UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
ABAKAN INC.
(Name of Issuer)
Shares of Common Stock, $0.0001 Par Value
(Title of Class of Securities)
00258J 107
(CUSIP Number)
Robert Miller
2665 S. Bayshore Drive, Suite 450, Miami, Florida 33133
Telephone: (786) 206-5368
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
November 13, 2014
(Date of Event Which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the
subject of this Schedule 13D, and is filing this schedule because of §§240.13d-1(e), 240.13d-1(f) or
240.13d-1(g), check the following box.o
Note: Schedules filed in paper format shall include a signed original and five copies of the schedule,
including all exhibits. See Rule 13d-7(b) for other parties to whom copies are to be sent.
* The remainder of this cover page shall be filled out for a reporting person's initial filing on this form
with respect to the subject class of securities, and for any subsequent amendment containing information
which would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed to be "filed" for the
purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the
liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the
Notes).
CUSIP NO. 00258J 107
1.
NAMES OF REPORTING PERSONS.
UP Scientech Materials Corp.
2.
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS)
(a)o
(b)o
3.
SEC USE ONLY
4.
SOURCE OF FUNDS (SEE INSTRUCTIONS)
WC
5.
CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) o
6.
CITZENSHIP OR PLACE OF ORGANIZATION
Taiwan
7.
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH
SOLE VOTING POWER
7,500,000
_____________________________________________________________________________________
_____
8.
SHARED VOTING POWER
0
9.
SOLE DISPOSITIVE POWER
7,500,000
_____________________________________________________________________________________
_____
10.
SHARED DISPOSITIVE POWER
0
11.
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
7,500,000 (see Item 5)
12.
CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
(SEE INSTRUCTIONS)o
2
13.
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 9.4% of the Issuer’s
outstanding shares of common stock (based on 79,501,088 shares outstanding as of January 23,
2015).
14.
TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
CO
ITEM 1. SECURITY AND ISSUER
This statement on Schedule 13D (the “Statement”) relates to shares of the common stock, $0.0001 per
share (the “Common Stock”), of Abakan Inc., a Nevada corporation (the "Issuer"). The principal offices
of the Issuer are located at 2665 S. Bayshore Drive, Suite 450, Miami, Florida 33133.
ITEM 2. IDENTITY AND BACKGROUND
(a) UP Scientech Materials Corp. is referred to herein as the "Reporting Person".
(b) The address or principal business office of the Reporting Person is: No. 5-3 Jiangua Road, Guanyin
Township, Taiwan 32844.
(c) The Reporting Person was incorporated in Taiwan.
(d) The principal business of the Reporting Person is the manufacture of wear-resistant clad plate.
(d) During the last five years, the Reporting Person has not been convicted in criminal proceedings.
(e) During the last five years, the Reporting Person was not a party to any civil proceeding of a judicial or
administrative body of competent jurisdiction and is not subject to any judgment, decree or final order
enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities
laws or finding any violation with respect to such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
On November 13, 2014, the Reporting Person acquired 7,500,000 shares of the Issuer for cash
consideration of $3,000,000 sourced from working capital.
ITEM 4. PURPOSE OF TRANSACTION
The Reporting Person acquired shares of Common Stock of the Issuer for investment purposes in
connection with a Letter Agreement dated November 13, 2014. The terms of the Letter Agreement
included the appointment of Kevin Chen to the Issuer’s board of directors as a representative of the
Reporting Person and a commitment to establish joint venture companies for the manufacture and sale of
the Issuer’s products.
The Reporting Person intends from time to time to review its investment in the Issuer on the basis of
various factors, including the Issuer’s business, financial condition, results of operations and prospects,
general economic and industry conditions, the securities markets in general and those for shares of
Common Stock of the Issuer in particular, as well as other developments and other investment
opportunities. Based upon such review, the Reporting Person will take such actions in the future as it may
deem appropriate in light of the circumstances existing from time to time, which may include further
acquisitions of shares of the Common Stock of the Issuer or disposal of some or all of the shares of
3
Common Stock of the Issuer currently owned by the Reporting Person, either in the open market or in
privately negotiated transactions.
In addition, the Reporting Person may engage in communications with one or more shareholders, officers
or directors of the Issuer, including discussions regarding the Issuer’s operations and strategic direction
and ideas that, if effected, could result in, among other things: (a) the acquisition by the Reporting Person
of additional securities of the Issuer, or the disposition of securities of the Issuer; (b) an extraordinary
corporate transaction, such as a merger, reorganization or liquidation, involving the Issuer or any of its
subsidiaries; (c) a sale or transfer of a material amount of assets of the Issuer or any of its subsidiaries; (d)
changes in the present board of directors or management of the Issuer; (e) a material change in the present
capitalization or dividend policy of the Issuer; (f) any other material change in the Issuer’s business or
corporate structure; (g) changes in the Issuer’s certificate of incorporation or bylaws or other actions
which may impede the acquisition of control of the Issuer by any person; (h) causing any class of the
Issuer’s securities to be delisted from a national securities exchange or to cease to be authorized to be
quoted in an inter-dealer quotation system of a registered national securities association; (i) a class of
equity securities of the Issuer becoming eligible for termination of registration pursuant to Section
12(g)(4) of the Act; or (j) any action similar to those enumerated above.
