UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 23, 2015
ABAKAN INC.
(Exact name of registrant as specified in its charter)
Nevada
000-52784
98-0507522
(State or other jurisdiction
(Commission
(IRS Employer
of incorporation)
File Number)
Identification No.)
2665 S. Bayshore Drive, Suite 450, Miami, Florida 33133
(Address of principal executive offices) (Zip code)
Registrant’s telephone number, including area code: (786) 206-5368
n/a
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing
obligation of the registrant under any of the following provisions:
□
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
□
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
□
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
□
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
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ITEM 1.01
ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
On July 23, 2015, Abakan Inc. (“Company”) and Powdermet, Inc. (“Powdermet”), its minority owned
subsidiary, entered into a Settlement and Exchange Agreement (“Settlement and Exchange”), pursuant to
which agreement the Company increased its ownership of MesoCoat, Inc. (“MesoCoat”) to one hundred
percent (100%)
The Settlement and Exchange caused the Company to decrease its minority ownership in Powdermet
from 24.1% to 3.6%, in exchange for the remaining 11.9% of MesoCoat owned by Powdermet,
$1,000,000 in cash payable in one payment of $250,000 and five (5) monthly installments of $150,000,
land and equipment worth $600,000, the extinguishment of existing inter-company debt of $486,000, and
the return of 400,000 outstanding Company common shares to treasury.
The decision to divest a significant portion of the Company’s ownership of Powdermet is the culmination
of the staged acquisition of MesoCoat planned as part of the Company’s initial investment in 2009.
_____________________________________________________________________________________
ITEM 4.01
CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT
_____________________________________________________________________________________
(b)
On July 23, 2015, upon the authorization and approval of the Board of Directors, the Company
engaged Maloney + Novotny LLC (“Maloney + Novotny”) as its independent registered public
accounting firm.
During the Company’s two most recent fiscal years and the subsequent interim period preceding Maloney
+ Novotny’s engagement, neither the Company nor anyone acting on its behalf consulted Maloney +
Novotny regarding either:
(i)
the application of accounting principles to a specified transaction, either completed or
proposed, or the type of audit opinion that might be rendered on the Company’s consolidated
financial statements, and no written report or oral advice was provided to the Company that
Maloney + Novotny concluded was an important factor considered by the Company in reaching
a decision as to an accounting, auditing or financial reporting issue; or
(ii) any matter that was the subject of a “disagreement” or “reportable event” (within the meaning
of Item 304(a) of Regulation S-K and Item 304(a)(1)(v) of Regulation S-K respectively).
The Company provided Maloney + Novotny with a copy of this Form 8-K prior to its filing with the
Commission.
_____________________________________________________________________________________
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_____________________________________________________________________________________
ITEM 7.01
REGULATION FD DISCLSOURE
_____________________________________________________________________________________
The information contained herein includes a press release attached to this current report in Item 9.01 as
Exhibit 99 which is incorporated by reference into this Item 7.01 in satisfaction of the public disclosure
requirements of Regulation FD. This information is “furnished” and not “filed” for purposes of Section
18 of the Exchange Act, or otherwise subject to the liabilities of that section. However, this information
may be incorporated by reference in another filing under the Exchange Act or the Securities Act only if,
and to the extent that, such subsequent filing specifically references the information incorporated by
reference herein.
ITEM 9.01
FINANCIAL STATEMENTS AND EXHIBITS
_____________________________________________________________________________________
(d)
Exhibit
10
Settlement and Exchange Agreement dated July 23, 2015
99
Press Release dated July 27, 2015
_____________________________________________________________________________________
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned hereunto duly authorized.
Abakan Inc.
Date
By: /s/ Robert H. Miller
July 27, 2015
Name: Robert H. Miller
Title: Chief Executive Officer
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Exhibit 10
SETTELEMENT AND EXCHANGE AGREEMENT
THIS SETTLEMENT AND EXCHANGE AGREEMENT ("Agreement"), dated as of July 23,
2015 (“Effective Date”), by and between POWDERMET, INC., a Delaware corporation with
headquarters located at 24112 Rockwell Drive, Euclid, Ohio 44117 ("Powdermet"), and ABAKAN INC.,
a Nevada corporation, with headquarters located at 2665 S. Bayshore Drive, Suite 450, Miami, Florida
33133 ("Abakan"). (Capitalized terms are defined in Article I below.)
WHEREAS, since May 31, 2014, none of the Indebtedness has been paid by MesoCoat to
Powdermet, due in part to the inability or unwillingness of Abakan to cause MesoCoat to pay the
Indebtedness, resulting in default notices and other actions, including litigation being undertaken or
considered by Powdermet;
WHEREAS, Powdermet and Abakan, have each determined that resolution of the non-payment
and other disagreements concerning the Indebtedness and consummation of the transactions contemplated
by this Agreement, on the terms and conditions of this Agreement, would be advantageous and beneficial
to their respective companies and shareholders; and
WHEREAS, the parties hereto desire to resolve all potential litigation regarding the Indebtedness
and to consummate the transactions contemplated herein.
NOW, THEREFORE, in consideration of the premises and the representations, warranties and
agreements herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1. Definitions. As used herein, the following terms shall have the following
meanings:
“Abakan Exchange Shares” means (400,000) of the shares owned by Powdermet in Abakan and
represented by the Abakan Certificate.
"Act" means the Securities Act of 1933, as amended, and the rules and regulations issued in
respect thereto.
“Abakan Certificate” means the certificate issued and dated May 31, 2014 for two million
(2,000,000) shares of Common Stock, par value $0.0001, of Abakan, currently owned and held by
Powdermet.
“Deed” means the limited warranty deed and easement and restriction agreement in the form of
Exhibit A attached hereto and made a part hereof.
