Exhibit 2
ACQUISITION OF ADVANCED ILLUMINATION TECHNOLOGIES, INC.
BY
GLOTECH INDUSTRIES, INC.
AGREEMENT AND PLAN OF ACQUISITION
THIS AGREEMENT AND PLAN OF ACQUISITION ("Agreement") is entered into by
and between ADVANCED ILLUMINATION TECHNOLOGIES, INC., a Florida corporation,
("AITI"), UTEK CORPORATION, a Delaware corporation, ("UTEK"), and GLOTECH
INDUSTRIES, INC., a Nevada corporation, ("GTHI").
WHEREAS, UTEK owns 100% of the issued and outstanding shares of common
stock of AITI ("AITI Shares"); and
WHEREAS, before the Closing Date, AITI has acquired the license for the
fields of use as described in the License Agreement, a part of Exhibit "A"
attached to and made a part of this Agreement ("License Agreement") and the
rights to develop and market a patented and proprietary technology for the
fields of uses specified in the License Agreement ("Technology").
WHEREAS, the parties desire to provide for the terms and conditions
upon which AITI will be acquired by GTHI in a, stock-for-stock exchange
("Acquisition") in accordance with the respective corporation laws of their
state, upon consummation of which all AITI Shares will be owned by GTHI, and all
issued and outstanding AITI Shares will be exchanged for common stock of GTHI
with terms and conditions as set forth more fully in this Agreement; and
WHEREAS, for federal income tax purposes, it is intended that the
Acquisition qualifies within the meaning of Section 368 (a)(1)(B) of the
Internal Revenue Code of 1986, as amended ("Code").
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt, adequacy and sufficiency of which are by
this Agreement acknowledged, the parties agree as follows:
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ARTICLE 1
THE STOCK-FOR-STOCK ACQUISITION
1.01 The Acquisition
(a) Acquisition Agreement. Subject to the terms and conditions of
this Agreement, at the Effective Date, as defined below, all AITI Shares shall
be acquired from UTEK by GTHI in accordance with the respective corporation laws
of their state and the provisions of this Agreement and the separate corporate
existence of AITI, as a wholly-owned subsidiary of GTHI, shall continue after
the closing.
(b) Effective Date. The Acquisition shall become effective
("Effective Date") upon the execution of this Agreement and closing of the
transaction.
1.02 Exchange of Stock. At the Effective Date, by virtue of the
Acquisition:
All of the AITI Shares that are issued and outstanding at the Effective
Date shall be exchanged for 1,000,000 unregistered shares of common
stock of GTHI ("GTHI Shares"), which by agreement of the shareholders
of AITI shall be issued as follows:
SHAREHOLDER NUMBER OF GTHI SHARES
----------- ---------------------
UTEK CORPORATION 1,000,000
1.03 Effect of Acquisition.
(a) Rights in AITI Cease. At and after the Effective Date, the
holder of each certificate of common stock of AITI shall cease to have any
rights as a shareholder of AITI.
(b) Closure of AITI Shares Records. From and after the Effective
Date, the stock transfer books of AITI shall be closed, and there shall be no
further registration of stock transfers on the records of AITI.
1.04 Closing. Subject to the terms and conditions of this
Agreement, the Closing of the Acquisition shall take place on or before June
23rd, 2003 ("Closing Date") unless extended by mutual consent of the parties in
writing.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
2.01 Representations and Warranties of UTEK and AITI. UTEK and AITI
represent and warrant to GTHI that the facts set forth below are true and
correct:
(a) Organization. AITI and UTEK are corporations duly organized,
validly existing and in good standing under the laws of their respective states
of incorporation, and they
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have the requisite power and authority to conduct their business and consummate
the transactions contemplated by this Agreement. True, correct and complete
copies of the articles of incorporation, bylaws and all corporate minutes of
AITI have been provided to GTHI and such documents are presently in effect and
have not been amended or modified.
(b) Authorization. The execution of this Agreement and the
consummation of the Acquisition and the other transactions contemplated by this
Agreement have been duly authorized by the board of directors and shareholders
of AITI and the board of directors of UTEK; no other corporate action by the
respective parties is necessary in order to execute, deliver, consummate and
perform their respective obligations hereunder; and AITI and UTEK have all
requisite corporate and other authority to execute and deliver this Agreement
and consummate the transactions contemplated by this Agreement.
(c) Capitalization. The authorized capital of AITI consists of
1,000,000 shares of common stock with a par value $1.00 per share. At the date
of this Agreement, 1,000 AITI Shares are issued and outstanding as follows:
SHAREHOLDER NUMBER OF AITI SHARES
----------- ---------------------
UTEK CORPORATION 1,000
All issued and outstanding AITI Shares have been duly and validly issued and are
fully paid and non-assessable shares and have not been issued in violation of
any preemptive or other rights of any other person or any applicable laws. AITI
is not authorized to issue any preferred stock. All dividends on AITI Shares
which have been declared prior to the date of this Agreement have been paid in
full. There are no outstanding options, warrants, commitments, calls or other
rights or agreements requiring AITI to issue any AITI Shares or securities
convertible into AITI Shares to anyone for any reason whatsoever. None of the
AITI Shares is subject to any change, claim, condition, interest, lien, pledge,
option, security interest or other encumbrance or restriction, including any
restriction on use, voting, transfer, receipt of income or exercise of any other
attribute of ownership.
(d) Binding Effect. The execution, delivery, performance and
consummation of this Agreement, the Acquisition and the transactions
contemplated by this Agreement will not violate any obligation to which AITI or
UTEK is a party and will not create a default under any such obligation or under
any agreement to which AITI or UTEK is a party. This Agreement constitutes a
legal, valid and binding obligation of AITI, enforceable in accordance with its
terms, except as the enforcement may be limited by bankruptcy, insolvency,
moratorium, or similar laws affecting creditor's rights generally and by the
availability of injunctive relief, specific performance or other equitable
remedies.
(e) Litigation Relating to this Agreement. There are no suits,
actions or proceedings pending or, to the best of AITI and UTEK's knowledge,
information and belief, threatened, which seek to enjoin the Acquisition or the
transactions contemplated by this Agreement or which, if adversely decided,
would have a materially adverse effect on the business, results of operations,
assets or prospects of AITI.
(f) No Conflicting Agreements. Neither the execution and delivery
of this
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Agreement nor the fulfillment of or compliance by AITI or UTEK with the terms or
provisions of this Agreement nor all other documents or agreements contemplated
by this Agreement and the consummation of the transaction contemplated by this
Agreement will result in a breach of the terms, conditions or provisions of, or
constitute a default under, or result in a violation of, AITI or UTEK's articles
of incorporation or bylaws, the Technology, the License Agreement, or any
agreement, contract, instrument, order, judgment or decree to which AITI or UTEK
is a party or by which AITI or UTEK or any of their respective assets is bound,
or violate any provision of any applicable law, rule or regulation or any order,
decree, writ or injunction of any court or government entity which materially
affects their respective assets or businesses.
(g) Consents. No consent from or approval of any court,
governmental entity or any other person is necessary in connection with
execution and delivery of this Agreement by AITI and UTEK or performance of the
obligations of AITI and UTEK hereunder or under any other agreement to which
AITI or UTEK is a party; and the consummation of the transactions contemplated
by this Agreement will not require the approval of any entity or person in order
to prevent the termination of the Technology, the License Agreement, or any
other material right, privilege, license or agreement relating to AITI or its
assets or business.
(h) Title to Assets. AITI has or has agreed to enter into the
agreements as listed on Exhibit A attached hereto. These agreements and the
assets shown on the balance sheet of attached Exhibit B are the sole assets of
AITI. AITI has or will by Closing Date have good and marketable title to its
assets, free and clear of all liens, claims, charges, mortgages, options,
security agreements and other encumbrances of every kind or nature whatsoever.
(i) Intellectual Property
(1) The United States Centers for Disease Control (CDC)
as represented by the National Institute of Occupational Safety and Health
(NIOSH) owns the Technology and has all right, power, authority and ownership
and entitlement to file, prosecute and maintain in effect the Patent application
with respect to the Invention listed in Exhibit A hereto, and
(2) The Technology was invented by Xxxxxx X. Xxxxx and
Xxxxx X. Xxxxxx ("Inventor"). The Inventor, has assigned all of their rights,
title and interests in the Technology to the CDC, and
(3) The License Agreement between the CDC and AITI
covering the Invention is legal, valid, binding and will be enforceable in
accordance with its terms as contained in Exhibit A.
(4) Except as otherwise set forth in this Agreement, GTHI
acknowledges and understands that AITI and UTEK make no representations and
provide no assurances that the rights to the Technology and Intellectual
Property contained in the License Agreement do not, and will not in the future,
infringe or otherwise violate the rights of third parties, and
(5) Except as otherwise expressly set forth in this
Agreement, AITI and
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UTEK make no representations and extend no warranties of any kind, either
express or implied, including, but not limited to warranties of merchantability,
fitness for a particular purpose, non-infringement and validity of the
Intellectual Property.
(j) Liabilities of AITI. AITI has no assets, no liabilities or
obligations of any kind, character or description except those listed on the
attached schedules and exhibits.
(k) Financial Statements. The unaudited financial statements of
AITI, including a balance sheet, attached as Exhibit B and made a part of this
Agreement, are, in all respects, complete and correct and present fairly AITI's
financial position and the results of its operations on the dates and for the
periods shown in this Agreement; provided, however, that interim financial
statements are subject to customary year-end adjustments and accruals that, in
the aggregate, will not have a material adverse effect on the overall financial
condition or results of its operations. AITI has not engaged in any business not
reflected in its financial statements. There have been no material adverse
changes in the nature of its business, prospects, the value of assets or the
financial condition since the date of its financial statements. There are no,
and on the Closing Date there will be no, outstanding obligations or liabilities
of AITI except as specifically set forth in the financial statements and the
other attached schedules and exhibits. There is no information known to AITI or
UTEK that would prevent the financial statements of AITI from being audited in
accordance with generally accepted accounting principles.
(l) Taxes. All returns, reports, statements and other similar
filings required to be filed by AITI with respect to any federal, state, local
or foreign taxes, assessments, interests, penalties, deficiencies, fees and
other governmental charges or impositions have been timely filed with the
appropriate governmental agencies in all jurisdictions in which such tax returns
and other related filings are required to be filed; all such tax returns
properly reflect all liabilities of AITI for taxes for the periods, property or
events covered by this Agreement; and all taxes, whether or not reflected on
those tax returns, and all taxes claimed to be due from AITI by any taxing
authority, have been properly paid, except to the extent reflected on AITI's
financial statements, where AITI has contested in good faith by appropriate
proceedings and reserves have been established on its financial statements to
the full extent if the contest is adversely decided against it. AITI has not
received any notice of assessment or proposed assessment in connection with any
tax returns, nor is AITI a party to or to the best of its knowledge, expected to
become a party to any pending or threatened action or proceeding, assessment or
collection of taxes. AITI has not extended or waived the application of any
statute of limitations of any jurisdiction regarding the assessment or
collection of any taxes. There are no tax liens (other than any lien which
arises by operation of law for current taxes not yet due and payable) on any of
its assets. There is no basis for any additional assessment of taxes, interest
or penalties. AITI has made all deposits required by law to be made with respect
to employees' withholding and other employment taxes, including without
limitation the portion of such deposits relating to taxes imposed upon AITI.
AITI is not and has never been a party to any tax sharing agreements with any
other person or entity.
(m) Absence of Certain Changes or Events. From the date of the
full execution of the Term Sheet until the Closing Date, AITI has not, and
without the written consent of GTHI, it will not have:
(1) Sold, encumbered, assigned let lapsed or transferred
any of its
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material assets, including without limitation the Intellectual Property, the
Patent License Agreement or any other material asset;
(2) Amended or terminated the Patent License Agreement or
other material agreement or done any act or omitted to do any act which would
cause the breach of the Patent License Agreement or any other material
agreement;
(3) Suffered any damage, destruction or loss whether or
not in control of AITI;
(4) Made any commitments or agreements for capital
expenditures or otherwise;
(5) Entered into any transaction or made any commitment
not disclosed to GTHI;
(6) Incurred any material obligation or liability for
borrowed money;
(7) Suffered any other event of any character, which is
reasonable to expect, would adversely affect the future condition (financial or
otherwise) assets or liabilities or business of AITI; or
(8) Taken any action which could reasonably be foreseen
to make any of the representations or warranties made by AITI or UTEK untrue as
of the date of this Agreement or as of the Closing Date.
(n) Material Agreements. Exhibit A attached contains a true and
complete list of all contemplated and executed agreements between AITI and a
third party. A complete and accurate copies of all material agreements,
contracts and commitments of the following types, whether written or oral to
which it is a party or is bound ("Contracts"), has been provided to GTHI and
such agreements are or will be at the Closing Date, in full force and effect
without modifications or amendment and constitute the legally valid and binding
obligations of AITI in accordance with their respective terms and will continue
to be valid and enforceable following the Acquisition. AITI is not in default of
any of the Contracts. In addition:
(1) There are no outstanding unpaid promissory notes,
mortgages, indentures, deed of trust, security agreements and other agreements
and instruments relating to the borrowing of money by or any extension of credit
to AITI; and
(2) There are no outstanding operating agreements, lease
agreements or similar agreements by which AITI is bound; and
(3) The complete final drafts of the License Agreement
have has been provided to GTHI; and
(4) Except as set forth in (3) above, there are no
outstanding licenses to or from others of any intellectual property and trade
names; and
(5) There are no outstanding agreements or commitments to
sell, lease or
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otherwise dispose of any of AITI's property; and
(6) There are no breaches of any agreement to which AITI
is a party.
(o) Compliance with Laws. AITI is in compliance with all
applicable laws, rules, regulations and orders promulgated by any federal, state
or local government body or agency relating to its business and operations.
