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                                                                   Exhibit 10.19

                              EMPLOYMENT AGREEMENT

      WHEREAS, the company identified below ("Company") employs the employee
identified below ("Employee") in the capacity identified below ("Position"); and

      WHEREAS, Employee desires to agree to the covenants relating to his
employment and post-employment activities in exchange for the undertakings of
Company hereunder.

      NOW, THEREFORE, in consideration of the foregoing, of the mutual promises
herein contained, and of other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties, intending legally to
be bound by this Employment Agreement ("Agreement"), agree as follows:

1.    Specifications and Definitions

(a)   Agreement Dated:  July 1, 2007

(b)   Company:   NanoDynamics, Inc.

(c)   Employee Name and Address:

      William E. Cann
      17038 Winning Colors Place
      Leesburg, VA 20176

(d)  Position: Vice President and Chief Financial Officer

(e)  Base Salary: $225,000

(f)  Basic Term:  One (1) year from the date hereof.

(g)  Geographic Area of Non-Competition: shall mean the areas specified below:
     Worldwide.

     The Employee specifically acknowledges that this geographic restriction is
     reasonable given the scope of Employee's responsibilities.

(h)  Specific Field of Non-Competition shall mean any "Similar Business" as
     defined in Section 9(a).

(i)  Affiliated Company: shall mean Company and any other business organization
     in which Company directly or indirectly holds a twenty-five percent (25%)
     or greater ownership interest.

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2.   Employment

Company agrees to employ Employee in the Position as set forth in Section 1(d),
and Employee agrees to accept such employment on the terms and conditions herein
set forth.

3.   Term

     The term of employment of Employee pursuant to this Agreement shall
     commence as of the date hereof and shall continue for the number of years
     equal to the Basic Term as defined in Section 1(f), and this Agreement
     shall be automatically renewed for additional one-year terms unless and
     until thirty (30) days prior written notice is given by either party to
     the other of the intent to not to renew the term of this Agreement as
     provided herein

4.   Duties

(a)  Employee shall, on a full-time basis, devote his best efforts and services
     to the Company in fulfilling the duties of the Position, which shall
     include duties normally associated with the Position at a comparable
     organization and such other duties as reasonably may be assigned from time
     to time by the Chief Executive Officer ("CEO") or the Board of Directors.
     Employee shall at all times conduct himself in a manner consistent with the
     duties and responsibilities of the Position. Employee shall at all times
     serve the best interests of the Company, reporting to and subject at all
     times to the direction and supervision of the CEO.

(b)  Employee represents and warrants that acceptance and delivery of this
     Agreement and the performance of his duties hereunder will not violate the
     terms of any other agreement to which he is or was a party or to which he
     is or was intended to be bound. Employee agrees not to enter into any
     agreement, either written or oral, which may conflict with this Agreement.
     Employee further represents and warrants that in performing his duties
     hereunder, he shall use his best efforts to comply with all applicable laws
     and regulations and that he immediately will report to the Board of
     Directors all material conduct by Company or its employees or agents
     (including Employee) which he knows or should have known is or may be
     illegal.

5.   Compensation and Benefits

(a)  The Base Salary may be reviewed periodically but not less frequently than
     once annually, and may be increased (but in no event decreased) to the
     extent, if any, determined by Company in its sole discretion.

(b)  Employee shall also be entitled to participate in any fringe benefit
     programs generally available to all employees of Company in accordance with
     and subject to the terms and conditions of such programs. Employee shall be
     entitled to three (3) weeks vacation in any calendar year. Vacation will
     not accumulate over multi-year periods.

(c)  Company shall reimburse Employee for all reasonable and necessary business
     expenses incurred by him in the performance of his duties hereunder which
     are properly documented

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     and in accordance with Company's policies and procedures as they may be
     amended from time to time.

(d)  In addition to Base Salary, in the first quarter of each calendar year,
     commencing in 2008, the Board of Directors shall establish an annual
     incentive compensation program consisting of both cash and stock options to
     be awarded to Employee based on corporate and individual performance during
     the applicable calendar year ("Incentive Compensation"). Awards shall be
     made as of January 31 of the following year. If Employee's employment is
     terminated for any reason, other than for "Just Cause" as defined in
     Section 13(a), during a calendar year, he shall be entitled to a pro rata
     share of the cash portion of the Incentive Compensation calculated at the
     end of such calendar year based on the number of months in the applicable
     calendar year prior to termination. The economic terms and performance
     criteria of the annual incentive compensation program shall be determined
     by the Board of Directors acting in its sole discretion. Any annual
     Incentive Compensation award earned by Employee, including, to the extent
     applicable, a prorated award, shall be paid to Employee by January 31 of
     the calendar year next following the calendar year for which the Incentive
     Compensation award was determined."

(e)  Upon the effective date of an initial public offering by the Company, , the
     Company shall grant an incentive stock option to Employee for 50,000 shares
     of the common stock of the Company pursuant to it 2007 Incentive Plan
     ("Option"). The Option shall be (i) exercisable at the public offering
     price, (ii) vest 25% on the first anniversary of the Option and 25% on each
     of the next three anniversaries of the Option, and (iii) expire on the
     tenth anniversary of the Option unless earlier terminated in accordance
     with the Company's 2007 Incentive Plan.

