qualify as a tax free reorganization under Section
368(a)(1)(E) of the Internal Revenue Code of 1986, as amended,
and related sections thereunder; and (iii) the Exchange shall
qualify as a transaction in securities exempt from registration
or qualification under the Securities Act of 1933, as amended,
and under the applicable securities laws of each state or
jurisdiction where the Shareholders reside.
C. The board of directors of SLBI deems it to be in the
best interest of SLBI and its shareholders to acquire all of the
assets listed on Exhibit A.
D. The board of directors of BioVision and its Shareholders
deem it to be in the best interest of BioVision shareholders to
exchange the shares of BioVision Exhibit A assets for shares of
SLBI, authorized but unissued, as hereinafter provided.
NOW, THEREFORE, in consideration of the mutual covenants,
agreements, representations and warranties contained in this
Agreement, the parties hereto agree as follows:
SECTION 1. EXCHANGE OF SHARES
1.1 Exchange of Shares. SLBI and the Shareholders of
BioVision hereby agree that the Shareholders shall, on the Closing
Date (as hereinafter defined), exchange all of the issued and
outstanding shares of BioVision for 2,650,000 shares of SLBI,
which will be restricted against resale for a period in
compliance with Rule 144. The number of shares of BioVision
capital stock owned by each Shareholder and the number of shares
of SLBI Common Stock which each will receive in the Exchange are
set forth in Exhibit A hereto.
1.2 Delivery of Shares. On the Closing Date, the
Shareholders will deliver to SLBI title documents, as necessary,
to effect the transfer of assets and the certificates
representing the Shares, duly endorsed (or with executed stock
powers) so as to make SLBI the sole owner thereof.
Simultaneously, SLBI will deliver certificates representing the
SLBI Shares to the Shareholders subject to certain conditions as
set forth in Section 8 of this Agreement. The Exchange shall not
be effected unless a minimum of ninety (90%) percent of BioVision
outstanding shares of capital stock are delivered to SLBI on the
Closing Date (as is more fully set forth in Section 8 of this
Agreement).
1.3 Investment Intent. The SLBI Shares have not been
registered under the Securities Act of 1933, as amended (the
"Act"), and may not be resold unless the SLBI Shares are
registered under the Act or an exemption from such registration
is available. The Shareholders represent and warrant that each
of them is acquiring the SLBI Shares for his own account, for
investment, and not with a view to the sale or distribution of
the SLBI shares. Each certificate representing the SLBI Shares
will have a legend thereon incorporating language or
substantially similar language, as follows:
"The Shares represented by the certificate have not been
registered under the Securities Act of 1933, as amended (the
"Act"). The shares have been acquired for investment and
may not be sold or transferred in the absence of an
effective Registration Statement for the shares under the
Act unless in the opinion of counsel satisfactory to the
Company, registration is not required under the Act."
1.4 Registration Rights and Agreements. The 2,650,000
Shares being issued to the Shareholders will carry "piggyback"
registration rights, such that if any registration of SLBI stock
occurs during the first year after Closing, then 20% of the
Shares will be registered. If no such registration is filed
during the first year, then 40% of the total number of Shares
still held by BioVision Shareholders will be registered (or become
unrestricted) during the ensuing year, solely for the benefit of
the former BioVision Shareholders. During the second subsequent
year, 60% of the unregistered, or restricted, shares of the
Shareholders will be registered. In any year in which a
registration statement is filed, BioVision Shareholders will have
a percentage of their shares registered that is equal or greater
than the registration of any other then-existing shareholders of
SLBI. If any of the registrations are not timely accomplished,
then the BioVision Shareholders may cause the registration to
occur at SLBI expense.
<PAGE>
SECTION 2. REPRESENTATIONS AND WARRANTIES OF BioVision
BioVision hereby represents and warrants as follows:
2.1 Organization and Good Standing: Ownership of Shares.
BioVision is a corporation duly organized, validly existing and in
good standing under the laws of the State of Florida. There are
no outstanding subscriptions, rights, options, warrants or other
agreements obligating BioVision to issue, sell or transfer any
stock or other securities of BioVision except the warrants and
options listed on Schedule 2.1 attached hereto and made a part
hereof.
2.2 Corporate Authority. BioVision has the corporate power
to enter into this Agreement and to perform its respective
obligations hereunder. The execution and delivery of this
Agreement and the consummation of the transaction contemplated
hereby have been duly authorized by the Board of Directors of
BioVision. The execution and performance of this Agreement will
not constitute a material breach of any agreement, indenture,
mortgage, license or other instrument or document to which
BioVision is a party and will not violate any judgment, decree,
order, writ, rule, statute, or regulation applicable to BioVision
or its properties. The execution and performance of this
Agreement will not violate or conflict with any provision of the
respective Certificate of Incorporation or by-laws of BioVision.
2.3 Ownership of Shares. Except as set forth on Schedule
2.3, the Shareholders are the owners of record and beneficially
of all of the issued and outstanding shares of capital stock of
BioVision, which shares are free and clear of all rights, claims,
liens and encumbrances, and have not been sold, pledged, assigned
or otherwise transferred except pursuant to this Agreement. The
shares represent all of the outstanding capital stock of
BioVision.
2.4 Financial Statements, Books and Records. Schedule 2.4
consists of the unaudited financial statements (balance sheet,
income statement, notes) of BioVision as of December 31, 1999 (the
"Financial Statements"). The Financial Statements fairly
represent the financial position of BioVision as at such dates and
the results of their operations for the periods then ended. The
Financial Statements were prepared in accordance with generally
accepted accounting principles applied on a consistent basis with
prior periods except as otherwise stated therein. The books of
account and other financial records of BioVision are in all
respects complete and correct in all material respects and are
maintained in accordance with good business and accounting
practices.
2.5 Access to Records. The corporate financial records,
minute books and other documents and records of BioVision have
been made available to SLBI prior to the Closing hereof.
2.6 No Material Adverse Changes. Since July 31, 1999 there
has not been:
(i) any material adverse change in the financial
position of BioVision except changes arising in the
ordinary course of business, which changes will in no
event materially and adversely affect the financial
position of BioVision;
(ii) any damage, destruction or loss materially
affecting the assets, prospective business, operations
or condition (financial or otherwise) of BioVision
whether or not covered by insurance;
(iii) any declaration, setting aside or
payment of any dividend or distribution with respect to
any redemption or repurchase of BioVision capital stock;
(iv) any sale of an asset (other than in the
ordinary course of business) or any mortgage or pledge
by BioVision of any properties or assets, other than as
set forth in Section 2.13 below; or
(v) adoption of any pension, profit sharing,
retirement, stock bonus, stock option or similar plan
or arrangement.
2.7 Taxes. BioVision as of December 31, 1999, has filed all
material tax, governmental and/or related forms and reports (or
extensions thereof) due or required to be filed and has (or will
have) paid or made adequate provisions for all taxes or
assessments which had become due as of December 31, 1999, and
there are no deficiency notices outstanding.
2.8 Compliance with Laws. BioVision has complied with all
federal, state, county and local laws, ordinances, regulations,
inspections, orders, judgments, injunctions, awards or decrees
applicable to it or its business which, if not complied with,
would materially and adversely affect the business of BioVision.
2.9 No Breach. The execution, delivery and performance of
this Agreement and the consummation of the transactions
contemplated hereby will not:
(i) violate any provision of the Certificate of
Incorporation or By-Laws of BioVision;
(ii) violate, conflict with or result in the
breach of any of the terms of, result in a material
modification of, otherwise give any other contracting
party the right to terminate, or constitute (or with
notice or lapse of time, or both constitute) a default
under any contract or other agreement to which BioVision
is a party or by or to which it or any of its assets or
properties may be bound or subject;
(iii) violate any order, judgment, injunction,
award or decree of any court, arbitrator or
governmental or regulatory body against, or binding
upon, BioVision or upon the properties or business of
BioVision; or
(iv) violate any statute, law or regulation of any
jurisdiction applicable to the transactions
contemplated herein which could have a materially
adverse effect on the business or operations of
BioVision.
2.10 Actions and Proceedings. BioVision is not a party to
any material pending litigation or, to its knowledge, any
governmental investigation or proceeding not reflected in the
BioVision Financial Statements, and to its best knowledge, no
material litigation, claims, assessments or Non-governmental
proceedings are threatened against BioVision except as set forth
on Schedule 2.10 attached hereto and made a part hereof.
2.11 Agreements. Schedule 2.11 sets forth any material
contract or arrangement to which BioVision is a party or by or to
which it or its assets, properties or business are bound or
subject, whether written or oral.
2.12 Brokers or Finders. No broker's or finder's fee will
be payable by BioVision in connection with the transactions
contemplated by this Agreement, nor will any such fee be incurred
as a result of any actions by BioVision or any of its
Shareholders, except as is listed on Schedule 2.12.
2.13 Real Estate. Except as set forth on Schedule 2.13,
BioVision owns no real property nor is a party to any leasehold
agreement.
2.14 Tangible Assets. BioVision has full title and interest
in all machinery, equipment, furniture, leasehold improvements,
fixtures, projects, owned or leased by BioVision, any related
capitalized items or other tangible property material to the
business of BioVision (the "Tangible Assets"), other than as set
forth in Section 2.13. BioVision holds all rights, title and
interest in all the Tangible Assets owned by it on the Balance
Sheet or acquired by it after the date on the Balance Sheet free
and clear of all liens, pledges, mortgages, security interests,
conditional sales contracts or any other encumbrances. All of
the Tangible Assets are in good operating condition and repair
and are usable in the ordinary course of business of BioVision and
conform to all applicable laws, ordinances and government orders,
rules and regulations relating to their construction and
operation, except as set forth on Schedule 2.14 hereto.