(p) Litigation. There is no suit, action or any arbitration,
administrative, legal or other proceeding of any kind or character, or any
governmental investigation pending or to the best knowledge of AITI or UTEK,
threatened against AITI, the Technology, Patent License Agreement, Consulting
Agreement or Research Agreement affecting its assets or business (financial or
otherwise), and neither AITI nor UTEK is in violation of or in default with
respect to any judgment, order, decree or other finding of any court or
government authority relating to the assets, business or properties of AITI or
the transactions contemplated hereby. There are no pending or threatened actions
or proceedings before any court, arbitrator or administrative agency, which
would, if adversely determined, individually or in the aggregate, materially and
adversely affect the assets or business of AITI or the transactions
contemplated.
(q) Employees. AITI has no and never had any employees. AITI is
not a party to or bound by any employment agreement or any collective bargaining
agreement with respect to any employees. AITI is not in violation of any law,
regulation relating to employment of employees.
(r) Neither AITI nor UTEK has any knowledge of any existing or
threatened occurrence, action or development that could cause a material adverse
effect on AITI or its business, assets or condition (financial or otherwise) or
prospects.
(s) Employee Benefit Plans. AITI states that there are no and have
never been any employee benefit plans, and there are no commitments to create
any, including without limitation as such term is defined in the Employee
Retirement Income Security Act of 1974, as amended, in effect, and there are no
outstanding or un-funded liabilities nor will the execution of this Agreement
and the actions contemplated in this Agreement result in any obligation or
liability to any present or former employee.
(t) Books and Records. The books and records of AITI are complete
and accurate in all material respects, fairly present its business and
operations, have been maintained in accordance with good business practices, and
applicable legal requirements, and accurately reflect in all material respects
its business, financial condition and liabilities.
(u) No Broker's Fees. Neither UTEK nor AITI has incurred any
investment banking, advisory or other similar fees or obligations in connection
with this Agreement or the transactions contemplated by this Agreement.
(v) Full Disclosure. All representations or warranties of UTEK and
AITI are true, correct and complete in all material respects to the best of our
knowledge on the date of this Agreement and shall be true, correct and complete
in all material respects as of the Closing Date as if they were made on such
date. No statement made by them in this Agreement or in the exhibits to this
Agreement or any document delivered by them or on
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their behalf pursuant to this Agreement contains an untrue statement of material
fact or omits to state all material facts necessary to make the statements in
this Agreement not misleading in any material respect in light of the
circumstances in which they were made.
2.02 Representations and Warranties of GTHI. GTHI represents and
warrants to UTEK and AITI that the facts set forth are true and correct.
(a) Organization. GTHI is a corporation duly organized, validly
existing and in good standing under the laws of Florida, is qualified to do
business as a foreign corporation in other jurisdictions in which the conduct of
its business or the ownership of its properties require such qualification, and
have all requisite power and authority to conduct its business and operate
properties.
(b) Authorization. The execution of this Agreement and the
consummation of the Acquisition and the other transactions contemplated by this
Agreement have been duly authorized by the board of directors of GTHI; no other
corporate action on their respective parts is necessary in order to execute,
deliver, consummate and perform their obligations hereunder; and they have all
requisite corporate and other authority to execute and deliver this Agreement
and consummate the transactions contemplated by this Agreement.
(c) Capitalization. The authorized capital of GTHI consists of
15,800,000 shares of common stock with a par value per share ("GTHI Shares");
and on the Effective Date of the Acquisition, 16,800,000 GTHI Shares (which will
include the 1,000,000 GTHI Shares issued at the closing of the Acquisition) will
be issued and outstanding. All issued and outstanding GTHI Shares have been duly
and validly issued and are fully paid and non-assessable shares and have not
been issued in violation of any preemptive or other rights of any other person
or any applicable laws.
(d) Binding Effect. The execution, delivery, performance and
consummation of the Acquisition and the transactions contemplated by this
Agreement will not violate any obligation to which GTHI is a party and will not
create a default hereunder, and this Agreement constitutes a legal, valid and
binding obligation of GTHI, enforceable in accordance with its terms, except as
the enforcement may be limited by bankruptcy, insolvency, moratorium, or similar
laws affecting creditor's rights generally and by the availability of injunctive
relief, specific performance or other equitable remedies.
(e) Litigation Relating to this Agreement. There are no suits,
actions or proceedings pending or to its knowledge threatened which seek to
enjoin the Acquisition or the transactions contemplated by this Agreement or
which, if adversely decided, would have a materially adverse effect on its
business, results of operations, assets, prospects or the results of its
operations of GTHI.
(f) No Conflicting Agreements. Neither the execution and delivery
of this Agreement nor the fulfillment of or compliance by GTHI with the terms or
provisions of this Agreement will result in a breach of the terms, conditions or
provisions of, or constitute a default under, or result in a violation of, their
respective corporate charters or bylaws, or any agreement, contract, instrument,
order, judgment or decree to which it is a party or by which it or any of its
assets are bound, or violate any provision of any applicable law, rule or
regulation or any order, decree, writ or injunction of any court or governmental
entity which materially affects its assets or business.
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(g) Consents. Assuming the correctness of UTEK and AITI's
representations, no consent from or approval of any court, governmental entity
or any other person is necessary in connection with its execution and delivery
of this Agreement; and the consummation of the transactions contemplated by this
Agreement will not require the approval of any entity or person in order to
prevent the termination of any material right, privilege, license or agreement
relating to GTHI or its assets or business.
(h) Financial Statements. The unaudited financial statements of
GTHI attached as Exhibit C present fairly its financial position and the results
of its operations on the dates and for the periods shown in this Agreement;
provided, however, that interim financial statements are subject to customary
year-end adjustments and accruals that, in the aggregate, will not have a
material adverse effect on the overall financial condition or results of its
operations. GTHI has not engaged in any business not reflected in its financial
statements. There have been no material adverse changes in the nature of its
business, prospects, the value of assets or the financial condition since the
date of its financial statements. There are no outstanding obligations or
liabilities of GTHI except as specifically set forth in the GTHI financial
statements.
(i) Full Disclosure. All representations or warranties of GTHI are
true, correct and complete in all material respects on the date of this
Agreement and shall be true, correct and complete in all material respects as of
the Closing Date as if they were made on such date. No statement made by them in
this Agreement or in the exhibits to this Agreement or any document delivered by
them or on their behalf pursuant to this Agreement contains an untrue statement
of material fact or omits to state all material facts necessary to make the
statements in this Agreement not misleading in any material respect in light of
the circumstances in which they were made.
(j) Compliance with Laws. GTHI is in compliance with all
applicable laws, rules, regulations and orders promulgated by any federal, state
or local government body or agency relating to its business and operations.
(k) Litigation. There is no suit, action or any arbitration,
administrative, legal or other proceeding of any kind or character, or any
governmental investigation pending or, to the best knowledge of GTHI, threatened
against GTHI materially affecting its assets or business (financial or
otherwise), and GTHI is not in violation of or in default with respect to any
judgment, order, decree or other finding of any court or government authority.
There are no pending or threatened actions or proceedings before any court,
arbitrator or administrative agency, which would, if adversely determined,
individually or in the aggregate, materially and adversely affect its assets or
business.
(l) GTHI has no knowledge of any existing or threatened
occurrence, action or development that could cause a material adverse effect on
GTHI or its business, assets or condition (financial or otherwise) or prospects.
2.03 Investment Representations of UTEK. UTEK represents and
warrants to GTHI that:
(a) General. It has such knowledge and experience in financial and
business matters as to be capable of evaluating the risks and merits of an
investment in GTHI Shares
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pursuant to the Acquisition. It is able to bear the economic risk of the
investment in GTHI Shares, including the risk of a total loss of the investment
in GTHI Shares. The acquisition of GTHI Shares is for its own account and is for
investment and not with a view to the distribution of this Agreement. Except a
permitted by law, it has a no present intention of selling, transferring or
otherwise disposing in any way of all or any portion of the shares at the
present time. All information that it has supplied to GTHI is true and correct.
It has conducted all investigations and due diligence concerning GTHI to
evaluate the risks inherent in accepting and holding the shares which it deems
appropriate, and it has found all such information obtained fully acceptable. It
has had an opportunity to ask questions of the officer and directors of GTHI
concerning GTHI Shares and the business and financial condition of and prospects
for GTHI, and the officers and directors of GTHI have adequately answered all
questions asked and made all relevant information available to them. UTEK is an
"accredited investor," as the term is defined in Regulation D, promulgated under
the Securities Act of 1933, as amended, and the rules and regulations
thereunder.
(b) Stock Transfer Restrictions.
UTEK acknowledges that the GTHI Shares will not be registered and UTEK
will not be permitted to sell or otherwise transfer the GTHI Shares in any
transaction in contravention of the following legend, which will be imprinted in
substantially the follow form on the stock certificate representing GTHI Shares:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT'), OR UNDER THE SECURITIES LAWS
OF ANY STATE. THESE SECURITIES MAY NOT BE SOLD, OFFERED FOR SALE, ASSIGNED,
TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS REGISTERED PURSUANT TO THE PROVISION
OF THE ACT AND THE LAWS OF SUCH STATES UNDER WHOSE LAWS A TRANSFER OF SECURITIES
WOULD BE SUBJECT TO A REGISTRATION REQUIREMENT, UNLESS UTEK CORPORATION HAS
OBTAINED AN OPINION OF COUNSEL STATING THAT SUCH DISPOSITION IS IN COMPLIANCE
WITH AN AVAILABLE EXEMPTION FROM SUCH REGISTRATION.
ARTICLE 3
TRANSACTIONS PRIOR TO CLOSING
3.01. Corporate Approvals. Prior to Closing Date, each of the
parties shall submit this Agreement to its board of directors and when
necessary, its respective shareholders and obtain approval of this Agreement.
Copies of corporate actions taken shall be provided to each party.
3.02 Access to Information. Each party agrees to permit, upon
reasonable notice, the attorneys, accountants, and other representatives of the
other parties reasonable access during normal business hours to its properties
and its books and records to make reasonable investigations with respect to its
affairs, and to make its officers and employees available to answer questions
and provide additional information as reasonably requested.
3.03 Expenses. Each party agrees to bear its own expenses in
connection with the negotiation and consummation of the Acquisition and the
transactions contemplated by this Agreement.
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3.04 Covenants. Except as permitted in writing, each party agrees
that it will:
(a) Use its good faith efforts to obtain all requisite licenses,
permits, consents, approvals and authorizations necessary in order to consummate
the Acquisition; and
(b) Notify the other parties upon the occurrence of any event
which would have a materially adverse effect upon the Acquisition or the
transactions contemplated by this Agreement or upon the business, assets or
results of operations; and
(c) Not modify its corporate structure, except as necessary or
advisable in order to consummate the Acquisition and the transactions
contemplated by this Agreement.
ARTICLE 4
CONDITIONS PRECEDENT
The obligation of the parties to consummate the Acquisition and the
transactions contemplated by this Agreement are subject to the following
conditions that may be waived, to the extent permitted by law:
4.01. Each party must obtain the approval of its board of directors
and such approval shall not have been rescinded or restricted.
4.02. Each party shall obtain all requisite licenses, permits,
consents, authorizations and approvals required to complete the Acquisition and
the transactions contemplated by this Agreement.
4.03. There shall be no claim or litigation instituted or threatened
in writing by any person or government authority seeking to restrain or prohibit
any of the contemplated transactions contemplated by this Agreement or challenge
the right, title and interest of UTEK in the AITI Shares or the right of AITI or
UTEK to consummate the Acquisition contemplated hereunder.
4.04. The representations and warranties of the parties shall be
true and correct in all material respects at the Effective Date.
4.05. The Technology and Intellectual Property has been prosecuted
in good faith with reasonable diligence.
4.06. To the best knowledge of UTEK and AITI, the License Agreement
is valid and in full force and effect without any default in this Agreement.
4.07. GTHI shall have received, at or within 5 days of Closing Date,
each of the following:
(a) the stock certificates representing the AITI Shares, duly
endorsed (or accompanied by duly executed stock powers) by UTEK for
cancellation;
(b) all documentation relating to the AITI's business, all in a
form and substance satisfactory to GTHI;
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(c) such agreements, files and other data and documents pertaining
to AITI's business as GTHI may reasonably request;
(d) copies of the general ledgers and books of account of AITI,
and all federal, state and local income, franchise, property and other tax
returns filed by AITI since the inception of AITI;
(e) certificates of (i) the Secretary of State of the State of
Florida as to the legal existence and good standing, as applicable, (including
tax) of AITI in Florida;
(f) the original corporate minute books of AITI, including the
articles of incorporation and bylaws of AITI, and all other documents filed in
this Agreement;
(g) all consents, assignments or related documents of conveyance
to give GTHI the benefit of the transactions contemplated hereunder;
(h) such documents as may be needed to accomplish the Closing
under the corporate laws of the states of incorporation of GTHI and AITI, and
(i) such other documents, instruments or certificates as GTHI, or
their counsel may reasonably request.
4.08. GTHI shall have completed due diligence investigation of AITI
to GTHI's satisfaction in their sole discretion.
4.09. GTHI shall receive the resignation effective the Closing Date
of each director and officer of AITI.
ARTICLE 5
LIMITATIONS
5.01. Survival of Representations and Warranties.
(a) The representations and warranties made by UTEK and AITI shall
survive for a period of 1 year after the Closing Date, and thereafter all such
representation and warranties shall be extinguished, except with respect to
claims then pending for which specific notice has been given during such 1-year
period.
(b) The representations and warranties made by GTHI shall survive
for a period of 1 year after the Closing Date, and thereafter all such
representations and warranties shall be extinguished, except with respect to
claims then pending for which specific notice has been given during such 1-year
period.
Page 12 of 67
5.02. Limitations on Liability. Notwithstanding any other provision
to this Agreement the contrary, neither party to this Agreement shall be liable
to the other party for any cost, damage, expense, liability or loss under this
indemnification provision until after the sum of all amounts individually when
added to all other such amounts in the aggregate exceeds $1,000 and then such
liability shall apply only to matters in excess of $1,000.
ARTICLE 6
REMEDIES
6.01 Specific Performance. Each party's obligations under this
Agreement are unique. If any party should default in its obligations under this
agreement, the parties each acknowledge that it would be extremely impracticable
to measure the resulting damages. Accordingly, the non-defaulting party, in
addition to any other available rights or remedies, may xxx in equity for
specific performance, and the parties each expressly waive the defense that a
remedy in damages will be adequate.
