EXHIBIT 10.27
PURCHASE AGREEMENT
THIS AGREEMENT dated as of the 1st day of January, 2006 by and among
METAMATERIA PARTNERS, LLC, an Ohio limited liability company having offices
located at 0000 Xxxxxxx Xxxx, Xxxxxxxx, XX 00000 (the "Purchaser"), and POUROUS
CERAMIC SHAPES, LLC, an Ohio limited liability company located at 0000 Xxxxxxx
Xxxx, Xxxxxxxx, XX 00000 (the "Seller").
INTRODUCTORY STATEMENT. The Seller desires to sell to the Purchaser, and
Purchaser desires to purchase from the Seller, upon and subject to the terms and
conditions contained in this Agreement, substantially all of the assets of the
Seller without assuming any of Seller's liabilities other than those royalty
obligations specifically described in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein and other good and valuable consideration, the parties hereto
agree as follows:
1. Assets to Be Purchased. On the terms and subject to the conditions set forth
in this Agreement, Seller agrees to sell and deliver to the Purchaser the
Acquired Assets. For purposes of this Agreement, the term "Acquired Assets"
shall mean all right, title, and interest in and to substantially all of the
assets constituting the business of the Seller including, but not limited to,
all (a) patents, patent applications, trademarks, trademark applications,
tradenames, logos, domain name registrations and addresses, copyrights, trade
secrets and other intellectual property ("Intellectual Property") as well as the
goodwill associated therewith, licenses and sublicenses granted and obtained
with respect thereto, and rights thereunder, remedies against infringements
thereof, and rights to protection of interests therein under the laws of all
jurisdictions, (b) agreements, contracts, purchase orders, instruments and other
similar arrangements, and rights thereunder, (c) franchises, approvals, permits,
telephone numbers, licenses, orders, registrations, certificates, variances, and
similar rights obtained from governments and governmental agencies, (d) books,
records, ledgers, files, documents, correspondence, customer lists and contacts,
drawings, and specifications, creative materials, advertising and promotional
materials, studies, reports, and other printed or written materials, (e)
furniture, fixtures, molds and equipment, (f) inventory and accounts receivable,
and (g) computer software applications.
On the Closing Date, Seller shall execute and deliver to Purchaser a xxxx
of sale in the form of Exhibit "A" attached hereto and made a part hereof ("Xxxx
of Sale") and such other documents of transfer as counsel for Purchaser shall
reasonably require to evidence the transfer of the Acquired Assets to Purchaser.
2. Retained Assets. The phrase "Acquired Assets" does not include
(a) Employee records;
(b) Any cash or prepaid amounts;
(c) Insurance policies;
(d) Bank accounts;
As of January 1, 2006
(e) Any interest in real property or any leased personal property;
(f) Any financial records or tax returns of the Seller for operations
prior to the Closing Date; and
(g) Articles of Organization, Operating Agreement, minutes and other
documents relating to the organization, maintenance, and existence
of the Seller as a limited liability company.
3. No Liabilities Assumed. The Purchaser will not assume or in any other way be
responsible for any of the liabilities, indebtedness or obligations of whatever
nature of the Seller except that Purchaser will assume the royalty obligations
of Seller to Xxxxxx X. Xxxxxxx, Xx. pursuant to the Assumption contained in the
Letter of Understanding attached hereto and made a part hereof as Exhibit "B"
("Letter of Understanding"). The Seller agrees to indemnify and hold the
Purchaser harmless from and against any and all liabilities, obligations,
losses, damages, claims, costs and expenses (including attorneys' fees and
expenses) which the Purchaser may incur in connection with any claims asserted
against the Purchaser based, in whole or in part, upon any claims, liabilities,
indebtedness or obligations which relate to the Seller or its business as
conducted prior to the Closing Date. Purchaser shall have no obligation to hire
the employees of Seller and no liability relating to any decision not to hire an
employee of Seller.