2.15 Liabilities. BioVision did not have any direct or
indirect indebtedness, liability, claim, loss, damage,
deficiency, obligation or responsibility, known or unknown, fixed
or unfixed, liquidated or unliquidated, secured or unsecured,
accrued or absolute, contingent or otherwise, including, without
limitation, any liability on account of taxes, any governmental
charge or lawsuit (all of the foregoing collectively defined to
as "Liabilities"), which are not fully, fairly and adequately
reflected on the Financial Statement except for a specific
Liabilities set forth on Schedule 2.15 attached hereto and made a
part hereof. As of the date of Closing, BioVision will not have
any Liabilities, other than Liabilities fully and adequately
reflected on the Financial Statements except for Liabilities
incurred in the ordinary course of business and as set forth in
Schedule 2.15. To the best knowledge of the Shareholders, there
is no circumstance, condition, event or arrangement which may
hereafter give rise to any Liabilities not in the ordinary course
of business.
2.16 Operations of BioVision. From the date of the Financial
Statements through date of Closing, BioVision has not and will not
have:
(i) incurred any indebtedness or borrowed money;
(ii) declared or paid any dividend or declared or
made any distribution of any kind to any shareholder,
or made any direct or indirect redemption, retirement,
purchase or other acquisition of any shares in its
capital stock;
(iii) made any loan or advance to any
shareholder, officer, director, employee, consultant,
agent or other representative or made any other loan or
advance otherwise than in the ordinary course of
business.
(iv) except in the ordinary course of business,
incurred or assumed any indebtedness or liability
(whether or not currently due and payable);
(v) disposed of any assets of BioVision except in
the ordinary course of business;
(vi) materially increased the annual level of
compensation of any executive employee of BioVision;
(vii) increased, terminated, amended or
otherwise modified any plan for the benefit of
employees of BioVision.
(viii) issued any equity securities or rights
to acquire such equity securities; or
(ix) except in the ordinary course of business,
entered into or modified any contract, agreement or
transaction.
2.17 Capitalization. The authorized capital stock of
BioVision consists of 1,000,000 shares of common stock, $0.01 par
value, of which 265,000 shares are presently issued and
outstanding. BioVision has not granted, issued or agreed to
grant, issue or make any warrants, options, subscription rights
or any other commitments of any character relating to the issued
or unissued shares of capital stock of BioVision except as set
forth on Schedule 2.1 attached hereto and made a part hereof.
BioVision has no subsidiaries or other entities except as listed
on Schedule 2.17 attached hereto, setting forth the shares or
percentage interest owned by BioVision.
2.18 Full Disclosure. No representation or warranty by
BioVision in this Agreement or in any document or schedule to be
delivered by them pursuant hereto, and no written statement,
certificate or instrument furnished or to be furnished by
BioVision pursuant hereto or in connection with the negotiation,
execution or performance of this Agreement contains or will
contain any untrue statement of a material fact or omits or will
omit to state any fact necessary to make any statement herein or
therein not materially misleading or necessary to a complete and
correct presentation of all material aspects of the business of
BioVision.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF SLBI
SLBI hereby represents and warrants as follows:
3.1 Organization and Good Standing. SLBI is a corporation
duly organized, validly existing and in good standing under the
laws of the State of Nevada. It has the corporate power to own
its own property and to carry on its business as now being
conducted and is duly qualified to do business in any
jurisdiction where so required except where the failure to so
qualify would have no material negative impact.
3.2 Corporate Authority. SLBI has the corporate power to
enter into this Agreement and to perform their respective
obligations hereunder. The execution and delivery of this
Agreement and the consummation of the transactions contemplated
hereby have been duly authorized by the Board of Directors of
SLBI and the shareholders as required by Nevada law. The
execution and performance of this Agreement will not constitute a
material breach of any agreement, indenture, mortgage, license or
other instrument or document to which SLBI is a party and will
not violate any judgment, decree, order, writ, rule, statute, or
regulation applicable to SLBI or its properties. The execution
and performance of this Agreement will not violate or conflict
with any provision of the respective Articles of Incorporation or
by-laws of SLBI.
3.3 The SLBI Shares. As of the Closing Date, there are
approximately 610 shareholders of record that are the owners of
2,751,344 shares of SLBI Common Stock, none of which owns in
excess of 5% of the issued and outstanding shares, except as may
be set forth on Schedule 3.3 attached hereto and made a part
hereof. There are no outstanding warrants, issued stock options,
stock rights or other commitments of any character relating to
the issued or unissued shares of either Common Stock or Preferred
Stock of SLBI, other than those which are set forth on Schedule
3.3 attached hereto. The SLBI shares on said schedule 3.3
represent all of the outstanding capital stock of SLBI.
At the Closing, the SLBI Shares to be issued and delivered
to the BioVision Shareholders hereunder will when so issued and
delivered, constitute valid and legally issued shares of SLBI
Common Stock, fully paid and nonassessable.
3.4 Financial Statement: Books and Records. Schedule 3.4
consists of the financial statements (balance sheet, income
statement and Notes) of SLBI for the fiscal year ended December
31, 1996 and interim financial statements ended at September 30,
1996, and for the preceding 3-year period (collectively the
"Financial Statements"). The Financial Statements fairly
represent the financial position of SLBI as at such date and the
results of their operations for the periods then ended. The
Financial Statements were prepared in accordance with generally
accepted accounting principles applied on a consistent basis with
prior periods except as otherwise stated therein. The books of
account and other financial records of SLBI are in all respects
complete and correct in all material respects and are maintained
in accordance with good business and accounting practices.
3.5 No Material Adverse Changes.
Since January 1, 1997, there has not been:
(i) any material adverse changes in the financial
position of SLBI except changes arising in the ordinary
course of business, which changes will in no event
materially and adversely affect the financial position
of SLBI, and the past audit for the fiscal year ended
December 31, 1996 will be consistent with the
representations made by SLBI to BioVision.
(ii) any damage, destruction or loss materially
affecting the assets, prospective business, operations
or condition (financial or otherwise) of SLBI whether
or not covered by insurance;
(iii) any declaration setting aside or payment
of any dividend or distribution with respect to any
redemption or repurchase of SLBI capital stock;
(iv) any sale of an asset (other than in the
ordinary course of business) or any mortgage pledge by
SLBI of any properties or assets; or
(v) adoption or modification of any pension,
profit sharing, retirement, stock bonus, stock option
or similar plan or arrangement.
(vi) except in the ordinary course of business,
incurred or assumed any indebtedness or liability,
whether or not currently due and payable;
(vii) any loan or advance to any shareholder,
officer, director, employee, consultant, agent or other
representative or made any other loan or advance
otherwise than in the ordinary course of business;
(viii) any material increase in the annual
level of compensation of any executive employee of
SLBI;
(ix) except in the ordinary course of business,
entered into or modified any contract, agreement or
transaction, except as described in Schedule 3.5;
(x) issued any equity securities or rights to
acquire equity securities other than as set forth in
Schedule 3.5.
3.6 Taxes. SLBI has timely filed all material tax,
governmental and/or related forms and reports (or extensions
thereof) due or required to be filed and has paid or made
adequate provisions for all taxes or assessments which have
become due as of the Closing Date, and there are no deficiencies
outstanding, and SLBI has a carry-forward tax loss in excess of
$1,000,000.
3.7 Compliance with Laws. SLBI has complied with all
federal, state, county and local laws, ordinances, regulations,
inspections, orders, judgments, injunctions, awards or decrees
applicable to it or its business, which, if not complied with,
would materially and adversely affect the business of SLBI or the
trading market for the SLBI Shares and specifically, and to the
best of its knowledge, SLBI complied with provisions for
registration under the Securities Act of 1933 and all applicable
blue sky laws in connection with its public stock filings, except
for filings due since December 31, 1996, and there are no
outstanding, pending or threatened stop orders or other actions
or investigations relating thereto. SLBI must file its quarterly
and annual reports through December 31, 1999 to return to its
listing status on the OTC Bulletin Board.
3.8 Actions and Proceedings. SLBI is not a party to any
material pending litigation or, to its knowledge, any
governmental proceedings are threatened against SLBI, except as
set forth on Schedule 3.8 attached hereto and made a part hereof.
3.9 Periodic Reports. SLBI has delivered to BioVision true
and complete copies of all forms filed pursuant to SEC Rules and
Regulations under the Securities Exchange Act of 1934, as
amended, except that SLBI is not current in its filings and will
have to become so during the ensuing 90 days following Closing.
As of their respective dates, such reports and statements did not
contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstance under
which they were made, not misleading. Schedule 3.9 sets forth
all of the documentation of such reports SLBI has delivered to
BioVision.
3.10 Disclosure. SLBI has (and at the Closing it will have)
disclosed in writing all events, conditions and facts materially
affecting the business, financial conditions or results of
operation of SLBI all of which have been set forth herein. SLBI
has not now and will not have, at the Closing, withheld
disclosure of any such events, conditions, and facts which they
have knowledge of or have reasonable grounds to know may exist.
3.11 Capitalization. The authorized Capital Stock of SLBI
consists of 26,000,000 shares of Common Stock of which 2,751,344
shares of Common Stock are issued and outstanding.
3.12 Access to Records. The corporate financial records,
minute books, and other documents and records of SLBI have been
made available to BioVision prior to the Closing hereof.
3.13 No Breach. The execution, delivery and performance of
this Agreement and the consummation of the transactions
contemplated hereby will not:
(i) violate any provision of the Articles of
Incorporation or By-Laws of SLBI;
(ii) violate, conflict with or result in the
breach of any of the terms of, result in a material
modification of, otherwise give any other contracting
party the right to terminate, or constitute (or with
notice or lapse of time or both constitute) a default
under, any contract or other agreement to which SLBI is
a party or by or to which it or any of its assets or
properties may be bound or subject;
(iii) violate any order, judgment, injunction,
award or decree of any court, arbitrator or
governmental or regulatory body against, or binding
upon, SLBI or upon the securities, properties or
business to SLBI; or
(iv) violate any statute, law or regulation of any
jurisdiction applicable to the transactions
contemplated herein.