6.   Illness, Incapacity or Death

(a)  If, during the term of this Agreement, Employee should be prevented from
     performing his duties by reason of illness or incapacity for an aggregate
     of ninety (90) days in any twelve (12) month period, then Company may
     immediately terminate this Agreement by ten (10) days notice in writing, in
     which event this Agreement shall thereupon terminate, and the provisions of
     Section 14 shall not apply and no further payments shall be due Employee
     from Company other than pursuant to any employee benefit plan or fringe
     benefit in which Employee participates.

(b)  If Employee dies during the term of this Agreement, this Agreement shall
     thereupon terminate, the provisions of Section 14 shall not apply and no
     further payments shall be due Employee from Company other than pursuant to
     any employee benefit plan or fringe benefit in which Employee participates.

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7.   Non-Disclosure of Information

It is understood that the business of Company and any Affiliated Company is of a
confidential nature. During the period of Employee's employment by Company,
Employee may have received and/or may secure confidential information concerning
Company and any Affiliated Company which, if known to competitors thereof, would
damage Company and any Affiliated Company. Employee (i) agrees that during and
after the term of this Agreement he will not, directly or indirectly,
appropriate to his own use or to the use of any third party and (ii) agrees that
during the term of this Agreement and for a period of five (5) years after the
term of this Agreement, divulge or disclose, any secret, proprietary or
confidential information or knowledge, obtained by him during the term hereof,
concerning such confidential matters of Company and any Affiliated Company,
including, but not limited to, information pertaining to research and
development, trade secrets, systems, manuals, confidential reports, customers,
suppliers, costs, pricing, methods, processes, designs, equipment catalogs,
operating procedures, equipment and methods used and preferred by Company's
customers and suppliers and fees paid by them. Confidential information does not
include any information which Employee can demonstrate was publicly available
prior to Employee's receipt of such information or thereafter became publicly
available without any action on Employee's part. Information shall be deemed
"publicly available" if it becomes a matter of public knowledge or is contained
in materials available to the public or is obtained from any source other than
Company or any Affiliated Company (or their directors, officers, employees or
outside advisors) provided that such source has not entered into a
confidentiality agreement with Company or any Affiliated Company with respect to
such information or obtained the information from an entity or person party to a
confidentiality agreement with Company or Affiliated Company. If Employee
becomes legally compelled to disclose any confidential information, Employee
will provide Company with immediate written notice so that Company may seek a
protective order or other appropriate remedy. If Company does not obtain such
protective order or other appropriate remedy, Employee will furnish only that
portion of the confidential information which Employee is legally required to
disclose.

8.   Trade Secrets

Employee covenants that he shall, while employed by Company, assign and transfer
over to Company or its designee all right, title and interest in and to all
trade secrets, secret processes, inventions, improvements, patents, patent
applications, trademarks, trademark applications, copyrights, copyright
registrations, discoveries and/or other developments (hereafter "Inventions")
which he may thereafter, alone or in conjunction with others, conceive, make,
acquire, or suggest at any time which relate to the products, processes, work,
research, or other activities of Company or any Affiliated Company. Any and all
Inventions which are of a proprietary nature and which Employee may conceive,
acquire or suggest, either alone or in conjunction with others, during his
employment with Company relating to or in any way pertaining to or in any way
connected with Company's or any Affiliated Company's business, shall be the sole
and exclusive property of Company or its designee; and Employee, whenever
required to do so by Company, shall, without further compensation or
consideration, properly execute any and all applications, assignments or other
documents which Company or its designee shall deem necessary in order to apply
for and obtain Letters Patent of the United States and/or comparable rights
afforded by foreign countries for the Inventions, or in order to assign and
convey to Company or its designee the sole and exclusive right, title and any
interest in and to the Inventions. This obligation shall continue beyond the
termination of this Agreement with respect to Inventions conceived or made by
Employee during

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the term of his employment by Company, and shall be binding upon his assigns,
executors, administrators and other legal representatives.

9.   Covenant Not to Compete

For purposes of Sections 9 and 10, "Affiliated Company" shall be limited to an
Affiliated Company as defined in Section 1(i) with which Employee has had
substantial involvement during the term of his employment with Company. Employee
acknowledges that the services he has rendered and is to render are of a special
and unusual character with a unique value to Company, the loss of which cannot
adequately be compensated by damages in an action at law. In view of the unique
value to Company of the services of Employee for which Company has contracted
hereunder, the substantial goodwill of the Company that Employee has obtained
and will continue to obtain and because of the confidential information to be
obtained by or disclosed to Employee, and as a material inducement to Company to
enter into this Agreement and to pay to the Employee the compensation and
benefits stated in Section 5 and other promises contained herein, Employee
covenants and agrees as follows:

(a)  During Employee's term of employment with the Company and for twelve (12))
     months thereafter, without regard to the reason for separation, Employee
     will not, without the prior written consent of Company, directly or
     indirectly, whether as a principal, agent, officer, director, employee,
     consultant or otherwise, alone or in association with any other person,
     firm, corporation or other business organization, carry on, or be engaged,
     employed by, concerned or take part in, or render services to, or own,
     share in the earnings of or invest in the stock, bonds or other securities
     of any person, firm, partnership, corporation or other business
     organization (other than the ownership of less than 5% of the securities of
     any public company) engaged anywhere in the Geographic Area of
     Non-Competition set forth in Section 1(g), in a business which is in
     competition with (i) any of the businesses carried on by Company; (ii) any
     of the businesses carried on by an Affiliated Company; or (iii) any
     business which Company or any Affiliated Company anticipates entering or
     anticipated entering as of the date of Employee's separation as the result
     of an active research and development program (each of the foregoing being
     herein sometimes referred to as a "Similar Business"). Employee shall not,
     directly or indirectly, solicit or divert business from the Company, or
     attempt to convert to other methods of using the same or similar products
     or services provided by Company. Employee acknowledges and agrees that
     conduct of any said activities by any person other than Company could
     accordingly constitute competition with Company and is expressly prohibited
     by this Section 13.