6.02 Costs. If any legal action or any arbitration or other
proceeding is brought for the enforcement of this agreement or because of an
alleged dispute, breach, default, or misrepresentation in connection with any of
the provisions of this agreement, the successful or prevailing party or parties
shall be entitled to recover reasonable attorneys' fees and other costs incurred
in that action or proceeding, in addition to any other relief to which it or
they may be entitled.
ARTICLE 7
ARBITRATION
In the event a dispute arises with respect to the interpretation or
effect of this Agreement or concerning the rights or obligations of the parties
to this Agreement, the parties agree to negotiate in good faith with reasonable
diligence in an effort to resolve the dispute in a mutually acceptable manner.
Failing to reach a resolution of this Agreement, either party shall have the
right to submit the dispute to be settled by arbitration under the Commercial
Rules of Arbitration of the American Arbitration Association. The parties agree
that, unless the parties mutually agree to the contrary such arbitration shall
be conducted in Tampa, Florida. The cost of arbitration shall be borne by the
party against whom the award is rendered or, if in the interest of fairness, as
allocated in accordance with the judgment of the arbitrators. All awards in
arbitration made in good faith and not infected with fraud or other misconduct
shall be final and binding. The arbitrators shall be selected as follows: one by
GTHI, one by UTEK and a third by the two selected arbitrators. The third
arbitrator shall be the chairman of the panel.
ARTICLE 8
MISCELLANEOUS
8.01. No party may assign this Agreement or any right or obligation
of it hereunder without the prior written consent of the other parties to this
Agreement. No permitted assignment shall relieve a party of its obligations
under this Agreement without the separate written consent of the other parties.
8.02. This Agreement shall be binding upon and inure to the benefit
of the parties
Page 13 of 67
and their respective permitted successors and assigns.
8.03. Each party agrees that it will comply with all applicable
laws, rules and regulations in the execution and performance of its obligations
under this Agreement.
8.04. This Agreement shall be governed by and construct in
accordance with the laws of the State of Florida without regard to principles of
conflicts of law.
8.05. This document constitutes a complete and entire agreement
among the parties with reference to the subject matters set forth in this
Agreement. No statement or agreement, oral or written, made prior to or at the
execution of this Agreement and no prior course of dealing or practice by either
party shall vary or modify the terms set forth in this Agreement without the
prior consent of the other parties to this Agreement. This Agreement may be
amended only by a written document signed by the parties.
8.06. Notices or other communications required to be made in
connection with this Agreement shall be sent by U.S. mail, certified, return
receipt requested, personally delivered or sent by express delivery service and
delivered to the parties at the addresses set forth below or at such other
address as may be changed from time to time by giving written notice to the
other parties.
8.07. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement.
8.08. This Agreement may be executed in multiple counterparts, each
of which shall constitute one and a single Agreement.
8.09 Any facsimile signature of any part to this Agreement or to
any other agreement or document executed in connection of this Agreement should
constitute a legal, valid and binding execution by such parties.
GLOTECH INDUSTRIES, INC. ADVANCED ILLUMINATION
TECHNOLOGIES, INC.
By: _______________________________ By: ____________________________
Xxxxx Xxxxxxxxxxx XXX X. XXXXXX
President and CEO President
Address: Address:
0000 Xxxxxxxxx Xxxxxxxxx Xxxx, Xxxxx 000 000 Xxxxx Xxxxxxx Xxxxxx
Page 14 of 67
Xxxxxxxxxxx, XX 00000 Xxxxx Xxxx, Xxxxxxx 00000
UTEK CORPORATION
By:___________________________
Xxxxxxxx X. Xxxxx, Ph.D.
Chief Executive Officer
Address:
000 Xxxxx Xxxxxxx Xxxxxx
Xxxxx Xxxx, Xxxxxxx 00000
EXHIBIT A
OUTSTANDING AGREEMENTS
NONEXCLUSIVE LICENSE AGREEMENT WITH THE CDC
PUBLIC HEALTH SERVICE
PATENT LICENSE AGREEMENT-NONEXCLUSIVE
COVER PAGE
Patent License Number:_________________________________________________________
Serial Number(s) of Licensed Patent(s):
US Patent Application Serial No. 10/086,773entitled "Lighted Line," filed
February 28, 2002.
Licensee: Advanced Illumination Technologies, Inc.
000 Xxxxx Xxxxxxx Xxxxxx
Xxxxx Xxxx, Xxxxxxx 00000
CRADA Number (if applicable):___________________________________________________
Page 15 of 67
Additional Remarks: ADVANCED ILLUMINATION TECHNOLOGIES, INC. PLANS TO BE
IMMEDIATELY ACQUIRED BY GLOTECH INDUSTRIES INC.
Address:
Glotech Industries, Inc.
0000 X.X. Xxxxxxxxx Xx.
Xxxxx 000
Xxxxxxxxxxx, Xxxxxxx 00000
Public Benefit (s): Enhancement of miner safety as well as enhanced
safety of other work and recreational activities.
This Patent License Agreement, hereinafter referred to as THE "AGREEMENT,"
consists of this Cover Page, an attached AGREEMENT, a Signature Page, Appendix A
(List of Patent(s) or Patent Application(s)), Appendix B (Fields of Use and
Territory), Appendix C (Royalties), Appendix D (Modifications), Appendix E
(Benchmarks), and Appendix F (Commercial Development Plan). The Parties to this
AGREEMENT are:
1) The National Institutes of Health ("NIH"), the Centers for Disease
Control and Prevention ("CDC"), or the Food and Drug Administration
("FDA"), hereinafter singly or collectively referred to as "PHS,"
agencies of the United States Public Health Service within the
Department of Health and Human Services ("DHHS"); and
2) The person, corporation, or institution identified ABOVE AND/OR ON THE
Signature Page, having offices at the address indicated on the
Signature Page, hereinafter referred to as "Licensee."
Page 16 of 67
PHS PATENT LICENSE AGREEMENT-NONEXCLUSIVE
PHS and LICENSEE agree as follows:
BACKGROUND
1.01 In the course of conducting biomedical and behavioral
research, PHS investigators made inventions that may have
commercial applicability.
1.02 By assignment of rights from PHS employees and other
inventors, DHHS, on behalf of the United States Government,
owns intellectual property rights claimed in any United States
and/or foreign patent applications or patents corresponding to
the assigned inventions. DHHS also owns any tangible
embodiments of these inventions actually reduced to practice
by PHS.
1.03 The Secretary of DHHS has delegated to PHS the authority to
enter into this AGREEMENT for the licensing of rights to these
inventions.
1.04 PHS desires to transfer these inventions to the private sector
through commercialization licenses to facilitate the
commercial development of products and processes for public
use and benefit.
1.05 LICENSEE desires to license these inventions for commercial
use.
..DEFINITIONS
2.01 "BENCHMARKS" mean the performance milestones that are set
forth in Appendix E.
2.02 "COMMERCIAL DEVELOPMENT PLAN" means the written
commercialization plan attached as Appendix F.
2.03 "FIRST COMMERCIAL SALE" means the initial transfer by or on
behalf of LICENSEE or its sublicensees of LICENSED PRODUCTS or
the initial practice of a LICENSED PROCESS by or on behalf of
LICENSEE or its sublicensees in exchange for cash or some
equivalent to which value can be assigned for the purpose of
determining NET SALES.
2.04 "GOVERNMENT" MEANS the Government of the United States of
America.
2.05 "LICENSED FIELDS OF USE" means the field(s) of use identified
in Appendix B.
2.06 "LICENSED PATENT RIGHTS" shall mean:
a) Patent applications including provisional patent
applications and PCT patent applications, and/or
patents listed in Appendix A, all divisions and
continuations of these applications, all patents
issuing from such applications, divisions, and
continuations, and any reissues, reexaminations, AND
EXTENSIONS OF ALL SUCH PATENTS;
b) to the extent that the following contain one or more
claims directed to the invention or inventions
disclosed in a) above: i) continuations-in-part of a)
above; ii) all divisions and continuations of these
continuations-in-part; iii) all patents issuing from
such continuations-in-part, divisions, and
continuations; and iv) any reissues, reexaminations,
AND EXTENSIONS OF ALL SUCH PATENTS;
Page 17 of 67
c) to the extent that the following contain one or more claims
directed to the invention or inventions disclosed in a) above:
all counterpart foreign applications and patents to a) and b)
above, including those listed in Appendix A.
LICENSED PATENT RIGHTS shall not include b) or c) above to the
extent that they contain one or more claims directed to new
matter which is not the subject matter disclosed in a) above.
2.07 "LICENSED PROCESS(ES)" means processes which, in the course of
being practiced would, in the absence of this AGREEMENT,
infringe one or more claims of the LICENSED PATENT RIGHTS that
have not been held invalid or unenforceable by an unappealed
or unappealable judgment of a court of competent jurisdiction.
2.08 "LICENSED PRODUCT(S)" means tangible materials which, in the
course of manufacture, use, offer to sell, sale, or
importation would, in the absence of this AGREEMENT, infringe
one or more claims of the LICENSED PATENT RIGHTS that have not
been held invalid or unenforceable by an unappealed or
unappealable judgment of a court of competent jurisdiction.
2.09 "LICENSED TERRITORY" means the geographical area identified in
Appendix B.
2.10 "NET SALES" means the total gross receipts for sales of
LICENSED PRODUCTS or practice of LICENSED PROCESSES by or on
behalf of Licensee or its sublicensees, and from leasing,
renting, or otherwise making LICENSED PRODUCTS available to
others without sale or other dispositions, whether invoiced or
not, less returns and allowances, packing costs, insurance
costs, freight out, taxes or excise duties imposed on the
transaction (if separately invoiced), and wholesaler and cash
discounts in amounts customary in the trade to the extent
actually granted. No deductions shall be made for commissions
paid to individuals, whether they be with independent sales
agencies or regularly employed by LICENSEE, or sublicensees,
and on its payroll, or for the cost of collections.
2.11 "PRACTICAL APPLICATION" means to manufacture in the case of a
composition or product, to practice in the case of a process
or method, or to operate in the case of a machine or system;
and in each case, under such conditions as to establish that
the invention is being utilized and that its benefits are to
the extent permitted by law or GOVERNMENT regulations
available to the public on reasonable terms.
GRANT OF RIGHTS
3.01 PHS hereby grants and LICENSEE accepts, subject to the terms
and conditions of this AGREEMENT, a nonexclusive license under
the LICENSED PATENT RIGHTS in the LICENSED TERRITORY to make
and have made, to use and have used, and to sell and have
sold, to offer to sell, and to import any LICENSED PRODUCTS in
the LICENSED FIELDS OF USE and to practice and have practiced
any LICENSED PROCESSES in the LICENSED FIELDS OF USE.
3.02 This AGREEMENT confers no license or rights by implication,
estoppel, or otherwise under any patent applications or
patents of PHS other than LICENSED PATENT RIGHTS regardless of
whether such patents are dominant or subordinate to LICENSED
PATENT RIGHTS.
SUBLICENSING
4.01 Upon written approval by PHS, which approval will not be
unreasonably withheld, LICENSEE may enter into sublicensing
agreements under the Licensed Patent Rights.
Page 18 of 67
4.02 LICENSEE agrees that any sublicenses granted by it shall
provide that the obligations to PHS of Paragraphs 5.01 5.02,
8.01, 10.01, 10.02, 12.05 and 13.07-13.08 of this Agreement
shall be binding upon the sublicensee as if it were a party to
this Agreement. LICENSEE further agrees to attach copies of
these Paragraphs to all sublicense agreements.
4.03 Any sublicenses granted by Licensee shall provide for the
termination of the sublicense, or the conversion to a license
directly between such sublicensees and PHS, at the option of
the sublicensee, upon termination of this Agreement under
Article 13. Such conversion is subject to PHS approval and
contingent upon acceptance by the sublicensee of the remaining
provisions of this Agreement.
4.04 Licensee agrees to forward to PHS a copy of each fully
executed sublicense agreement postmarked within thirty (30)
days of the execution of such agreement. To the extent
permitted by law, PHS agrees to maintain each such sublicense
agreement in confidence.
STATUTORY AND PHS REQUIREMENTS AND RESERVED GOVERNMENT RIGHTS
5.01 Prior to the FIRST COMMERCIAL SALE, LICENSEE agrees to provide
PHS reasonable quantities of LICENSED PRODUCTS or materials
made through the LICENSED PROCESSES for PHS research use.
5.02 LICENSEE agrees that products used or sold in the United
States embodying LICENSED PRODUCTS or produced through use of
LICENSED PROCESSES shall be manufactured substantially in the
United States, unless a written waiver is obtained in advance
from PHS.
ROYALTIES AND REIMBURSEMENT
6.01 LICENSEE agrees to pay to PHS a noncreditable, nonrefundable
license issue royalty as set forth in Appendix C within thirty
(30) days from the date that this AGREEMENT becomes effective.
6.02 LICENSEE agrees to pay to PHS a nonrefundable minimum annual
royalty as set forth in Appendix C. The minimum annual royalty
is due and payable on January 1 of each calendar year and may
be credited against any earned royalties due for sales made in
that year. The minimum annual royalty due for the first
calendar year of this AGREEMENT may be prorated according to
the fraction of the calendar year remaining between the
effective date of this AGREEMENT and the next subsequent
January 1.
6.03 LICENSEE agrees to pay PHS earned royalties as set forth in
Appendix C.
6.04 LICENSEE agrees to pay PHS benchmark royalties as set forth in
Appendix C and Appendix E
6.05 A patent or patent application licensed under this AGREEMENT
shall cease to fall within the LICENSED PATENT RIGHTS for the
purpose of computing the earned royalty and payments in any
given country on the earliest of the dates that a) the
application has been abandoned and not continued, b) the
patent expires or irrevocably lapses, or c) the claim has been
held to be invalid or unenforceable by an unappealed or
unappealable decision of a court of competent jurisdiction or
administrative agency.
6.06 No multiple royalties shall be payable because any LICENSED
PRODUCTS or LICENSED PROCESSES are covered by more than one of
the LICENSED PATENT RIGHTS.