3.14 Brokers or Finders. No broker's or finder's fee will
be payable by SLBI in connection with the transactions
contemplated by this Agreement, nor will any such fee be incurred
as a result of any actions of SLBI.
3.15 OTC Bulletin Board. SLBI shares are listed on the OTC
"Pink Sheets" under the symbol "SLBI". No representation is
being made by SLBI of any value as to the trading of the shares
of SLBI. At the Closing Date, and thereafter until such time as
SLBI becomes a current reporting company, SLBI's Rule 15(c)2-11
documentation and reports required to be filed with the SEC as
discussed above, will be non-current, which exception shall be
permitted, with the representation that SLBI will become current
within 60 days at no expense to the current corporation after the
merger.
3.16 Authority to Execute and Perform Agreements. SLBI has
the full legal right and power and all authority and approval
required to enter into, execute and deliver this Agreement and to
perform fully its obligations hereunder. This Agreement has been
duly executed and delivered and is the valid and binding
obligation of SLBI enforceable in accordance with its terms,
except as may be limited by bankruptcy, moratorium, insolvency or
other similar laws generally affecting the enforcement of
creditors' rights. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby and
the performance by SLBI of this Agreement, in accordance with its
respective terms and conditions will not:
(i) require the approval or consent of any
governmental or regulatory body or the approval or
consent of any other person;
(ii) conflict with or result in any breach or
violation of any of the terms and conditions of, or
constitute (or with any notice or lapse of time or both
would constitute) a default under, any order, judgment
or decree applicable to SLBI, or any instrument,
contract or other agreement to which SLBI is a party or
by or to which SLBI is bound or subject; or
(iii) result in the creation of any lien or
other encumbrance on the assets or properties of SLBI.
3.17 Full Disclosure. No representation or warranty by SLBI
in this Agreement or in any document or schedule to be delivered
by them pursuant hereto, and no written statement, certificate or
instrument furnished or to be furnished by SLBI pursuant hereto
or in connection with the negotiation, execution or performance
of this Agreement contains or will contain any untrue statement
of a material fact or omits or will omit to state any fact
necessary to make any statement herein or therein not materially
misleading or necessary to complete and correct presentation of
all material aspects of the business of SLBI.
SECTION 4. CONDITIONS PRECEDENT
4.1 Conditions Precedent to the Obligation of BioVision and
its Shareholders. All obligations of BioVision and its
Shareholders under this Agreement are subject to the fulfillment,
prior to or as of the Closing Date, as indicated below, of each
of the following conditions:
(a) The representations and warranties by or on
behalf of SLBI contained in this Agreement or in any
certificate or document delivered pursuant to the
provisions hereof shall be true in all material
respects at and as of Closing Date as though such
representations and warranties were made at and as of
such time.
(b) SLBI shall have performed and complied in all
material respects, with all covenants, agreements, and
conditions set forth in, and shall have executed and
delivered all documents required by this Agreement to
be performed or complied with or executed and delivered
by them prior to or at the Closing.
(c) On or before the Closing, the Board of
Directors and the shareholders of SLBI shall have
approved, in accordance with Nevada law, the execution,
delivery and performance of this Agreement and the
consummation of the transaction contemplated herein and
authorized all of the necessary and proper action to
enable SLBI to comply with the terms of the Agreement.
(d) The Exchange shall be permitted by Nevada law
and SLBI shall have sufficient shares of SLBI Common
Stock authorized to complete the Exchange.
(e) At the Closing, all instruments and documents
delivered to BioVision and the Shareholders pursuant to
provisions hereof shall be reasonably satisfactory to
legal counsel for BioVision.
(f) SLBI shall have issued to BioVision
shareholders 2,650,000 shares of its restricted common
stock.
(g) The shares of restricted SLBI Common Stock to
be issued to the Shareholders of BioVision at Closing
will be validly issued, nonassessable and fully paid
under Nevada corporation law and will be issued in a
non-public offering and isolated transaction in
compliance with all federal and state securities laws,
bearing a restrictive legend, as is more fully set
forth above.
(h) This transaction must have been approved by
BioVision.
4.2 Conditions Precedent to the Obligations of SLBI and
SLBI Shareholders. All obligations of SLBI under this Agreement
are subject to the fulfillment, prior to or at Closing, of each
of the following conditions:
(a) The representations and warranties by
BioVision and its Shareholders, contained in this
Agreement or in any certificate or document delivered
pursuant to the provisions hereof shall be true in all
material respects at and as of the Closing as though
such representations and warranties were made at and as
of such time;
(b) BioVision and its Shareholders shall have
performed and complied with, in all material respects,
with all covenants, agreements, and conditions set
forth in, and shall have executed and delivered all
documents required by this Agreement to be performed or
complied or executed and delivered by them prior to or
at the Closing;
SECTION 5. COVENANTS
5.1 Corporate Examinations and Investigations. Prior to
the Closing Date, the parties acknowledge that they have been
entitled, through their employees and representatives, to make
such investigation of the assets, properties, business and
operations, books, records and financial condition of the other
as they each may reasonably require. No investigations, by a
party hereto shall, however, diminish or waive any of the
representations, warranties, covenants or agreements of the party
under this Agreement.
5.2 Further Assurances. The parties shall execute such
documents and other papers and take such further actions as may
be reasonably required or desirable to carry out the provisions
hereof and the transactions contemplated hereby. Each such party
shall use its best efforts to fulfill or obtain the fulfillment
of the conditions to the Closing, including, without limitation,
the execution and delivery of any documents or other papers, the
execution and delivery of which are necessary or appropriate to
the Closing.
5.3 Confidentiality. In the event the transactions
contemplated by this Agreement are not consummated, SLBI,
BioVision and the Shareholders agree to keep confidential any
information disclosed to each other in connection therewith for a
period of three (3) years from the date hereof; provided,
however, such obligation shall not apply to information which:
(i) at the time of the disclosure was public
knowledge;
(ii) after the time of disclosure becomes public
knowledge (except due to the action of the receiving
party); or
(iii) the receiving party had within its
possession at the time of disclosure.
(iv) is ordered disclosed by a Court of proper
jurisdiction.
5.4 Stock Certificates. At the Closing, the Shareholders
shall have delivered the certificates representing the Shares
duly endorsed (or with executed stock powers) so as to make SLBI
the sole owner thereof. At such Closing, SLBI shall issue to the
Shareholders the SLBI Shares.
SECTION 6. SURVIVAL OF REPRESENTATIONS AND WARRANTIES OF
BioVision AND SLBI
Notwithstanding any right of either party to investigate the
affairs of the other party and its Shareholders, each party has
the right to rely fully upon representations, warranties,
covenants and agreements of the other party and its Shareholders
contained in this Agreement or in any document delivered to one
by the other or any of their representatives, in connection with
the transactions contemplated by this Agreement. All such
representations, warranties, covenants and agreements shall
survive the execution and delivery hereof and the closing
hereunder for 3 years following the Closing.
SECTION 7. INDEMNIFICATION
For a period of three (3) years from the Closing, BioVision
and its Shareholders agree to indemnify and hold harmless SLBI,
and SLBI agrees to indemnify and hold harmless BioVision, and its
Shareholders, at all times after the date of this Agreement
against and in respect of any liability, damage, or deficiency,
all actions, suits, proceedings, demands, assessments, judgments,
costs and expenses, including attorneys' fees, incident to any of
the foregoing, resulting from any material misrepresentation made
by any indemnifying party to an indemnified party, an
indemnifying party's breach of covenant or warranty or an
indemnifying party's nonfulfillment of any agreement hereunder,
or from any material misrepresentation or omission from any
certificate furnished or to be furnished hereunder.
SECTION 8. DOCUMENTS AT CLOSING AND THE CLOSING
8.1 Documents at Closing At the Closing, the following
transactions shall occur, all of such transactions being deemed
to occur simultaneously:
(a) BioVision will deliver, or will cause to be
delivered, to SLBI the following:
(i) a certificate executed by the President and
Secretary of BioVision to the effect that all
representations and warranties made by BioVision under
this Agreement are true and correct as of the Closing,
the same as though originally given to SLBI on said
date;
(ii) a certificate from the State of Florida dated
at or about the Closing to the effect that BioVision is
in good standing under the laws of said State;
(iii) all other items, the delivery of which
is a condition precedent to the obligations of SLBI, as
set forth in Section 4.
(iv) Stock certificates representing those shares
of BioVision to be exchanged for SLBI Shares will be
delivered.
(b) SLBI will deliver or cause to be delivered to
BioVision and the BioVision Shareholders:
(i) stock certificates representing those shares
of SLBI Shares to be issued as a part of the Exchange
as described in Section I hereof;
(ii) certified copies of resolutions by SLBI Board
of Directors authorizing this transaction; and an
opinion of SLBI counsel as described in Section 4
above;
(iii) all other items, the delivery of which
is a condition precedent to the obligations of
BioVision, as set forth in Section 4 hereof.
8.2 The Closing. The Closing shall take place at the
conclusion of the Escrow or at such other later time or place as
may be agreed upon by the parties hereto. At the Closing, the
parties shall provide each other with such documents as may be
necessary.
SECTION 9. MISCELLANEOUS
9. 1 Waivers. The waiver of a breach of this Agreement or
the failure of any party hereto to exercise any right under this
Agreement shall in no way constitute waiver as to future breach
whether similar or dissimilar in nature or as to the exercise of
any further right under this Agreement.