“Equipment” means the equipment currently used in the production of PComP Inc., including (a)
Niro production minor spray dryer and associated equipment; (b) carbon element furnace; (c) LECO C
and LECO Oxygen tester; (d) SWEECO 24” screening system; (e) Turbo Classifier; (f) Roll Crusher, and
(g) other equipment listed as PComP only in that certain use and service agreement, dated as May 31,
2014, by and between Powdermet and MesoCoat.
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"Encumbrance" means any security interest, mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or otherwise), charge against or interest in property to
secure payment of a debt or performance of an obligation or other priority or preferential arrangement of
any kind or nature whatsoever.
“Indebtedness” means all base and additional rents, use fees, principal indebtedness and interest
payable as of the Effective Date in respect of the following documents and instruments: (i) the Ground
Lease dated as of May 31, 2014 between Sherman and MesoCoat; (ii) the Sublease Agreement dated as of
May 31, 2014 between MesoCoat and Powdermet in respect of Building 37 at 24112 Rockwell Drive,
Euclid, Ohio; (iii) the Use and Services Agreement dated as of May 31, 2014 between MesoCoat and
Powdermet in respect of Building 40 at 24112 Rockwell Drive, Euclid, Ohio; (iv) the Cognovit
Promissory Note dated May 31, 2014 from MesoCoat to and in favor of Andrew J. Sherman in the
original amount of $32,313; and (v) the Cognovit Promissory Note dated May 31, 2014 from MesoCoat
to and in favor of Powdermet in the original amount of $198,167.85.
“Land” means the 5.7161 acres of land (Permanent Parcel 637-30-010) owned by Sherman, and
known as 24220 Rockwell Drive, Euclid, Ohio, together with the non-exclusive easements, all as set forth
on Exhibit A attached hereto and made part hereof.
"Law" means any law, statute, regulation, rule, ordinance, requirement or other binding action or
requirement of any governmental, regulatory or administrative body, agency or authority or any court of
judicial authority.
“MesoCoat” means MesoCoat, Inc., a Nevada corporation, with headquarters located at 24112
Rockwell Drive, Euclid, Ohio 44117.
“MesoCoat Certificate” means the certificate issued and dated May 31, 2014 for fifty two
thousand (52,000) shares of Common Stock, par value $0.001 per share, of MesoCoat, currently owned
and held by Powdermet.
"MesoCoat Exchange Shares" means fifty two thousand (52,000) of the shares owned by
Powdermet in MesoCoat and represented by the MesoCoat Certificate.
"Order" means any decree, order, judgment, writ, award, injunction, stipulation or consent of or
by any Federal, state or local government or any court, administrative agency or commission or other
governmental authority or agency, domestic or foreign.
"Permitted Title Exceptions" means (i) taxes and assessments, both general and special, which are
a lien but not yet due and payable; (ii) zoning and building laws and ordinances and other laws and
regulations now in effect or hereafter adopted by any governmental authority having or acquiring
jurisdiction thereover; (iii) matters which would be disclosed by an accurate survey and inspection of the
Land; and (iv) those covenants, rights, terms, conditions, limitations, restrictions and easements which are of
record or are created under and by virtue of the Deed.
"Person" means any individual, corporation, general or limited partnership, joint venture,
association, limited liability company, joint stock company, trust, business, bank, trust company, estate
(including any beneficiaries thereof), unincorporated entity, cooperative, association, government branch,
agency or political subdivision thereof or organization of any kind.
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Exhibit 10
“Powdermet Certificate” means the certificate issued and dated May 31, 2014 for two hundred
eighty six thousand eight hundred and thirteen (286,813) shares of Common Stock, par value $0.001 per
share, currently owned and held by Abakan.
"Powdermet Exchange Shares" means two hundred forty four thousand (244,000) of the shares
owned by Abakan in Powdermet and represented by the Powdermet Certificate.
"Sherman" means Sherman Properties, LLC, an Ohio limited liability company, with
headquarters located at 9090 Kephart Drive, Mentor, Ohio 44060.
"Transaction Documents" means any and all stock certificates, deeds, bill of sale and any
ancillary contracts, agreements or other documents that are entered into in connection with the
transactions contemplated hereby.
ARTICLE II
TRANSACTIONS
SECTION 2.1. Agreement. Subject to the terms and conditions of this Agreement, at the
Closing,
(a)
Powdermet shall transfer the MesoCoat Exchange Shares and the Abakan Exchange
Shares to Abakan as provided in Section 2.2 (a) and (b)(i) hereof;
(b)
Abakan shall transfer the Powdermet Exchange Shares to Powdermet as provided in
Section 2.2 (a) and (b)(ii) hereof;
(c)
Powdermet shall cause Sherman to transfer the Land to MesoCoat as provided in Section
2.2 (a) and (b)(iii) hereof;
(d)
Powdermet shall transfer the Equipment as provided in Section 2.2 (a) and (b)(iv) hereof;
(e)
Powdermet shall pay to Abakan the sum of One Million Dollars ($1,000,000) as provided
in Section 2.2 (a) and (b)(v) hereof;
(f)
Powdermet shall and cause its applicable affiliates to forgive and release MesoCoat from
its and their obligations to pay certain amounts as provided in Section 2.2 (a) and (b)(vi) hereof; and
(g)
Notwithstanding the release of MesoCoat as provided in Section 2.1 (f) and Section 2.2
(a) and (b)(vi) hereof, Powdermet shall be obligated to pay to Andrew J. Sherman all of the Indebtedness
evidenced by the Cognovit Promissory Note dated May 31, 2014 from MesoCoat to and in favor of
Sherman in the original amount of $32,313.
SECTION 2.2. The Closing.
(a)
Subject to the terms and conditions of this Agreement, the closing of the transactions
contemplated by this Agreement (the "Closing"), shall take place on and as of the Effective Date,
provided that the last of the conditions set forth in Article V shall have been fulfilled or waived (other
than those that this Agreement contemplates will be satisfied at or immediately prior to the Closing), or at
such other time as shall be mutually agreed upon by Powdermet and Abakan (the "Closing Date").