6.07 On sales of LICENSED PRODUCTS by LICENSEE to sublicensees or
affiliated parties or on sales made in other than an
arm's-length transaction, the value of the NET SALES
attributed under
Page 19 of 68
this Article 6 to such a transaction shall be that which would
have been received in an arm's-length transaction, based on
sales of like quantity and quality products on or about the
time of such transaction.
6.08 With regard to expenses associated with the preparation,
filing, prosecution, and maintenance of all patent
applications and patents included within the LICENSED PATENT
RIGHTS incurred by PHS prior to the effective date of this
AGREEMENT, LICENSEE shall pay to PHS, as an additional
royalty, within sixty (60) days of PHS's submission of a
statement and request for payment to LICENSEE, an amount
equivalent to such patent expenses previously incurred by PHS.
6.09 With regard to expenses associated with the preparation,
filing, prosecution, and maintenance of all patent
applications and patents included within the LICENSED PATENT
RIGHTS incurred by PHS on or after the effective date of this
AGREEMENT, PHS, at its sole option, may require LICENSEE:
A. To pay PHS on an annual basis, within sixty (60) days
of PHS'S submission of a statement and request for
payment, a royalty amount equivalent to a prorated
share of all such patent expenses incurred during the
previous calendar year(s); or
B. To pay such expenses directly to the law firm
employed by PHS to handle such functions. However, in
such event, PHS and not LICENSEE shall be the client
of such law firm.
LICENSEE'S prorated share of patent expenses shall be
determined by dividing the patent expenses by the number of
licensees of the patent at the time the expenses were
incurred.
In limited circumstances, LICENSEE may be given the right to
assume responsibility for the preparation, filing,
prosecution, or maintenance of any patent application or
patent included with the LICENSED PATENT RIGHTS. In that
event, LICENSEE shall directly pay the attorneys or agents
engaged to prepare, file, prosecute or maintain such patent
applications or patents and shall provide to PHS copies of
each invoice associated with such services as well as
documentation that such invoices have been paid.
6.10 LICENSEE may elect to surrender its rights in any country of
the LICENSED TERRITORY under any LICENSED PATENT RIGHTS upon
ninety (90) days written notice to PHS and owe no payment
obligation under Article 6.10 for patent-related expenses
incurred in that country after the effective date of such
written notice.
PATENT FILING, PROSECUTION, AND MAINTENANCE
7.01 PHS agrees to take responsibility for the preparation, filing,
prosecution, and maintenance of any and all patent
applications or patents included in the LICENSED PATENT
RIGHTS.
RECORD KEEPING
8.01 LICENSEE agrees to keep accurate and correct records of
LICENSED PRODUCTS made, used, sold, or imported and LICENSED
PROCESSES practiced under this Agreement appropriate to
determine the amount of royalties due PHS. Such records shall
be retained for at least five (5) years following a given
reporting period, and shall be available during normal
business hours for inspection at the expense of PHS by an
accountant or other designated auditor selected by PHS for the
sole purpose of verifying reports and payments hereunder. The
Page 20 of 67
accountant or auditor shall only disclose to PHS information
relating to the accuracy of reports and payments made under
this AGREEMENT. If an inspection shows an underreporting or
underpayment in excess of five percent (5%) for any twelve
(12) month period, then LICENSEE shall reimburse PHS for the
cost of the inspection at the time LICENSEE pays the
unreported royalties, including any late charges as required
by Paragraph 9.07 of this AGREEMENT. All payments required
under this Paragraph shall be due within thirty (30) days of
the date PHS provides LICENSEE notice of the payment due.
8.02 LICENSEE agrees to conduct an audit of sales and royalties
conducted by an independent auditor at least every two (2)
years if annual sales of the LICENSED PRODUCT or LICENSED
PROCESSES are over two (2) million dollars. The audit shall
address, at a minimum, the amount of gross sales by or on
behalf of LICENSEE during the audit period, terms of the
license as to percentage or fixed royalty to be remitted to
the GOVERNMENT, the amount of royalty funds owed to the
GOVERNMENT under this AGREEMENT, and whether the royalty
amount owed has been paid to the GOVERNMENT and is reflected
in the records of the LICENSEE. The audit shall also indicate
the PHS license number, product, and time period being
audited. A report certified by the auditor shall be submitted
promptly by the auditor directly to PHS on completion.
LICENSEE shall pay for the entire cost of the audit.
REPORTS ON PROGRESS, BENCHMARKS, SALES, AND PAYMENTS
9.01 Prior to signing this AGREEMENT, LICENSEE has provided to PHS
the COMMERCIAL DEVELOPMENT PLAN at Appendix F, under which
LICENSEE intends to bring the subject matter of the LICENSED
PATENT RIGHTS to the point of PRACTICAL APPLICATION. This
COMMERCIAL DEVELOPMENT PLAN is hereby incorporated by
reference into this Agreement. Based on this plan, performance
BENCHMARKS are determined as specified in Appendix E.
9.02 LICENSEE shall provide written annual reports on its product
development progress or efforts to commercialize under the
COMMERCIAL DEVELOPMENT PLAN for each of the LICENSED FIELDS OF
USE within sixty (60) days after December 31 of each calendar
year. These progress reports shall include, but not be limited
to: progress on research and development, status of
applications for regulatory approvals, manufacturing,
marketing, importing, and sales during the preceding calendar
year, as well as plans for the present calendar year. PHS also
encourages these reports to include information on any of
LICENSEE'S public service activities that relate to the
LICENSED PATENT RIGHTS. If reported progress differs from that
projected in the COMMERCIAL DEVELOPMENT PLAN and BENCHMARKS,
LICENSEE shall explain the reasons for such differences. In
any such annual report, LICENSEE may propose amendments to the
COMMERCIAL DEVELOPMENT PLAN, acceptance of which by PHS may
not be denied unreasonably. LICENSEE agrees to provide any
additional information reasonably required by PHS to evaluate
LICENSEE'S performance under this AGREEMENT. LICENSEE may
amend the BENCHMARKS at any time upon written consent by PHS.
PHS shall not unreasonably withhold approval of any request of
LICENSEE to extend the time periods of this schedule if such
request is supported by a reasonable showing by LICENSEE of
diligence in its performance under the COMMERCIAL DEVELOPMENT
PLAN and toward bringing the LICENSED PRODUCTS to the point of
practical application as defined in 37 CFR 404.3(d). LICENSEE
shall amend the COMMERCIAL DEVELOPMENT PLAN and BENCHMARKS at
the request of PHS to address any LICENSED FIELDS OF USE not
specifically addressed in the plan originally submitted.
9.03 LICENSEE shall report to PHS the dates for achieving
Benchmarks specified in Appendix C
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and/or Appendix E and the FIRST COMMERCIAL SALE in each
country in the LICENSED TERRITORY within thirty (30) days of
such occurrence.
9.04 LICENSEE shall submit to PHS within sixty (60) days after each
calendar half-year ending June 30 and December 31 a royalty
report setting forth for the preceding half-year period the
amount of the LICENSED PRODUCTS sold or LICENSED PROCESSES
practiced by or on behalf of LICENSEE in each country within
the LICENSED TERRITORY, the NET SALES, and the amount of
royalty accordingly due. With each such royalty report,
LICENSEE shall submit payment of the earned royalties due. If
no earned royalties are due to PHS for any reporting period,
the written report shall so state. The royalty report shall be
certified as correct by an authorized officer of LICENSEE and
shall include a detailed listing of all deductions made under
Paragraph 2.10 to determine NET SALES made under Article 6 to
determine royalties due.
9.05 Royalties due under Article 6 shall be paid in U.S. dollars.
For conversion of foreign currency to U.S. dollars, the
conversion rate shall be the New York foreign exchange rate
quoted in The Wall Street Journal on the day that the payment
is due. All checks and bank drafts shall be drawn on United
States banks and shall be payable, as appropriate, to "CDC/
Technology Transfer" and shall reference the licensing
agreement number assigned by the Centers for Disease Control
and Prevention (CDC). All payments required by the AGREEMENT
shall be sent to the following address: Centers for Disease
Control and Prevention, Technology Transfer Office, 0000
Xxxxxxx Xxxx, X.X., (XX-X00), Xxxxxxx, Xxxxxxx 00000. Any loss
of exchange, value, taxes, or other expenses incurred in the
transfer or conversion to U.S. dollars shall be paid entirely
by LICENSEE. The royalty report required by Paragraph 9.04 of
this AGREEMENT shall accompany each such payment and a copy of
such report shall also be mailed to PHS at its address for
notices indicated on the Signature Page of this AGREEMENT.
9.06 LICENSEE shall be solely responsible for determining if any
tax on royalty income is owed outside the United States and
shall pay any such tax and be responsible for all filings with
appropriate agencies of foreign governments.
9.07 Interest and penalties may be assessed by PHS on any overdue
payments in accordance with the Federal Debt Collection Act.
The payment of such late charges shall not prevent PHS from
exercising any other rights it may have as a consequence of
the lateness of any payment.
9.08 All plans and reports required by this Article 9 and marked
"confidential" by LICENSEE shall, to the extent permitted by
law, be treated by PHS as commercial and financial information
obtained from a person and as privileged and confidential, and
any proposed disclosure of such records by the PHS under the
Freedom of Information Act, 5 U.S.C. Section 552 shall be
subject to the pre-disclosure notification requirements of 45
CFR Section 5.65(d).
PERFORMANCE
10.01 LICENSEE shall use its reasonable best efforts to bring the
License Products and Licensed Processes to Practical
Application. "Reasonable best efforts" for the purposes of
this provision shall include adherence to the COMMERCIAL
DEVELOPMENT PLAN at Appendix F and performance of the
BENCHMARKS at Appendix E. The efforts of a sublicensee shall
be considered the efforts of LICENSEE.
10.02 Upon the FIRST COMMERCIAL SALE, until the expiration of this
Agreement, LICENSEE shall use its reasonable best efforts to
make LICENSED PRODUCTS and LICENSED PROCESSES
Page 22 of 67
reasonably accessible to the United States public.
INFRINGEMENT AND PATENT ENFORCEMENT
11.01 PHS and LICENSEE agree to notify each other promptly of each
infringement or possible infringement of the LICENSED PATENT
RIGHTS, as well as any facts which may affect the validity,
scope, or enforceability of the LICENSED PATENT RIGHTS of
which either Party becomes aware.
11.02 In the event that a declaratory judgment action alleging
invalidity of any of the LICENSED PATENT RIGHTS shall be
brought against PHS, PHS agrees to notify LICENSEE that an
action alleging invalidity has been brought. PHS does not
represent that it will commence legal action to defend against
a declaratory action alleging invalidity. LICENSEE shall take
no action to compel the GOVERNMENT either to initiate or to
join in any such declaratory judgment action. Should the
GOVERNMENT be made a party to any such suit by motion or any
other action of LICENSEE, LICENSEE shall reimburse the
GOVERNMENT for any costs, expenses, or fees which the
GOVERNMENT incurs as a result of such motion or other action.
Upon LICENSEE's payment of all costs incurred by the
GOVERNMENT as a result of LICENSEE's joinder motion or other
action, these actions by LICENSEE will not be considered a
default in the performance of any material obligation under
this AGREEMENT.
NEGATION OF WARRANTIES AND INDEMNIFICATION
12.01 PHS offers no warranties other than those specified in Article
1.
12.02 PHS does not warrant the validity of the LICENSED PATENT
RIGHTS and makes no representations whatsoever with regard to
the scope of the LICENSED PATENT RIGHTS, or that the LICENSED
PATENT RIGHTS may be exploited without infringing other
patents or other intellectual property rights of third
parties.
12.03 PHS MAKES NO WARRANTIES, EXPRESSED OR IMPLIED, OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OF ANY
SUBJECT MATTER DEFINED BY THE CLAIMS OF THE LICENSED PATENT
RIGHTS OR TANGIBLE MATERIALS RELATED THERETO.
12.04 PHS does not represent that it will commence legal actions
against third parties infringing the LICENSED PATENT RIGHTS.
12.05 LICENSEE shall indemnify and hold PHS, its employees,
students, fellows, agents, and consultants harmless from and
against all liability, demands, damages, expenses, and losses,
including but not limited to death, personal injury, illness,
or property damage in connection with or arising out of a) the
use by or on behalf of LICENSEE, its sublicensees, directors,
employees, or third parties of any LICENSED PATENT RIGHTS, or
b) the design, manufacture, distribution, or use of any
LICENSED PRODUCTS, LICENSED PROCESSES or materials by
LICENSEE, or other products or processes developed in
connection with or arising out of the LICENSED PATENT RIGHTS.
LICENSEE agrees to maintain a liability insurance program
consistent with sound business practice.
TERM, TERMINATION, AND MODIFICATION OF RIGHTS
13.01 This AGREEMENT is effective when signed by all parties and
shall extend to the expiration of the last to expire of the
LICENSED PATENT RIGHTS unless sooner terminated as provided in
this
Page 23 of 67
Article 13.
13.02 In the event that LICENSEE is in default in the performance of
any material obligations under this AGREEMENT, including but
not limited to the obligations listed in Article 13.05, and if
the default has not been remedied within ninety (90) days
after the date of notice in writing of such default, PHS may
terminate this AGREEMENT by written notice, and pursue
outstanding amounts owed through procedures provided by the
Federal Debt Collection Act.
13.03 In the event that LICENSEE becomes insolvent, files a petition
in bankruptcy, has such a petition filed against it,
determines to file a petition in bankruptcy, or receives
notice of a third party's intention to file an involuntary
petition in bankruptcy, LICENSEE shall immediately notify PHS
in writing. Furthermore, PHS shall have the right to terminate
this AGREEMENT immediately upon LICENSEE's receipt of written
notice.
13.04 LICENSEE shall have a unilateral right to terminate this
AGREEMENT and/or any licenses in any country by giving PHS
sixty (60) days written notice to that effect.