(b)  As a separate and independent covenant, Employee agrees that during
     Employee's term of employment with the Company and for a period of twelve
     (12) months thereafter, without regard to the reason for separation, he
     will not in any manner, directly or indirectly (except in the course of his
     employment with Company), for the purpose of conducting or engaging in any
     Similar Business, call upon, solicit, advise or otherwise do, or attempt to
     do, business with any clients, customers or accounts of Company or any
     Affiliated Company.

(c)  As a separate and independent covenant, during the term of Employee's
     employment with the Company, Employee shall promptly disclose to Company
     each business opportunity of a type which, based upon its prospects and
     relationship to the business of Company, Company might

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     reasonably consider pursuing. If Employee's employment is terminated for
     any reason, Company shall have the exclusive right to participate in or
     undertake any such opportunity on its own behalf without any involvement by
     or remuneration to Employee.

10.  Covenant Not to Solicit

Employee agrees that during the term of his employment with Company and for a
period twelve (12) months thereafter, without regard to the reason for
separation, Employee will not, directly or indirectly: (i) attempt to hire any
officer or employee of the Company or an Affiliated Company; (ii) assist in such
hiring by any other person, (iii) encourage any such employee to terminate his
employment with Company or an Affiliated Company, (iv) encourage any customer of
Company or an Affiliated Company to terminate its relationship with, as
applicable, Company or an Affiliated Company, and/or (v) encourage any supplier
of Company or Affiliated Company to terminate its relationship with, as
applicable, Company or an Affiliated Company.

11.  Remedies

(a)  Employee acknowledges and agrees that Company does not have any adequate
     remedy for a breach or threatened breach by Employee of any of the
     provisions of Sections 7, 8, 9, or 10. Company, in addition to and not in
     limitation of any other rights, remedies or damages available to company at
     law or in equity, shall be entitled to a temporary and permanent injunction
     in order to prevent or restrain any such breach or threatened breach by
     Employee or by Employee's partners, agents, representatives, servants,
     employers, employees, and/or persons directly or indirectly acting for or
     with him. Employee expressly waives any security that might otherwise be
     required in connection with obtaining such relief

(b)  Employee agrees that, in the event he violates Sections 7, 8, 9, or 10 of
     this Agreement, he will forfeit the right to further compensation or
     benefits under Sections 5 or 13 of this Agreement and will be required to
     reimburse the Company for any compensation or benefits, including severance
     pay, that were provided to him during any period in which he was in
     violation.

12.  Reasonableness of Restrictions; Survival

(a)  Employee acknowledges that he has carefully read and considered the
     provisions of Sections 1(g), 1(h), 7, 8, 9, and 10; and having done so,
     agrees that the restrictions set forth in these paragraphs, including, but
     not limited to, the time period of the restrictions, the geographical areas
     of the restrictions and the scope of the restrictions set forth in Sections
     1(g), 1(h), 7, 8, 9, and 10 are fair and reasonable and are reasonably
     required for the protection of the compelling and legitimate business
     interests of Company and its officers, directors, and other employees.

(b)  Employee acknowledges that his agreement to be subject to and abide by the
     provisions of Sections 7, 8, 9, and 10 are material conditions to his
     employment with the Company and the Company's willingness to enter into
     this Agreement.

(c)  Employee acknowledges that the restrictions and limitations set forth in
     this Agreement will not prevent Employee from earning a living following
     his separation from employment with the Company.

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(d)  If any of the provisions of Sections 7, 8, 9 and/or 10 shall be held to be
     invalid or unenforceable, the remaining provisions thereof shall
     nevertheless continue to be valid and enforceable as though the invalid or
     unenforceable parts have not been included therein. If any provision of
     Sections 7, 8, 9, and 10 relating to the time period, the geographical
     areas of restriction and/or the scope of restrictions shall be declared by
     a court of competent jurisdiction to exceed the maximum time period, areas
     and/or scope such court deems reasonable and enforceable, the time period,
     geographical areas of restriction and/or scope of restriction deemed
     reasonable and enforceable by the court shall become and thereafter be the
     maximum time period, geographical areas or scope under this Agreement.

(c)  Sections 7, 8, 9, 10, 11, 12, 13 and 15 shall survive the termination of
      this Agreement.

13.  Termination for Just Cause; Voluntary Termination

(a)  Company may terminate this Agreement with Just Cause by giving written
     notice to Employee, and Company may direct Employee to cease activities
     related to the Agreement and vacate the premises of Company immediately.
     Just Cause shall exist if Employee:

          (1) is convicted of or pleads nolo contendere to a felony;

          (2) materially breaches this Agreement, provided, however, that any
     breach of Sections 7, 8, 9 and/or 10 shall be deemed to be material; or

          (3) engages in conduct constituting gross negligence that materially
     injures the Company or conduct that constitutes a gross disregard of his
     duties as set forth in Sections 1(d), 2 and 4 of this Agreement.