(b)
Subject to the conditions set forth in this Agreement, the parties agree to consummate the
following transactions at the Closing:
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(i)
Powdermet shall assign and transfer to Abakan the MesoCoat Exchange Shares and the
Abakan Exchange Shares, by properly completing and executing the assignment and transfer sections on
the reverse side of the MesoCoat Certificate and the Abakan Certificate and delivering the MesoCoat
Certificate and the Abakan Certificate to MesoCoat and Abakan, respectively, in exchange for duly issued
and executed stock certificates for one million six hundred thousand (1,600,000) shares of Abakan. The
MesoCoat Certificate and the Abakan Certificate shall each be duly endorsed or accompanied by duly
executed stock powers sufficient to validly assign and transfer the MesoCoat Exchange Shares and the
Abakan Exchange Shares to Abakan.
(ii)
Abakan shall assign and transfer to Powdermet the Powdermet Exchange Shares, by
properly completing and executing the assignment and transfer section on the reverse side of the
Powdermet Certificate and delivering the Powdermet Certificate to Powdermet in exchange for a duly
issued and executed stock certificate for forty two thousand eight hundred thirteen (42,813) shares of
Powdermet. The Powdermet Certificate shall be duly endorsed or accompanied by a duly executed stock
power sufficient to validly assign and transfer the Powdermet Exchange Shares to Powdermet.
(iii)
As soon as practicable following the Effective Date but not later than November 30,
2015, Abakan shall, at its sole cost and expense, cause MesoCoat to install (i) a new properly constructed
paved driveway, approximately 30 feet in width, extending from Rockwell Drive to Buildings 37 and 40,
on and along the strip of land on the southwesterly side of the Land and the adjoining portion of Parcel #3
(as shown on the Lot Split plat, filed for record on June 10, 2011 as Cuyahoga County Automated File
Number 201106100338 and recorded in Volume 366 at Page 48 of Cuyahoga County Records) and (ii)
new separate underground water and gas lines, extending southeasterly across the Land from Rockwell
Drive to Buildings 37 and 40 (collectively the “MesoCoat Driveway and Utility Improvements”) so as to
provide improved water and gas service to Building 37 and Building 40. Upon and only after installation
of the MesoCoat Driveway and Utility Improvements, Powdermet shall cause Sherman to transfer fee
simple title in and to the Land to MesoCoat by a Deed, free and clear of all liens and encumbrances,
except for the Permitted Title Exceptions, all in accordance with that certain Purchase Agreement
between Sherman and Powdermet. The Land and improvements thereon shall be transferred in an “AS
IS” physical and environmental condition, without representation or warranty of any kind by Powdermet.
(iv)
Powdermet shall transfer the Equipment to MesoCoat by bill of sale, subject, however, to
the obligation of MesoCoat to continue to sell PComP powders to Powdermet at fair market value for use
in its Hybrimet™ consolidated nanocomposite wear component product line, with the addition of a LECO
carbon and LECO Oxygen test machines.
(v)
Powdermet shall pay, in funds immediately available to Abakan, the sum of $1,000,000
as follows: $250,000 on or before the end of the Effective Date and five (5) monthly installments of no
less than $150,000.00 each, commencing on or before the 30th day following the Effective Date and
continuing on monthly anniversary thereof until paid.
(vi)
Powdermet shall, and shall cause its affiliates to cancel, forgive, waive and release the
Indebtedness to and including the Effective Date by individual and several releases, it being understood,
however, that Abakan shall cause MesoCoat to meet any and all obligations, including rents, use fees,
taxes and other charges payable under (i) the Sublease Agreement dated as of May 31, 2014 between
MesoCoat and Powdermet in respect of Building 37 at 24112 Rockwell Drive, Euclid, Ohio; (ii) the Use
and Services Agreement dated as of May 31, 2014 between MesoCoat and Powdermet in respect of
Building 40 at 24112 Rockwell Drive, Euclid, Ohio from and after the Effective Date.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF POWDERMET
Powdermet represents and warrants to Abakan that the statements contained in this Article III are
true and correct as of the Effective Date of this Agreement and as of the Closing of the transactions
provided for in the Transaction Documents.
SECTION 3.1. Power and Authority; Enforceability. Powdermet is a corporation duly
organized, validly existing and in good standing under the laws of its jurisdiction of incorporation.
Powdermet has all requisite capacity, power and authority to execute, deliver and perform this
Agreement. No other corporate action on the part of Powdermet is necessary to authorize the execution
and delivery by Powdermet of this Agreement or the consummation by it of the contemplated
transactions. This Agreement has been duly executed and delivered and, upon execution by Abakan, will
constitute a valid and legally binding obligation of Powdermet, enforceable against Powdermet in
accordance with its terms, except (a) as limited by applicable bankruptcy, insolvency, reorganization,
moratorium, and other laws of general application affecting enforcement of creditors' rights generally and
(b) as limited by laws or decisions relating to the discretionary nature of specific performance and other
equitable remedies, to general principles of equity, or to the discretion of any court in granting any relief
or issuing any order, whether the proceeding is at law, in equity or otherwise.
SECTION 3.2. Title to the MesoCoat Exchange Shares and the Abakan Exchange Shares.
Powdermet is the sole legal and beneficial owner of the MesoCoat Exchange Shares and Abakan
Exchange Shares and has good and marketable title thereto. All of the MesoCoat Exchange Shares and
Abakan Exchange Shares owned by Powdermet are owned free and clear of any liens, claims, options,
charges, or Encumbrances of whatsoever nature. Powdermet has the unqualified right to sell, assign, and
deliver the MesoCoat Exchange Shares and Abakan Exchange Shares, and, upon consummation of the
transactions contemplated by this Agreement, Abakan will acquire good and valid title to the MesoCoat
Exchange Shares and Abakan Exchange Shares, free and clear of all liens, claims, options, charges, and
Encumbrances of whatsoever nature.
