EQUITY AGREEMENT
THIS EQUITY AGREEMENT (the "Agreement") is made effective as of the
1st day of November, 2002 by and between the University of Florida
Research Foundation, Inc. (hereinafter called "UFRF"), a nonstock,
nonprofit Florida corporation, and GloTech Industries, Inc. (hereinafter
called "Licensee" or "GloTech"), a corporation organized and existing
under the laws of Delaware.
WHEREAS, UFRF and Licensee have entered into certain License
Agreements with respect to certain inventions owned by UFRF or in which
UFRF has a joint, undivided interest;
WHEREAS, as an accommodation to Licensee, UFRF is willing to accept
shares of common stock of Licensee (the "Shares") in lieu of charging
Licensee certain fees under the License Agreements.
NOW THEREFORE, in consideration of the mutual covenants and
agreements set forth below, the parties covenant and agree as follows:
Section 1. Definitions
For the purpose of this Agreement, the Appendix A definitions shall apply.
Capitalized terms used and not otherwise defined herein shall have the
meanings assigned thereto in the License Agreements.
Section 2. Issuance of Shares to UFRF; Closing Deliveries
A. Issuance of Shares
(1) On the Effective Date of the License Agreements, Licensee
shall issue to UFRF 200,000 Shares, being equal to two percent
(2%) of the total number of issued and outstanding Shares of
Licensee on the Effective Date prior to such issuance calculated
on a fully diluted basis, and Licensee shall deliver, or cause
to be delivered, to UFRF a stock certificate, duly signed by
appropriate officers of Licensee and issued in UFRF's name,
representing all of the Shares required to be issued to UFRF.
(2) All Shares shall be fully-paid and non-assessable upon
their issuance to UFRF. UFRF's execution of this Agreement and
the License Agreements shall be deemed full consideration for
the issuance of the Shares, and no additional consideration for
such Shares shall be due from UFRF. No Shares shall be subject
to any restrictions on their transfer other than the
restrictions specified in Appendix C hereto.
B. Closing Deliveries
On the Effective Date, in addition to the certificates
evidencing the Shares, Licensee shall deliver to UFRF the
following:
(1) a certificate from Licensee, dated as of the Effective Date
and signed by the Secretary or an Assistant Secretary of
Licensee, certifying that the attached copies of the Certificate
of Incorporation, Bylaws of Licensee, and resolutions of the
Board of Directors of Licensee approving the License Agreements,
this Agreement and the transactions contemplated thereby, are
all true, complete and correct and that such resolutions remain
unamended and in full force and effect.
(2) an opinion of Xxxxx X. Xxxxxx, counsel to Licensee, dated
as of the Effective Date and substantially in the form of
Appendix F hereto.
Section 3. Representations and Warranties
A. Representations and Warranties by Licensee
Licensee represents and warrants to UFRF that:
(1) Licensee is a duly organized and validly existing
corporation under the laws of the State of Delaware adequate
power and authority to conduct the business in which it is now
engaged or currently proposed to be engaged, and Licensee is
duly qualified to do business as a foreign corporation and is in
good standing in such other states or jurisdictions as is
necessary to enable it to carry on its business or own its
properties.
(2) There are no actions, suits, or proceedings pending or
threatened against or affecting Licensee, its officers or
directors in their capacity as such, its properties, or its
patents in any court or before any governmental or
administrative agency, which can have any material adverse
effect on the business as now conducted or as currently proposed
to be conducted, on the properties, the financial condition, or
income of Licensee, or the transactions contemplated by this
Agreement or the License Agreements and Licensee is not in
default under any order or judgment of any court or governmental
or administrative agency.
(3) Licensee is not a party to any agreement or instrument, or
subject to any charter, bylaw, or other corporate restrictions
materially adversely affecting its business and operations,
present or prospective, or its property, assets, or condition,
financial or otherwise.
(4) Licensee is not in default or breach in the performance,
observance, or fulfillment of any of the obligations, covenants,
or conditions contained in any bond, debenture, note, or other
evidence of indebtedness or any contract or other agreement of
Licensee.
(5) This Agreement has been duly authorized, executed, and
delivered on behalf of Licensee and constitutes the valid and
binding agreement of Licensee, enforceable in accordance with
its terms, and Licensee has full power and lawful authority to
issue, sell, and repurchase the Shares on the terms and
conditions herein set forth.