Except to the extent that the foregoing may be deemed to be a plan or proposal, the Reporting Person
currently has no plans or proposals that relate to or would result in any of the actions specified in clause
(a) through (j) of Item 4 of this Statement. The Reporting Person reserves the right, based on all relevant
factors and subject to applicable law, at any time and from time to time, to review or reconsider its
position, change its purpose, take other actions (including actions that could involve one or more of the
types of transactions or have one or more of the results described in paragraphs (a) through (j) of Item 4
of this Statement) or formulate and implement plans or proposals with respect to any of the foregoing.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
(a) The Reporting Person owns an aggregate of 7,500,000 shares (representing 9.4%) of the issued and
outstanding common stock of the Issuer.
(b) The Reporting Person has the sole power to vote or direct the vote, and sole power to dispose of or
direct the disposition of the shares reported above in this Item 5(a).
(c) The Reporting Person has not effected any transaction in the shares of the Issuer during the past 60
days except the acquisition of 7,500,000 shares of the Issuer’s common stock from the Issuer.
(d) No person other than the Reporting Person, has the right to receive or the power to direct the receipt of
dividends from, or the proceeds from the sale of, the shares reported above in this Item 5(a).
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS
WITH RESPECT TO SECURITIES OF THE ISSUER
4
The Reporting Person entered into a Shareholders Voting Agreement with Robert Miller, Maria Maz, The
Thomas and Mario Miller Family Irrevocable Trust and The Tarija Foundation (collectively the
“Shareholders”) on November 11, 2014, pursuant to which the Shareholders agreed to vote in favor of the
election of a nominee of the Reporting Person to the Issuer’s board of directors at any shareholders
meeting called for that purpose. The term of the Shareholders Voting Agreement expires on the earliest of
the expiration of a three year commitment to so vote commencing on the date a nominee of the Reporting
Person is appointed as a director of the Issuer and the date on which the Reporting Person’s ownership of
the Issuer falls below six percent on a fully diluted basis. Mr. Kevin Chen was appointed to the Issuer’s
board of directors on November 13, 2014, as a nominee of the Reporting Person. Other than as reflected
above, the Reporting Person does not have any contracts, arrangements, understandings or relationships
with respect to the securities of the Issuer.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
99.1
Letter Agreement dated November 13, 2014.
99.2
Shareholders Voting Agreement dated November 11, 2014.
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set
forth in this statement is true, complete and correct.
January 30, 2015
Date
UP SCIENTECH MATERIALS CORP.
/s/ Chih-Huang
By: Chih-Huang
Title Chairman
Attention: Intentional misstatements or omissions of fact
constitute Federal criminal violations (See 18 U.S.C. 1001).
5
EXHIBIT INDEX
Exhibit
Description of Exhibit
Letter Agreement dated November 13, 2014 (furnished herewith)
Voting Agreement dated November 11, 2014 (furnished herewith)
6
Exhibit 99.1
November 13, 2014
Mr. Robert Miller
Director and CEO
Abakan Inc.
2665 S. Bayshore Drive,
Suite 450, Miami,
Florida 33133
U.S.A.
Dear Mr. Miller:
UP Scientech Materials Corp. ("UP Scientech") is pleased to present Abakan Inc. ("Abakan") this letter
agreement regarding its proposed capital injection and business cooperation with respect to Abakan's and
its subsidiary MesoCoat, Inc.'s ("MesoCoat's") PCompP™ and CermaClad™ technologies. For purposes
of this letter, Abakan and MesoCoat shall be hereinafter jointly referred to as the "Company."
For purposes of this letter:
a) "PCompP™" shall mean coatings employing nano-structured ceramic-metal composites formed with a
nano-composite core and binder coating.
b) "CermaClad™" shall mean the use of a high intensity light source captured in a reflector to rapidly fuse
CRA, metal and ceramic coatings on steel pipe, plate, bar and other surfaces.
c) "CermaClad™ for Plate" shall mean CermaClad™ for coating steel plates.
d) "CermaClad™ for Other Applications" shall mean CermaClad™ for coating surfaces other than steel
plates such as steel pipes and bars.
e) "CermaClad™ for Pipes" shall mean CermaClad™ for coating steel pipes.
f) References to PCompP™ and CermaClad™ shall include future Company products and technologies
which fall within these definitions but shall not include other products or technologies.
We believe that this strategic alliance of UP Scientech and the Company constitutes a compelling
opportunity to commercialize and expand the markets for the unique and valuable technology developed
by the Company.