13.05 PHS shall specifically have the right to terminate or modify,
at its option, this AGREEMENT, if PHS determines that the
LICENSEE: 1) is not executing the COMMERCIAL DEVELOPMENT PLAN
submitted with its request for a license and the LICENSEE
cannot otherwise demonstrate to PHS's satisfaction that the
LICENSEE has taken, or can be expected to take within a
reasonable time, effective steps to achieve practical
application of the LICENSED PRODUCTS or LICENSED PROCESSES; 2)
has not achieved the Benchmarks as may be modified under
Paragraph 9.02; 3) has willfully made a false statement of, or
willfully omitted, a material fact in the license application
or in any report required by the license agreement; 4) has
committed a material breach of a covenant or agreement
contained in the license; 5) is not keeping LICENSED PRODUCTS
or LICENSED PROCESSES reasonably available to the public after
commercial use commences; 6) cannot reasonably satisfy unmet
health and safety needs; or 7) cannot reasonably justify a
failure to comply with the domestic production requirement of
Paragraph 5.02 unless waived. In making this determination,
PHS will take into account the normal course of such
commercial development programs conducted with sound and
reasonable business practices and judgment and the annual
reports submitted by LICENSEE under Paragraph 9.02. Prior to
invoking this right, PHS shall give written notice to LICENSEE
providing LICENSEE specific notice of, and a ninety (90) day
opportunity to respond to, PHS's concerns as to the previous
items 1) to 7). If LICENSEE fails to alleviate PHS's concerns
as to the previous items 1) to 7) or fails to initiate
corrective action to PHS's satisfaction, PHS may terminate
this AGREEMENT.
13.06 PHS reserves the right according to 35 U.S.C. Section
209(f)(4) to terminate or modify this AGREEMENT if it is
determined that such action is necessary to meet requirements
for public use specified by federal regulations issued after
the date of the license and such requirements are not
reasonably satisfied by LICENSEE.
13.07 Within thirty (30) days of receipt of written notice of PHS'S
unilateral decision to modify or terminate this AGREEMENT,
LICENSEE may, consistent with the provisions of 37 CFR 404.11,
appeal the decision by written submission to the designated
PHS official. The decision of the designated PHS official
shall be the final agency decision. LICENSEE may thereafter
exercise any and all administrative or judicial remedies that
may be available.
13.08 Within ninety (90) days of termination of this AGREEMENT under
this Article 13, a final report shall be submitted by
LICENSEE. Any royalty payments, including those incurred but
yet paid (e.g., full minimum annual royalty), and those
related to patent expense, due to PHS
Page 24 of 67
shall become immediately due and payable upon termination or
expiration. If terminated under this Article 13, sublicensees
may elect to convert their sublicenses to direct licenses with
PHS pursuant to Paragraph 4.03. Unless otherwise specifically
provided for under this AGREEMENT, upon termination or
expiration of this AGREEMENT, LICENSEE shall return all
LICENSED PRODUCTS or materials included within the LICENSED
PATENT RIGHTS to PHS or provide PHS with certification of the
destruction thereof.
GENERAL PROVISIONS
14.01 Neither Party may waive or release any of its rights or
interests in this AGREEMENT except in writing. The failure of
the GOVERNMENT to assert a right hereunder or to insist upon
compliance with any term or condition of this AGREEMENT shall
not constitute a waiver of that right by the GOVERNMENT or
excuse a similar subsequent failure to perform any such term
or condition by LICENSEE.
14.02 This AGREEMENT constitutes the entire agreement between the
Parties relating to the subject matter of the LICENSED PATENT
RIGHTS, and all prior negotiations, representations,
agreements, and understandings are merged into, extinguished
by, and completely expressed by this AGREEMENT.
14.03 The provisions of this AGREEMENT are severable, and in the
event that any provision of this AGREEMENT shall be determined
to be invalid or unenforceable under any controlling body of
law, such determination shall not in any way affect the
validity or enforceability of the remaining provisions of this
AGREEMENT.
14.04 If either Party desires a modification to this AGREEMENT, the
Parties shall, upon reasonable notice of the proposed
modification by the Party desiring the change, confer in good
faith to determine the desirability of such modification. No
modification will be effective until a written amendment is
signed by the signatories to this AGREEMENT or their
designees.
14.05 The construction, validity, performance, and effect of this
AGREEMENT shall be governed by Federal law as applied by the
Federal courts in the District of Columbia.
14.06 All notices required or permitted by this AGREEMENT shall be
given by prepaid, first class, registered or certified mail
properly addressed to the other Party at the address
designated on the following Signature Page, or to such other
address as may be designated in writing by such other Party.
Notices shall be considered timely if such notices are
received on or before the established deadline date or sent on
or before the deadline date as verifiable by U.S. Postal
Service postmark or dated receipt from a commercial carrier.
Parties should request a legibly dated U.S. Postal Service
postmark or obtain a dated receipt from a commercial carrier
or the U.S. Postal Service. Private metered postmarks shall
not be acceptable as proof of timely mailing.
14.07 This AGREEMENT shall not be assigned by LICENSEE except a)
with the prior written consent of PHS, such consent not to be
withheld unreasonably; or b) as part of a sale or transfer of
substantially the entire business of LICENSEE relating to
operations which concern this Agreement. LICENSEE shall notify
PHS within ten (10) days of any assignment of this Agreement
by LICENSEE, and Licensee shall pay PHS, as an additional
royalty, one percent (1%) of the fair market value of any
consideration received for any assignment of this Agreement
within thirty (30) days of such assignment.
14.08 LICENSEE agrees in its use of any PHS-supplied materials to
comply with all applicable
Page 25 of 67
statutes, regulations, and guidelines, including PHS and DHHS
regulations and guidelines. LICENSEE agrees not to use the
materials for research involving human subjects or clinical
trials in the United States without complying with 21 CFR Part
50 and 45 CFR Part 46. LICENSEE agrees not to use the
materials for research involving human subjects or clinical
trials outside of the United States without notifying PHS, in
writing, of such research or trials and complying with the
applicable regulations of the appropriate national control
authorities. Written notification to PHS of research involving
human subjects or clinical trials outside of the United States
shall be given no later than sixty (60) days prior to
commencement of such research or trials.
14.09 LICENSEE acknowledges that it is subject to and agrees to
abide by the United States laws and regulations (including the
Export Administration Act of 1979 and Arms Export Control Act)
controlling the export of technical data, computer software,
laboratory prototypes, biological material, and other
commodities. The transfer of such items may require a license
from the cognizant Agency of the U.S. GOVERNMENT or written
assurances by LICENSEE that it shall not export such items to
certain foreign countries without prior approval of such
agency. PHS neither represents that a license is or is not
required or that, if required, it shall be issued.
14.10 LICENSEE agrees to xxxx the LICENSED PRODUCTS or their
packaging sold in the United States with all applicable U.S.
patent numbers and similarly to indicate "Patent Pending"
status.
14.11 By entering into this AGREEMENT, PHS does not directly or
indirectly endorse any product or service provided, or to be
provided, by LICENSEE whether directly or indirectly related
to this AGREEMENT. LICENSEE shall not state or imply that this
AGREEMENT is an endorsement by the GOVERNMENT, PHS, any other
GOVERNMENT organizational unit, or any GOVERNMENT employee.
Additionally, LICENSEE shall not use the names of NIH, CDC,
PHS, or DHHS or the GOVERNMENT or their employees in any
advertising, promotional, or sales literature without the
prior written consent of PHS.
14.12 The Parties agree to attempt to settle amicably any
controversy or claim arising under this AGREEMENT or a breach
of this AGREEMENT, except for appeals of modifications or
termination decisions provided for in Article 13. LICENSEE
agrees first to appeal any such unsettled claims or
controversies to the designated PHS official, or designee,
whose decision shall be considered the final agency decision.
Thereafter, LICENSEE may exercise any administrative or
judicial remedies that may be available.
14.13 Nothing relating to the grant of a license, nor the grant
itself, shall be construed to confer upon any person any
immunity from or defenses under the antitrust laws or from a
charge of patent misuse, and the acquisition and use of rights
pursuant to 37 CFR Part 404 shall not be immunized from the
operation of state or Federal law by reason of the source of
the grant.
14.14 Paragraphs 4.03, 8.01, 9.06-9.08, 12.01-12.05, 13.08, 13.09,
and 14.12 of this AGREEMENT shall survive termination of this
AGREEMENT.
SIGNATURES BEGIN ON NEXT PAGE
Page 26 of 67
PHS PATENT LICENSE AGREEMENT-NONEXCLUSIVE
SIGNATURE PAGE
For PHS:
_______________________________________ ________________
Signature of Authorized PHS Official Date
Xxxxxx Xxxxxxx, X.X., Ph.D.
Director
Technology Transfer Office
Centers for Disease Control and Prevention
Mailing Address for Notices: Technology Transfer Office
Centers for Disease Control and Prevention
0000 Xxxxxxx Xxxx, X.X.
Mailstop E-67
Xxxxxxx, Xxxxxxx 00000 XXX
For LICENSEE (Upon, information and belief, the undersigned expressly certifies
or affirms that the contents of any statements of LICENSEE made or referred to
in this document are truthful and accurate.):
by:
______________________________________ _______________
Signature of Authorized Official Date
Xxx Xxxxxx
------------
Printed Name
Title: President/ Advanced Illumination Technologies, Inc.
Official and Mailing Address for Notices: 000 Xxxxx Xxxxxxx Xxxxxx
Xxxxx Xxxx, Xxxxxxx 00000
Any false or misleading statements made, presented, or submitted to the
Government, including any relevant omissions, under this Agreement and during
the course of negotiation of this Agreement are subject to all applicable civil
and criminal statutes including Federal statutes 31 U.S.C.Sections 3801-3812
(civil liability) and 18 U.S.C. Section 1001 (criminal liability including
fine(s) and/or imprisonment).
Page 27 of 67
APPENDIX A--PATENT(S) OR PATENT APPLICATION(S)
PATENT(S) OR PATENT APPLICATION(S):
US Patent Application Serial No. 10/086,773entitled "Lighted Line,"
filed February 28, 2002.
Page 28 of 67
APPENDIX B--LICENSED FIELD(S) OF USE AND TERRITORY
Licensed Field(s) of Use:
All fields of use encompassed by Licensed Patent Rights.
Licensed Territory:
Worldwide
Page 29 of 67
APPENDIX C--ROYALTIES
ROYALTIES:
Licensee agrees to pay to PHS a noncreditable, nonrefundable license issue
royalty in the amount of five thousand dollars ($5,000.00 USD) payable within
thirty (30) days from the date of this Agreement becomes effective.
Licensee agrees to pay to PHS a nonrefundable minimum annual royalty as follows:
Two Thousand Five Hundred dollars ($2,500) due and payable on January 1, 2004;
Seven Thousand Five Hundred dollars ($7,500) due and payable on January 1, 2005;
Ten Thousand dollars ($10,000) on January 1, 2006; and
Fifteen Thousand dollars ($15,000) due and payable on January 1 of 2007 and each
succeeding year during the term of this Agreement.
Licensee agrees to pay PHS earned royalties on Net Sales by or on behalf of
Licensee as follows:
Royalty of three percent (3%) of Net Sales on Licensed Products for Licensed
Field of Use.
Licensee agrees to pay PHS sublicensing royalties as follows:
Fifty percent (50%) of all royalties, payments, fees, and income received from
sublicensees, but no less than one and one-half percent (1.5%).
Licensee agrees to pay PHS benchmark royalties as follows:
None
Page 30 of 67
APPENDIX D--Modifications
PHS and LICENSEE agree to the following modifications to the Articles and
Paragraphs of this AGREEMENT:
6.08 Delete
6.10 Delete.
13.01 Replace with the following:
This AGREEMENT is effective when signed by all parties and shall extend
for the shorter of twenty (20) years or to the expiration of the last
to expire of the LICENSED PATENT RIGHTS unless sooner terminated as
provided in this Article 13.
Page 31 of 67
APPENDIX E--BENCHMARKS AND PERFORMANCE
LICENSEE agrees to the following BENCHMARKS for its performance under this
AGREEMENT and, within thirty (30) days of achieving a BENCHMARK, shall notify
PHS that the BENCHMARK has been achieved.
NoneAPPENDIX F--COMMERCIAL DEVELOPMENT PLAN
Licensee shall expend reasonable efforts and resources to carry out the
development and marketing plan submitted with Licensee's application for a
license and to bring the Licensed Patent Rights to the point of practical
application as defined in Title 37 of the Code of Federal Regulations, Section
404.3(d). Licensee shall offer Licensed Products for sale within eighteen (18)
months of the Effective Date of this Agreement unless this period is extended by
mutual agreement of the parties. PHS shall not unreasonably withhold approval of
any request by Licensee to extend this period if such request is supported by
evidence of reasonable efforts by Licensee to bring the Licensed Patent Rights
to practical application, including any reasonable and diligent application for
regulatory approvals required by any Government agency.
Page 32 of 67
US PATENT APPLICATION SERIAL NO. 10/086,773
ENTITLED "LIGHTED LINE," FILED FEBRUARY 28, 0000
XXXXXX XXXXXX PATENT APPLICATION 20020126473
KIND CODE A1
XXXXX, XXXXXX X. ; ET AL. SEPTEMBER 12, 2002
Lighted line
ABSTRACT
A lighted line having an elongate flexible wire-formed bulbless light source is
encased in a supportive covering which may include a surrounding rope and
tubular sheathing. An electrical power source operatively connected to the
wire-formed light source is adapted to energize it to produce light which
radiates laterally of the line and emanates through the rope and tubular
sheathing.
Inventors: XXXXX, XXXXXX X.; (Clairton, PA) ; XXXXXX, XXXXX X.; (Clairton, PA)
Correspondence KLARQUIST XXXXXXXX, LLP
Name and ONE WORLD TRADE CENTER
Address: XXXXX 0000
000 XX XXXXXX XXXXXX
XXXXXXXX
XX
00000-0000
XX
Assignee Name THE GOVERNMENT OF THE UNITED STATES OF AMERICA AS
and Adress: REPRESENTED BY THE SECRETARY OF THE
DEPARTMENT OF
Serial No.: 086773
Series Code: 10
Filed: FEBRUARY 28, 2002
U.S. CURRENT CLASS: 362/84; 362/191; 362/391; 362/396
U.S. CLASS AT PUBLICATION: 362/84; 362/191; 362/391; 362/396
INTERN'L CLASS: F21V 009/16
CLAIMS
Page 33 of 67
1. A lighted line comprising an elongate flexible wire-formed light source
capable of generating laterally radiating light having an elongate flexible
translucent sheathing extending thereabout, an electrical power source
operatively connected to said light source adapted to energize said light
source, and an elongate flexible covering extending about said light source,
said covering constructed to permit light radiating from said light source to
pass therethrough.