     For purposes of this Section 13(a) only, any action, or failure to act,
     shall not be considered "gross negligence" or "gross disregard" if it is
     done by Employee in good faith and with reasonable belief that his action
     or omission was in the best interest of the Company. Company shall provide
     written notice of its intention to immediately terminate hereunder for Just
     Cause, provided that in the case of termination under clauses (3) or (4)
     above, Company shall give thirty (30) days' written notice of its intention
     to terminate this Agreement, which notice shall state with particularity
     the acts and or reasons upon which Company bases such termination, during
     which 30-day period Employee shall have the opportunity to cure. If
     Employee is terminated for Just Cause, he shall not be entitled to receive
     any of the payments or benefits described in Section 14. Employee shall
     nevertheless be bound by the covenants of Sections 7, 8, 9, and 10.

(b)  Employee may terminate his employment by giving thirty (30) days' advance
     written notice to Company. Upon receipt of such thirty (30) days' written
     notice from Employee, Company may, at its sole discretion, elect to
     terminate Employee's employment at any time thereafter prior to the
     Employee's designated last day of employment, and Company shall continue
     Employee's Base Salary for the remainder of such period or such shorter
     period as is mutually agreed upon. If Employee terminates his employment or
     is terminated after he provides notice under this Section 13(b), Employee
     shall not be entitled to receive any of the payments or benefits described
     in Section 14, but he shall nevertheless be bound by the covenants of
     Sections 7, 8, 9, and 10.

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14.  Termination Without Just Cause

(a)  Provided Employee has not obtained other employment, after the date of
     Employee's termination, Company shall commence payment to Employee at the
     rate of Employee's current Base Salary until such time that Employee
     obtains other employment, but in no event for longer than a period of
     twelve (12) months. The period described in this sub-paragraph (b) is
     hereafter referred to as the "Continuation Period". During the Continuation
     Period, Company will pay up to Employee's current Base Salary in accordance
     with the Company's usual payroll procedures (less withholding taxes and
     customary employee deductions). If during the Continuation Period, Employee
     should obtain employment or other work not prohibited hereby and his
     aggregate compensation pursuant thereto is less than the compensation
     payable during the Continuation Period, then Company shall pay to Employee
     an amount equal to the difference between such other compensation and the
     compensation payable during the Continuation Period; provided that, upon
     request by Company, Employee shall provide any and all documentation
     requested to allow Company to assess his aggregate compensation from such
     other employment or other work.

(b)  From the date of termination until the expiration of the Continuation
     Period, and subject to restrictions imposed under applicable tax and other
     laws and applicable plan provisions, Company shall also continue medical,
     dental, vision, and prescription drug benefits as may be generally
     available from time to time to all employees of Company. The benefits
     provided by the preceding sentence shall be secondary and supplemental to
     any like benefits provided by another employer. In the event applicable
     laws prevent, or Company plan documents do not provide for, participation
     or continuation of Employee as set forth above, then Company will reimburse
     the Employee for reasonable out-of-pocket costs in obtaining substantially
     equivalent individual or family coverage, as the case may be. Any
     continuation coverage that Employee receives or for which he is provided
     reimbursement during the Continuation Period, as provided for under this
     sub-paragraph 15(c), shall be credited against his entitlement, if any, to
     continued coverage at Employee's expense under the Consolidated Omnibus
     Budget Reconciliation Act ("COBRA"). No other employee benefits, such as
     retirement, pension, 401k, savings, stock options or the like, or any other
     benefits, shall be continued.

(c)  Notwithstanding anything to the contrary contained in Section 14(a) or (b),
     for purposes of compliance with the requirements of Section 409A(a)
     (2)(B)(i) of the Internal Revenue Code and the regulations promulgated
     thereunder (the "6-Month Delay Requirement"), any payments to be made by
     Company to Employee under Section 14(a) or (b) ("Separation Pay") which, if
     paid as provided in said Section would violate the 6-Month Delay
     Requirement (specifically for this purpose taking into account the
     exception provided for under Treasury Regulation Section 1.409A-1(b)
     (9)(iii)(A) where the Separation Pay does not exceed 200% of the lesser of
     (i) Employee's annualized compensation based upon his annual rate of pay
     from Company for his taxable year immediately preceding his taxable year in
     which his termination occurs, or (ii) the maximum amount of compensation
     that may be taken into account under a tax-qualified retirement plan
     pursuant to Internal Revenue Code Section 401(a)(17) for the year in which
     Employee's termination occurs), the payment of such Separation Pay shall be
     suspended as necessary to comply with the 6-Month Delay Requirement, and
     any such payments so suspended for such purpose shall be aggregated and
     paid by Company to Employee in a lump sum on the date of the next payment
     of Separation Pay payable following the end of the applicable suspension
     period under the 6-Month Delay Requirement. Further,

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     any Separation Pay described in Treasury Regulation Section
     1.409A-1(b)(9)(iii)(A) to be paid to Employee hereunder shall be paid by no
     later than the last day of Employee's second taxable year following his
     taxable year in which his termination occurs."

(d)  Employee shall not be entitled to receive any Incentive Compensation in
     respect of any periods after the Employee's date of termination.

(e)  Employee shall be bound by the covenants of Sections 7, 8, 9, and 10
     provided the Company is not in default under this Agreement.