9.2 Amendment. This Agreement may be amended or modified
only by an instrument of equal formality signed by the parties or
the duly authorized representatives of the respective parties.
9.3 Assignment. This Agreement is not assignable except by
operation of law.
9.4 Notice. Until otherwise specified in writing, the
mailing addresses and fax numbers of the parties of this
Agreement shall be as follows:
To: SLBI:
Robert M. Terry, c/o Dieterich & Associates
11300 West Olympic Boulevard, Suite 800
Los Angeles, California 90064
To: BioVision:
Gary Rosen, Vice-President
8814 Sonoma Lake Road
Boca Raton, Florida 33434
Any notice or statement given under this Agreement shall be
deemed to have been given if sent by registered mail addressed to
the other party at the address indicated above or at such other
address which shall have been furnished in writing to the
addressor.
9.5 Governing Law. This Agreement shall be construed, and
the legal relations be the parties determined, in accordance with
the laws of the State of Nevada, thereby precluding any choice of
law rules which may direct the application of the laws of any
other jurisdiction.
9.6 Arbitration.
(a) All disputes and differences arising in connection
with or relating to the provisions of this Agreement,
including what constitutes a dispute or difference, shall be
settled and finally determined by arbitration unless
agreement in writing has been reached between the parties
within ninety (90) days after either party shall have given
written notice to the other party of the existence of a
dispute or difference which it desires to have arbitrated.
Such notice shall state the point or points in dispute.
(b) Arbitration shall be conducted in Los Angeles, CA,
in accordance with the rules of the American Arbitration
Association augmented by the rights of Civil Discovery
included in the Federal Rules of Civil Procedure by three
(3) arbitrators, one of whom shall be selected by SLBI, one
by BioVision, and a Chairman of the Arbitration Court
selected by the two arbitrators so selected. The applicable
law shall be as provided above. Each party shall notify the
other party of the arbitrator selected by it within sixty
(60) days of the giving of written notice referred to above.
In the event that the two arbitrators selected by the
parties are unable to reach agreement as to the third
arbitrator, the third arbitrator shall be selected by the
American Arbitration Association. Arbitration shall be held
in the jurisdiction of the party against which or whom the
arbitration is instituted. Each party shall be given the
opportunity to present to the arbitrators its evidence,
witnesses and arguments, and the right to be represented by
counsel of its selection when the other party be represented
by counsel, of its selection when the other party presents
its evidence, witnesses and arguments. In the event one of
the parties shall fail, after reasonable notice, to appear
and participate in the arbitration proceedings as normally
interpreted by the above-mentioned rules, the arbitrators
shall be entitled to make their decision and award on the
basis of evidence, witnesses and arguments presented by the
party appearing.
(c) The decision and the award of the arbitrators
shall be in writing and shall be final and binding upon the
parties hereto. Judgment upon the award rendered my be
entered in any court having jurisdiction thereof, or
application may be made to such court for a judicial
acceptance of the award and an order of enforcement, as the
case may be. The expenses of arbitration shall be borne n
accordance with the determination of the arbitrators with
respect thereto. Pending decision by the arbitrators with
respect to the dispute or difference undergoing arbitration,
all other obligations of the parties hereto shall continue
as stipulated herein, and all monies not directly involved
in such dispute or difference shall be paid when due. All
parties will have the right to appeal as if the award had
been rendered in Federal District Court.
9.7 Publicity. No publicity release or announcement
concerning this Agreement or the transactions contemplated hereby
shall be issued by either party hereto at any time from the
signing hereof without advance approval in writing of the form
and substance by the other party.
9.8 Entire Agreement. This Agreement (including the
Exhibits and Schedules to be attached hereto) and the collateral
agreements executed in connection with the consummation of the
transactions contemplated herein contain the entire agreement
among the parties with respect to the exchange and issuance of
the Shares and the SLBI Shares and related transactions, and
supersede all prior agreements, written or oral, with respect
thereto.
9.9 Headings. The headings in this Agreement are for
reference purposes only and shall not in any way affect the
meaning or interpretation of this Agreement.
9.10 Severability of Provisions. The invalidity or
unenforceability of any term, phrase, clause, paragraph,
restriction, covenant, agreement or provision of this Agreement
shall in no way affect the validity or enforcement of any other
provision or any part thereof.
9.11 Counterparts. This Agreement may be executed in any
number of counterparts, each of which when so executed, shall
constitute an original copy hereof, but all of which together
shall consider but one and the same document.
9.12 Binding Effect. This Agreement shall be binding upon
the parties hereto and inure to the benefit of the parties, their
respective heirs, administrators, executors,
successors and assigns.
9.13 Press Releases. The parties will mutually agree as to
the wording and timing of any informational releases concerning
this transaction prior to and through Closing.
IN WITNESS WHEREOF, the parties have executed this Agreement
on the date first above written.
SemcoLABS, Inc.
an Nevada corporation
By: __________________________
Robert M. Terry
Chairman
Semco BioVision, Inc.
a Florida corporation
By: __________________________
Gary Rosen, COO
<PAGE>
EXHIBIT "A"
LIST OF BioVision SHAREHOLDERS
<PAGE>
SCHEDULES
BioVision Schedules
2.1 BioVision Warrants and Options currently in existence: None
2.4 BioVision Financial Statements; unaudited and accepted 31 Dec
99
2.10 BioVision Claims, Litigation, Government actions pending:
None
2.11 BioVision Significant contracts: US Patent Office trademark
registrations (Serial Numbers 75-487303/304/305) giving the
right to use of the name "SemcoLABS" in general trade dress
in the United States
2.12 BioVision Brokers Agreements due by BioVision contract: None
2.13 BioVision List of Real Estate Owned and List of Leases: None
2.14 BioVision List of exceptions to the Tangible Assets on
balance sheets: None
2.15 BioVision List of undisclosed Liabilities: None
2.17 BioVision List of Subsidiaries: None
SLBI Schedules
3.3 SLBI list of 5% or greater shareholders, and outstanding
warrants and options, plus notes: Tweed Investments
(1,112,000), Lema Investments (268,000)
3.4 SLBI Financial Statements: None
3.5 List of transactions of SLBI for contracts and in which
stock has been issued or committed: cancellation of legal
fees for 150,000 shares
3.8 SLBI List of Pending Actions not disclosed in financial
statements:
Siegel vs. GAD and SLBI: estimated exposure of $30,000
maximum
3.9 SLBI list of periodic reports filed with SEC or
Broker/Dealers
3.14 SLBI's list of brokers: None
3.15 SLBI list of exceptions to any current SEC filings: Non-
current after 3rd Quarter, 1996.
<PAGE>
Exhibit 10.9
MONACO INVESTMENT GROUP, LTD.
a Bahamian Limited Liability Company
DISTRIBUTOR AGREEMENT
THIS DISTRIBUTOR AGREEMENT ("Agreement") is made by and
between MONACO INVESTMENT GROUP, LTD., a Bahamian limited
liability company ("Monaco"), and Sanitary Environmental
Monitoring Labs, Inc. (formerly SemcoLABS, Inc.), a Florida
corporation ("Distributor" or "Sub-Licensee").
WHEREAS, Monaco is engaged in the business of importing from
Merck KGaA, Darmstadt, Germany, certain laboratory chemical
products, including the HY-LiTE hygiene monitoring system; and
WHEREAS, the Distributor is engaged in the business of
selling goods and services for food preparation sanitation
monitoring and auditing to the retail food industry.
NOW THEREFORE, in consideration of the foregoing promises
and the mutual covenants hereinafter expressed, the parties
hereto agree as follows:
1. DEFINITIONS
For purposes of this Agreement, the following words and terms
shall have the meaning set forth below:
1.1 "Area" shall mean the United States of America, its
territories and possessions.
1.2 "Effective Date" shall mean the date upon which this
Agreement is executed by Monaco.
1.3 "Field" shall mean the market defined as restaurant and
retail food service vendors and providers such as schools,
military bases, nursing homes, hotels, rest homes, cruise ships
and prisons. "Field" specifically does not include the food,
beverage processing, drinking water, water cooling and/or water
processing markets.
1.4 "Products" shall mean those products specified in Schedule
1.4.
1.5 "Termination Date" shall mean the date upon which this
Agreement is cancelled or terminated, as provided in Sections 15
or 16 herein.
2. GRANT OF DISTRIBUTORSHIP
2.1 Exclusive Distributorship. Upon the terms and conditions set
forth herein, subject to Sections 2.3 and 2.4 below, Monaco
appoints Distributor as the exclusive distributor for the sale
and promotion of Products solely within the Area and solely to
the Field and not for resale outside the Area or the Field.
Distributor shall not appoint sub-distributors or agents
hereunder without Monaco's prior written consent. Distributor
shall not knowingly sell Products to any person for resale
outside the Area or outside the Field.
2.2 Best Efforts. Distributor agrees to use its best efforts to
enact and carry out a merchandising policy designed to preserve
the goodwill that is presently associated with the name and
reputation of Monaco and Products. Monaco agrees to use its best
efforts to fill orders placed by Distributor; provided, however,
it is understood that lead time will vary according to
manufacturing and other conditions and that all delivery dates
announced by Monaco are estimates.
2.3 Reserved Sales. Monaco reserves the right to make direct
sales to customers within and outside the Area but outside the
Field.
2.4 Area Annual Minimum Purchases. Distributor shall, each
calendar year, purchase and pay for at least the minimum number
of Products as provided by Distributor and specified below. In
the event Distributor does not purchase and pay for the annual
minimum amounts, Monaco shall have the right to terminate this
Agreement effective the end of the first month next succeeding
the year in which such minimum purchases were not made.