UP Scientech welcomes the prospect of working with the Company in order to consummate a mutually
beneficial transaction. This letter sets forth the basis upon which UP Scientech proposes, subject to
execution of definitive agreements, receipt of internal/regulatory approvals and satisfaction of certain other
conditions as described herein or in the definitive agreements, to proceed with such a transaction.
Exhibit 99.1
1.
UP Scientech Purchase of Abakan Shares
UP Scientech and Abakan intend to enter into a share subscription agreement (the "SSA"), pursuant to
which UP Scientech shall purchase 7,500,000 voting common restricted shares of Abakan (constituting
9.52% of the total issued and outstanding voting shares of Abakan on a fully diluted basis, post the issuance
of the 7,500,000 shares to UP Scientech or 8.95% of the fully diluted total shares post the issuance of the
7,500,000 shares) at a price of US$0.40 per share for an aggregate purchase price of US$3,000,000.
The Company proposes to use the proceeds from this share subscription agreement as outlined below.
Description of Use of Proceeds
Amount Raised
$3,000,000
MesoCoat G&A, Taxes & Utilities
450,000
MesoCoat PComP Capex & Consumables
925,000
MesoCoat Cermaclad Budget
220,000
MesoCoat AP (including amounts owed to Powdermet)
810,000
Alberta
35,000
Abakan G&A, AP
560,000
TOTAL
$3,000,000
2.
Director Appointment
(a)
On the closing of the SSA, Abakan's 1) Board of Directors shall appoint one individual, tabled by
UP Scientech, to serve as a member of Abakan's Board of Directors for a term that shall end the
earlier of 3 years from the date of appointment or the date on which UP Scientech's fully diluted
ownership of Abakan falls below 6.0%; 2) over the duration of the term in which the director tabled
by UP Scientech serves on Abakan's Board of Directors, Robert Miller, Maria Maz, The Thomas
and Mario Miller Family Trust and the Tarija Foundation (the "Shareholders") shall agree to vote
in favour of the director tabled by UP Scientech at any annual or special meeting of Abakan's
shareholders called for the election of directors; and 3) Abakan shall cause the Shareholders to
issue a letter prior to or simultaneously upon execution of the SSA, undertaking that they shall vote
in favour of the director tabled by UP Scientech at any annual or special meeting of Abakan's
shareholders called for the election of directors during the term mentioned above. Such appointed
director shall have all rights that a non-executive director normally has, including but not limited
to discussion and approval at Board of Directors and committee meetings of the budgets that are
present by management, and the right to receive biweekly cash flow statements.
(b)
Subsequent to the closing of the SSA, if the term of service of the individual, tabled by UP
Scientech, as a director expires, or such individual is not elected as a director at an annual or special
meeting of Abakan's shareholders, then Abakan's Board of Directors shall permit UP Scientech to
designate an observer to attend regularly scheduled or special meetings of the Board of Directors
and committee meetings, having access to any documents available to a non-executive director,
including but not limited to, the budgets that are presented by management and biweekly cash flow
statements, so long as UP Scientech holds no less than 6% of the voting shares of Abakan.
3.
Information to be Provided to UP Scientech
(a)
The Company shall further provide to UP Scientech necessary information and reasonable
Exhibit 99.1
resources and assign necessary people to assist UP Scientech to understand and evaluate the
strength and edge of the PComPTM products, including but not limited to providing product
manuals, brochures and information, delivering sufficient product samples for testing, and
furnishing training of UP Scientech's sales and technical representatives.
(b)
The Company has furnished UP Scientech with its plan to expand the production capacity of
PComPTM products to 18 tons (1.5 tons per month), and shall provide monthly updates of the
execution status to UP Scientech for its information.
4.
Agreement to Enter into Additional Transactions
UP Scientech and the Company intend to enter into the following additional transactions described in this
Section 4. The parties anticipate that to facilitate the proposed transactions, both parties need to further
negotiate, finalize, execute and deliver the following definitive agreements (containing customary
representations, warranties, covenants, indemnities and conditions to closing, as appropriate):
(a)
PCompP™ Exclusive Sales Agency Agreement. An exclusive agency agreement (the "Sales
Agency") for the PComPTM products between UP Scientech and the Company for the sale of
PComPTM products in Japan, Korea, China and Taiwan ("Jurisdictions").
(i)
UP Scientech shall earn a sales agency commission equal to 10% of the revenue generated
from the sale of PComPTM products in the Jurisdictions during the first year of the term of
the Sales Agency and a percentage to be negotiated for the period following the first year
of the Sales Agency.
(ii)
The Sales Agency shall have a three-year term, starting from the date on which the
Company can deliver to UP Scientech PComP™ W104, W333 and W611, PComP™ T45
and T48, PComP™ M144 and MB05™.
(iii)
Upon expiration of the initial three years, the Sales Agency Agreement shall be
automatically renewable for an additional one year renewal term upon the election of UP
Scientech, subject to satisfaction of the Minimum Sales Volumes for the initial three years
as shown on Exhibit A. The terms and conditions for renewal after such additional one
year renewal term shall be determined by the parties hereto.