(6) Consummation of the transactions contemplated by this
Agreement in compliance with provisions of this Agreement will
not result in any breach of any of the terms, conditions, or
provisions of, or constitute a default under, or result in the
creation of any lien, charge, or encumbrance on, any property or
assets of Licensee pursuant to any indenture, mortgage, deed of
trust, agreement, corporate charter, bylaws, contract, or other
instrument to which Licensee is a party or by which Licensee may
be bound or any law, rule, regulation, qualification, license,
order or judgment applicable to Licensee or any of its property.
(7) Licensee is in compliance with all federal, state and local
environmental laws and there are no conditions currently
existing or contemplated which are likely to subject Licensee to
damages, penalties, injunctive relief, removal costs, remedial
costs or cleanup costs under any such laws or assertions
thereof.
(8) Attached hereto as Appendix B and hereby made a part hereof
are the Articles of Incorporation (including any amendments
thereto) and the Bylaws (including any amendments thereto) of
Licensee in effect on the date hereof.
(9) Pursuant to its Articles of Incorporation, Licensee is
authorized to issue 50,000,000 Shares, of which 10,000,000
Shares are issued and outstanding. All issued and outstanding
Shares are, and the Shares issuable to UFRF will be, validly
issued, fully paid and nonassessable, and are not subject to any
preemptive rights. There are no other authorized or outstanding
Equity Securities of any class, kind, or character, and there
are no outstanding subscriptions, options, warrants, or other
agreements, or commitments obligating Licensee to issue any
additional shares of its capital stock of any class, or any
options or rights with respect thereto, or any securities
convertible into any shares of stock of any class. No person
has any preemptive rights, rights of first refusal, "tag along"
rights, rights of co-sale or any similar rights with respect to
the issuance of the Shares contemplated hereby.
(10) Attached hereto as Appendix C and hereby made a part hereof
is a list of all restrictions on the transfer of any Shares or
other securities of Licensee and all agreements between any
shareholders or convertible debt holders of Licensee regarding
the valuation, voting or transfer of any Shares or other
securities of Licensee.
(11) Attached hereto as Appendix D and hereby made a part hereof
are the unaudited financial statements of Licensee for the year
ended December 31, 2002. These financial statements are true
and complete and are in accordance with the books and records of
Licensee. As of the date of the most recent financial
statements provided to UFRF under this Agreement, Licensee has
no material liabilities, absolute or contingent, that are not
reflected in such financial statements except obligations
incurred in the ordinary course of business and the License
Agreements.
(12) Since the date of the most recent financial statements
provided to UFRF under this Agreement, there has been no: (a)
material adverse change in the condition, financial or
otherwise, of Licensee other than changes in the ordinary course
of business; (b) damage or loss, whether or not covered by
insurance, materially and adversely affecting Licensee's
properties or business taken as a whole; and (c) declaration or
setting aside, or payment of any dividend or other distribution
in respect of the stock of Licensee or any direct or indirect
redemption, purchase or other acquisition of such shares.
(13) Licensee has timely filed all tax returns and reports
required to be filed by it. Licensee has timely paid all taxes,
interest and penalties required to be paid pursuant to said
returns or otherwise required to be paid by it.
(14) Attached hereto as Appendix E is a true and complete record
of (i) issued and outstanding Shares as of the Effective Date
and the holders thereof, and (ii) Shares issuable under options,
warrants or other convertible equity or debt instruments
outstanding as of the Effective Date, whether vested or non-
vested, restricted or unrestricted, the holders thereof, the
exercise price or conversion price therefor and an outline of
all other material terms with respect thereto.
B. Representations and Warranties by UFRF
UFRF represents and warrants to Licensee that:
(1) UFRF is acquiring the Shares for investment for its own
account and not with a view to resale or distribution within the
meaning of the Securities Act, and UFRF does not intend to
divide its participation with other or to resell or otherwise
dispose of all or any part of the Shares without registration
under the Securities Act, except to Licensee or unless and until
it determines at some future date that changed circumstances,
not now in its contemplation, make such disposition advisable.
(2) This Agreement has been duly authorized, executed, and
delivered on behalf of UFRF and constitutes the valid and
binding agreement of UFRF, enforceable in accordance with its
terms, and UFRF has full power and lawful authority to acquire
the Shares on the terms and conditions herein set forth.
C. Survival and Timing of Warranties
The warranties and representation made in this Section 3 shall
survive the closing of any issuance of shares to UFRF. The
warranties and representations made in this Section 3 shall be
true and correct as of the date of this Agreement and as of the
date the Shares are issued to UFRF.