2.4.1 Minimum Purchase Amount:
Year 1 $115,200;
Year 2 $384,000;
Year 3 $768,000; and
Year 4 $1,536,000
2.5 Distributor agrees to and shall not sell, market or
distribute any competitive ATP bioluminescence instrument during
the term or any renewal term of this Agreement.
3. LIST PRICES OF PRODUCTS AND DISTRIBUTOR DISCOUNTS
3.1 Determination of Price. Products shall be sold to
Distributor by Monaco at list prices less distributor discounts
as are set forth in Schedule 1.4. Prices shall not include taxes,
if any, which shall be payable by Distributor.
3.2 Current Price. Monaco reserves the right to at any time and
from time to time change list prices and/or distributor discount
upon reasonable advance notice to Distributor, which in any event
need not be more than thirty (30) days .
4. PAYMENT FOR PRODUCTS
4.1 Terms of Payment. All payments due Monaco shall be made
within thirty (30) days following the date of the invoice for the
Products shipped. Payments not made when due shall bear a late
charge of one and one-half percent (1.5%) per month on the
overdue amount, which Distributor acknowledges constitutes a fee
for the special handling of late payments and not a finance
charge.
4.2 Limitation on Set-offs. No set-offs or deductions of any
kind shall be made by Distributor on payments due Monaco, unless
Distributor has received from Monaco prior written authorization
to make such set-offs or deductions.
5. ACCEPTANCE OF ORDERS AND SHIPMENT OF PRODUCTS
5.1 Acceptance. Monaco will not be bound by any order placed by
Distributor for Products until such order has been accepted by
the Monaco at its office in Nassau, Bahamas. No order having a
total value of less than Three Hundred Dollars ($300.00) at
Distributor's cost shall be entitled to acceptance. Upon
acceptance by Monaco, each such order shall constitute a binding
agreement of Distributor to purchase and make payment for
Products specified on the order upon the terms and conditions of
this Agreement. Monaco reserves the right to cancel any accepted
order if, in the sole opinion of Monaco, the creditworthiness of
Distributor is in any way impaired.
5.2 Inconsistent Terms in an Order. In the event any terms or
conditions contained in any order by Distributor are inconsistent
with the terms of this Agreement, such inconsistent order terms
or conditions shall be null and void and shall not be binding on
Monaco notwithstanding the acceptance of such order by Monaco.
5.3 Shipping of the Products. Monaco shall ship to Distributor
Products set forth in an order accepted by Monaco within a
reasonable time after acceptance by Monaco of such order.
Delivery of all Products sold by Monaco to Distributor shall be
f.o.b., Gibbstown, New Jersey. The method and route of shipment,
unless previously agreed to in writing by the Monaco, shall be at
the sole discretion of Monaco.
5.4 Return of Products.
5.4.1 Nondefective Products. Distributor shall not
return Products without prior written authorization of Monaco for
such return. Distributor shall make such request for return of
Products within thirty (30) days of the date of shipment of said
Products to Distributor. If Monaco authorizes the return of
Products, Monaco reserves the right to charge Distributor thirty
percent (30%) of the invoice price as a restocking fee.
Distributor shall bear all costs and expenses of returning
Products and all risk of loss until returned Products are
received at the address of Monaco set forth above, or at such
other location as Monaco shall have designated for return. All
returned Products must be received by Monaco in their original,
unopened and completely resalable containers. Products without
original markings and/or labels will not be accepted for return.
5.4.2 Defective Products. Distributor may return
defective Products to Monaco, at the expense of Monaco, upon
receipt of written authorization of Monaco for such return.
Distributor shall make such request for return of Products within
thirty (30) days of date of shipment of Products or upon receipt
of a Recall Notice from Monaco.
6. UNDERTAKINGS OF DISTRIBUTOR
6.1 Sale of Products. Distributor, for itself and its
representatives and employees, shall:
(i) conduct any and all sales activities in connection with
Products in a lawful manner, consistent with the highest
standards of fair trade, fair competition and business ethics;
(ii) purchase exclusively from and through Monaco all
Products sold by Monaco, Merck KGaA, Darmstadt, Germany or any
Merck KGaA affiliated company; and
(iii) resell each Product offered for sale and bearing a
designated registered trademark of Monaco and/or Merck KGaA
without any change whatsoever in the original labeling and
packaging including covering, removing, relabeling and repacking.
6.2 Marketing Efforts. Distributor will use its best efforts to
diligently and faithfully develop demand for Products and to
solicit purchases thereof so as to maintain a substantial and
increasing volume of sales of Products. At all times hereunder,
Distributor shall maintain adequate facilities and personnel to
accomplish this purpose. Distributor will provide Monaco with
current market information, including a quarterly list of all its
customers of Products whether such Products have been sold,
leased or provided without charge. Distributor will ensure that
all Merck Product information, including availability and
pricing, are accurately maintained on Distributor's order
processing and fulfillment system and updated on a regular basis
as notified by Monaco. Distributor acknowledges that the failure
to consistently maintain accurate Product information in its
order processing and fulfillment system constitutes a material
breach of this Agreement.
6.3 Internet Website Link. Merck owns and operates an Internet
website to provide customers with comprehensive information about
its products, services and distribution outlets. If Distributor
owns and/or operates its own Internet website, Distributor hereby
grants to Monaco, and thereby, Merck, permission to link from any
of Merck's Internet websites to the Internet website owned by or
operated on behalf of Distributor and Monaco hereby grants to
Distributor permission to link from any of Distributor's Internet
websites to the Internet website owned by and operated on behalf
of Merck through its license with Monaco.
6.4 Facility Standards. Distributor facilities wherein Product
is handled and/or stored shall meet or exceed all local, national
and/or appropriate chemical industry standards for the handling,
storage and distribution of all types of reagent chemicals.
6.5 Resale Prices of the Products. Distributor shall, in its
full and exclusive discretion, establish the prices at which it
resells Products.
6.6 Change of Control. The continuing control and management of
Distributor must at all times be acceptable to Monaco. In the
event of a change in Distributor's ownership or control, or a
change in the management, business structure or form of
organization of Distributor, Distributor shall immediately
provide Monaco with written notification of such change.
7. UNDERTAKINGS OF Monaco
7.1 Sales and Promotional Literature. Monaco will supply
Distributor, without charge, with reasonable quantities of
Product sales literature and promotional material for use in the
Area.
7.2 Conventions, Meetings and Workshops. Monaco will
periodically exhibit Merck Products at conventions, meetings and
workshops and will support the Distributor in the organization of
Distributor's sales meeting.
7.3 Technical Service. Monaco will provide access to technical
consulting service to support any uses of Products or to answer
any questions and/or claims with respect to Products.
8. LIMITED WARRANTY AND EXCLUSIVE REMEDY
Monaco warrants that Products shall, at the time of delivery to
Distributor, be free from defects in materials and workmanship
and will conform to the specifications set forth on the Product
label. Monaco's sole responsibility under this warranty shall be
limited to the replacement, at Monaco's expense and complete
discretion, of any Product not complying with this warranty. The
foregoing warranty shall apply only if Monaco is notified by
Distributor of any such alleged non-conformance therewith within
ten (10) days after Distributor learns of the same. The
foregoing warranty is expressly conditioned upon Products being
used, operated, handled, shipped and maintained by Distributor in
accordance with reasonable commercial practice and any specific
Product labeling and is void as to any Product modified, altered
or damaged by any person other than Monaco (unless done with
Monaco's prior written consent). This warranty shall not be
applicable to any Products which become defective through
Distributor's negligence or through intentional acts.
EXCEPT FOR THE WARRANTY SET FORTH IN THIS SECTION 8, MONACO MAKES
NO OTHER WARRANTY OF ANY KIND WITH REGARD TO PRODUCTS WHETHER
EXPRESS, ARISING BY OPERATION OF LAW, OR IMPLIED BY COURSE OF
DEALING, USAGE OR TRADE OR OTHERWISE, INCLUDING WITHOUT
LIMITATION THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS
FOR A PARTICULAR PURPOSE. MONACO SHALL NOT IN ANY CIRCUMSTANCE
BE LIABLE FOR INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES.
9. PATENT CLAIMS
Distributor shall promptly notify Monaco in writing in the event
Distributor is informed or has reason to believe that any third
party is infringing a Merck patent covering Products, or any
parts or components thereof, or otherwise copying, imitating or
reproducing Products or any parts or components thereof.
10. PRODUCT LIABILITY CLAIMS
Distributor shall notify Monaco promptly (but no later than
within five (5) business days) of any product liability claim or
action brought with respect to Products.
11. CONFIDENTIAL INFORMATION
Distributor shall neither use nor disclose to any third party any
confidential information concerning the business or Products of
Monaco and Merck which Distributor may acquire while fulfilling
its obligations under this Agreement (or under any prior
agreements between Monaco and Distributor). Distributor shall
take all necessary precautions to prevent any such disclosure by
its employees, officers, directors and representatives.
Distributor acknowledges that all right, title and interest in
and to the aforesaid confidential information is vested in Monaco
and that such information is the sole property of Monaco. For
purposes of this Agreement, the term "confidential information"
shall include, but not be limited to, trade secrets and
unpatentable intellectual property.
12. USE OF NAME AND TRADEMARKS
12.1 Use of Name and Trademarks. During the term of this
Agreement, Distributor may indicate, in signs, advertising,
publicity of other sales, marketing media or materials, that it
is an authorized dealer or distributor of Merck Products.
However, Distributor shall not use the name, trademarks, trade
names or logo which Merck and Monaco may at any time adopt, use
or register ("Trademarks") in their own name, in any fictitious
business name or otherwise to identify Distributor.