(b)
Exclusive PComp™ License. After UP Scientech exercises its right to establish a PComP™ Joint
Venture and upon such PComP™ JV Company being duly incorporated under Section 5, the
Company shall grant to the PComP™ JV Company an indefinite exclusive non-royalty bearing
technology license agreement to use PCompP™ technology to engineer, build, own, operate and
maintain a plant to manufacture PComPTM powder products in Taiwan for sale in the Jurisdictions.
(c)
Exclusive CermaClad™ for Plate License. (i) Upon the CermaClad™ for Plate JV Company in
Taiwan being duly incorporated under Section 5 and/or (ii) after UP Scientech exercises its right to
establish a CermaClad™ for Plate Joint Venture Outside of the Jurisdictions (defined as those
territories outside of the Jurisdictions) and upon the CermaClad™ for Plate JV Company Outside
Exhibit 99.1
of the Jurisdictions being duly incorporated under Section 5, the Company shall grant to such
CermaClad™ for Plate JV an indefinite exclusive non-royalty bearing license agreement to use
CermaCladTM technology (i) to engineer, build, own, operate and maintain a production plant to
coat plate in Taiwan for sale globally (or globally but excluding the jurisdiction where such plant
is located if the CermaClad™ for Plate Joint Venture Outside of the Jurisdictions is established)
and/or (ii) to engineer, build, own, operate and maintain a production plant to coat plate Outside of
the Jurisdictions for sale in the jurisdiction where such plant is located unless otherwise agreed by
the parties, as applicable.
(d)
Exclusive CermaClad™ for Pipe License. After UP Scientech exercises its right to establish a
CermaClad™ for Pipe Joint Venture, and upon such CermaClad™ for Pipe JV Company being
duly incorporated under Section 5, the Company shall grant to the CermaClad™ for Pipe JV an
indefinite exclusive non-royalty bearing license agreement to use CermaCladTM technology to
engineer, build, own, operate and maintain a production plant to coat pipe in Taiwan for sale in the
Jurisdictions.
5.
Agreement to Establish Joint Ventures
UP Scientech and the Company shall establish a CermaClad™ for Plate Joint Venture in Taiwan. UP
Scientech shall have the right to require the Company to establish another up to two joint venture companies
in Taiwan and one joint venture company Outside of the Jurisdictions (together with the CermaClad™ for
Plate Joint Venture in Taiwan, "JV Companies") to build and operate plants to manufacture PComPTM and
CermaCladTM products. The primary terms of the joint ventures shall be as follows:
PComPTM JV Plant
(a)
UP Scientech shall have two years to exercise its right to require the Company to establish a
PComP™ Joint Venture from the date the Company completes the expansion of its production
capacity of PComP™ to 18 tons per year (1.5 tons per month) and notifies UP Scientech in writing
(the "Initial Date") of the increased production capacity.
(b)
UP Scientech shall subscribe to 80% of the shares of the PComP™ JV Company in cash, which
subscription shall pay for 100% of the startup costs associated the PComP™ JV Company plant,
and the Company shall license the know-how and technology to the PComP™ JV Company in
exchange for 20% of the shares of the PComPTM JV Company.
(c)
The plant can only be built in Taiwan.
(d)
UP Scientech shall contribute operating expertise, sales channels for the product and assist the
PComP™ JV Company to protect PComPTM related technology.
(e)
The PComPTM JV Company shall be licensed to sell PComPTM products only within the
Jurisdictions, unless otherwise agreed by the Company.
(f)
UP Scientech and the Company shall in good faith negotiate, agree on and execute a joint venture
agreement and the license agreement within three months of UP Scientech's exercise of its right to
form a PComP™ Joint Venture.
CermaCladTM Plate JV Plant - Taiwan
Exhibit 99.1
(a)
Within two (2) months after this letter is executed by Abakan, UP Scientech and the Company shall
in good faith and with best efforts (i) complete the financial projection and the timeline to establish
the CermaClad™ for Plate Joint Venture - Taiwan and the timeline to engineer, build, own, operate
and maintain the CermaClad™ Plate JV Company Plant – Taiwan, (ii) negotiate, agree on and
execute a joint venture agreement and the license agreement, and (iii) proceed with establishment
of the CermaClad™ for Plate Joint Venture - Taiwan.
(b)
UP Scientech shall subscribe to 51% of the shares of the CermaClad™ for Plate JV Company -
Taiwan in cash, which subscription shall pay for 51% of the startup costs associated with the
CermaClad™ Plate JV Company Plant – Taiwan, and the Company shall license without royalty
the know-how and technology to the CermaClad™ for Plate JV Company – Taiwan and shall pay
for 49% of the startup costs associated with the CermaClad™ Plate JV Company Plant – Taiwan
in exchange for 49% of the shares of the CermaClad™ Plate JV Company - Taiwan.