4. Purchase Price. (a) Price. The Purchaser agrees to (i) pay the Seller ONE
HUNDRED TWENTY-THREE THOUSAND THREE HUNDRED FOURTEEN DOLLARS ($123,314), and
(ii) deliver to the Seller or its designees at the Closing, warrants
("Warrants") to purchase up to an aggregate of 20,000 shares of the common
stock, $.001 par value, of NanoDynamics, Inc., the parent company of Purchaser,
at a price of $6.50 per share in the form attached as Exhibit C to this
Agreement (the "Purchase Price"). The Purchase Price shall be paid on the
Closing Date by check or wire transfer and delivery to Seller of the Warrants.
Seller hereby direct Purchaser to deliver the warrants on the Closing Date
issued as follows: (i) a warrant issued in the name of Xxxxxxx Xxxxxx for 11,600
shares of NanoDynamics, Inc. and (ii) a warrant issued in the name of Xxxxxxx
Xxxxx for 8,400 shares of NanoDynamics.
(b) Transfer Taxes. Purchaser shall be responsible for and shall pay when
due any and all sales, use, stamp, registration or similar transfer taxes
("Transfer Taxes") imposed in connection with the transaction contemplated by
this Agreement. The parties agree that $21,819 of the Purchase Price shall be
allocated to furniture, fixtures and equipment. Seller agrees to report this
amount in connection with all tax returns following the Closing Date, unless
Purchaser has given its prior approval of a different amount.
5. Representations of the Seller. The Seller represents and warrants to the
Purchaser that (i) the Seller is a limited liability company duly organized,
validly existing and in good standing under the laws of the State of Ohio, (ii)
Xxxxxxx Xxxxxx and Xxxxxxx Xxxxx are the sole members of the Seller, (iii) the
execution, delivery and performance of this Agreement and the Xxxx of Sale have
been duly authorized; (iv) the corporate action required hereunder will not
violate any agreement to which it is a party or by which it is bound, and both
this Agreement and the Xxxx of Sale when executed and delivered will be legally
enforceable and binding upon the
As of January 1, 2006
Seller in accordance with their terms, (v) the Seller has duly filed all tax
returns, paid all taxes, charges, penalties and interest and there are no
ongoing audits by any government; (vi) the balance sheet and other financial
information provided by Seller as of December 31, 2005 is true and correct in
all material respects (vii) the Seller has not entered into any contract,
understanding or agreement relating to the sale or transfer of the Business;
(viii)the Seller has good and marketable title to all of the Acquired Assets,
free and clear of any agreement or understanding with respect to the use or
possession thereof or any rights thereto and of all liens, leases, mortgages,
pledges, encumbrances, security interests, or charges of any kind or character;
(ix) there is no action, suit, investigation or other proceeding pending or
threatened against or involving the Seller, the Business or the Acquired Assets
, the Seller does not know of any material basis for any such action, suit,
investigation or other proceeding, and there are no judgments or judgment liens
outstanding against the Seller; (x) there are no warranty or other product
claims pending or threatened against the Seller (xi) the Intellectual Property
is owned and used solely and exclusively by, no other person has any rights in
the Intellectual Property whether by license, sublease or otherwise, (xii) the
Intellectual Property does not, to the best of Seller's knowledge, conflict or
infringe upon the rights of others; (xiii) Seller is not aware of any third
party infringement with respect to the Intellectual Property, (xiv) the Seller
is in compliance in all respects with, and the Seller has not received in the
last twelve (12) months any notice of failure to comply with, any applicable
statutes, laws, ordinances, rules, regulations, orders or directives pertaining
to the operation of the Business, and (xv) the consummation of the transactions
contemplated by this Agreement does not require the consent of, or notice to,
any third party.
6. Representations of the Purchaser. The Purchaser represents and warrants to
the Seller that (i) it is a limited liability company duly organized, validly
existing and in good standing under the laws of the State of Ohio; (ii) the
execution, delivery and performance of this Agreement and the Warrants have been
duly authorized; (iii) the corporate action required hereunder will not violate
any agreement to which it is a party or by which it is bound, and both this
Agreement and the Warrants when executed and delivered will be legally
enforceable and binding upon the Purchaser in accordance with their terms.