12.2 Merck's Exclusive Rights. Distributor acknowledges Merck's
and Monaco's exclusive right, title and interest in and to any
Trademarks and agrees that it will not at any time do or cause to
be done any act or thing, directly or indirectly contesting or in
any way impairing or tending to impair the owner's exclusive
right, title or interest in any Trademark and the goodwill
symbolized by it. Distributor specifically acknowledges that its
distribution of any Products identified by any Trademark shall
not create in Distributor any right, title or interest in the
Trademark.
12.3 Proper Attribution. Distributor agrees that it will not use
the Trademarks except in conjunction with the promotion or sales
of Products. Any reference by the Distributor in advertising,
catalogs, texts, etc., to a Product identified by a registered
trademark shall include such identification by use of the
registered trademark symbol and reference to the owner thereof as
designated by the Merck and Monaco.
12.4 Notification of Infringement. Distributor shall promptly
notify Monaco of any infringement, imitation, or illegal use or
misuse of any Trademark which comes to Distributor's attention.
Distributor further agrees and undertakes that Distributor shall
not at any time take any action to prevent the infringement,
imitation, or illegal use or misuse of any Trademark, it being
acknowledged by Distributor that such action falls wholly within
the authority of Merck as sole owner of the Trademarks.
12.5 Distributor Cooperation. Distributor shall fully cooperate
and assist Monaco and Merck in connection with any matter
pertaining to the protection of any Trademark, whether in the
courts, administrative agencies or otherwise, and to give Monaco
or its legal representatives access, under appropriate conditions
of confidentiality, to all of Distributor's files, records and
other information which may be relevant thereto.
13. INDEMNITY
13.1 Indemnification by Distributor. Distributor shall indemnify
and hold harmless Monaco, Merck and their shareholders, officers,
directors, employees and representatives against, and in respect
of, any and all claims and damages of every kind for injury to or
death of any person or persons and for damage to or loss of
property, arising out of or attributed, directly or indirectly,
to the conduct, operations or performance of Distributor.
Distributor shall carry insurance with minimum limits of
$1,000,000 for combined bodily injury and property damage with an
acceptable insurance carrier providing that such insurance shall
not be cancelled without at least thirty (30) days prior written
notice to Monaco and Merck.
13.2 Indemnification by Monaco. Monaco shall indemnify and hold
harmless Distributor and its shareholders, officers, directors,
employees and representatives against, and in respect of, any and
all claims, losses, expenses, costs, obligations and liabilities
and damages of every kind arising out of any defects, failures or
malfunctions of any Product, except those caused by Distributor
or otherwise arising out of or attributed, directly or
indirectly, to the conduct, operations, or performance of
Distributor. Monaco agrees to provide pass-through indemnity from
Merck, which will maintain products liability insurance
containing a vendor's endorsement in favor of Distributor (as
necessary) covering all products sold pursuant to the terms of
this Agreement with minimum limits of $10,000,000 for combined
bodily injury and property damage providing that such insurance
shall not be cancelled without at least thirty (30) days prior
written notice to Distributor.
14. INDEPENDENT CONTRACTOR RELATIONSHIP
Distributor shall be deemed to be an independent contractor with
respect to all matters relating to this Agreement and shall bear
all of its own expenses in connection with this Agreement.
Distributor shall have no authority, whether express or implied,
to assume or create any obligation on behalf of Monaco nor shall
Distributor issue or cause to be issued any price quotations or
draft any letters or documents under the name of Monaco, but
rather shall use its own name for such purposes.
<PAGE>
15. TERM AND CANCELLATION
15.1 Term. The term of this Agreement shall commence on the
effective Date and shall continue in full force and effect for an
initial term of four (4) years and shall thereafter be
automatically renewed and continue in effect for successive
renewal terms of two (2) years each unless one hundred and eighty
(180) days prior to the termination of the initial term of the
Agreement or the renewal term thereof either party provides
written notice to the other that it shall terminate this
Agreement at the end of said initial term or renewal term.
16. TERMINATION
This Agreement shall be terminable or shall terminate if and when
any of the following events occur:
16.1 Breach of Agreement by the Distributor. Monaco may terminate
this Agreement immediately upon written notice to Distributor if
Distributor fails to cure any and all breaches of its obligations
hereunder within ten (10) days after delivery by Monaco and
Distributor of written notice of such breach or breaches.
16.2 Bankruptcy or Cessation of Business. This Agreement shall
terminate automatically upon cessation of business, election to
dissolve, dissolution, insolvency, failure in business,
commission of an act of bankruptcy, general assignment for the
benefit of creditors, or filing of any petition in bankruptcy or
for relief under the provisions of the bankruptcy laws, by or of
Distributor.
16.3 Distributor's Failure to Make Timely Payments.
Notwithstanding Section 4.1, Monaco may immediately terminate
this Agreement upon the inability or failure of Distributor to
make, when due, any payments in United States currency required
herein, or any inability or prospective inability of Distributor
to perform its obligations hereunder.
16.4 Merger, Consolidation or Change of Ownership. This Agreement
may be terminated immediately, at the sole option of Monaco, in
the event Distributor, without the prior written approval of
Monaco, merges, consolidates or sells all or substantially all of
its assets, or if there is a change in control of Distributor
pursuant to Section 6.8 hereof.
16.5 Enactment of Laws Restricting Termination. Monaco may
terminate this Agreement in the event that a law, decree or
regulation is enacted or adopted by any governmental authority
which would impair or restrict in any manner whatsoever the right
of Monaco to terminate or elect not to renew this Agreement;
provided, however, that such termination shall not take effect
until the day prior to the effective date of the aforementioned
law, decree or regulation.
16.6 Failure of Distributor to Achieve Minimum Annual Purchases.
Monaco may terminate this Agreement upon thirty (30) days written
notice to Distributor in the event that Distributor fails to
purchase and pay for the annual minimum purchase quantities set
forth in Section 2.4.
17. RIGHTS AND OBLIGATIONS UPON TERMINATION OR CANCELLATION
Upon the termination or cancellation of this Agreement:
17.1 Non-Liability of Monaco. Monaco shall not be liable for
consequential damages of any kind, whether as a result of a loss
by Distributor of present or prospective profits, anticipated
sales, expenditures, investments, commitments made in connection
with this Agreement, or on account of any other reason or cause
whatsoever.
17.2 Obligations of Distributor. Distributor agrees to return to
Monaco any unused sales literature and other such materials
supplied to it by Monaco as well as any and all other supporting
documents made available by Monaco to Distributor. Upon
termination of this Agreement, the Distributor agrees to
discontinue the use of the name and trademarks of Monaco and
Merck KGaA, Darmstadt, Germany, except for the sale of the
Products bearing said name or trademarks remaining in the
Distributor's inventory.
17.3 Disposal of Products. Distributor shall follow any
reasonable instructions from Monaco regarding the disposal of any
remaining Products; provided, however, Monaco may, within a
period of sixty (60) days following the Termination Date
repurchase from Distributor any or all remaining salable Products
as described under Return of Nondefective Products, Section5.4.1.
17.4 Continuing Obligations. Each party shall abide by and uphold
any and all rights or obligations of the other accrued or
existing as of the Termination Date.
18. MISCELLANEOUS
18.1 Force Majeure. Neither party shall be liable for any loss,
damage, detention, delay or failure to perform in whole or in
part, resulting from causes beyond control of the party,
including, but not limited to, fires, strikes, insurrections,
riots, embargoes, shortages of motor vehicles, delays in
transportation, inability to obtain supplies of raw materials, or
requirements or regulations of the United States government or
any other civil or military authority. In no event shall either
party be liable for consequential damages.
18.2 Entire Agreement; Modification; Waiver. This Agreement
constitutes the entire agreement between the parties with respect
to the subject matter hereof and supersedes all prior and
contemporaneous agreements and understandings between them. No
supplement, modification or amendment of this Agreement shall be
binding unless executed in writing by all the parties. No waiver
of any of the provisions of this Agreement shall be deemed, or
shall constitute, a waiver of any other provision, whether or not
similar, nor shall any waiver constitute a continuing waiver. No
waiver shall be binding unless executed in writing by the party
making the waiver.
18.3 Construction. The language of this Agreement and of each and
every paragraph, term and/or provision of this Agreement shall,
in all cases, for any and all purposes, and in any and all
circumstances be construed as a whole, according to its meaning,
not strictly for or against Distributor or Monaco, and with no
regard whatsoever to the identity or status of any person or
persons who drafted all or any portion of this Agreement.
18.4 Notices. All notices, requests, demands and other
communications under this Agreement shall be in writing and shall
be deemed to have been duly given on the date of delivery if
delivered personally to the party to whom or which notice is to
be given, or on the seventh (7th) day after mailing if mailed to
the party to whom or which notice is to be given, by first class
mail, registered or certified, postage prepaid, properly
addressed to the party to receive the notice at the following
address or at any other address given to the other party in the
manner provided by this Section 18.4.
If to Monaco:
E. Dawson Roberts
ROBERTS, HIGGS & COMPANY
Magna Carta Court
Parliament Street, P.O. Box N915
Nassau, Bahamas
With a copy to:
Dieterich & Associates
11300 West Olympic Boulevard, Suite 800
Los Angeles, California 90064
If to Distributor:
Sanitary Environment Monitoring, Inc.
9045 La Fontana Boulevard
Boca Raton, FL 33434
Attn.: President
If notice shall be sent by telefax or cable, a confirming copy of
such telefax or cable shall be sent by mail to the addressee.
Nothing contained herein shall justify or excuse failure to give
oral notice for the purpose of informing the other party hereto
when prompt notification is required, but, it is understood that
such oral notice shall in no way satisfy the requirement of a
written notice.
18.5 Severability. If any provision of this Agreement is
determined to be invalid or unenforceable, the provision shall be
deemed to be severable from the remainder of this Agreement and
shall not cause the invalidity or unenforceability of the
remainder of this Agreement.