(c)
The plant can only be built in Taiwan.
(d)
UP Scientech shall contribute operating expertise, sales channels for the product and assist the
CermaClad™ for Plate JV Company - Taiwan to protect CermaCladTM Plate related technology.
(e)
The CermaClad™ Plate JV Company - Taiwan shall be licensed to sell CermaCladTM Plate products
globally, until such time, if ever, that UP Scientech exercises its right to require the Company to
establish the CermaClad™ for Plate Joint Venture – Outside of the Jurisdictions, and upon then the
CermaClad™ Plate JV Company – Taiwan's license to sell CermaCladTM Plate products would be
excluding the jurisdiction where such CermaClad™ Plate JV Company –Outside of the
Jurisdictions is located, unless otherwise agreed upon by UP Scientech and the Company.
CermaCladTM Plate JV Plant – Outside of the Jurisdictions
(a)
UP Scientech may exercise its right to require the Company to establish the CermaClad™ for Plate
Joint Venture – Outside of the Jurisdictions until the later of two years from the Initial Date or from
the date that the Company opens its first CermaClad™ Plate plant.
(b)
UP Scientech shall subscribe to 49% of the shares of the CermaClad™ for Plate JV Company–
Outside of the Jurisdictions in cash, which subscription shall pay for 49% of the startup costs
associated with the CermaClad™ for Plate JV Plant– Outside of the Jurisdictions, and the Company
shall license without royalty the know-how and technology to the CermaClad™ for Plate JV
Company – Outside of the Jurisdictions and pay for 51% of the startup costs associated with the
CermaClad™ for Plate JV Plant– Outside of the Jurisdictions in exchange for 51% of the shares of
the CermaClad™ Plate JV Company – Outside of the Jurisdictions.
(c)
UP Scientech shall contribute operating expertise, sales channels for the product and assist the
CermaClad™ for Plate JV Company – Outside of the Jurisdictions to protect CermaCladTM Plate
related technology.
(d)
The CermaClad™ Plate JV Company – Outside of the Jurisdictions shall be licensed to sell
CermaCladTM Plate products in the jurisdiction where such CermaClad™ Plate JV Company –
Exhibit 99.1
Outside of the Jurisdictions is located, unless otherwise agreed by UP Scientech and the Company.
(e)
UP Scientech and the Company shall in good faith negotiate, agree on and execute a joint venture
agreement and the license agreement within three months of UP Scientech's exercise of its right to
form a CermaClad™ for Plate Joint Venture – Outside of the Jurisdictions.
CermaCladTM Pipe JV Plant
(a)
UP Scientech may exercise its right to require the Company to establish the CermaClad™ for Pipe
Joint Venture until the later of two years from the Initial Date or from the date that the Company
opens its first commercial four-line CermaClad™ pipe plant.
(b)
UP Scientech shall subscribe to 40% shares of the CermaClad™ for Pipe JV Company in cash,
which subscription shall pay for 50% of the start up costs associated with the CermaClad™ for
Pipe JV Plant, and the Company shall subscribe to 50% of the shares of the CermaClad™ for Pipe
JV Company in cash, which subscription shall pay for 50% of the start up costs associated with the
CermaClad™ Pipe JV Plant and license the know-how and technology to the CermaClad™ for
Pipe JV Company in exchange for another 10% shares of the CermaClad™ for Pipe JV Company.
(c)
The plant can only be built in Taiwan.
(d)
UP Scientech shall contribute operating expertise, sales channels for the product and assist the
CermaClad™ for Pipe JV Company to protect CermaCladTM Pipe related technology.
(e)
The CermaClad™ for Pipe JV Company shall be licensed to sell CermaCladTM Pipe products only
in the Jurisdictions, unless otherwise agreed to by the Company.
(f)
UP Scientech and the Company shall in good faith negotiate, agree on and execute a joint venture
agreement and the license agreement within three months of UP Scientech's exercise of its right to
form the CermaClad™ Pipe Joint Venture.
6.
Ownership of Intellectual Property
Each party shall own its background intellectual property.
Any new improvements, derivatives or new methods to produce or deliver PCompP™ or CermaClad™
products or services developed by any of the respective JV Companies (“New IPs”) shall be owned equally
by UP Scientech and the Company and assigned to a new company, to be formed by the parties hereto with
equal equity ratio, and licensed to the respective JV Companies for no additional consideration. The new
IPs shall not be assigned, entrusted, licenced, pledged, or abandoned without the consent of both parties.
Both parties hereto shall have complete access to all JV facilities, equipment, books and records at all times.