Section 4. Miscellaneous Covenants
A. Financial Statements and Other Information
As long as UFRF owns any Equity Securities, Licensee shall
promptly provide to UFRF such Financial Statements, amendments
to or restatements of its Articles of Incorporation or Bylaws,
stock transfer restrictions and agreements among shareholders
with respect to the valuation, transfer or voting of Shares and
amendments thereto as may be effected from time to time, and
such other information respecting the business, affairs, and
financial condition of Licensee as UFRF may reasonably request.
Financial Statements shall be provided within the time that such
Financial Statements are required to be provided to holders of
preferred stock of Licensee. UFRF's representatives may visit
and inspect any of the properties, books and information of
Licensee, upon reasonable notice, during business hours and in a
manner not disruptive to the business of the Licensee.
B. Issuance of Shares/Options to Affiliates/Founders
Licensee shall not issue any Equity Securities (including
Shares) to any of the shareholders of Licensee listed on
Appendix A attached hereto (the "Founders"), Affiliate thereof
or Affiliate of Licensee for less than the fair market value of
that security. Licensee shall have the burden of proving that
the consideration to be paid for any such Equity Securities
equals the fair market value of such Equity Securities issued.
C. Piggyback Registration Rights
UFRF shall be granted the same incidental or piggyback
registration rights that are granted to the purchasers of Series
A Common Stock of Licensee and shall be made a party to the
registration rights agreement with the holders of such Series A
Common Stock.
D. Rule 144 Reporting
With a view to making available to UFRF the benefits of certain
rules and regulations of the Commission which may permit UFRF to
sell securities of Licensee to the public without registration,
Licensee agrees to:
(1) Make and keep public information available, as those terms
are understood and defined in Rule 144 under the Securities Act,
at all times following the effective date of the first
registration under the Securities Act filed by Licensee for an
offering of its securities to the general public;
(2) Use its best efforts to file with the Commission in a
timely manner all reports and other documents required of
Licensee under the Securities Act and the Exchange Act at any
time following registration of any of its securities under the
Securities Act or Exchange Act; and
(3) So long as UFRF owns any Shares, furnish to UFRF forthwith
upon request a written statement by Licensee as to its
compliance with the reporting requirements of Rule 144 (at any
time following the effective date of the first registration
statement filed by Licensee for an offering of its securities to
the general public), and of the Securities Act and the Exchange
Act following registration of any of its securities under the
Securities Act or Exchange Act, a copy of the most recent annual
or quarterly report of Licensee, and such other reports and
documents so filed as UFRF may reasonably request in availing
itself of any rule or regulation of the Commission allowing UFRF
to sell any such securities without registration.
E. Transfer or Assignment of Registration Rights
The rights to cause Licensee to register the securities granted
to UFRF hereunder may be transferred or assigned by UFRF to a
transferee or assignee of any of UFRF's Shares; provided,
however, that such transfer or assignment of Shares was
permitted under this Agreement.
Section 5. Termination
A. Unless terminated sooner by either party as provided below, this
Agreement shall terminate on the date that UFRF, after having been
issued Shares hereunder, no longer owns any Equity Securities. If
this Agreement terminates automatically as provided in this Section
5.A, the License Agreements shall remain in effect according to the
terms specified therein.
B. If Licensee at any time fails to timely issue Shares to UFRF on
a timely basis, or otherwise commits a material breach of this
Agreement, or if any of the representations or warranties made by
Licensee are untrue in any material respect as of any date on which
they are required to be true and correct, and Licensee fails to
remedy any such breach or default within thirty (30) days after
written notice thereof by UFRF, UFRF may, at its option, terminate
either this Agreement, the License Agreements, or all of them.
Section 6. Assignability
Except as set forth in Section 4.E, neither party may assign its rights or
obligations under this Agreement, except that Licensee may assign this
Agreement in connection with the sale of all or substantially all of the
assets or stock of the Licensee, whether by merger, acquisition or
otherwise, if the successor assumes all of the Licensee's obligations
hereunder.
Section 7. Miscellaneous
This Agreement shall be construed exclusively in accordance with the
internal laws of the State of Florida.
Section 8. Notices
Any notice required to be given pursuant to the provisions of this
Agreement shall be in writing and shall be deemed to have been given at
the earlier of the time when actually received as a consequence of any
effective method of delivery, including but not limited to hand delivery,
transmission by telecopier, or delivery by a professional courier service
or the time when sent by certified or registered mail addressed to the
party for whom intended at the address below or at such changed address as
the party shall have specified by written notice, provided that any notice
of change of address shall be effective only upon actual receipt:
to UFRF:
University of Florida Research Foundation, Inc.