SECTION 3.3. Consents and Approvals. Since the board of directors of Powdermet has duly
authorized the execution, delivery and performance of this Agreement, neither the execution, delivery and
performance of this Agreement by Powdermet, nor the consummation by Powdermet of any transaction
related hereto, including the transfer, sale and delivery of the MesoCoat Exchange Shares and Abakan
Exchange Shares will require any additional consent, approval, license, Order or authorization of, filing,
registration, declaration or taking of any other action with, or notice to, any Person, other than such
consents, approvals, filings or actions as may be required under the Federal securities laws which have or
will be made.
SECTION 3.4. No Conflicts. The execution and delivery by Powdermet of this Agreement and
the Transaction Documents to which it is or will become a party do not, and the consummation of the
transactions contemplated by this Agreement and the Transaction Documents to which it is or will
become a party shall not, assuming the consents, approvals, filings or actions described in Section 3.3 are
made or obtained, as the case may be, (a) contravene, conflict with, or result in any violation or breach of
any provision of the certificate of incorporation or by-laws of Powdermet, (b) result in any violation or
breach of, or constitute (with or without notice or lapse of time, or both) a default (or give rise to a right
of termination, cancellation or acceleration of any obligation or loss of any benefit) under any of the
terms, conditions or provisions of any note, bond, mortgage, indenture, lease, contract or other agreement,
instrument or obligation to which Powdermet is a party or by which it or any of its properties or assets
may be bound, or (c) conflict or violate any permit, concession, franchise, license, judgment, Order,
decree, statute, law, ordinance, rule or regulation of any government, governmental instrumentality or
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court, domestic or foreign, applicable to Powdermet or any of its properties or assets, except in the case of
(b) and (c) for any such conflicts, violations, defaults, terminations, cancellations or accelerations which
would not, individually or in the aggregate, materially and adversely affect the MesoCoat Exchange
Shares or Abakan Exchange Shares being conveyed by Powdermet to Abakan.
SECTION 3.5. Purchase Entirely for Own Account.
(a)
The Powdermet Exchange Shares to be received by Powdermet will be acquired for
investment for its own account, and not with a view to the resale or distribution of any part thereof.
(b)
Powdermet has no present intention of selling, granting any participation in, or otherwise
distributing the Powdermet Exchange Shares, except as permitted by the Act.
(c)
Powdermet is an "accredited investor" under Rule 501(a) promulgated under the Act.
SECTION 3.6. Commissions. Powdermet is not obligated to pay any fee or commission to any
broker, finder or other similar Person in connection with the transactions contemplated by this
Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF ABAKAN
Abakan represents and warrants to Powdermet that the statements contained in this Article IV are
true and correct as of the Effective Date of this Agreement and as of the Closing of the transactions
provided for in the Transaction Documents.
SECTION 4.1. Power and Authority; Enforceability. Abakan is a corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction of incorporation. Abakan has all
requisite capacity, power and authority to execute, deliver and perform this Agreement. No other
corporate action on the part of Abakan is necessary to authorize the execution and delivery by Abakan of
this Agreement or the consummation by it of the contemplated transactions. This Agreement has been
duly executed and delivered and, upon execution by Powdermet, will constitute a valid and legally
binding obligation of Abakan, enforceable against Abakan in accordance with its terms, except (a) as
limited by applicable bankruptcy, insolvency, reorganization, moratorium, and other laws of general
application affecting enforcement of creditors' rights generally and (b) as limited by laws or decisions
relating to the discretionary nature of specific performance, and other equitable remedies, to general
principles of equity, or to the discretion of any court in granting any relief or issuing any order, whether
the proceeding is at law, in equity or otherwise.
SECTION 4.2. Title to the Powdermet Exchange Shares. Abakan is the sole legal and beneficial
owner of the Powdermet Exchange Shares and has good and marketable title thereto. All of the
Powdermet Exchange Shares owned by Abakan are owned free and clear of any liens, claims, options,
charges, or Encumbrances of whatsoever nature. Abakan has the unqualified right to sell, assign, and
deliver the Powdermet Exchange Shares, and, upon consummation of the transactions contemplated by
this Agreement, Powdermet will acquire good and valid title to the Powdermet Exchange Shares, free and
clear of all liens, claims, options, charges, and Encumbrances of whatsoever nature.
SECTION 4.3. Consents and Approvals. Since the board of directors of Abakan has duly
authorized the execution, delivery and performance of this Agreement, neither the execution, delivery and
performance of this Agreement by Abakan, nor the consummation by Abakan of any transaction related
hereto, including the transfer, sale and delivery of the Powdermet Exchange Shares, will require any
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additional consent, approval, license, Order or authorization of, filing, registration, declaration or taking
of any other action with, or notice to, any Person, other than such consents, approvals, filings or actions as
may be required under the Federal securities laws which have or will be made.
SECTION 4.4. No Conflicts. The execution and delivery by Abakan of this Agreement and the
Transaction Documents to which it is or will become a party do not, and the consummation of the
transactions contemplated by this Agreement shall not, assuming the consents, approvals, filings or
actions described in Section 4.3 are made or obtained, as the case may be, (a) contravene, conflict with, or
result in any violation or breach of any provision of the articles of incorporation or by-laws of Abakan,
(b) result in any violation or breach of, or constitute (with or without notice or lapse of time, or both) a
default (or give rise to a right of termination, cancellation or acceleration of any obligation or loss of any
benefit) under any of the terms, conditions or provisions of any note, bond, mortgage, indenture, lease,
contract or other agreement, instrument or obligation to which Abakan is a party or by which it or any of
its properties or assets may be bound, or (c) conflict or violate any permit, concession, franchise, license,
judgment, Order, decree, statute, law, ordinance, rule or regulation of any government, governmental
instrumentality or court, domestic or foreign, applicable to Abakan or any of its properties or assets,
except in the case of (b) and (c) for any such conflicts, violations, defaults, terminations, cancellations or
accelerations which would not, individually or in the aggregate, materially and adversely affect the
Powdermet Exchange Shares being conveyed by Abakan to Powdermet.