1.1 7. Notices
1.2 Any and all notices or other communications or deliveries required or permitted to be provided
hereunder shall be in writing and shall be deemed given and effective on the earliest of (a) the date of
transmission, if such notice or communication is delivered via facsimile (provided the sender receives a
machine-generated confirmation of successful transmission) at the facsimile number specified in this
Section prior to 6:30 p.m. (Florida time) on a Business Day, (b) the next Business Day after the date of
Exhibit 99.1
transmission, if such notice or communication is delivered via facsimile at the facsimile number specified
in this Section on a day that is not a Business Day or later than 6:30 p.m. (Florida time) on any Business
Day, (c) the Business Day following the date of mailing, if sent by U.S. nationally recognized overnight
courier service, or (d) upon actual receipt by the party to whom such notice is required to be given. The
address for such notices and communications shall be as follows:
If to Abakan:
Abakan, Inc.
2665 S. Bayshore Drive, Suite 450
Miami, Florida 33133
Attn: Robert Miller
Telephone: 1 786 206-5368
Fax: 1 305 487-7481
Email: robert.miller@abakaninc.com
If to UP Scientech:
UP Scientech Materials Inc.
No. 5-3, Jianguo Road
Guanyin Township
Taoyuan County, 32844
Taiwan R.O.C.
Attn: George Chang
Telephone: 886 3 4833690
Fax: 886 3 4834193
Email: George@upplate.com
8.
Arbitration
Any controversies incurred or related to this letter of intent shall be resolved in an amicable way, provided
that any controversies that cannot be resolved shall be submitted to the Hong Kong International Arbitration
Centre in Hong Kong for arbitration.
9.
Due Diligence
From time to time before and/or after closing of the capital injection of US$3 million under the SSA, UP
Scientech may need to conduct certain due diligence or require certain information, which may include but
not limited to the provision of information covering the technology owned, used, developed, and to be
developed by the Company and/or their affiliates as well as the technology licensed by any third parties to
the Company and/or their affiliates and the technology licensed by the Company and/or their affiliates to
any third parties. The Company agrees to fully cooperate and provide such information as requested by UP
Scientech subject to those obligations of confidentiality attendant to any such information.
10.
Required Approvals and Others
The above proposal shall be subject to corporate and regulatory approvals required by UP Scientech,
including but not limited to the Board of Directors' approval and the approval of or report to the Central
Bank of Republic of China (Taiwan).
Abakan will hold a meeting of the Board of Directors prior to execution of this letter to duly approve the
terms and conditions of this letter, including but not limited to provision of the observer position to UP
Scientech under Section 2(b) hereof. Abakan shall cause MesoCoat to perform its obligations hereunder.
Exhibit 99.1
11.
Fees and Expenses
UP Scientech and the Company shall pay their respective costs and expenses related to the proposed
transactions, including the costs and expenses related to preparation and negotiation of the definitive
agreements.
12.
Legal and Confidentiality
Subject to provision by Abakan of a copy of Abakan's meeting minutes of its Board of Directors duly
approving the terms and conditions of this letter, including but not limited to provision of the observer
position to UP Scientech under Section 2(b) hereof, this letter shall be binding on the parties hereto, subject
to execution of definitive agreements, receipt of internal/regulatory approvals and satisfaction of certain
other conditions as described herein or in the definitive agreements, to proceed with such a transaction.
This letter is governed by and construed in accordance with Taiwan laws, without regard to principles of
conflicts of laws thereof.
UP Scientech requests that neither the Company, its directors, officers and employees nor its advisors make
any announcement or disclosure to third parties of UP Scientech's interest in this proposed transaction or
of the contents of this letter unless otherwise required by applicable laws and regulations, under which the
content of the announcement or disclosure shall be agreed by UP Scientech in advance.
We look forward to working with you on this transaction.
Yours faithfully
for and on behalf of
UP SCIENTECH MATERIALS CORP.
/s/ George Chang
George Chang, Chairman
Agreed and accepted this 13th day of November,
2014 for and on behalf of:
ABAKAN INC.
/s/ Robert Miller
Robert Miller, Director and CEO
EXHIBIT 99.2
SHAREHOLDER VOTING AGREEMENT
THIS SHAREHOLDER VOTING AGREEMENT, dated as of November 11, 2014 (this "Voting
Agreement"), is between UP Scientech Materials Corp. ("UP Scientech"), and Robert H. Miller, Maria C.
Maz, the Thomas and Mario Miller Family Irrevocable Trust U/A/D 12/01/2009 and the Tarija Foundation
(each a "Shareholder" and collectively, the "Shareholders").
WITNESSETH:
Whereas UP Scientech and Abakan Inc. (“Abakan”) have entered into a Letter Agreement (“Letter
Agreement”) of even date, pursuant to which, UP Scientech shall enter into a share subscription agreement
(“SSA”), a Sales Agency Agreement and acquire the right to participate with Abakan in certain additional
joint venture transactions as detailed in said Letter Agreement; and
Whereas, the Shareholders, individually or as trustees or custodians, subsequent to the closing of the SSA,
shall be the beneficial owners of twenty four million one hundred and twenty thousand (24,120,000) shares
or collectively in excess of thirty five percent (35%) of the issued and outstanding voting shares of Abakan's
common stock (such shares, along with all other shares of capital stock of Abakan acquired by each
Shareholder subsequent to the date hereof, are referred to herein collectively as the "Subject Shares"); and
Whereas, as a condition of entering into the Letter Agreement, UP Scientech has requested that the
Shareholders agree, and the Shareholders have agreed, among other things, to vote and commit the Subject
Shares upon the terms and subject to the conditions set forth herein.