15.  Arbitration

Whenever a dispute (other than a dispute arising under Sections 7, 8, 9, and 10
of this Agreement) arises between the parties concerning this Agreement or the
employment relationship, including without limitation the termination thereof,
the parties shall use their best efforts to resolve the dispute by mutual
agreement. If such a dispute cannot be so resolved, it shall be submitted to
final and binding arbitration to the exclusion of all other avenues of relief,
and adjudicated pursuant to the American Arbitration Association's Rules for
Employment Disputes then in effect. In the event that the parties are unable to
agree upon an arbitrator, the AAA shall supply the names of seven (7)
arbitrators from which the Employee and the Company shall alternatively strike
names, the last name remaining shall be the designated arbitrator. The party to
strike first shall be determined by the toss of a coin. The decision of the
arbitrator must be in writing and shall be final and binding on the parties, and
judgment may be entered on the arbitrator's award in any court having
jurisdiction thereof. The expenses of the arbitration shall be borne equally by
the parties, and each party shall be responsible for his or its own attorneys'
fees. For the purposes of this Section 15, the term "dispute" means all
controversies or claims relating to terms, conditions and privileges of
employment, including without limitation claims for breach of contract,
discrimination, harassment, wrongful discharge, misrepresentation, defamation,
emotional distress or any other personal injury, or indemnification, but
excluding claims for unemployment compensation or worker's compensation.

16.  Indemnification

Without limitation of any other indemnification provided by the Company's
Certificate of Incorporation or Bylaws or action of its Board of Directors,
Company agrees to indemnify Employee for all acts and omissions of Employee,
provided that Employee acted, or omitted to act, in good faith and in a manner
he reasonably believed to be in or not opposed to the best interests of Company
and consistent with Employee's Position. To the extent that such acts or
omissions are covered under Company's then-existing insurance policies for
Directors and Officers insurance, including but not limited to, employment
practices liability insurance, Employee agrees to surrender the defense of any
related dispute to Company or its designee if so elected by Company.

17.  Burden and Benefit

This Agreement shall be binding upon and shall inure to the benefit of Company
and Employee and their respective heirs, personal and legal representatives,
successors and assigns.

18.  Governing Law

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In view of the fact that the principal office of the Company is located in
Buffalo, New York, it is understood and agreed that the construction and
interpretation of this Agreement shall at all times and in all respects be
governed by the laws of the State of New York (without giving effect to the
principles of conflict of laws).

19.  Separability

The invalidity of all or any part of any section of this Agreement shall not
render invalid the remainder of this Agreement or the remainder of such section.
If any provision of this Agreement is too broad as to be unenforceable, it is
expressly intended by the parties hereto that such provision shall be
interpreted to be only so broad as is enforceable.

20.  Section Headings

The section headings of this Agreement are for convenience of reference only and
shall not affect the construction or interpretation of any of the provisions
hereof.

21.  Counterparts

This Agreement may be executed in any number of counterparts, each of which
shall be deemed to be an original, but all of which together shall constitute
one and the same instrument.

22.   Entire Agreement; Amendment

This Agreement contains the entire agreement and understanding by and between
Company and Employee with respect to the employment of Employee, and no
representations, promises, agreement or understanding, written or oral, not
contained herein shall be of any force or effect. No change or modification of
this Agreement shall be valid or binding unless it is in writing and signed by
the party intended to be bound. No waiver of any provision of this Agreement
shall be valid unless it is in writing and signed by the party against whom the
waiver is sought to be enforced. No valid waiver of any provision of this
Agreement at any time shall be deemed a waiver of any other provision of this
Agreement at such time or at any other time, and Company's failure at any time
to require the performance by Employee of any of the terms hereof shall in no
way affect Company's right to thereafter enforce such terms.

23.  Notices

All notices or other communications which are required or may be given under
this Agreement shall be in writing and shall be deemed to have been duly given
if delivered or mailed, first class mail, postage prepaid, or delivered
personally, or by courier, to the following addresses:

     If Sent to Company:      NanoDynamics, Inc.
                              901 Fuhrmann Blvd.
                              Buffalo, NY 14203
                              Attention:  Keith A. Blakely, CEO

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     If Sent to Employee:     At the Address Indicated
                              In the Records of Company

24.  Section 409A

All payments of "nonqualified deferred compensation" (within the meaning of
Section 409A) by Company to Employee are intended to comply with the
requirements of Section 409A, and shall be interpreted consistent therewith.
Neither Company nor Employee, individually or in combination, may accelerate any
such deferred payment, except in compliance with Section 409A, and no amount
shall be paid prior to the earliest date on which it is permitted to be paid
under Section 409A. Notwithstanding anything to the contrary contained in
Section 22, no amendment may be made under the Agreement if it would cause the
Agreement or any payment under the Agreement to not be in compliance with the
requirements of Section 409A."

      IN WITNESS WHEREOF, Company and Employee have duly executed this Agreement
as of the day and year set forth in Section 1(a) above.

                              NANODYNAMICS, INC.

                                  s/Richard L. Berger
                              ---------------------------
                              By:  Richard L. Berger
                              Its: President

                                  s/ William Cann
                              ---------------------------
                                   WILLIAM CANN

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                                                                   EXHIBIT 10.20

NEITHER THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE
CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR
THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY.

                                                 Date of Issuance: June 21, 2007

                                                                  $10,000,000.00

                           6.0% CONVERTIBLE DEBENTURE

      THIS DEBENTURE (this "Debenture") is a duly authorized and validly issued
6.0% Convertible Debenture of NanoDynamics, Inc., a Delaware corporation, having
a principal place of business at 901 Fuhrmann Boulevard, Buffalo, New York 14203
(the "Company"), designated as its 6.0% Convertible Debenture. This Debenture
shall become due on the Maturity Date (as defined herein). This Debenture may
not be prepaid, in whole or in part, without the prior written consent of the
Holder.