SECTION 4.5. Purchase Entirely for Own Account.
(a)
The MesoCoat Exchange Shares and Abakan Exchange Shares to be received by Abakan
will be acquired for investment for its own account, and not with a view to the resale or
distribution of any part thereof.
(b)
Abakan has no present intention of selling, granting any participation in, or otherwise
distributing the MesoCoat Exchange Shares and Abakan Exchange Shares, except, in the case of (a) and
(b) of this Section 4.5, as permitted by the Act.
SECTION 4.6. Commissions. Abakan is not obligated to pay any fee or commission to any
broker, finder or other similar Person in connection with the transactions contemplated by this
Agreement.
ARTICLE V
CONDITIONS PRECEDENT; RELATED COVENANTS
SECTION 5.1. Closing Efforts. Each of the parties hereto shall use its commercially reasonable
efforts ("Reasonable Efforts") to take all actions and to do all things necessary, proper or advisable to
consummate the transactions contemplated by this Agreement, including using their respective
Reasonable Efforts to ensure that (i) all representations and warranties remain true and correct in all
material respects through the Closing Date, and (ii) the conditions to the obligations of the other parties to
consummate the transactions are satisfied.
SECTION 5.2. Conditions Precedent to the Obligations of Abakan. The obligations of Abakan
to transfer the Powdermet Exchange Shares to Powdermet at the Closing are subject to the fulfillment of
the condition that, at the Closing, the representations and warranties of Powdermet set forth in this
Agreement shall be true and correct in all material respects, in each case as of the Effective Date of this
Agreement and as of the Closing as though made as of the Closing.
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SECTION 5.3. Conditions Precedent to the Obligations of Powdermet. The obligations of
Powdermet to transfer the MesoCoat Exchange Shares and the Abakan Exchange Shares to Abakan at the
Closing are subject to the fulfillment of the condition that, at the Closing, the representations and
warranties of Abakan set forth in this Agreement shall be true and correct in all material respects, in each
case as of the Effective Date of this Agreement and as of the Closing as though made as of the Closing.
ARTICLE VI
TERMINATION
SECTION 6.1. Termination by Mutual Consent. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned at any time prior to the Closing by the written
consent of each party hereto.
SECTION 6.2. Termination by Either Abakan or Powdermet. This Agreement may be
terminated (upon written notice from the terminating party hereto to the other party hereto) and the
transactions contemplated hereby may be abandoned by action of any party hereto, if (a) the Closing shall
not have occurred, or (b) any Federal, state or local government or any court, administrative agency or
commission or other governmental authority or agency, domestic or foreign shall have issued a Law or
Order permanently restraining, enjoining or otherwise prohibiting the transactions contemplated hereby
and such Law or Order shall have become final and non-appealable.
SECTION 6.3. Effect of Termination and Abandonment. In the event of termination of this
Agreement pursuant to this Article VI hereof, no party hereto or, its directors or officers or other
controlling persons shall have any liability or further obligation to any other party hereto pursuant to this
Agreement, except that Article VII hereof shall survive termination of this Agreement and nothing herein
will relieve any party hereto from liability for any breach of this Agreement occurring prior to such
termination or of any existing obligations that were to be resolved by this Agreement.
ARTICLE VII
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
SECTION 7.1. Survival of Representations. All representations, warranties, and agreements
made by any party in this Agreement or pursuant hereto shall survive the execution and delivery hereof
for a period of one (1) year from and after the Closing.
SECTION 7.2. Indemnification. Each party to this Agreement agrees to indemnify the other
party and hold same harmless from and in respect of any assessment, loss, damage, liability, cost, and
expense (including, without limitation, interest, penalties, and reasonable attorneys' fees) in excess of
twenty five thousand ($25,000) in the aggregate, imposed upon or incurred by either party resulting from
a breach of any agreement, representation, or warranty by the other party in connection with this
Agreement. Assertion by a party of their right to indemnification under this Section 7.2. shall not
preclude the assertion by the parties of any other rights or the seeking of any other remedies against the
opposing party.
ARTICLE VIII
GENERAL PROVISIONS; OTHER AGREEMENTS
SECTION 8.1. Press Releases. Other than any required filings under the Federal securities laws,
neither of the parties hereto will, without first obtaining the approval of the other, make any public
announcement, directly or indirectly, regarding this Agreement, nor the nature of the transaction
contemplated by this Agreement, to any person except as required by law or regulatory bodies and other
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Exhibit 10
than to the respective principals or other representatives of the parties, each of whom shall be similarly
bound by such confidentiality obligations. If any such press release or public announcement is so
required by either party (except in the case of any disclosure required under the Federal securities laws to
be made in a filing with the Securities and Exchange Commission), the disclosing party shall consult with
the other parties prior to making such disclosure, and the parties shall use all reasonable efforts, acting in
good faith, to agree upon a text for such disclosure which is satisfactory to each of the parties.
SECTION 8.2. Expenses. Regardless of whether the transactions contemplated hereby are
consummated, all legal and other costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party hereto incurring such costs and expenses.
SECTION 8.3. Piggy Back Registration Rights.
(a)
Should Abakan determine to register any of its common stock (the “Abakan Shares”)
under the Act on a form that would be suitable for a registration involving the Abakan Shares, Abakan
shall notify Powdermet to afford it an opportunity to include in such registration statement all or any part
of the Abakan Shares. Should Powdermet determine to include in any such registration statement all or
any part of such Abakan Shares, Powdermet shall, within (10) ten days after receipt of the above-
described notice from Abakan, notify Abakan in writing, and in such notice shall inform Abakan of the
number of Abakan Shares Powdermet wishes to include in such registration statement subject to the terms
and conditions of hereto, Abakan shall include in such registration, and in any underwriting involved
therein, the number of Abakan Shares specified by Powdermet.