18.6 Assignment. This Agreement constitutes a personal contract
with Distributor. Distributor may not transfer or assign this
Agreement or any part thereof without the prior written approval
of Monaco. This Agreement shall be binding upon and shall inure
to the benefit of Monaco and its successors and assigns, and
shall be binding upon and inure to the benefit of Distributor and
its permitted assignees.
18.7 Arbitration. Any controversy or claim arising out of or
relating to this Agreement shall be submitted to arbitration in
accordance with the Commercial Rules of the American Arbitration
Association; provided, however, that this clause shall not be
construed to limit or to preclude either party from bringing any
action in any court of competent jurisdiction for injunctive or
other provisional relief as necessary or appropriate. The
arbitration shall be conducted either in Miami, Florida or Los
Angeles, California, at the option of the initiating party. Any
award or determination of the arbitration tribunal shall be
final, nonappealable, and conclusive upon the parties, and
judgment thereon may be entered by any court of competent
jurisdiction.
18.8 Governing Law. This Agreement has been entered into in the
State of Florida, and all questions with respect to the
construction of this Agreement and the rights and liabilities of
the parties shall be governed by the laws of the State of
Florida, as between Monaco and Distributor, but under the laws of
the State of New York for purposes of disputes with Merck or EM
Science, without regard to New York choice-of-law principles.
18.9 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
18.10 Captions. The captions of the sections and subsidiary
sections of this Agreement are included for reference purposes
only and are not intended to be a part of the Agreement or in any
way to define, limit or describe the scope or intent of the
particular provision to which they refer.
INTENDING TO BE LEGALLY BOUND, Monaco and Distributor have
executed this Agreement as of the date first written above.
MONACO INVESTMENT SANITARY ENVIRONMENTAL
GROUP, LTD. MONITORING, INC.
By: ___________________________ By: __________________________
Title: ________________________ Title:
_______________________
Date: ________________________ Date: ________________________
<PAGE>
SCHEDULE 1.4 - PRODUCTS
Product Description Distributor Pricing
HY-LiTE 2 Instrument $4,000.00 per instrument
Refill Pack $375.00 per pack
Pens Only $300.00 per pack
<PAGE>
Exhibit 10.10
SUBSCRIPTION AGREEMENT
(Shares)
Accredited Investors Only
SANITARY ENVIRONMENTAL MONITORING LABS, INC.
(formerly SEMCOLABS, INC.)
SHARE INTERESTS IN SANITARY ENVIRONMENTAL MONITORING LABS, INC.
(FORMERLY SEMCOLABS, INC.), A NEVADA CORPORATION, HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, IN
RELIANCE UPON EXEMPTION FROM REGISTRATION PROVIDED BY SECTION
4(2) AND RULE 506 OF THAT ACT. FURTHER, THE INTERESTS ARE BEING
SOLD PURSUANT TO REGISTRATION OR EXEMPTIONS IN VARIOUS STATES IN
WHICH THEY ARE BEING OFFERED AND MAY BE SUBJECT TO ADDITIONAL
RESTRICTIONS ON TRANSFER IN SUCH JURISDICTIONS. THE INTERESTS
CANNOT BE SOLD, TRANSFERRED, ASSIGNED OR OTHERWISE DISPOSED OF
EXCEPT IN COMPLIANCE WITH THE RESTRICTIONS ON TRANSFERABILITY
CONTAINED IN THE SHARE PURCHASE AGREEMENT, AND APPLICABLE FEDERAL
AND STATE SECURITIES LAWS AND WILL NOT BE TRANSFERRED OF RECORD
EXCEPT IN COMPLIANCE WITH THE SUCH LAWS.
To be Fully Completed By Shareholders
Along With Appendices
If and when accepted by Sanitary Environmental Monitoring
Labs, Inc. ("SEMCOLABS" or the "Company"), this Subscription
Agreement and the attached and incorporated "Deal Memorandum"
shall constitute a subscription for Five Hundred Thousand Dollars
($500,000) in the form of $150,000 in cash purchase, and $350,000
in note purchase, of the common stock of the Company (the
"Shares"), for the purchase price of $0.25 per share, and
equivalent rights for Subscriber on the note, at $0.25 per share,
payment therefor to occur within 75 days of delivery of the note
by Subscriber to the Company. Each part of this Subscription
Agreement must be completed by the subscriber and, by his
execution below, he acknowledges that he understands that the
Company is relying upon the accuracy and completeness of this
document in complying with his obligations under applicable
securities laws.
1. Method of Subscription: The undersigned hereby
subscribes for 2,000,000 Shares, at a price of $0.25 per Share
issued by Sanitary Environmental Monitoring Labs, Inc., a Nevada
corporation ("Semco"), representing a cumulative offering of
$500,000, payable $150,000 in cash and $350,000 by secured
promissory note.
The undersigned understands that before his subscription for
Shares will be accepted, he must have completed, executed,
acknowledged, sworn to (where required) and returned to the
Company, the following:
a. This Subscription Agreement;
b. The Purchaser Representative Affidavit, if applicable
(available on request).
c. Cash or check payable to the order of "SEMCOLABS, INC."
in the amount of $150,000, and execution of a Note for
$350,000 to Sanitary Environmental Monitoring Labs,
Inc., payable 75 days after tender of the Note.
The undersigned further agrees that this subscription is and
shall be irrevocable, but the obligations hereunder will
terminate if this subscription is not accepted by the Company in
whole or in part, by the Closing Date. The Closing Date is June
23, 2000 (unless extended by the Company to June 30, 2000).
2. Acceptance by Company: The undersigned understands that
the Company will notify him whether the subscription has been
accepted, or rejected, in whole or in part, within one (1) day
after delivery to the Company or the Closing Date, whichever is
later. If this subscription is rejected by the Company, all
funds and documents tendered by the undersigned shall be returned
promptly, without interest or deduction. It is understood that
the Company shall have the sole discretion of determining which
of the subscriptions should be rejected.
3. Receipt and Review of Materials: The undersigned
acknowledges that he has been furnished and has carefully read
the current SEC filings of the Company, provided to subscriber's
counsel and/or agents, relating to the Company and the documents
attached as exhibits. The undersigned understands that:
(a) The Company has a limited financial and operating
history, and no long-term history as a profitable
enterprise.
(b) There are potential risks incident to the ownership
of Shares in the Company, such investment is speculative and
involves a possible loss by the undersigned of his
investment in the Company.
(c) No federal or state agency has passed upon the
Shares or made any finding or determination concerning the
fairness of this investment and the terms of the offering
may not conform to the guidelines of certain state
securities administrators.
(d) There can be no assurance that the Internal Revenue
Code or the Regulations promulgated thereunder will not be
amended in a manner that would deprive the Company or its
investors of any tax treatment the Shareholder believes will
be derived from investment in the Company's Shares.
(e) The books and records of the Company will be
reasonably available for inspection by the undersigned
and/or his investment advisors, if any, at the Company's
place of business, although the Company is over 3 years
behind in its SEC filings.
4. Independent Advice: The undersigned acknowledges that
they have been advised to consult their own attorney concerning
the Company and to consult with independent tax counsel regarding
the tax consequences of an investment in Shares of the Company.
5. Limitation on Transfer of Shares: The undersigned
understands that an investment in the Company has certain
limitations that may restrict transfer. In particular, the
undersigned recognizes and agrees that:
(a) An investment in the Company Shares must be held
at least one year.
(b) Because of the restrictions described below, there
is a lack of any market existing or to exist for these
Shares and possible adverse tax consequences may result from
a resale of Shares in the Company.
(c) The undersigned's right to transfer the Shares
will be subject to compliance with securities regulations
promulgated by both state and federal governments.
(d) Prior to any transfer or assignment of Shares
becoming effective, the Company may require an opinion of
counsel to the effect that such transfer or assignment will
be made in compliance with applicable securities laws.
Because the Shares have not been registered under the
Securities Act of 1933, as amended, or the securities laws
of any state, the undersigned must bear the economic risk of
investment in the Shares for an indefinite period of time.
Therefore, the Shares cannot be offered, sold, transferred,
pledged or hypothecated to any person unless they are either
subsequently registered under said Act or an exemption from
such registration is available. Further, unless the Shares
are registered under the securities act of the state in
which offered and sold, the undersigned may not resell,
hypothecate, transfer, assign or make any other disposition
of said Shares except in a transaction exempt or excepted
from the registration requirements of the securities act of
such state, and the specific approval of securities
regulators of such sales may be required in some states.
6. Conflicts of Interest: The undersigned understands that
certain conflicts of interest exist between the Company and
certain of its officers and directors as a result of share
holdings and hereby acknowledges, consents to and waives such
conflicts of interest.
7. Representations of Subscriber: The undersigned
represents and warrants that:
(a) The undersigned is at least twenty-one (21) years
of age, and is either (i) an "accredited investor" (as that
term is defined in Rule 501 of Regulation D of the
Securities and Exchange Commission), or (ii) has a net worth
of at least five times the value of the Shares to be
purchased (exclusive of home, furnishings and automobiles
and without regard to the undersigned's investment in this
offering) and had during the last taxable year and
anticipates that he will have during the current taxable
year gross income of at least $200,000. If a corporation,
it is on a consolidated basis according to its most recent
financial statement, within the above net worth standard,
and if a partnership, each partner is within the above
standards.
(b) The undersigned has carefully reviewed and
understands the risks of, and other considerations relating
to, a purchase of Shares.
(c) The undersigned, and their purchaser
representatives and investment advisors, if any, have been
furnished all materials relating to the Company and its
proposed activities, the offering of Shares, and have been
afforded the opportunity to obtain any additional
information necessary to verify the accuracy of any
representations or information.