2. The line of claim 1, wherein said light source comprises a bulbless lighted
wire.
3. The line of claim 1, wherein said light source comprises an
electroluminescent light source.
4. The line of claim 1, wherein said covering comprises an elongate rope through
which said light source extends axially.
5. The line of claim 4, wherein said rope comprises a braided rope having an
axially extending opening through which said light source extends.
6. The line of claim 4, wherein said covering further comprises an elongate
flexible translucent tube having a central bore through which said rope and
light source extend.
7. The line of claim 1, wherein said covering comprises an elongate flexible
translucent plastic tube having a central bore through which said light source
extends axially.
8. The line of claim 7, which further comprises an elongate rope extending
axially through said bore adjacent said light source.
9. The line of claim 1, wherein said light source comprises an
electroluminescent light source and said electrical power source comprises a
battery electrically connected through an inverter to said light source to
provide alternating current to said light source.
10. The line of claim 1, wherein said cover comprises an elongate flexible
braided rope through which said light source extends axially, said rope having
light passages extending between braided strands in the rope to permit light to
pass therethrough.
11. The line of claim 1, wherein the light source comprises multiple elongate
light source segments coupled together in end-to-end configuration with each
light source segment having a visual characteristic different from the segment
adjacent thereto.
12. The line of claim 11, wherein said visual characteristic is color.
13. The line of claim 11, wherein the light source segments comprise
electroluminescent light source segments which are electrically connected in
series to be energized by a single power source.
14. The line of claim 1, which further comprises a first connector coupled to
one end of the line and a second connector coupled to the other end of the line.
15. The line of claim 14, which further comprises a third connector mounted on
said line for sliding movement along the line intermediate the first and second
connectors.
16. The line of claim 14, wherein a connector comprises a snap lock connector
adapted to permit
Page 34 of 67
connecting a person to the line.
17. An elongate lighted lifeline comprising an elongate flexible wire-formed
light source capable of generating laterally radiating light having an elongate
flexible translucent sheathing extending thereabout, an electrical power source
operatively connected to said light source adapted to energize said light
source, an elongate flexible covering extending about said light source, said
covering constructed to permit light radiating from said light source to pass
therethrough, and a first connector coupled to one end of the covering and a
second connector coupled to the other end of the covering.
18. The lifeline of claim 17, wherein said covering comprises an elongate
braided rope having an axially extending opening through which said light source
extends.
19. The lifeline of claim 17, wherein said covering comprises an elongate
flexible translucent tube having a central bore through which said light source
extends.
20. The lifeline of claim 19, which further comprises an elongate rope extending
axially through said bore adjacent said light source.
21. The lifeline of claim 17, wherein said light source comprises an
electroluminescent light source and said electrical power source comprises a
battery electrically connected through an inverter to said light source to
provide alternating current to said light source.
22. The lifeline of claim 17, wherein said cover comprises an elongate flexible
braided rope through which said light source extends axially, said rope having
light passages extending between braided strands in the rope to permit light to
pass therethrough.
23. The lifeline of claim 17, wherein the light source comprises multiple
elongate light source segments coupled together in end-to-end configuration with
each light source segment having a visual characteristic different from the
segment adjacent thereto.
24. The lifeline of claim 23, wherein the visual characteristic is color.
25. The lifeline of claim 23, wherein the light source segments comprise
electroluminescent light source segments which are electrically connected in
series to be energized by a single power source.
26. The lifeline of claim 17, which further comprises a third connector mounted
on said line for sliding movement along the line intermediate the first and
second connectors.
27. The lifeline of claim 26, wherein a connector comprises a snap lock
connector adapted to permit connecting a person to the line.
28. The lifeline of claim 17, wherein said light source is capable of producing
light throughout a major portion of the length of the lifeline.
29. The lifeline of claim 17, wherein said light source is capable of producing
light in a substantially continuous line throughout a major portion of the
length of the lifeline.
DESCRIPTION
FIELD OF THE INVENTION
Page 35 of 67
[0001] The present invention relates to a lighted line, and more particularly to
a lighted line which has sufficient strength and durability that it may be used
in place of a working rope.
BACKGROUND OF THE INVENTION
[0002] There are many instances where it would be desirable to have an elongate
flexible line which is self-lighted, yet which has the strength and durability
found in a normal working rope.
[0003] Specific applications include use as a lifeline for interconnecting
people in environments where visibility may be impaired. Examples of such are
darkened tunnels, or smoke-filled buildings. In such instances multiple parties
may be attached to a single line at spaced intervals therealong. In the past,
where non-lighted lines have been used, they have been subject to tripping
hazards, entangling on obstacles, and other problems which cause difficult or
dangerous situations for the users.
[0004] Further, lighted lines having sufficient strength and durability also
could be used for other activities, such as for tethering or supporting in dark
or impaired visibility regions, for entertainment value, such as might be used
in jump ropes, and many other applications.
SUMMARY OF THE DISCLOSURE
[0005] An object of the present invention is to provide a novel self-lighted,
strong and durable elongate flexible line which may be used in applications
where a usual rope may have been used in the past.
[0006] A further object of the invention is the provision of an elongate
self-lighted line which may be segmented by different light characteristics,
such as colorations, along the length of the line to denote specific positional
arrangements.
[0007] Another object of the invention is the provision of a lighted line which
requires only small power requirements, such that it is adaptable for use in
environments where the use of lighted lines requiring higher electrical power
requirements would be unsafe or could produce hazards.
[0008] A still further object of the present invention is to provide an elongate
flexible line which produces light radiating outwardly generally from all sides
of the line, such that it is visible from any direction.
[0009] Yet another object of the present invention is to provide a novel lighted
lifeline which may be used in darkened or otherwise impaired visibility
environments for interconnecting multiple parties in an activity such that the
lifeline is visible to alleviate tripping and falling problems and to allow
personnel working in such environments, or around moving machinery in low light
areas, to be seen more easily.
[0010] These and other objects and advantages of the present invention will
become more fully apparent upon reading of the following description in light of
the following drawings.
BRIEF DESCRIPTION OF THE DRAWINGS
[0011] FIG. 1 is a general view of a number of parties interconnected to each
other in what could be a darkened, smoky, or other impaired visibility
environment, using a lighted line according to the present invention;
[0012] FIG. 2 is an enlarged view of the lighted line with attachments as it
might be used in the illustration of FIG. 1.;
Page 36 of 67
[0013] FIG. 3 is an enlarged perspective view of a section of the lighted line
with portions broken away to illustrate component parts of the line; and
[0014] FIG. 4 is an electrical circuit diagram illustrating schematically means
for powering the lighted line.
DETAILED DESCRIPTION
[0015] Referring to FIG. 1, a plurality of rescue, or other working team members
10, 12, 14, 16, 18 are illustrated in a potentially impaired visibility
environment, such as a mining tunnel 20. The members of the team are operatively
connected to an elongate connecting line 22. The lead and tail members of the
team 10 and 18, respectively, are connected generally directly to line 22, while
members 12, 14, and 16 are connected to line 22 via auxiliary lines, or straps,
26. As is best seen in FIG. 2, line 22 has double locking snap connectors 30
secured to its opposite ends, to which team members 10 and 18 may be connected
in a usual fashion. Other double locking snap connectors, such as that indicated
generally at 32, are mounted for sliding along line 22 by having line 22
extending through an eye 32a as illustrated in FIG. 3. Carabiners or other
styles of connectors indicated generally at 34 in FIG. 2 interconnect straps, or
auxiliary lines, 26 to connectors 32. The opposite sets of ends of lines 26 are
operatively connected to individual team members in a usual fashion. Swivel
connectors (not shown) also may be used in connecting team members to the line.
For example swivels could be connected between connectors 30 and line 22, and
between connectors 32 and lines 26.
[0016] In this working arrangement as indicated in FIG. 1, connectors 30 at
opposite ends of line 32 are connected to the lead and tail team members, while
intermediate members 12, 14, and 16, although generally positioned at spaced
intervals along line 22, are allowed to move longitudinally along the line due
to connectors 32 being slidable along line 22.
[0017] It has been found that when using the usual rope or line, it is difficult
for team members to maintain their position in relation to the line, they may
get entangled in the line, or trip over such and fall which may cause other team
members to fall, or the line may get entangled in other obstacles which presents
its own set of problems Further, if there is equipment working in the region and
the environment is dark, smoky, or visibility is impaired for some other reason,
it is difficult for others to see the workers and their line, again presenting
safety hazards.
[0018] In an effort to overcome these and other problems the present device uses
a self-lighted line for line 22.
[0019] Explaining further, and referring to FIG. 3, a section of line 22 is
shown on an enlarged scale. The line includes an elongate translucent plastic
outer tube or sheathing 40. Extending longitudinally through the center of tube
40 is an elongate braided rope 42. The rope 42 is so constructed that light may
pass therethrough also. In the illustrated embodiment the rope has openings
extending between braided strands through which light may pass. Further, the
strands of material in the braided rope may be of a material which allows light
to pass therethrough.
[0020] Extending longitudinally through the center of rope 42 is an elongate
flexible, bulbless, light wire 44. In the illustrated embodiment the light wire
may be a wire-formed electroluminescent light source in the form of an elongate
flexible cable which incorporates a pair of electrodes 46, 48 typically made of
copper wire. These wires are encased in a surrounding supporting sheath 50 which
may be a plastic covering. An electroluminescent material (not shown) is
interposed between electrodes 46, 48. The electroluminescent material may
typically comprise an electroluminophor powder disposed in a resin. Sheath 50 is
made of a flexible translucent material through which light may pass also. The
resulting elongated light wire 44 is compact, flexible, and is easily extended
through the center of braided rope 42. As is known in the art, the color, or
possibly other differentiation characteristics, of the light which may be
Page 37 of 67
emitted by the electroluminescent light source, or line, 44 is generally
dependent upon the type of electroluminophor powder selected or may be varied by
the characteristics of sheath 50.
[0021] The flexible elongate light source, or light wire, 44 may be of the type
disclosed in U.S. Xxx. No. 5,485,355 entitled "Electroluminescent Light
Sources." A source of light wire in the United States which has been found to
work well is Live Wire Enterprises at X.X. Xxx 000000, Xxxxxxxx, X.X. 00000.
[0022] A battery pack 60 is shown in FIG. 2 connected to line 22 as an
electrical source for operating light source, or wire, 44. As shown in greater
detail in FIG. 4, the battery 5 pack 60 includes a battery 62, a switch 64, and
an inverter 66. Terminals 68, 70 are operatively connected to electrodes 46, 48.
Light source, or wire, 44 includes a pair of terminals 68, 70 which are
connected to inverter 66. The inverter 66 also includes input lines 72, 74.
Input line 74 is connected directly to one side of battery 62, while line 72 is
connected to one side of switch 64. Closing of switch 64 operatively connects
battery 62 to inverter 66 which provides alternating current to the light
source, or wire, 44. When the switch is open, as shown in FIG. 4, no current
flows to light source 44, and thus no light is produced thereby. When switch 64
is closed current is provided to light source 44 and it is in a luminescent
condition to produce light.
[0023] The light source, or wire, 44 produces substantially continuous laterally
radiating light along a light emitting path, or region, which is coextensive
with the length of light source 44. In the illustrated embodiment, the full
length of line 22 would be lit by light source 44 extending longitudinally
therealong. Since sheath 50, rope 42, and tubing 40 all permit light to pass
therethrough, light emanating from light source 44 will be visible radiating
laterally along the length of the line.
[0024] In selected operations, it may be desirable to have different
longitudinal sections of a line show in different colors, or have other
different light characteristics. Thus, as illustrated in FIG. 1, each one
quarter length of line 22A, 22B, 22C, 22D, may be colored differently from other
quarters of the line. For example, one quarter length of the line may be blue,
the next quarter length orange, the next quarter length green, and the final
quarter length red. This is accomplished by using lines with different color
characteristics connected in series along line 22.
[0025] As is known in the art, the color of the light emitted by an
electroluminescent source depends on the type of electroluminophor powder used
and/or the characteristics of sheath 50, and thus lines of different colors may
be provided to be connected in series to produce sections of different color
along the line.
[0026] A specific embodiment of the invention which has been found to work well
to provide a lighted team lifeline 22 as shown in FIGS. 1-3 includes four
different colored flexible light wires 44 (from Live Wire Enterprises as noted
previously) connected in series and passing longitudinally through a 0.6 cm
diameter hollow single braided polypropylene rope 42 (336 kg tensile strength).
The light wire has four sections, each of which is approximately two meters in
length, and each in a different color, such as blue, orange, green, and red,
respectively from one end to the other end. The entire length of the braided
rope is sheathed with a clear polyvinyl chloride tubing 40. This line structure
has double locking snap connectors, such as that indicated at 30, connected
thereto by having the opposite end portions of line 22 doubled back and bound.
[0027] Battery pack 60 is connected to one end of the line as indicated
schematically in FIGS. 2 and 4. Battery 62 may be a 9 volt battery which will
power the light source throughout the full length of the line. The three movable
double locking snap connectors 32 are slidably mounted on the line intermediate
connectors 30 allowing intermediate team members to move freely along the line
to provide flexibility of motion to perform activities needed. When the switch
64 is closed, power from battery 62 causes line 22 to light. The multiple line
segments of different colors permit the team members to visualize a normal work
spacing along the line, but they can move as needed along the length of the
line.
Page 38 of 67
[0028] Although the lighted line has been discussed in detail above as being
used as a lighted line to which personnel may be attached, the line may also
serve other purposes. Since the line has good tensile strength due to the use of
the braided rope 42 and good durability due to the enclosing tube sheathing 40
it allows the line to be used in many other applications. Such other
applications where a normal rope would be used, but where a lighted line is
beneficial are use as support lines, tethers, leashes, such as may be used for
controlling animals in nighttime conditions, jump ropes, or for other
entertainment purposes.