7. Conditions Precedent to Closing.
(a) Conditions Precedent to the Obligation of the Purchaser to Close. The
obligations of the Purchaser to consummate the transactions provided for in this
Agreement is subject to the satisfaction at or before the Closing Date of each
of the following conditions precedent:
(i) Execution and delivery by Seller to Purchaser of the Xxxx of Sale and
such other assignments and documents of transfer as counsel for Purchaser
may reasonably require to effect the transactions contemplated by this
Agreement;
(ii) Execution and delivery by Seller to Purchase of the Letter of
Understanding attached as Exhibit B to this Agreement;
(iii) The representations and warranties of the Seller contained in this
Agreement shall be true and correct as of the Closing Date; and
As of January 1, 2006
(iv) There shall have occurred no material casualty or impairment to the
Acquired Assets after December 31, 2005.
(b) Conditions Precedent to the Obligations of the Seller to Close. The
obligations of the Seller to consummate the transactions provided for in this
Agreement is subject to the following conditions precedent:
(i) The Purchaser shall have paid the Purchase Price including execution
and delivery of the Warrants to the Seller;
(ii) The representations and warranties of the Purchaser contained in this
Agreement shall be true in all material respects as of the Closing Date;
(iii) Execution and delivery by the Purchaser to the Seller of the
Assumption contained in Exhibit B to this Agreement; and
(iv) Termination of the Sublease between Purchaser and Seller.
8. Closing Date. The closing ("Closing Date") shall occur at the offices of
Purchaser as the parties may reasonably agree after all of the conditions
precedent have been satisfied.
9. Post-Closing Covenants. The parties agree as follows with respect to the
period following the Closing Date.
(a) General. In case at any time after the Closing Date any further action is
necessary or desirable to carry out the purposes of this Agreement, each of the
parties will take such further action (including the execution and delivery of
such further instruments and documents) as the other party reasonably may
request, at the sole cost and expense of the requesting party (unless the
requesting party is entitled to indemnification hereunder).
(b) Transition. The Seller will not take any action that is designed or intended
to have the effect of discouraging any licensor, customer, supplier, or other
business associate of the business relating to the Acquired Assets from
maintaining the same business relationships with the Buyer after the Closing
Date as it maintained prior to the Closing Date. The Seller will refer all
customer inquiries relating to the Acquired Assets to the Purchaser from and
after the Closing Date.
(c) Confidentiality. Seller shall treat and hold as such all of the confidential
information relating to the Purchaser, NanoDynamics, Inc. and the Acquired
Assets, refrain from using any of the confidential information of the Purchaser,
NanoDynamics or the Acquired Assets except as permitted by this Agreement, and
deliver promptly to the Purchaser or destroy, at the request and option of the
Purchaser, all tangible embodiments (and all copies) of confidential information
which are in its possession.
(d) Non-Competition. Seller agrees it shall not for a period of five (5) years
following the Closing Date, engage, directly or indirectly, either as an
employee, independent contractor, or owner, any business relating to porous
ceramic materials or products ("Restricted Activities").
As of January 1, 2006
Without limiting the foregoing, the Seller agrees not to solicit, directly or
indirectly, the Seller's current, past or future employees, contractors,
customers or clients for Restricted Activities during such five (5) year period.
(e) Seller Dissolution and Liquidation. Seller shall liquidate and dissolve on
or before December 31, 2006.
(f) Remedies. The parties agree that the remedy at law for a breach by Seller of
the agreements in this Section 9 of this Agreement would be inadequate, and such
agreements may be specifically enforced or enjoined by the Purchaser. The
foregoing shall not be interpreted as denying any person such rights as it may
have under this Agreement or any other agreement or to seek relief at law or
equity with respect to damages resulting from a breach of this Section.
10. Breach of Covenants, Representations and Warranties; Indemnification.
(a) The Seller and the Purchaser shall each indemnify, hold harmless and defend
the other at all times after the date of this Agreement, against and in respect
of: (i) any damage, loss or expense resulting from any misrepresentation or
breach of warranty or representation or of any covenant or agreement on the part
of either of them under this Agreement; and (ii) all actions, suits or
proceedings incident to any of the foregoing.
(b) The Purchaser shall indemnify, hold harmless and defend the Seller at all
times after the date of this Agreement against and in respect of: (i) any
damage, loss or expense resulting from any claim against the Seller relating to
acts or omissions by or on behalf of the Purchaser at any time or relating to
operation of the Business after the Closing Date; and (ii) all actions, suits or
proceedings incident to any of the foregoing.