(b)
Any registration hereto that involves an underwriting of shares of Abakan’s common
stock, shall not require the inclusion of any of Powdermet’s Abakan Shares unless Powdermet accepts the
terms of the underwriting as agreed upon between Abakan and the underwriters, and then only in such
quantity as the underwriters determine in their sole discretion would not jeopardize the success of the
offering. Furthermore, any other registration hereto, shall only require Abakan to include Powdermet’s
Abakan Shares in such quantity as Abakan’s board of directors in good faith determines in their sole
discretion would not jeopardize the success of the offering.
SECTION 8.4. Sale of Abakan Shares. Notwithstanding any prohibitions agreed to in any stock
agreement or other agreement heretofore entered into between Abakan and Powdermet, Abakan agrees
that Powdermet may sell any of its shares of Abakan on and after the Effective Date.
SECTION 8.5. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Ohio without regard to the conflicts of laws provisions thereof.
SECTION 8.6. Dispute Resolution. Should there be any dispute between the parties arising from
this Agreement, the resolution thereof shall be by confidential arbitration, held in Cleveland, Ohio, with the
arbitrator to be chosen by mutual consent of the parties. If the parties cannot agree as to an arbitrator, then
the arbitrator shall be, or is to be selected by, former Cuyahoga County Common Pleas Judge James J.
McMonagle, currently of Vorys, Sater, Seymour and Pease LLP. If he is unavailable or unwilling to be or
select an arbitrator, then the Presiding Judge of the Common Pleas Court of Cuyahoga County shall select
the arbitrator.
Unless the parties mutually agree otherwise, arbitration shall be in accordance with the Rules of
the American Arbitration Association currently in effect. The demand for arbitration shall be filed in
writing with the other parties. A demand for arbitration shall be made within a reasonable time after the
dispute has arisen, and in no event shall it be made after the date when institution of legal or equitable
proceedings based on such dispute would be barred by the applicable statute of limitations. No arbitration
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arising out of or relating to this Agreement shall include, by consolidation or joinder or in any other manner,
parties other than persons substantially involved in a common question of fact or law whose presence is
required if complete relief is to be accorded in arbitration. No person or entity shall be included as an
original third party or additional third party to an arbitration whose interest or responsibility is insubstantial.
Consent to arbitration involving an additional person or entity shall not constitute consent to arbitration of
a dispute not described therein or with a person or entity not named or described therein. All agreements
to arbitrate shall be specifically enforceable under applicable law in any court having jurisdiction thereof.
The award rendered by the arbitrator shall be in writing and state the reasons therefor. Any such award
shall be final and binding on the parties and judgment may be entered upon it in accordance with applicable
law in any court having jurisdiction thereof. The arbitrator shall also make all determinations as to payment
of the arbitrator’s fee, filing fees and, all other costs and expenses incurred in connection with the
arbitration. The procedures specified in this Section 8.6 shall be the sole and exclusive procedures for the
resolution of disputes among the parties arising out of or relating to a dispute set forth in above; provided,
however, that a party, without prejudice to the above procedures, may seek a preliminary injunction or other
provisional judicial relief, if in its sole judgment such action is necessary to avoid irreparable damage or to
preserve the status quo. Despite such action, the parties shall continue to participate in good faith in the
procedures specified in this Section 8.6.
Unless otherwise mutually agreed to by the parties, in the event of a dispute arising from this
Agreement where the amount at issue exceeds $250,000, each of the parties retains, and may pursue, any
and all legal rights hereunder or at law or equity. The parties agree that any suit arising from this
Agreement shall be brought in the Cuyahoga County Court of Common Pleas.
To the extent permitted by law, each of Powdermet and Abakan waives any right to have a jury
participate in resolving any dispute where the amount at issue exceeds $250,000, whether sounding in
contract, tort, or otherwise, by and among any of the parties arising out of, connected with, related to, or
incidental to this Agreement, or any other agreements executed in connection therewith or transactions
related thereto.
SECTION 8.7. Headings. Article and Section headings used in this Agreement are for
convenience only and shall not affect the meaning or construction of this Agreement.
SECTION 8.8. Entire Agreement. This Agreement constitutes the entire agreement between the
parties hereto and supersedes all prior agreements and understandings, both written and oral, with respect
to the subject matter hereof.
SECTION 8.9. Counterparts. This Agreement may be executed in one or more counterparts, each
of which shall be deemed an original but all of which together shall constitute one and the same
instrument. Signatures on this Agreement may be communicated by facsimile transmission and shall be
binding upon the parties hereto so transmitting their signatures. Counterparts with original signatures
shall be provided to the other parties hereto following the applicable facsimile transmission; provided that
the failure to provide the original counterpart shall have no effect on the validity or the binding nature of
this Agreement.
SECTION 8.10. Amendment. Any term of this Agreement may be modified or amended only by
an instrument in writing signed by each of the parties hereto.
SECTION 8.11. Severability. If one or more provisions of this Agreement are held to be
unenforceable under applicable law, such provision shall be excluded from this Agreement and the
balance of the Agreement shall be interpreted as if such provision were so excluded and shall be enforced
in accordance with its terms.
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Exhibit 10
IN WITNESS WHEREOF, the parties hereto have caused this Settlement and Exchange
Agreement to be duly executed and delivered as of the date set forth above.
POWDERMET, INC., a Delaware corporation
By: /s/ Andrew J. Sherman
Name: Andrew J. Sherman
Title: Chief Executive Officer
ABAKAN INC., a Nevada corporation
By: /s/ Robert H. Miller
Name: Robert H. Miller
Title: Chief Executive Officer
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Exhibit 10
EXHIBIT A
LIMITED WARRANTY DEED
AND
EASEMENT AND RESTRICTION AGREEMENT
KNOW ALL MEN BY THESE PRESENTS, that SHERMAN PROPERTIES, LLC, an Ohio
limited liability company (the "Grantor"), for the consideration of Ten Dollars ($10.00) and other good and
valuable consideration received to their satisfaction of MESOCOAT, INC., a Nevada corporation (the
"Grantee"), whose tax mailing address is 24112 Rockwell Drive, Euclid, Ohio 44117, does give, grant, bargain,
sell and convey unto the said Grantee, its successors and assigns, the following described premises (the
"Premises"), being a part of the premises last conveyed by deed from Utica Realty Holdings, LLC to the
Grantor, dated November 21, 2002 and filed for record as Cuyahoga County Automated File Number
200211270615:
Situated in the City of Euclid, County of Cuyahoga and State of Ohio and known as being all of
Split Parcel #2, of the Lot Split Plat of a part of Original Euclid Township, Atwater Tract, and part of
Original Euclid Township Lot No. 37, Tract 18 as shown by the recorded plat Volume 366 at Page 48 of
Cuyahoga County Map Records as appears by said plat, be the same more or less, but subject to all legal
highways.