Now, therefore, in consideration of the premises and the mutual representations, agreements and covenants
hereinafter set forth, and intending to be legally bound hereby, the parties hereto hereby agree as follows:
1.
Agreement.
(a)
The Shareholders agree to vote the Subject Shares, during the period between the date hereof and
the Expiration Date (as defined hereinafter), at any special or annual meeting of the shareholders, in favor
of electing an individual nominated by UP Scientech to Abakan’s board of directors.
(b)
Prior to the Expiration Date, the Shareholders shall not enter into any agreement or understanding
with any person to vote or give instructions in any manner inconsistent with the preceding paragraph (a).
(c)
The Shareholders shall not vote, sell, deal in, assign, pledge, transfer or encumber in any manner
whatsoever any of the Subject Shares, except; 1) the Subject Shares may be sold to third parties bound to
the terms and conditions similar to those agreed herein; and 2) the Thomas and Mario Miller Family Trust
and the Tarija Foundation are allowed to sell up to a maximum of 100,000 Subject Shares per quarter. in
the public market in accordance with the rules and regulations of the United States Securities Act of 1993,
as amended.
(d)
Each Shareholder will agree to such other terms and conditions, if any, as may be requested by any
underwriter of the Subject Shares or required by any securities regulatory authority having jurisdiction over
Abakan, that do not conflict with this Voting Agreement.
(e)
No person executing this Voting Agreement who is or becomes prior to the Expiration Date a
director of Abakan, or any successor thereof, makes any agreement or understanding herein in his or her
capacity as such director. Each Shareholder signs solely in his or her capacity as the owner, trustee or
custodian of the Subject Shares.
2.
Representations and Warranties of the Shareholders. Each Holder hereby represents andwarrants
to UP Scientech, severally and not jointly, that:
(a)
this Voting Agreement has been duly executed and delivered by each Shareholder and is the legal,
valid and binding obligation of and fully enforceable in accordance with its terms against such Shareholder;
(b)
no consent of any governmental entity, beneficiary, co-trustee or other person is necessary for the
execution, delivery and performance of this Voting Agreement by each Shareholder;
(c)
subsequent to the closing of the SSA, the Shareholders shall be the beneficial owners of twenty four
million one hundred and twenty thousand (24,120,000) shares or collectively in excess of thirty five percent
(35%) of the issued and outstanding voting shares of Abakan's common stock;
(d)
each Shareholder shall own the Subject Shares free and clear of any encumbrance other than this
Voting Agreement and does not own, directly or indirectly, any other shares of Abakan's common stock or
any option, warrant or other right to acquire any shares of Abakan's common stock;
(e)
each Shareholder shall have the power and right to vote all of the Subject Shares;
(f)
except as provided herein, each Shareholder has not (i) granted any power-of-attorney or other
authorization or interest with respect to any of the Subject Shares, (ii) deposited any of the Subject Shares
into a voting trust, or (iii) entered into any prior voting agreement or other arrangement with respect to any
of the Subject Shares; and
(g)
the execution, delivery and performance of this Voting Agreement by the Shareholders does not
and will not result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other
restriction of any court or governmental authority to which the Shareholders are subject, or its constitutional
documents in case of any Shareholder being a trust or foundation.
3.
Covenants of the Shareholders. Each Shareholder hereby agrees and covenants that during the
period between the date hereof and the Expiration Date, any shares of capital stock of Abakan (including,
without limitation, Abakan's common stock) that any Shareholder purchases or with respect to which such
Shareholder otherwise acquires beneficial ownership (including by reason of stock dividends, split-ups,
recapitalizations, combinations, exchanges of shares or the like) shall be considered Subject Shares and
subject to each of the terms and conditions of this Voting Agreement;
4.
Expiration Date. This Voting Agreement to vote in favor for the election of UP Scientech’s
nominee to Abakan’s board of directors at any annual or special meeting called for the purpose of electing
directors shall expire on the earliest of (a) the expiration of the three (3) year commitment to so vote
commencing on the date the nominee of UP Scientech is appointed as a director of Abakan; and (b) the date
on which UP Scientech’s ownership of Abakan falls below six percent (6%) on a fully diluted basis (such
earliest date being referred to herein as the "Expiration Date").
5.
Notices. All notices, requests, claims, demands and other communications hereunder shall be in
writing and shall be given (and shall be deemed to have been duly given upon receipt) by delivery in person,
telecopy or by registered or certified mail (postage prepaid, return receipt requested) or by overnight courier
to the respective parties at the following addresses (or at such other address for a party as shall be specified
in a notice given in accordance with this Section 6):
UP Scientech Materials Corp.