(c) The Seller shall indemnify, hold harmless and defend the Purchaser at all
times after the date of this Agreement against and in respect of: (i) any
damage, loss or expense resulting from any claim against the Purchaser relating
to acts or omissions by or on behalf of the Seller at any time or relating to
operation of the Business prior to the Closing Date; and (ii) all actions, suits
or proceedings incident to any of the foregoing.
11. Survival of Representations, Warranties, and Covenants. The representations,
warranties, covenants and agreements made by the parties hereto or made in any
instruments delivered in connection herewith, shall survive the execution of
this Agreement and shall be fully enforceable at law or in equity by either
party, or their respective successors and assigns.
12. Governing Law. The validity, interpretation and legal effect of this
Agreement shall be governed by, and the rights and liabilities of the parties
hereto shall be determined in accordance with the laws of the State of Ohio.
13. Arbitration. Any dispute or claim arising out of or in connection with any
provision of this Agreement will be finally settled by binding arbitration in
Columbus, Ohio in accordance with the rules of the American Arbitration
Association by one arbitrator appointed in accordance with said rules. The
arbitrator shall apply Ohio law, without reference to rules of conflicts of law
or rules of statutory arbitration, to the resolution of any dispute, Judgment on
the award rendered by the arbitrator may be entered in any court having
jurisdiction thereof. Notwithstanding the
As of January 1, 2006
foregoing, the parties may apply to any court of competent jurisdiction for
preliminary or interim equitable relief, or to compel arbitration in accordance
with this paragraph, without breach of this arbitration provision.
14. Invalid or Unenforceable Provisions. The invalidity or unenforceability of
any particular provision or provisions of this Agreement shall not affect the
other provisions hereof, and this Agreement shall be construed in all respects
as if such invalid or unenforceable provisions were omitted; provided that the
same can be done in a manner, and with a result, which is essentially consistent
with the bargain of the parties as expressed herein, including but not limited
to the amount and terms of payment of the repurchase price.
15. Amendment. This Agreement cannot be amended, modified or terminated except
pursuant to an instrument in writing signed by each of the parties hereto.
16. Notices. All notices provided for hereunder shall be served personally or by
certified mail or nationally recognized overnight courier to the respective
addresses of the parties set forth at the beginning of this Agreement, or to
such other addresses as may be specified from time to time by the parties in
writing.
17. Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the parties, their heirs, legal representatives, successors and
assigns.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the 1st day of January , 2006.
POUROUS CERAMIC SHAPES, LLC
By: /s/ Xxxxxxx Xxxxxx
---------------------------------------
Xxxxxxx Xxxxxx, Member
By: /s/ Xxxxxxx Xxxxx
---------------------------------------
Xxxxxxx Xxxxx, Member
METAMATERIA PARTNERS, LLC
By: /s/ Xxxxxxx XxXxxxxx
---------------------------------------
Xxxxxxx XxXxxxxx, Vice President
As of January 1, 2006
The undersigned, being all of the members of Pourous Ceramic Shapes, LLC, for
and in consideration of MetaMateria Partners LLC, execution of the foregoing
agreement, hereby agree to be bound by the provisions of Section 9 of the
foregoing agreement.
/s/ J. Xxxxxxx Xxxxxx
-------------------------------------------
J. Xxxxxxx Xxxxxx
/s/ Xxxxxxx X. Xxxxx
-------------------------------------------
Xxxxxxx X. Xxxxx
As of January 1, 2006
EXHIBIT A
XXXX OF SALE
POUROUS CERAMIC SHAPES, LLC, an Ohio limited liability company with an
address at 0000 Xxxxxxx Xxxx, Xxxxxxxx, XX 00000 ("Seller"), for good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, hereby grants, bargains, sells, transfers and delivers to
METAMATERIA PARTNERS, LLC, an Ohio limited liability company with an address at
0000 Xxxxxxx Xxxx, Xxxxxxxx, XX 00000 ("Purchaser"), those items listed in
Schedule A attached hereto and made a part hereof ("Acquired Assets"), to have
and to hold the Acquired Assets unto Purchaser, its successors and assigns,
forever.