Permanent Parcel Number 647-30-010
TOGTHER WITH a permanent non-exclusive easement and right of way for the benefit of
Grantee and any future owners of the Premises, for use as private drives for ingress and egress to and
from the Premises and Rockwell Drive in the City of Euclid, Ohio for pedestrian and vehicular traffic and
to maintain, repair and replace said drives, on and over the following described premises insofar as said
drives are now or hereafter located thereon:
Situated in the City of Euclid, County of Cuyahoga and State of Ohio and known as being all of
Parcels #1 and #3, of the Lot Split Plat of a part of Original Euclid Township, Atwater Tract, and part of
Original Euclid Township Lot No. 37, Tract 18 as shown by the recorded plat Volume 366 at Page 48 of
Cuyahoga County Map Records as appears by said plat, be the same more or less, but subject to all legal
highways.
Permanent Parcel Numbers 647-30-008 and 647-30-009
RESERVING UNTO GRANTOR, its successors and assigns, the right to and the right to grant
a permanent non-exclusive easement and right of way for the benefit of Grantor and any future owners of
the lands retained by Grantor, for (i) use as private drives, for ingress and egress to and from said retained
lands and Rockwell Drive in the City of Euclid, Ohio for pedestrian and vehicular traffic and to maintain,
repair and replace said drives, (ii) for the installation and maintenance of water, gas, electric and other
utility lines, and (iii) for the parking of automobiles and other vehicles, on, over and under the Premises
insofar as said drives, utility lines and parking areas are now or hereafter located on the Premises:
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Exhibit 10
Situated in the City of Euclid, County of Cuyahoga and State of Ohio and known as being all of
Split Parcel #2, of the Lot Split Plat of a part of Original Euclid Township, Atwater Tract, and part of
Original Euclid Township Lot No. 37, Tract 18 as shown by the recorded plat Volume 366 at Page 48 of
Cuyahoga County Map Records as appears by said plat, be the same more or less, but subject to all legal
highways.
Permanent Parcel Number 647-30-010.
TO HAVE AND TO HOLD the above granted and bargained Premises with the appurtenances
thereunto belonging, unto the said Grantee, its successors and assigns forever. And the said Grantor does for
itself and its successors and assigns, covenant with the said Grantee, its successors and assigns, that at and
until the ensealing of these presents, the title to said Premises has not been encumbered or impaired, by, from,
through or under any act of said Grantor, and that it will forever warrant and defend said Premises, with the
appurtenances thereunto belonging unto the said Grantee, its successors and assigns, against all lawful claims
and demands whatsoever of all persons claiming by, from, through or under any act of the Grantor, except (i)
taxes and assessments, both general and special, which are a lien but not yet due and payable; (ii) zoning
and building ordinances, if any; (iii) matters which would be disclosed by an accurate survey and
inspection of the Premises; and (iv) those covenants, rights, terms, conditions, limitations, restrictions and
easements which are of record or are created herein.
The said Grantee, by acceptance of and in consideration of the execution and delivery of this deed,
covenants and agrees with and for the benefit of the said Grantor, its successors and assigns, and any present
or future owners of parcels comprised in the premises last conveyed by deed to the said Grantor as recited
hereinabove, and for the respective successors and assigns of each, to hold and use all or any portion of the
Premises, subject to the following covenants, rights, terms, conditions, limitations, restrictions and easements
which run with the land and are imposed for the protection of the lands of the said Grantor:
1.
All buildings, additions or alterations nor any additional out buildings, structure or
improvement of any kind, including, without limiting the generality of the foregoing, any fencing or other
barriers, blacktopping, driveways, roadways or trees, bushes or other landscaping, shall be erected, constructed
or installed and used for and within the activity and use limitations described in that certain instrument entitled
Land Use Restriction filed for record on November 26, 2014, as Cuyahoga County Automated File Number
201411250470.
2.
No building, addition or alteration nor any additional out building, structure or
improvement of any kind, including, without limiting the generality of the foregoing, any fencing or other
barriers, blacktopping, driveways, roadways or trees, bushes or other landscaping, shall be erected, constructed
or installed without, in each instance, first having obtained the written consent of the said Grantor or its
successors and assigns, which consent shall not be withheld or delayed provided that the design, dimensions,
location, grades and site lines of any such building, addition, alteration or any additional out building, structure
or improvement shall, in the judgment of the said Grantor, reasonably exercised, be harmonious and compatible
with the uses then being made by the said Grantor or its successors and assigns of the aforementioned lands of
which the Premises is a part.
3.
The owners of parcels which are benefitted by any of the easements granted or
reserved herein shall each be responsible for and pay the cost of repairing, replacing and maintaining the drives,
utility lines and parking areas located on the parcel or parcels owned by such owners.
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4.
Failure or neglect to enforce the foregoing covenants, rights, terms, conditions,
limitations, restrictions and easements shall in no event be construed, taken or held to be a waiver thereof, and
the said Grantor, its successors and assigns, shall at any time and at all times have the right to enforce the same.
5.
The foregoing covenants, rights, terms, conditions, limitations, restrictions and
easements shall be deemed to be covenants running with the land herein described and not conditions and shall
bind the said Grantee, its successors and assigns, unless and until any change or changes thereto shall have
been approved in writing by the said Grantor, its successors, or assigns.