No. 5-3, Jianguo Rd.
Guanyin Township
Taoyuan County 32844
Taiwan R.O.C.
Shareholders
Robert H. Miller
4801 Alhambra Circle
Coral Gables, Florida 33146
Maria C. Maz
4801 Alhambra Circle
Coral Gables, Florida 33146
Thomas and Mario Miller Irrevocable Family Trust U/A/D 12/01/2009
3757 Heron Ridge Lane,
Westin, Florida, 33331
Tarija Foundation
4527 West 10th Avenue
Vancouver, British Columbia V6R 2J2
6.
Amendments; No Waivers.
(a)
Any provision of this Voting Agreement may be amended or waived prior to the Expiration Date
if, and only if, such amendment or waiver is in writing and signed, in the case of an amendment, by UP
Scientech and each of the Shareholders or in the case of a waiver, by the party or parties against whom the
waiver is to be effective.
(b)
No failure or delay by any party in exercising any right, power or privilege hereunder shall operate
as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall
be cumulative and not exclusive of any rights or remedies provided by law.
7.
Expenses. All costs and expenses incurred in connection with the preparation and furtherance of
this Voting Agreement shall be paid by the party or parties incurring such cost or expense.
8.
Successors and Assigns. The provisions of this Voting Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and assigns; provided, that no party may
assign, delegate or otherwise transfer any of its rights or obligations under this Voting Agreement without
the prior written consent of the other parties hereto.
9.
Non-Survival of Representations and Warranties. All representations, warranties and agreements
made by the Shareholders and UP Scientech in this Voting Agreement shall promptly terminate upon the
Expiration Date.
10.
Parties in Interest. Nothing in this Voting Agreement is intended to provide any rights or remedies
to any person other than the parties hereto.
11.
Counterparts. This Voting Agreement may be executed in one or more counterparts, and by the
different parties hereto in separate counterparts, each of which when executed shall be deemed an original
but all of which taken together shall constitute one and the same agreement.
12.
Governing Law. This Voting Agreement will be construed and enforced in accordance with and
governed by the laws of the State of Florida, without reference to principles of conflicts of law. Each of the
parties consents to the jurisdiction of the federal courts whose districts encompass any part of the State of
Florida in connection with any dispute arising under this Voting Agreement and hereby waives, to the
maximum extent permitted by law, any objection, including any objection based on forum non conveniens,
to the bringing of such proceeding in such jurisdictions.
13.
Jury Trial Waiver. EACH PARTY HERETO HEREBY WAIVES ALL RIGHTS TO TRIAL BY
JURY IN ANY ACTION OR PROCEEDING INSTITUTED BY EITHER OF THEM AGAINST THE
OTHER THAT PERTAINS DIRECTLY OR INDIRECTLY TO THIS VOTING AGREEMENT.
14.
Specific Performance. The parties hereto agree that irreparable damage would occur in the event
any provision of this Voting Agreement was not performed in accordance with the terms hereof and that,
in addition to any remedy to which they are entitled at law or in equity, the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Voting Agreement and to enforce specifically the terms
and provisions of this Voting Agreement without the need to post a bond or prove special damages.
15.
Interpretation. The descriptive headings contained in this Voting Agreement are included for
convenience of reference only and shall not affect in any way the meaning or interpretation of this Voting
Agreement. When a reference is made in this Voting Agreement to a Section, such reference shall be to a
Section of this Voting Agreement unless otherwise indicated. Whenever the words "include," "includes" or
"including" are used in this Voting Agreement they shall be deemed to be followed by the words "without
limitation."
16.
Entire Agreement. This Voting Agreement and the related irrevocable proxy constitutes the entire
agreement between the parties with respect to the subject matter hereof and supersedes all prior written and
oral and all contemporaneous agreements and understandings with respect to the subject matter hereof.
Each party acknowledges and agrees that no other party hereto makes any representations or warranties,
whether express or implied, other than the express representations and warranties contained herein.
17.
Severability. If any term or other provision of this Voting Agreement is held to be invalid or
unenforceable by a court of competent jurisdiction, this Voting Agreement shall be interpreted and
enforceable as if such provision were severed or limited, but only to the extent necessary to render such
provision of this Voting Agreement enforceable.
IN WITNESS WHEREOF, each of the parties hereto has executed this Voting Agreement as of the date
first set forth above.
UP SCIENTECH MATERIALS CORP.
/s/ George Chang
By: George Chang
Chairman
Shareholders
ROBERT H. MILLER
/s/ Robert H. Miller
Robert H. Miller
MARIA C. MAZ
/s/ Maria C. Maz
Maria C. Maz
THOMAS AND MARIO FAMILY IRREVOCABLE TRUST U/A/D 12/01/2009
/s/ Dennis Goetz
By: Dennis Goetz
Trustee
TARIJA FOUNDATION
/s/ Robert H. Miller
By: Robert H. Miller
Trustee