      FOR VALUE RECEIVED, the Company promises to pay to Nano-applications
Holdings B.V., a company with limited liability incorporated under the laws of
The Netherlands, or its registered assigns (the "Holder"), in cash the principal
sum of Ten Million Dollars and Zero Cents ($10,000,000.00), together with
interest on the unpaid principal balance of this Debenture from time to time
outstanding at the rate of 6.0% per annum, compounded annually, until paid in
full. Subject to the conversion provisions set forth herein, all principal and
accrued interest shall be due and payable on the Maturity Date or as otherwise
provided herein.

      Interest shall be calculated on the basis of a 360-day year, consisting of
twelve 30 calendar day periods, and shall accrue daily commencing on the
Original Issue Date (as defined herein) until payment in full has been made of
the principal amount of this Debenture, together with all accrued and unpaid
interest. Interest shall cease to accrue with respect to any principal amount
that has been converted.

      The Company has issued this Debenture pursuant to a Debenture Purchase
Agreement, dated as of June 15, 2007 (the "Purchase Agreement").

      This Debenture is subject to the following additional provisions:

<PAGE>

      SECTION 1. DEFINITIONS. For the purposes hereof, capitalized terms not
defined herein shall have the meanings assigned to them in the Purchase
Agreement and the following terms shall have the following meanings:

            "Affiliate" means, with respect to any Person, any other Person that
directly or indirectly through one or more intermediaries controls, is
controlled by or is under common control with, the Person in question. The term
"Affiliate," when used herein without reference to any Person, shall mean an
Affiliate of the Company.

            "Business Day" means any day except Saturday, Sunday, any day which
shall be a federal legal holiday in the United States or any day on which
banking institutions in the State of New York are authorized or required by law
or other governmental action to close.

            "Change of Control Transaction" means the occurrence after the date
hereof of any of (i) an acquisition after the date hereof by an individual or
legal entity or "group" (as described in Rule 13d-5(b)(1) promulgated under the
Exchange Act) of beneficial ownership of in excess of 51% of the voting
securities of the Company, or (ii) the Company merges into or consolidates with
any other Person, or any Person merges into or consolidates with the Company
and, after giving effect to such transaction, the stockholders of the Company
immediately prior to such transaction own less than 33% of the aggregate voting
power of the Company or the successor entity of such transaction, or (iii) the
Company sells or transfers its assets, as an entirety or substantially as an
entirety, to another Person and the stockholders of the Company immediately
prior to such transaction own less than 33% of the aggregate voting power of the
acquiring entity immediately after the transaction, or (iv) a replacement at one
time or within a three year period of more than one-half of the members of the
Company's board of managers which is not approved by a majority of those
individuals who are members of the board of managers on the date hereof (or by
those individuals who are serving as members of the board of managers on any
date whose nomination to the board of managers was approved by a majority of the
members of the board of managers who are members on the date hereof).

            "closing of the IPO" means the first closing of the IPO, whether or
not such closing includes the exercise of the underwriters' over-allotment
option; and "closing date of the IPO" means the date on which the first closing
of the IPO occurs, whether or not such closing includes the exercise of the
underwriters' over-allotment option.

            "Commission" means the Securities and Exchange Commission.

            "Common Stock Equivalents" means any securities of the Company or
the Company's Subsidiaries which would entitle the holder thereof to acquire at
any time Common Stock, including, without limitation, any debt, preferred stock,
rights, options, warrants or other instrument that is at any time convertible
into or exercisable or exchangeable for, or otherwise entitles the holder
thereof to receive, Common Stock.

            "Common Stock" means the common stock, $0.00l par value per share,
of the Company and stock of any other class into which such shares may hereafter
have been reclassified or changed.

                                       -2-
<PAGE>

            "Company" shall have the meaning set forth in the first paragraph of
the preamble hereto.

            "Consolidated Net Asset Value" means, as of any date of
determination, the consolidated assets of the Company and its subsidiaries minus
the liabilities of the Company and its subsidiaries, determined in accordance
with GAAP; provided, that, Epic Energy Solutions, LLC and its subsidiaries shall
be excluded from any calculation of Consolidated Net Asset Value.

            "Conversion Date" shall have the meaning set forth in Section 5(a)
hereof.

            "Conversion Price" shall have the meaning set forth in Section 5(c).

            "Debenture" shall have the meaning set forth in the first paragraph
of the preamble hereto.

            "Event of Default" shall have the meaning set forth in Section 4(a)
hereof.

            "Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.

            "GAAP" means United States generally accepted accounting principles.

            "Holder" shall have the meaning set forth in the second paragraph of
the preamble hereto.

            "IPO" means the Company's first underwritten public offering of its
Common Stock under the Securities Act.

            "Maturity Date" means the second anniversary of the closing of the
IPO; provided, however, that the Holder may elect to extend the Maturity Date
until the third anniversary of the closing of the IPO by delivering written
notice thereof to the Company at least four (4) months prior to the second
anniversary of the closing of the IPO (the "Maturity Date Extension").

            "Maturity Date Extension" shall have the meaning set forth in the
definition of Maturity Date.

            "Notice of Conversion" shall have the meaning set forth in Section
5(a) hereof.

            "Original Issue Date" means the date of the first issuance of the
Debenture regardless of the number of transfers of the Debenture and regardless
of the number of instruments which may be issued to evidence the Debenture.

            "Person" or "person" means any natural person, trust, estate,
unincorporated organization, firm, corporation, association, partnership, joint
venture, joint stock company, limited liability company or governmental
authority, whether acting in an individual, fiduciary or other capacity.