6.
The said Grantee shall recite or refer to these covenants, rights, terms, conditions,
limitations, restrictions and easements in all future instruments transferring the Premises conveyed by this deed
or any part thereof.
IN WITNESS WHEREOF the Grantor has hereunto set its hand this __ day of _____, 2015.
SHERMAN PROPERTIES, LLC, an Ohio limited
liability company
By: ____________________________________
Andrew J. Sherman, its Managing Member
STATE OF OHIO
)
)
SS:
COUNTY OF CUYAHOGA
)
BEFORE ME, a Notary Public in and for said County and State, appeared Andrew J.
Sherman, who acknowledged that he did sign the foregoing instrument as Managing Member of Sherman
Properties, LLC and that the same was his free act and deed individually and as such Managing Member.
IN TESTIMONY WHEREOF, I have set my hand and official seal at Cleveland, Ohio this
__ day of July, 2015.
__________________________________
Notary Public
This instrument prepared by:
Lee A. Chilcote, Esq.
Chilcote Law Firm LLP
12434 Cedar Road, Suite 3
Cleveland Heights, Ohio 44106
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Exhibit 99
Abakan Acquires 100% Ownership of
MesoCoat
MIAMI, FL--(Marketwired - Jul 27, 2015) - Abakan Inc. (OTCQB: ABKI) ("Abakan"), an
emerging leader in the advanced coatings market, is pleased to announce that, following its long
term strategy, Abakan has increased ownership in subsidiary, MesoCoat Inc. to 100%. In
exchange for 20.5% of Abakan's minority ownership in Powdermet Inc. (from 24.1% to 3.6%),
Abakan has acquired from Powdermet: the remaining 11.9% of MesoCoat, along with land and
equipment worth $550,000, the extinguishment of existing inter-company debt of $486,000, the
return of 400,000 outstanding Abakan common shares to authorized capital and $1,000,000 in
cash.
"Obtaining 100% ownership of MesoCoat along with owning the 5.7 acres of land where our
clad pipe manufacturing facility sits and on which we plan to build a 160 ton/year PComP
powder production facility were some of Abakan's goals for CY 2015. This transaction also
transfers ownership of necessary PComP powder production equipment from Powdermet to
MesoCoat, in addition to 6 cash payments over 5 months totaling $1,000,000 which will be
utilized in part to fund capital expenses for the PComP facility. PComP testing and recent sales
have been very successful so we expect to meet the growing demand for this product with
increased production capacity. When constructed, the new plant running at full capacity would
be able to increase annual revenues by approximately $20,000,000," said Abakan CEO, Robert
Miller.
The decision to divest a significant portion of Abakan's ownership of Powdermet, was mutually
agreed upon by the respective Boards of Abakan and Powdermet, and is the culmination of the
staged acquisition of MesoCoat planned as part of Abakan's initial investment in 2009. The price
per share of the latest conversion of Abakan's investment in MesoCoat is equal to the last price at
which Abakan converted invested capital to equity in May 2014. Abakan originally purchased a
41% interest in Powdermet specifically because of the MesoCoat shares owned by Powdermet.
The 41% interest was purchased from Kennametal Inc., in March, 2011 for $1,700,000, of which
37.4% has now been returned to Powdermet in two separate transaction for an approximate value
to Abakan of $10,000,000, based on the same value per share calculated in the valuation of
MesoCoat relied upon Abakan's May 31, 2014 year end audit, translating into an effective return
on investment of around 500%.
About Abakan, Inc.
Abakan develops, manufactures and markets advanced nano-composite materials, and innovative
fabricated metal products for applications in the oil and gas, petrochemical, mining, aerospace
and defense, energy, infrastructure and processing industries. Abakan's technology portfolio
currently includes high-speed, large-area metal cladding technology, and long-life nano-
composite anti-corrosion and wear coating materials. Abakan's products have demonstrated
longer life, higher productivity and extremely high strength-to-weight ratios compared to
competing technologies. The Abakan group of companies has been honored by The Wall Street
Journal as the #1 Manufacturing Innovation across the globe; by Pipeline Industries Guild as the
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Exhibit 99
Top Subsea Pipeline Technology; by Forbes as the #1 Most Promising Material Science
Company in the United States; by American Metals Market with the Steel Excellence Award; by
Inc. 500 as one of the Fastest Growing Manufacturing Company in the U.S.; and has received
numerous other trade, industry and technology awards including five R&D 100 Awards and a
Technology Innovation Award from the National Institute of Standards and Technology. Over
$50 million has been invested in product development and testing by federal agencies, national
labs and our companies in order to deliver products that offer improved performance over the
current state of art. Abakan has introduced its PComP™ W for metal asset protection and life
extension to the oil and gas and mining industries, and is currently focused on the scale-up and
commercialization of its highly disruptive metal cladding products for the oil and gas, oil sands,
and mining industries. Abakan currently operates from multiple locations in United States, and in
Canada.
Forward-Looking Statements
A number of statements contained in this press release are forward-looking statements. These
forward looking statements involve a number of risks and uncertainties including technological
obsolescence, market acceptance of future products, competitive market conditions, and the
sufficiency of capital resources. The actual results Abakan may achieve could differ materially
from any forward-looking statements due to such risks and uncertainties. Abakan encourages the
public to read the information provided here in conjunction with its most recent filings on Form
10-K, Form 10-Q and 8-K. Abakan's public filings may be viewed at www.sec.gov.
Abakan Inc. is on Facebook
Abakan Inc. is on Twitter
Contact Information
Contact
Abakan, Inc.
Robert Miller
Chief Executive Officer
Phone: 786-206-5368
Email: robert.miller@abakaninc.com
www.abakaninc.com
Investor Relations
Surety Financial Group, LLC
Phone: 410-833-0078
Email: info@suretyfingroup.com
www.suretyfingroup.com
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