(d) The Company has answered all inquiries directed to
it by the undersigned concerning the Company and its
proposed activities, all matters relating to the technology
license and the various underlying contracts and the
offering and sale of the Shares.
(e) Neither the undersigned nor their purchaser
representatives and investment advisors, if any, have been
furnished any offering literature other than the Company's
operating and business documents and the undersigned and his
purchaser representatives and investment advisors, if any,
have relied only on the information contained in the such
documents described in these subparagraphs (d) and (e),
furnished or made available to them by the Company.
(f) The undersigned is acquiring the Shares for their
own account, as principal, for investment purposes only and
not with a view to the resale or distribution of all or any
part of such Shares, and he has no present intention,
agreement or arrangement to divide their participation with
others or to resell, assign, transfer or otherwise dispose
of all or any part of such Shares unless and until they
determine, at some future date, that changed circumstances,
not contemplated by them at the time of their purchase,
makes such disposition advisable.
(g) The undersigned, if a corporation, partnership,
trust or other form of business entity, is authorized and
otherwise duly qualified to purchase and hold Shares in the
Company; has obtained tax advice as it deems necessary; and
such entity has its principal place of business as set forth
herein and has not been formed for the specific purpose of
acquiring Shares in the Company. (If the undersigned is one
of the aforementioned entities, it hereby agrees to supply
any additional written information that may be requested by
the Company.)
(h) The undersigned has adequate means of providing for
their current needs and personal contingencies and does not
contemplate a need for liquidity in this investment.
(i) The undersigned has not distributed the offering
materials (if any) to anyone other than a designated
purchaser representative and no one except such purchaser
representative has used the materials, and they have not
made any copies thereof.
(j) All of the information which is set forth below
with respect to the undersigned is correct and complete as
of the date hereof and, if there should be any material
change in such information prior to the acceptance of this
Subscription Agreement by the Company, the undersigned will
immediately furnish the revised or corrected information to
the Company.
8. Agreement to be Bound by Terms and Conditions: The
undersigned hereby adopts, accepts and agrees to be bound by all
the terms and conditions of the offering made by the Company, and
by all the terms and provisions of the Shares. Upon acceptance
of this Subscription Agreement by the Company, the undersigned
shall become a Shareholder for all purposes.
9. Indemnity: The undersigned hereby agrees to indemnify
the Company and hold the Company harmless from and against any
and all liability, damage, cost or expense incurred on account of
or arising out of:
(a) Any inaccuracy in the Subscriber's declarations,
representations, and warranties set forth in this
Subscription Agreement;
(b) The disposition of any of the Shares which
Subscriber will receive, contrary to their declarations,
representations and warranties set forth in this
Subscription Agreement; and
(c) Any action, suit or proceeding based upon (i) the
claim that said declarations, representations, or warranties
were inaccurate or misleading or otherwise cause for
obtaining damages or redress from the Company; or (ii) the
disposition of any of the Shares or any part thereof.
10. Miscellaneous: The undersigned further understands,
acknowledges and agrees that:
(a) This Subscription Agreement is not transferrable or
assignable by the undersigned.
(b) This Subscription Agreement, upon acceptance by the
Company, shall be binding upon the heirs, executors,
administrators, successors and assigns of the undersigned.
(c) If the undersigned is more than one person, the
obligations of the undersigned shall be joint and several
and the representations and warranties herein contained
shall be deemed to be made by and be binding upon each such
person and his heirs, executors, administrators, successors
and assigns.
(d) This Subscription Agreement shall be construed in
accordance with and governed by the laws of the State of
Nevada, except as to the manner in which the subscribing
Share Holder elects to take title to Shares which shall be
construed in accordance with the state of his principal
residence.
(e) This Subscription Agreement and the attached "Deal
Memorandum" (with included promissory note and security
instruments) constitute the entire agreement between the
parties.
11. Representations as to Investment Qualifications: The
undersigned represents that they have such knowledge and
experience in business and financial matters that they are
capable of evaluating the Company and the proposed activities
thereof, and the risks and merits of investment in the Shares,
and of making an informed investment decision thereon, and have
not consulted with others in connection with evaluating such
risks and merits. The undersigned hereby further represents, by
placing their initials in front of the applicable description:
_________ (a) I am a natural person whose individual net
worth, or joint net worth with his or her spouse, is in excess of
$1,000,000. For purposes of this paragraph, "net worth" means
the excess of total assets at fair market value including home
and personal property, over total liabilities; or who had an
individual income in excess of $200,000 or with his or her spouse
had joint income in excess of $300,000 and each of the previous
two years and who reasonably expects to have the same income
level this year.
_________ (b) A bank or savings and loan association acting
in either its individual or a fiduciary capacity, any
broker/dealer registered pursuant to Section 15 of the Securities
Exchange Act of 1934, as amended, an insurance company, an
investment company registered under the Investment Company Act of
1940 or a business development company as defined in that Act, a
Small Business Investment Partnership licensed by the U.S. Small
Business Administration, an employee benefit plan within the
meaning of the Employee Retirement Income Security Act of 1974,
so long as the decision to invest in the Partnership is being
made by a fiduciary which is either a bank, savings and loan
association, insurance company or registered investment advisor,
or if the employee benefit plan has total assets in excess of
$5,000,000 at the date hereof, or, of a self-directed plan, with
investment decisions made solely by persons that are accredited
investors; or a private business development company as defined
in Section 202(a)(22) of the Investment Advisors Act of 1940; or
a corporation, partnership or other entity in which all of the
equity owners qualify as accredited investors under any one or
more of the previous categories.
12. Amount of Subscription:
(a) Number of Shares (including
fractions thereof) of the
Company): 2,000,000
(b) Total Capital Contribution: $500,000
($150,000 in cash and
$350,000 in notes)
13. Type of Ownership for Shares: The undersigned elects
to hold title to the Shares/Notes subscribed for herein as
follows (check one):
[ ] Individual Ownership
(one signature required)
[ ] Community Property
(one signature required if interest held in one name
(i.e., managing spouse), two signatures required if
Share held in both names)
[ ] Tenants in Common
(both parties must sign)
[ ] Joint Tenants with Right of Survivorship (both parties
must sign)
[ ] Trust
(include name of trust, name of trustee, date trust was
formed, and copy of the Trust Agreement or other
authorization)
[ ] Partnership
(include a copy of the Statement of
Partnership or Partnership Agreement authorizing
signature)
[X] Corporation
(include certified corporate resolution authorizing
signature)
[ ] Qualified Retirement Plan (or IRA)
_________________________________________________________________
________________ (Please print here the exact name
(registration) Subscriber desires on account) // Soc. Sec. # or
Tax ID. #
Share: SOCIAL SECURITY OR TAXPAYER I.D. NUMBER MUST APPEAR ABOVE
OR WITHHOLDING PROVISIONS WILL BE IMPOSED UPON THE COMPANY.
(If a trust, date trust established and name of trustee:
________________________________________________)
(Note: Investors should seek the advice of their attorney
in deciding in which of the above forms they should take
ownership of the Shares, since different forms of ownership can
have varying gift tax, estate tax, income tax and other
consequences, depending on the state of the investor's domicile
and his particular personal circumstances. For example, in
community property states, if community property assets are used
to purchase Shares held as separate property, this might have
adverse gift tax consequences.)
I (we) prefer to have correspondence sent to:
GIRARDI FINANCIAL, INC.
c/o Walter Lack
Engstrom, Lipscomb & Lack
10100 Santa Monica Boulevard, 16th Floor
Los Angeles, California 90067
Fax: (310) 552-9434
Business Phone Number: (310) 552-3800
U.S. Citizen? ___X___Yes ______No
IN WITNESS WHEREOF, subject to acceptance by the Company,
the undersigned has completed and executed this Subscription
Agreement to evidence his subscription for Shares of SANITARY
ENVIRONMENTAL MONITORING LABS, Inc., a Nevada corporation, this
___ day of June, 2000.
GIRARDI FINANCIAL, INC.
Signature
A copy of this subscription agreement will be returned to you
when countersigned below. The Company has accepted this
Subscription this 23rd day of June, 2000.
SANITARY ENVIRONMENTAL
MONITORING LABS, INC.
a Nevada corporation
By: /s/ Robert M. Terry
Robert M. Terry, Chairman
Exhibit 10.10 (Continued)
PROMISSORY NOTE
(With Collateral Security)
$350,000.00 June 23, 2000
FOR VALUE RECEIVED, GIRARDI FINANCIAL, INC. (hereinafter
called "Payor") does hereby promise to pay to SANITARY
ENVIRONMENTAL MONITORING LABS, INC. (hereinafter called "Payee"),
the principal sum of Three Hundred Fifty Thousand and no 100
Dollars ($350,000.00). Principal shall all be payable at the
business address of Payee, 5478 Village Road, Long Beach,
California 90808, at no interest for the term of the Note, on or
before August 23, 2000. This Note represents a payment for
common stock in the Company, subject to the cancellation
provisions embodied in the Deal Memorandum attached to the
Subscription Agreement, and which stock is being issued
contemporaneously with tender of the Note, and is therefore
secured by the following collateral:
Residential property located at 713 James Lane, Incline
Village, Nevada, identified as Section 4, Lot D, Parcel
122194-04 on the Assessor's parcel map.
If any payment under this Note is not paid when due, and
this note has not been cancelled by operation of the Deal
Memorandum, then all shares issued in reliance on this Note will
be cancelled.
IN WITNESS WHEREOF, the Payor has caused this Note to be
signed this 23rd day of June, 2000 in Los Angeles, California.
GIRARDI FINANCIAL, INC.
By: /s/ Walter Lack
Attorney-in-fact for
Girardi Financial, Inc.