[0029] The product is strong, durable, and versatile to provide a wide variety
of uses where a lighted line may be desirable.
[0030] While a preferred embodiment of the present invention has been described
in detail above, various modifications, alterations, and changes may be made
without departing from the spirit and scope of the invention as is defined in
the following claims.
* * * * *
Page 39 of 67
EXHIBIT B
GLOTECH INDUSTRIES, INC.
FINANCIAL STATEMENTS
AS OF MARCH 31, 2003
GLOTECH INDUSTRIES, INC.
[A Development Stage Company]
FINANCIAL STATEMENTS
MARCH 31, 2003
GLOTECH INDUSTRIES, INC.
[A Development Stage Company]
CONTENTS
PAGE
----
- Independent Auditors' Report . . . . . . . . . . . . . 1
- Balance Sheet, March 31, 2003. . . . . . . . . . . . . 2-3
- Statement of Operations, for the period from inception
on July 18, 2002 through March 31, 2003. . . . . . . . 4
- Statement of Stockholders' Equity, for the period
from inception on July 18, 2002 through March 31,
Page 40 of 67
2003. . . . . . . . . . . . . . . . . . . . . . . . . 5
- Statement of Cash Flows, for the period from inception
on July 18, 2002 through March 31, 2003. . . . . . . . . 6-7
- Notes to Financial Statements. . . . . . . . . . . . . . 8-14
INDEPENDENT AUDITORS' REPORT
Board of Directors
GLOTECH INDUSTRIES, INC.
Gainesville, Florida
We have audited the accompanying balance sheet of GloTech Industries, Inc. [a
development stage company] at March 31, 2003, and the related statements of
operations, stockholders' equity and cash flows for the period from inception on
July 18, 2002 through March 31, 2003. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements audited by us present fairly, in all
material respects, the financial position of GloTech Industries, Inc. [a
Page 41 of 67
development stage company] as of March 31, 2003, and the results of its
operations and its cash flows for the period from inception on July 18, 2002
through March 31, 2003, in conformity with generally accepted accounting
principles in the United States of America.
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As discussed in Note 9 to the financial
statements, the Company was only recently formed and has not yet been successful
in establishing profitable operations. These factors raise substantial doubt
about the ability of the Company to continue as a going concern. Management's
plans in regards to these matters are also described in Note 9. The financial
statements do not include any adjustments that might result from the outcome of
these uncertainties.
/s/ Xxxxxxxxx, Xxxxx & Xxxxx, P.C.
-----------------------------------
XXXXXXXXX, XXXXX & XXXXX, P.C.
May 14, 2003
Salt Lake City, Utah
GLOTECH INDUSTRIES, INC.
[A Development Stage Company]
BALANCE SHEET
ASSETS
March 31,
2003
--------
CURRENT ASSETS:
Cash . . . . . . . . . . . . . . . . . . . $ 133,595
Employee advances. . . . . . . . . . . . . 1,735
Inventory. . . . . . . . . . . . . . . . . 30,859
Page 42 of 67
----------
Total Current Assets . . . . . . . . . 166,189
----------
PROPERTY AND EQUIPMENT, net. . . . . . . . . 5,114
----------
OTHER ASSETS:
Definite-life intangible assets, net . . . 22,772
Deferred reorganization costs and advances 255,000
Security deposit . . . . . . . . . . . . . 500
----------
Total Other Assets . . . . . . . . . . 278,272
----------
$ 449,575
==========
GLOTECH INDUSTRIES, INC.
[A Development Stage Company]
BALANCE SHEET
LIABILITIES AND STOCKHOLDERS' EQUITY
March 31,
2003
----------
CURRENT LIABILITIES:
Accounts payable . . . . . . . . . . . . . $ 17,434
Accounts payable - related parties . . . . 36,000
Accrued expenses . . . . . . . . . . . . . 4,265
Loans payable - related party. . . . . . . 81,750
----------
Total Current Liabilities. . . . . . . 139,449
Page 43 of 67
STOCKHOLDERS' EQUITY:
Common stock, $.0001 par value,
50,000,000 shares authorized,
15,800,000 shares issued and outstanding 1,580
Capital in excess of par value . . . . . . 564,420
(Deficit) accumulated during the
development stage. . . . . . . . . . . . (155,874)
----------
410,126
Less: Subscription receivable. . . . . . . (100,000)
----------
Total Stockholders' Equity . . . . . . . 310,126
----------
$ 449,575
==========
The accompanying notes are an integral part of this financial statement.
GLOTECH INDUSTRIES, INC.
[A Development Stage Company]
STATEMENT OF OPERATIONS
From Inception
on July 18,
2002 Through
March 31, 2003
--------------
REVENUE. . . . . . . . . . . . . . . . $ 868
COST OF GOODS SOLD . . . . . . . . . . 413
Page 44 of 67
GROSS PROFIT . . . . . . . . . . . . . . 455
EXPENSES:
General and administrative 154,746
-------------
LOSS FROM OPERATIONS . . . . . . . . . . (154,291)
OTHER INCOME (EXPENSE):
Interest expense . . . . . . . . . . . (1,583)
-------------
LOSS BEFORE INCOME TAXES . . . . . . . . (155,874)
CURRENT TAX EXPENSE. . . . . . . . . . . -
DEFERRED TAX EXPENSE . . . . . . . . . . -
-------------
NET LOSS . . . . . . . . . . . . . . . . $ (155,874)
=============
LOSS PER COMMON SHARE. . . . . . . . . . $ (.02)
=============
The accompanying notes are an integral part of this financial statement.
Page 45 of 67
GLOTECH INDUSTRIES, INC.
[A Development Stage Company]
STATEMENT OF STOCKHOLDERS' EQUITY
FROM THE DATE OF INCEPTION ON JULY 18, 2002
THROUGH MARCH 31, 2003
Deficit
Accumulated
Common Stock Capital in During the
------------------------- Excess of Development Subscription
Shares Amount Par Value Stage Receivable
----------- ------------ ---------- ----------- ------------
BALANCE, July 18, 2002. . . . - $ - $ - $ - $ -
Common stock issued for
cash at $.0001 per
share, July 2002. . . . . . 10,000,000 1,000 - - -
Common stock issued for
license agreement
valued at $.05 per share,
November 2002. . . . . . . 200,000 20 9,980 - -
Common stock issued for
services rendered valued
at $.05 per share,
December 2002 . . . . . . . 100,000 10 4,990 - -
Common stock issued for
cash at $.10 per share,
Page 46 of 67
December 2002. . . . . . . 500,000 50 49,950 - -
Common stock issued for
cash at $.10 per share,
March, 2003 . . . . . . . 4,000,000 400 399,600 - -
Common stock issued for
subscription receivable
at $.10 per share,
March 2003 . . . . . . . . 1,000,000 100 99,900 - (100,000)
Net loss for the period ended
March 31, 2003. . . . . . . - - - (155,874) -
----------- ------------ ---------- ----------- ------------
BALANCE, March 31, 2003. . . 15,800,000 $ 1,580 $ 564,420 $ (155,874) $ (100,000)
=========== ============ ============ ============= ============
The accompanying notes are an integral part of this financial statement.
GLOTECH INDUSTRIES, INC.
[A Development Stage Company]
STATEMENT OF CASH FLOWS
From Inception
on July 18,
2002 Through
March 31, 2003
--------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss. . . . . . . . . . . . . . . . . . . . . . . $ (155,874)
Page 47 of 67
Adjustments to reconcile net loss to
net cash used by operating activities:
Depreciation and amortization . . . . . . . . . . . . . 580
Non-cash services for stock . . . . . . . . . . . . . . 5,000
Changes in assets and liabilities:
(Increase) in employee advances . . . . . . . . . . (1,735)
(Increase) in inventory . . . . . . . . . . . . . . (30,859)
Increase in accounts payable. . . . . . . . . . . . 17,434
Increase in accounts payable - related party. . . . 36,000
Increase in accrued expenses. . . . . . . . . . . . 4,265
--------------
Net Cash Provided (Used) by
Operating Activities. . . . . . . . . . . . . . . (125,189)
--------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment. . . . . . . . . . . . (5,649)
Payments for license agreement. . . . . . . . . . . . . . (12,817)
Payment of security deposit . . . . . . . . . . . . . . . (500)
--------------
Net Cash Provided (Used) by
Investing Activities . . . . . . . . . . . . . . (18,966)
--------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock. . . . . . . . . . 451,000
Proceeds from loans payable . . . . . . . . . . . . . . . 116,750
Repayment of loans payable. . . . . . . . . . . . . . . . (35,000)
Payment of deferred reorganization costs and advances (255,000)
--------------
Net Cash Provided by Financing
Activities. . . . . . . . . . . . . . . . . . . . 277,750
--------------
NET INCREASE IN CASH. . . . . . . . . . . . . . . . . . . . 133,595
CASH AT BEGINNING OF PERIOD . . . . . . . . . . . . . . . . -
Page 48 of 67
--------------
CASH AT END OF PERIOD . . . . . . . . . . . . . . . . . $ 133,595
==============
GLOTECH INDUSTRIES, INC.
[A Development Stage Company]
STATEMENT OF CASH FLOWS
[Continued]
From Inception
on July 18,
2002 Through
March 31, 2003
--------------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest . . . . . . . . . . . . . . . . . . . $ -
Income taxes . . . . . . . . . . . . . . . . . $ -
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
For the period from inception on July 18, 2002 through March 31, 2003:
During November 2002, the Company issued 200,000 shares of
stock in exchange for a license agreement valued at $10,000 or
$.05 per share.
During December 2002, the Company issued 100,000 shares of
stock in exchange for services rendered valued at $5,000 or
$.05 per share.
During March 2003, the Company issued 1,000,000 shares of
stock for a
Page 49 of 67
subscription receivable of $100,000 or $.10 per share.
The accompanying notes are an integral part of this financial statement.
GLOTECH INDUSTRIES, INC.
[A Development Stage Company]
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION - GloTech Industries, Inc. ("the Company") was organized under
the laws of the State of Delaware on July 18, 2002. The Company plans to
produce products based on electroluminescent technology. The Company has
not yet generated significant revenues from planned principal operations
and is considered a development stage company as defined in Statement of
Financial Accounting Standards ("SFAS") No. 7. The Company has, at the
present time, not paid any dividends and any dividends that may be paid in
the future will depend upon the financial requirements of the Company and
other relevant factors.
On March 31, 2003, the Company was acquired by R & R Ranching, Inc. ("R&R")
pursuant to an Agreement and Plan of Reorganization signed March 26, 2003.
The agreement called for R&R to issue up to 15,800,000 post-split shares of
common stock to the shareholders of the Company for at least 80% and up to
100% of the outstanding shares of the Company's common stock wherein the
Company became a wholly-owned subsidiary of R&R [See Note 2].
CASH AND CASH EQUIVALENTS - The Company considers all highly liquid debt
investments purchased with a maturity of three months or less to be cash
equivalents.
Page 50 of 67
CONCENTRATION OF CREDIT RISK - As of March 31, 2003, the Company has cash
balances in excess of federally insured amounts of approximately $34,000.
INVENTORY - Inventory is stated at the lower of cost or market using the
first-in, first-out method [See Note 3].
PROPERTY AND EQUIPMENT - Property and equipment are stated at cost.
Expenditures for major renewals and betterments that extend the useful
lives of property and equipment are capitalized, upon being placed in
service. Expenditures for maintenance and repairs are charged to expense as
incurred. Depreciation is computed using the straight-line method over the
estimated useful lives of the assets of three to five years.
WEBSITE COSTS - The Company has adopted the provisions of Emerging Issues
Task Force 00-2, "Accounting for Web Site Development Costs." Costs
incurred in the planning stage of a website are expensed as research and
development while costs incurred in the development stage are capitalized
and amortized over the life of the asset, estimated to be five years. As of
March 31, 2003, the Company has capitalized a total of $2,270 of website
costs. The Company did not incur any planning costs and did not record any
research and development costs for the period from inception on July 18,
2002 through March 31, 2003.
INTANGIBLE ASSETS - The Company accounts for its intangible assets in
accordance with Statement of Financial Accounting Standards No. 142,
"Goodwill and Other Intangible Assets".
REVENUE RECOGNITION - The Company's revenue comes from the sale of products
based on electroluminescent technology. The Company recognizes revenue upon
delivery of the product.
GLOTECH INDUSTRIES, INC.
[A Development Stage Company]
Page 51 of 67
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [CONTINUED]
ADVERTISING COSTS - Advertising costs, except for costs associated with
direct-response advertising, are charged to operations when incurred. The
costs of direct-response advertising are capitalized and amortized over the
period during which future benefits are expected to be received. The
Company expensed $26,227 in advertising costs during the period from
inception on July 18, 2002 through March 31, 2003.
RESEARCH AND DEVELOPMENT - Research and development costs are expensed as
incurred. The Company expensed $5,790 in research and development costs
during the period from inception on July 18, 2002 through March 31, 2003.
LOSS PER SHARE - The computation of loss per share is based on the weighted
average number of shares outstanding during the period presented in
accordance with Statement of Financial Accounting Standards No. 128,
"Earnings Per Share". [See Note 11]
STOCK BASED COMPENSATION - The Company accounts for its stock based
compensation in accordance with Statement of Financial Accounting Standards
No. 123 "Accounting for Stock-Based Compensation." This statement
establishes an accounting method based on the fair value of equity
instruments awarded to employees as compensation. However, companies are
permitted to continue applying previous accounting standards in the
determination of net income with disclosure in the notes to the financial
statements of the differences between previous accounting measurements and
those formulated by the new accounting standard. The Company has adopted
the disclosure only provisions of SFAS No. 123. Accordingly, the Company
has elected to determine net income using previous accounting standards.
ACCOUNTING ESTIMATES - The preparation of financial statements in
Page 52 of 67
conformity with generally accepted accounting principles in the United
States of America requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities, the disclosures
of contingent assets and liabilities at the date of the financial
statements, and the reported amount of revenues and expenses during the
reported period. Actual results could differ from those estimated.