                                       -3-
<PAGE>

            "Private Equity Financing" means the sale of shares of the Company's
Common Stock (or securities convertible, exercisable or exchangeable into the
Company's Common Stock) in a bona fide financing transaction that results in net
proceeds to the Company of at least $25,000,000, other than an underwritten
public offering registered under the Securities Act.

            "Securities Act" means the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder.

            "Subsidiary" means (a) any corporation or limited liability company
of which more than 50% of the issued and outstanding equity securities having
ordinary voting power to elect a majority of the board of directors of such
corporation or board of managers of such limited liability company is at the
time directly or indirectly owned or controlled by Company, (b) any partnership,
joint venture, or other association of which more than 50% of the equity
interest having the power to vote, direct or control the management of such
partnership, joint venture or other association is at the time directly or
indirectly owned and controlled by Company, (c) any other entity included in the
financial statements of Company on a consolidated basis.

            "Trading Day" means a day on which the Common Stock is traded on a
Trading Market.

            "Trading Market" means, as applicable, the following markets or
exchanges on which the Common Stock is listed or quoted for trading on the date
in question: the American Stock Exchange, the New York Stock Exchange, the
Nasdaq Stock Market LLC, the Nasdaq SmallCap Market or the OTC Bulletin Board.

            "Underlying Shares" means the shares of Common Stock issuable or
issued upon conversion of the Debenture or as payment of interest in accordance
with the terms hereof.

            "VWAP" means, for any date, the price determined by the first of the
following clauses that applies: (a) if the Common Stock is then listed or quoted
on a Trading Market, the daily volume weighted average price of the Common Stock
for such date (or the nearest preceding date) on the Trading Market on which the
Common Stock is then listed or quoted as reported by Bloomberg Financial L.P.
(based on a Trading Day from 9:30 a.m. Eastern Time to 4:02 p.m. Eastern Time);
(b) if the Common Stock is not then listed or quoted on a Trading Market and if
prices for the Common Stock are then quoted on the OTC Bulletin Board, the
volume weighted average price of the Common Stock for such date (or the nearest
preceding date) on the OTC Bulletin Board; (c) if the Common Stock is not then
listed or quoted on the OTC Bulletin Board and if prices for the Common Stock
are then reported in the "Pink Sheets" published by the Pink Sheets, LLC (or a
similar organization or agency succeeding to its functions of reporting prices),
the most recent bid price per share of the Common Stock so reported; or (d) in
all other cases, the fair market value of a share of Common Stock as determined
by the Board of Directors of the Company in good faith.

      SECTION 2. INVESTMENT REPRESENTATIONS. The Holder represents and warrants
to the Company as follows as of the date it acquires this Debenture and as of
each date it converts the Debenture, in whole or in part, into Underlying
Shares:

                                       -4-
<PAGE>

      (a) Investment. It is acquiring the Debenture, and (if and when it
converts this Debenture) it will acquire the Underlying Shares, for its own
account for investment and not with a view to, or for sale in connection with,
any distribution thereof, nor with any present intention of distributing or
selling the same; and the Holder has no present or contemplated agreement,
undertaking, arrangement, obligation, indebtedness or commitment providing for
the disposition thereof.

      (b) Accredited Investor. The Holder is an "accredited investor" as defined
in Rule 501(a) under the Securities Act.

      (c) Experience. The Holder has made such inquiry concerning the Company
and its business and personnel as it has deemed appropriate; and the Holder has
sufficient knowledge and experience in finance and business that it is capable
of evaluating the risks and merits of its investment in the Company.

      (d) Information. The Holder has obtained all such information and had the
opportunity to ask management of the Company all such questions as it has
requested; provided that this Section 2(d) shall not limit any of the Company's
representations and warranties hereunder or under the Purchase Agreement.

      (e) Principal Place of Business. In the case of the original Holder, its
principal place of business is located outside of the United States at Lange
Kleiweg 60F, 2288 GK Rijswijk, The Netherlands.

SECTION 3. TRANSFERS, ETC.

      (a) Neither this Debenture nor any of the Underlying Shares shall be sold
or transferred unless either (i) they first shall have been registered under the
Securities Act, or (ii) the Company first shall have been furnished with an
opinion of legal counsel, reasonably satisfactory to the Company, to the effect
that such sale or transfer is exempt from the registration requirements of the
Securities Act and any applicable state securities laws. Notwithstanding the
foregoing, no registration or opinion of counsel shall be required for a
transfer made in a broker's transaction in accordance with Rule 144 under the
Securities Act.

      (b) Notwithstanding the foregoing, from and after any conversion of this
Debenture and continuing until the second anniversary of the closing of the IPO,
the Holder shall not without the prior written consent of the Company sell or
otherwise transfer on any single Trading Day any Underlying Shares representing
in excess of fifty percent (50%) of the average reported daily volume in the
Company's Common Stock for the thirty (30) day period immediately preceding such
sale or transfer. The Holder shall provide the Company with three Business Days
prior written notice of any sale or other transfer of Underlying Shares for
consideration in excess of Two Million Dollars ($2,000,000).

      (c) Each certificate representing Underlying Shares shall bear the legends
substantially in the following forms:

                                       -5-
<PAGE>

            "The securities represented by this certificate have not been
            registered under the Securities Act of 1933, as amended, and may not
            be offered, sold or otherwise transferred, pledged or hypothecated
            unless and until such securities are registered under such Act or an
            opinion of counsel satisfactory to the Company is obtained to the
            effect that such registration is not required."

            "The securities represented by this certificate are subject to
            certain restrictions on transfer and notice requirements as set
            forth in the issuer's 6% convertible debenture in the original
            principal amount of $10,000,000 and dated June 21, 2007."