219 Xxxxxxx Hall
XX Xxx 000000
Xxxxxxxxxxx, Xxxxxxx 00000-0000
Attention: President
with a copy to:
Office of Technology Licensing
University of Florida
3rd Floor Xxxxxx Xxxx
XX Xxx 000000
Xxxxxxxxxxx, Xxxxxxx 00000-0000
Attention: Director
to Licensee:
Xxxxx Xxxxxxxxxxx, CEO
GloTech Industries, Inc.
0000 XX Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxxx, Xxxxxxx 00000
with a copy to:
Xxxxx X. Xxxxxx
Suite 1450, The Xxxxxx Building
000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Section 9. Integration
This Agreement constitutes the full understanding between the parties with
reference to the subject matter hereof, and no statements or agreements by
or between the parties, whether orally or in writing, except as provided
for elsewhere in this Section 9, made prior to or at the signing with
respect to the subject matter hereof, shall vary or modify the written
terms of this Agreement. Neither party shall claim any amendment,
modification, or release from any provisions of this Agreement by mutual
agreement, acknowledgment or otherwise, unless such mutual agreement is in
writing, signed by the other party, and specifically states that it is an
amendment to this Agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement on the dates indicated below.
"UFRF"
/s/ UNIVERSITY OF FLORIDA RESEARCH FOUNDATION, INC.
"LICENSEE"
GLOTECH INDUSTRIES, INC.
By: /s/ Xxxxx Xxxxxxxxxxx
APPENDIX A
DEFINITIONS IN EQUITY AGREEMENT
"Shares" shall mean shares of Licensee's common stock, $.0001 par value
per share.
(2) "License Agreements" shall mean the license agreements entered into
between UFRF and Licensee of even date herewith pertaining to each
Licensed Patent Group, as such term is defined in each License Agreement.
(3) "Affiliate" shall mean any person who is related by blood or marriage
to any person or entity who owns more than twenty percent of the issued
and outstanding shares of Licensee or to any officer, director, or
employee of Licensee or any entity in which any such person has a direct
or indirect beneficial ownership interest or for which any such person
serves as a director, officer or employee.
(4) "Financial Statements" shall mean a balance sheet, and the related
statements of earnings, stockholders' equity and cash flow as of the end
of the last fiscal year that has been completed when the statements are to
be provided to UFRF and a balance sheet and income statement as of the end
of the last fiscal quarter, which financial statements shall be in the
form and delivered at the time that such financial statements are
delivered to holders of preferred stock of Licensee. Financial Statements
shall be true and complete and prepared in accordance with the books and
records of Licensee and with generally accepted accounting principles.
(5) "Equity Securities" shall mean the Shares, any other capital stock of
Licensee (including preferred shares), and any securities of Licensee that
are convertible into capital stock of Licensee or that carry a right to
subscribe to or acquire capital stock of Licensee.
(6) "Register," "Registered," and "Registration" shall refer to a
registration effected by preparing a filing a Registration Statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such Registration Statement.
(7) "Proportionate Share Percentage" with respect to UFRF, for purposes
of Section 4.B, shall mean the percentage derived by dividing the
aggregate Shares then owned by UFRF by the total number of issued and
outstanding Shares on an as-converted basis at such time.
(8) "Securities Act" shall mean the Securities Act of 1933, as amended,
or any similar federal statute, and the rules and regulations of the
Securities and Exchange Commission issued under such act, as they each
may, from time to time, be in effect.
(9) "Commission" shall mean the Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act.
(10) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
APPENDIX B
ARTICLES OF INCORPORATION AND BYLAWS
APPENDIX C
STOCK RESTRICTIONS
1.1 Restrictive Legend. Each certificate representing (i) the Shares and
(ii) any other securities issued in respect of the Shares upon any stock
split, stock dividend, recapitalization, merger, consolidation or similar
event, shall (unless otherwise permitted by the provisions of Section 1.2
below) be stamped or otherwise imprinted with a legend in substantially
the following form (in addition to any legend required under applicable
state securities laws).