Seller hereby represents and warrants to Purchaser that Seller has the
full right, power and authority to sell the Acquired Assets and to make and
execute this Xxxx of Sale. Seller hereby agrees to warrant and defend the title
to the Acquired Assets conveyed hereby to Purchaser against the lawful claims
and demands of all persons claiming by, through or under Seller, but not
otherwise.
Seller further represents and warrants that the Acquired Assets are free
and clear of all security interests, mortgages, liens, encumbrances or other
charges whatsoever.
This instrument shall be governed by and shall be construed in accordance
with the internal laws of the State of Ohio without regard to principles of
conflicts of laws.
IN WITNESS WHEREOF, the Seller has caused this instrument to be duly
executed as of the 1st day of January, 2006.
POUROUS CERAMIC SHAPES, LLC
By: /s/ Xxxxxxx Xxxxx
---------------------------------------
Xxxxxxx Xxxxx, President
As of January 1, 2006
SCHEDULE A
ACQUIRED ASSETS
Substantially all of the assets constituting the business of the Seller
including, but not limited to, all (a) patents, patent applications, trademarks,
trademark applications, tradenames, logos, domain name registrations and
addresses, copyrights, trade secrets and other intellectual property as well as
the goodwill associated therewith, licenses and sublicenses granted and obtained
with respect thereto, and rights thereunder, remedies against infringements
thereof, and rights to protection of interests therein under the laws of all
jurisdictions, (b) agreements, contracts, purchase orders, instruments and other
similar arrangements, and rights thereunder, (c) franchises, approvals, permits,
telephone numbers, licenses, orders, registrations, certificates, variances, and
similar rights obtained from governments and governmental agencies, (d) books,
records, ledgers, files, documents, correspondence, customer lists and contacts,
drawings, and specifications, creative materials, advertising and promotional
materials, studies, reports, and other printed or written materials, (e)
furniture, fixtures and equipment, (1) inventory and accounts receivable, and
(g) software applications.
For the purpose of specificity but not by way of limitation, the Acquired Assets
include:
Contracts
Credit Card processor agreement,
Sublease agreement between PCS and MetaMateria
Sales Agreements with Drs. Xxxxxx & Xxxxx
Ohio TFAF PO between MetaMateria and PCS to develop insulation products
for fuel cells.
Exclusive License of US Patent No. 6,245,236 Reciprocating Biological Filter
Exclusive License of US Trademark No. 75410684
Continued on Next Page
As of January 1, 2006
POUROUS CERAMIC SHAPES ACQUIRED ASSETS P. 2
ASSET SCHEDULE
ACCOUNTS RECEIVABLE 6,915.16
INVENTORIES, estimated 6,250.00
Property Valuation at Aquisiton 1-1-06
DESCRIPTION COST
------------------------------------------------------------ ---------
OFFICE EQUIPMENT
iBeam computer 375.00
iBeam computer 375.00
TOTAL - OFFICE EQUIPMENT 750.00
Accumulated Depreciation-Office Equipment -750.00
---------
NET BOOK VALUE 12-31-05 0.00
=========
PRODUCTION EQUIPMENT
Paragon Kiln & controller 600.00
Royalton Food Cabinet 600.00
Performax drum sander 749.00
AST Meter measure system 14,000.00
Air Dryer 500.00
Air Compressor 622.03
Electro Genf Molds 1,860.00
3 T Gantry Crane 1,000.00
1 - 5T Chiller Used 1,750.00
1 Xxxx Slurry Pump 2,089.08
2 Xxxx Drum Pump Heads 1,171.00
2 Xxxx Drum Pump Bodys 440.00
1 Xxxx Slurry Pump 2,082.74
2 SS Chiller Tanks 1,000.00
---------
28,463.85
Accumulated Depreciation-Production Equipment -6,644.66
NET BOOK VALUE PRODUCTION EQUIPMENT 12-31-05 21,819.19
=========
1/1/2006 TOTAL NET BOOK VALUE PROPERTY & EQUIPMENT 21,819.19
=========
TOTAL ASSET VALUATION JANUARY 1, 2006 34,984.35
=========
As of January 1, 2006
EXHIBIT B
0000 Xxxxxxx Xx
Xxxxxxxx, XX 00000 POUROUS CERAMIC SHAPES LLC
000-000-0000
000-000-0000 (Fax)
LETTER OF UNDERSTANDING
CELL-PORE(TM) ROYALTY
In 2001, Kent Marine (Kent) with headquarters in Georgia, purchased from Cercona
of America, Inc. (Cercona) the technology, patents and products to make
Cell-Pore(TM) from Xxxxxx X. Xxxxxxx Xx. Cell-Pore(TM) is sold into the fish
tank market for the purpose of biologically controlling wastes generated in such
tanks. Cercona made available to Kent all intellectual property, trademarks and
processing technology and Kent continued to manufacture Cell-Pore(TM) products
in Dayton, OH for approximately one year after the purchase.