RECENTLY ENACTED ACCOUNTING STANDARDS - Statement of Financial Accounting
Standards ("SFAS") No. 141, "Business Combinations", SFAS No. 142,
"Goodwill and Other Intangible Assets", SFAS No. 143, "Accounting for Asset
Retirement Obligations", SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets", SFAS No. 145, "Rescission of FASB
Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and
Technical Corrections", SFAS No. 146, "Accounting for Costs Associated with
Exit or Disposal Activities", SFAS No. 147, "Acquisitions of Certain
Financial Institutions - an Amendment of FASB Statements No. 72 and 144 and
FASB Interpretation No. 9", and SFAS No. 148, "Accounting for Stock-Based
Compensation - Transition and Disclosure - an Amendment of FASB Statement
No. 123", were recently issued. SFAS No. 141, 142, 143, 144, 145, 146, 147
and 148 have no current applicability to the Company or their effect on the
financial statements would not have been significant.
GLOTECH INDUSTRIES, INC.
[A Development Stage Company]
NOTES TO FINANCIAL STATEMENTS
NOTE 2 - AGREEMENT AND PLAN OF REORGANIZATION
On March 26, 2003, the Company entered into an agreement and plan of
reorganization whereby R & R Ranching, Inc. ("R&R") agreed to acquire up to
100% of the Company in a stock for stock exchange. The agreement called for
R&R to issue up to 15,800,000 post-dividend shares of common stock to the
shareholders of the Company for at least 80% and up to 100% of the
outstanding shares of the Company's common stock. The agreement also called
Page 53 of 67
for R&R to effect a 2-for-1 forward stock split (effected by dividend). The
agreement also provided that 18,800,000 post-dividend shares of R&R common
stock would be acquired and cancelled. The Company was required to raise a
minimum of $500,000 in a private offering to accredited investors prior to
closing. The Company has accounted for the acquisition as closing after the
close of business on March 31, 2003. Accordingly, no transactions have been
recorded in the accompanying financial statements as a result of the
Agreement and Plan of Reorganization, thus, the accompanying financial
statements reflect the condition of the Company just prior to acquisition.
Included in other assets as deferred reorganization costs and advances at
March 31, 2003, is $215,000 which the Company paid into escrow to cover the
cost of legal fees and to acquire the 18,800,000 shares of stock for
cancellation. Also included is $40,000 which was paid as a finder's fee in
connection with the acquisition.
NOTE 3 - INVENTORY
Inventory consists of the following at:
March 31,
2003
----------
Finished goods . . . $ 4,278
Raw materials. . . . 26,581
----------
Total Inventory. . $ 30,859
==========
The Company has estimated that no allowance for slow moving or obsolete
inventory was necessary at March 31, 2003.
NOTE 4 - PROPERTY AND EQUIPMENT
Property and equipment consist of the following at:
Page 54 of 67
March 31,
2003
----------
Office furniture and equipment. $ 3,379
Website costs.................. 2,270
----------
5,649
Less: Accumulated depreciation (535)
----------
Net Property and Equipment... $ 5,114
==========
Depreciation expense for the period from inception on July 18, 2002 through
March 31, 2003 was $535.
GLOTECH INDUSTRIES, INC.
[A Development Stage Company]
NOTES TO FINANCIAL STATEMENTS
NOTE 5 - DEFINITE-LIFE INTANGIBLE ASSETS
Definite-life intangible assets consist of the following at:
March 31,
2003
----------
License agreement with University
of Florida Research Foundation $ 21,511
Page 55 of 67
Patent application in process . . 1,306
----------
22,817
Less: Accumulated amortization. . (45)
----------
Net Intangible assets . . . . . $ 22,772
==========
The Company's definite-life intangible assets are being amortized over 20
years with no residual value. Amortization expense for the period from
inception on July 18, 2002 through March 31, 2003 was $45. The Company
estimates that its amortization expense for each of the next five years
will be approximately $1,150 per year.
The Company has an exclusive license agreement with sublicensing terms with
the University of Florida Research Foundation ("UFRF"). The license became
effective on May 30, 2002 and was previously held by other unrelated
entities but has since been assigned to the Company. The Company issued
200,000 shares of common stock valued at $10,000 or $.05 per share to UFRF
as consideration for the license agreement. The license relates to certain
patents, pending patents and trademarks for inventions owned by UFRF. The
license provides that a royalty be paid to UFTF based on 2% of the selling
price. There is no minimum royalty for the first year but there will be an
increasing annual minimum royalty beginning at $5,000 for the second year
and increasing annually to an $8,000 annual minimum royalty for the fifth
year and years thereafter. The Company will also reimburse UFTF for any
costs related to the preparation, filing, maintenance, etc. of the
trademarks and patents, which as of March 31, 2003 amounted to an
additional $11,511.
NOTE 6 - RELATED PARTY TRANSACTIONS
MANAGEMENT COMPENSATION - As of March 31, 2003, the Company has paid
consulting fees of $12,500 and salary of $35,000 to an officer/director of
the Company.
Page 56 of 67
ACCOUNTS PAYABLE - As of March 31, 2003, the Company has accrued consulting
fees of $36,000 payable to a shareholder of the Company for management
consultation services.
LOAN PAYABLE - The Company has received various loans from an entity
related to shareholders of the Company. At March 31, 2003, a total of
$116,750 had been loaned and the unpaid balance was $81,750. Accrued
interest at March 31, 2003 amounted to $1,583. The loan was subsequently
paid in full with interest at approximately 3.8% per annum.
GLOTECH INDUSTRIES, INC.
[A Development Stage Company]
NOTES TO FINANCIAL STATEMENTS
NOTE 7 - CAPITAL STOCK
COMMON STOCK - The Company has authorized 50,000,000 shares of $.0001 par
value common stock. During July 2002, in connection with its organization,
the Company issued 10,000,000 shares of its previously authorized but
unissued common stock. The shares were issued for $1,000 cash (or $.0001
per share).
During November 2002, the Company issued 200,000 shares of its previously
authorized but unissued common stock to UFRF in exchange for a license
agreement to use certain patents, pending patents, trademarks, etc. that
are related to inventions owned by UFRF. The shares were valued at $10,000,
or $.05 per share.
On December 1, 2002, the Company issued a total of 100,000 shares of its
previously authorized but unissued common stock to two consultants for
services rendered. The shares were valued at $5,000 or $.05 per share.
Page 57 of 67
On December 19, 2002, the Company issued 500,000 shares of its previously
authorized but unissued common stock for cash of $50,000 or $.10 per share.
During March 2003, the Company issued 5,000,000 shares of its previously
authorized but unissued common stock pursuant to a private offering at $.10
per share. At March 31, 2003, the Company had received proceeds of $400,000
and had recorded a subscription receivable for the remaining $100,000.
NOTE 8 - OPERATING LEASE
The Company has entered into a lease agreement with the Gainesville
Technology Enterprise Center ("GTEC") for office space of approximately 450
square feet and for the use of certain common areas. The lease has an
initial term of twelve months commencing on September 1, 2002. Following
the initial term, the lease will continue on a month to month basis. The
lease will extend no longer than 36 months from the commencement date
unless the landlord, in its sole discretion, chooses to extend the lease
for an additional 12 month period. Rent payments for the first year will be
$350 per month increasing to $413 for the second year and increasing to
$450 for the third year. The Company will also be billed separately for the
use of certain office services based upon usage. The total amounts paid
under this agreement for the period from inception on July 18, 2002 through
March 31, 2003 amounted to $3,195.
NOTE 9 - GOING CONCERN
The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles in the United States of America,
which contemplate continuation of the Company as a going concern. However,
the Company was only recently formed and has not yet been successful in
establishing profitable operations. These factors raise substantial doubt
about the ability of the Company to continue as a going concern. In this
regard, management is proposing to raise any necessary additional funds not
provided by operations through loans or through additional sales of its
common stock. There is no assurance that the Company will be successful in
Page 58 of 67
raising this additional capital or in achieving profitable operations. The
financial statements do not include any adjustments that might result from
the outcome of these uncertainties.
GLOTECH INDUSTRIES, INC.
[A Development Stage Company]
NOTES TO FINANCIAL STATEMENTS
NOTE 10 - INCOME TAXES
The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes". SFAS
No. 109 requires the Company to provide a net deferred tax asset/liability
equal to the expected future tax benefit/expense of temporary reporting
differences between book and tax accounting methods and any available
operating loss or tax credit carryforwards.
The Company has available at March 31, 2003 an unused operating loss
carryforward of approximately $163,000 which may be applied against future
taxable income and which expires in 2023. The amount of and ultimate
realization of the benefits from the operating loss carryforwards for
income tax purposes is dependent, in part, upon the tax laws in effect, the
future earnings of the Company, and other future events, the effects of
which cannot be determined. Because of the uncertainty surrounding the
realization of the loss carryforwards, the Company has established a
valuation allowance equal to the tax effect of the loss carryforwards and,
therefore, no deferred tax asset has been recognized for the loss
carryforwards. The net deferred tax asset is approximately $31,100 as of
March 31, 2003, with an offsetting valuation allowance at year end of the
same amount resulting in a change in the valuation allowance of
approximately $31,100 for the period from inception on July 18, 2002
through March 31, 2003.
Page 59 of 67
NOTE 11 - LOSS PER SHARE
The following data shows the amounts used in computing loss per share:
>From Inception
on July 18,
2002 Through
March 31, 2003
---------------
Loss from continuing operations
available to common shareholders
(numerator)..................... $ (155,874)
---------------
Weighted average number of
common shares outstanding used
in loss per share for the period
(denominator)................... 10,598,438
---------------
Dilutive loss per share was not presented, as the Company had no common
stock equivalent shares for all periods presented that would affect the
computation of diluted loss per share.
GLOTECH INDUSTRIES, INC.
[A Development Stage Company]
NOTES TO FINANCIAL STATEMENTS
NOTE 12 - COMMITMENTS
SALES AGENT AGREEMENTS - The Company has entered into agreements with its
Page 60 of 67
sales agents wherein the Company agrees to pay commissions to its sales
agents. The agreements provide for commissions of 10% of sales made by the
agents.
INDEPENDENT CONTRACTOR AGREEMENT - The Company has entered into an
independent contractor agreement with Product Design Solutions, Inc.
("PDS") wherein PDS would provide product design, development, and
prototyping services. The agreement has a term of one year and provides for
an hourly rate for any services that are rendered.
NOTE 13 - SUBSEQUENT EVENTS
On March 31, 2003, subsequent to the accompanying financial statements, the
Company completed its proposed reorganization with R & R Ranching, Inc.
[See Note 2].
In April 2003, the Company repaid loans from related parties totaling
$81,750 along with interest of $1,750.
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EXHIBIT C
ADVANCED ILLUMINATION TECHNOLOGIES, INC.
PLANT CITY, FLORIDA
---------------------------------------------------
FINANCIAL STATEMENTS
AND ACCOUNTANTS' COMPILATION REPORT
FOR THE INTERIM PERIOD JUNE 13, 2003 TO JUNE 19, 2003
CONTENTS
FINANCIAL STATEMENTS: PAGE
----
Report of Certified Public Accountants 1
Balance Sheet 2
Statement of Operations and Retained Earnings 3
Statement of Cash Flows 4
Notes to Financial Statements 5
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To the Board of Directors of
Advanced Illumination Technologies, Inc.
We have compiled the accompanying balance sheet of Advanced Illumination
Technologies, Inc. as of June 19, 2003 and the related statements of operations
and retained earnings and cash flows for the interim period then ended, in
accordance with Statements on Standards for Accounting and Review Services
issued by the American Institute of Certified Public Accountants.
A compilation is limited to presenting in the form of financial statements
information that is the representation of management. We have not audited or
reviewed the accompanying financial statements and, accordingly, do not express
an opinion or any other form of assurance on them.
Tampa, Florida
Ceritified Public Accountants
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ADVANCED ILLUMINATION TECHNOLOGIES, INC.
BALANCE SHEET
JUNE 19, 2003
ASSETS
ASSETS:
Cash $ 50,000
Technology License 5,000
----------
TOTAL ASSETS $ 55,000
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Accrued expenses 5,000
----------
STOCKHOLDERS' EQUITY:
Common stock, $1 par value; 1,000,000 shares authorized,
1,000 issued and outstanding $ 1,000
Additional paid in capital 49,000
Retained earnings -
----------
Total stockholders' equity 50,000
----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 55,000
==========
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ADVANCED ILLUMINATION TECHNOLOGIES, INC.
STATEMENT OF OPERATIONS AND RETAINED EARNINGS
FOR THE INTERIM PERIOD JUNE 13, 2003 TO JUNE 19, 2003
REVENUE $ -
EXPENSES: None
NET LOSS BEFORE INCOME TAX -
PROVISION FOR INCOME TAX None
-----
NET LOSS -
RETAINED EARNINGS, JUNE 13, 2003 -
-----
RETAINED EARNINGS, JUNE 19, 2003 $ -
=====
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ADVANCED ILLUMINATION TECHNOLOGIES, INC.
STATEMENT OF CASH FLOWS
FOR THE INTERIM PERIOD JUNE 13, 2003 TO JUNE 19, 2003
OPERATING ACTIVITIES:
Net income None
Adjustments to reconcile net loss to net cash
provided by operating activities -
Technology license (5,000)
Accrued expenses 5,000
--------
Net cash used by operating activities -
--------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from capital contributions 50,000
--------
Net cash provided by financing activities 50,000
--------
NET INCREASE IN CASH 50,000
CASH AT JUNE 13, 2003 -
--------
CASH AT JUNE 19, 2003 $ 50,000
========
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ADVANCED ILLUMINATION TECHNOLOGIES, INC.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE INTERIM PERIOD JUNE 13, 2003 TO JUNE 19, 2003
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
FORMATION -
The Corporation was formed under the laws of the State of Florida
on June 13 , 2003 and Utek Corporation owns 100% of the outstanding
common stock.
ACCOUNTING BASIS -
The financial statements were prepared on the accrual basis of
accounting.
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