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
APPLICABLE STATE SECURITIES LAWS. THESE SECURITIES HAVE BEEN ACQUIRED
FOR INVESTMENT AND NOT WITH A VIEW TO DISTRIBUTION OR RESALE, AND MAY
NOT BE SOLD, MORTGAGED, PLEDGED, HYPOTHECATED OR OTHERWISE
TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH
SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND ANY
APPLICABLE STATE SECURITIES LAWS, OR THE AVAILABILITY OF AN EXEMPTION
FROM THE REGISTRATION PROVISIONS OF THE SECURITIES ACT OF 1933, AS
AMENDED, AND APPLICABLE STATE SECURITIES LAWS.
Each holder consents to Licensee's making a notation on its records
and giving instructions to any transfer agent of the Shares in order to
implement the restrictions on transfer established in this Section 1.1.
Such legend shall be removed by Licensee from any certificate at such time
as the holder of the Shares represented by the certificate satisfies the
requirements of Rule 144(k) under the Securities Act, provided that Rule
144(k) as then in effect does not differ substantially from Rule 144(k) as
in effect as of the date of this Agreement and other applicable
regulations do not then require such legend to be included on the Shares,
and provided further that Licensee has received from the holder a written
representation that (i) such holder is not an affiliate of Licensee and
has not been an affiliate during the preceding three months, (ii) such
holder has beneficially owned the Shares represented by the certificate
for a period of at least two years, (iii) such holder otherwise satisfies
the requirements of Rule 144(k) as then in effect with respect to such
Shares, and (iv) such holder will submit the certificate for any such
Shares to Licensee for reapplication of the legend at such time as the
holder becomes an affiliate of Licensee or otherwise ceases to satisfy the
requirements of Rule 144(k) as then in effect.
1.2 Notice of Proposed Transfers. The holder of each certificate
representing Shares by acceptance thereof agrees to comply in all respects
with the provisions of this Section 1.2. Prior to any proposed sale,
assignment, transfer or pledge of Shares, unless there is in effect a
registration statement under the Securities Act covering the proposed
transfer, the holder thereof shall give written notice to the Licensee of
such holder's intention to effect such transfer, sale, assignment or
pledge in sufficient detail, and shall be accompanied at such holder's
expense by a written opinion of legal counsel who shall, and whose legal
opinion shall, be reasonably satisfactory to the Licensee addressed to the
Licensee, to the effect that the proposed transfer of the Shares may be
effected without registration under the Securities Act. Each certificate
evidencing the Shares transferred as above provided shall bear, except if
such transfer is made pursuant to Rule 144, the appropriate restrictive
legend set forth in Section 1.1 above, except that such certificate shall
not bear such restrictive legend if in the opinion of counsel for such
holder and Licensee such legend is not required in order to establish
compliance with any provisions of the Securities Act. Prior to any
transfer of the Shares in accordance with this Section 1.2, such
transferee shall execute and deliver a form of agreement reasonably
acceptable to the Licensee wherein the transferee agrees to be bound by
the provisions of this Appendix C.
1.3 "Market Stand-Off" Agreement. Each holder hereby agrees that
during a period, not to exceed 180 days, following the effective date of
the initial, effective registration statement of Licensee filed under the
Securities Act, it shall not, to the extent requested by Licensee and any
underwriter, sell, pledge, transfer, make any short sale of, loan, grant
any option for the purchase of, or otherwise transfer or dispose of (other
than to donees who agree to be similarly bound) any common stock of
License held by it at any time during such period except common stock
included in such registration; provided, however, that all other
stockholders with registration rights and all officers and directors of
Licensee enter into similar agreements on substantially similar terms. If
requested by any underwriter, each holder shall execute and deliver to
such underwriters an agreement in form reasonably acceptable to such
underwriter evidencing the obligation described in this Section 1.4.
In order to enforce the foregoing covenant, Licensee may impose stop-
transfer instructions with respect to the Shares of each holder (and the
shares or securities of every other person subject to the foregoing
restriction) until the end of such period.
1.4 Transfer to Competitor. No holder shall transfer any Shares to
a competitor of Licensee, as determined by the Board of Directors of
Licensee in good faith. This provision shall terminate after the closing
of the sale of Equity Securities of Licensee registers pursuant to a
registration statement filed under the Securities Act.
APPENDIX D
FINANCIAL STATEMENTS
APPENDIX E
LIST OF STOCKHOLDERS AND OPTIONHOLDERS
See attached copies of certificates representing all shares issued as of
November 15, 2002, the Effective Date of this Agreement, including 200,000
shares issued to the University of Florida Research Foundation, Inc.
There are no options, warrants or other instruments convertible to equity
or debt outstanding as of the Effective Date.
APPENDIX F
FORM OF OPINION