In December 2003, Pourous Ceramic Shapes LLC (PCS) purchased from Kent the
Cell-Pore(TM) business and as part of this purchase assumed a royalty obligation
that was a part of the purchase agreement between Kent and Cercona; namely:
Buyer (Kent Marine) agrees to pay Seller (Xxxxxx Xxxxxxx Xx.) a royalty of
Three Percent (3%) of sales in excess of the break-even point (estimated
to be Four Hundred Thousand Dollars ($400,000.00)) for the life of the
patents transferred to Buyer.
All rights to intellectual property, trademarks and manufacturing technology
that was acquired by Kent was subsequently transferred to PCS as part of the
purchase agreement. Cercona had 10 patents relating to the production of fired
porous ceramic products; however, except for, titled "Reciprocating Biological
Filter" all had expired or were close to expiration and no fees were paid for
their transfer or continuation by Kent Marine, nor by PCS. U.S. Patent 6,215,236
is active and the fees paid for its continuation. This patent teaches the
construction of a Biorocker assembly for use in aerobic removal of toxins from a
liquid. This patent was issued on June 12, 2001. A product with the trade name
BioRocker(TM) is currently made and sold for use in smaller fish tanks; however,
it is applicable for use in larger aquaculture tanks or ponds.
Cell-Pore(TM) is a high surface area, porous fired ceramic bio-media product
used to house wet biofilms containing aerobic or anaerobic bacteria. Products
include the BioRocker(TM), bioslabs, biocartridges, BioBlox(TM), and other
special shapes made from this material.
Annual sales of Cell Pore(TM) products under PCS have never exceeded $200,000;
however, as part of the purchase agreement from Kent Marine, a 3% royalty for
all sales in excess of $400,000 is to be paid to Xxxxxx X. Xxxxxxx Xx. and this
liability should be transferred as part of the sale. Without a commercial use of
the Biorocker(TM) technology or Cell-Pore(TM) products, it is unlikely that
sales for fish applications will ever exceed $400,000. If they do, it will be
for higher margin products and such royalty can be absorbed in the selling
price.
As of January 1, 2006
PCS has also developed and manufactured a number of other porous materials that
are not considered covered by this agreement. These include fired insulation,
unfired porous products, high temperature filter products and specialty
filtration media used for non-fish or non-biological removal of contaminants.
The undersigned hereby represents and warrants that the foregoing is true and
correct in all respects and acknowledges that MetaMateria Partners, LLC will
rely on same in connection with entering into an Asset Purchase Agreement with
PCS of even date herewith.
POUROUS CERAMIC SHAPES, LLC As of January 1, 2006 ______________
By: /s/ Xxxxxxx Xxxxx Date Signed
-----------------------
Xxxxxxx Xxxxx, President
ASSUMPTION
METAMATERIA PARTNERS, LLC hereby assumes and agrees to pay the royalty
obligations of PCS to Xxxxxx X. Xxxxxxx, Xx. as set forth in the preceding
letter with respect to sales of Cell Pore products occurring on or after January
1, 2006.
METAMATERIA PARTNERS, LLC
By: /s/ Xxxxxxx XxXxxxxx
----------------------------------------
Xxxxxxx XxXxxxxx, Vice President
As of January 1, 2006