            The first foregoing legend shall be removed from the certificates
      representing any Underlying Shares, at the request of the holder thereof,
      at such time as they become eligible for resale pursuant to Rule 144(k)
      under the Act. The second foregoing legend shall be removed from the
      certificates representing any underlying shares, at the request of the
      holder thereof, at the second anniversary of the closing of the IPO.

      (d) Prior to due presentment to the Company for transfer of this
Debenture, the Company and any agent of the Company may treat the Person in
whose name this Debenture is duly registered on the records of the Company
regarding registration and transfers of the Debenture as the owner hereof for
the purpose of receiving payment as herein provided and for all other purposes,
whether or not this Debenture is overdue, and neither the Company nor any such
agent shall be affected by notice to the contrary.

      (e) This Debenture is exchangeable for an equal aggregate principal amount
of Debentures of different authorized denominations (of no less than
$2,000,000), as requested by the Holder surrendering the same. No service charge
will be made for such exchange.

SECTION 4. EVENTS OF DEFAULT AND DEMAND FOR PAYMENT.

      (a) "Event of Default", wherever used herein, means any one of the
following events (whatever the reason and whether it shall be voluntary or
involuntary or effected by operation of law or pursuant to any judgment, decree
or order of any court, or any order, rule or regulation of any administrative or
governmental body):

            (i) the closing of the IPO does not occur on or before the first
      anniversary of the Original Issue Date;

            (ii) (A) the gross proceeds from the sale of shares of Common Stock
      by the Company in the IPO, as of the closing of the IPO (as disclosed on
      the cover page of the final prospectus relating to the IPO) are less than
      $25,000,000, or (B) the product of (x) the number of shares of Common
      Stock outstanding immediately following the closing of the IPO and (y) the
      price per share at which

                                       -6-
<PAGE>

      the Common Stock was sold to the public in the IPO (as disclosed on the
      cover page of the final prospectus relating to the IPO) is less than
      $100,000,000;

            (iii) any default in the payment of the principal of or interest on
      the Debenture when the same shall become due and payable (whether on the
      Maturity Date or by acceleration or otherwise);

            (iv) the Company shall fail to observe or perform any other covenant
      or agreement contained in this Debenture (other than a breach by the
      Company of its obligations to deliver shares of Common Stock to the Holder
      upon conversion, which breach is addressed in clause (xi) below) which
      failure is not cured, if possible to cure, within the earlier to occur of
      (A) five Trading Days after notice of such default sent by the Holder or
      by any other Holder and (B) 10 Trading Days after the Company shall become
      aware of such failure;

            (v) a default or event of default (subject to any grace or cure
      period provided for in the applicable agreement, document or instrument)
      shall occur under any other material agreement to which the Company is
      bound regarding indebtedness of the Company for borrowed money in a
      principal amount equal to $2,000,000 or more;

            (vi) any representation or warranty made herein, or in the Purchase
      Agreement shall be untrue or incorrect in any material respect as of the
      date made;

            (vii) the Company shall commence, or there shall be commenced
      against the Company other than by Holder or any Affiliate thereof, a case
      under any applicable bankruptcy or insolvency laws as now or hereafter in
      effect or any successor thereto, or the Company commences any other
      proceeding under any reorganization, arrangement, adjustment of debt,
      relief of debtors, dissolution, insolvency or liquidation or similar law
      of any jurisdiction whether now or hereafter in effect relating to the
      Company or there is commenced against the Company any such bankruptcy,
      insolvency or other proceeding which remains undismissed for a period of
      150 days; or the Company is adjudicated insolvent or bankrupt; or any
      order of relief or other order approving any such case or proceeding is
      entered; or the Company suffers any appointment of any custodian or the
      like for it or any substantial part of its property which continues
      undischarged or unstayed for a period of 150 days; or the Company makes a
      general assignment for the benefit of creditors; or the Company shall fail
      to pay, or shall be unable to pay, its debts generally as they become due;
      or the Company shall call a meeting of its creditors with a view to
      arranging a composition, adjustment or restructuring of its debts; or the
      Company shall by any act or failure to act expressly indicate its consent
      to, approval of or acquiescence in any of the foregoing; or any corporate
      or other action is taken by the Company for the purpose of effecting any
      of the foregoing;

                                       -7-
<PAGE>

            (viii) a material adverse change (excluding any increase in the
      Company's amount or rate of losses attributable to research and
      development and business development expenses) in the condition (financial
      or otherwise), results of operations, properties, business or prospects of
      the Company and its subsidiaries, taken as a whole, has occurred and is
      continuing, unless such event does not impair the Company's ability to
      repay the Debenture in full when due;

            (ix) the Company shall default in any of its obligations under any
      mortgage, credit agreement or similar facility, indenture agreement,
      factoring agreement or other instrument under which there may be issued,
      or by which there may be secured or evidenced any indebtedness for
      borrowed money or money due under any long term leasing or factoring
      arrangement of the Company in an amount exceeding $2,000,000, whether such
      indebtedness now exists or shall hereafter be created and such default
      results in such indebtedness becoming or being declared due and payable
      prior to the date on which it would otherwise become due and payable;

            (x) the Company shall be a party to any Change of Control
      Transaction;

            (xi) the Company shall fail for any reason to deliver to its
      transfer agent all instructions and other documents required by the
      transfer agent (collectively, the "Transfer Documents") to issue to the
      Holder certificates representing Underlying Shares prior to the tenth
      Trading Day after the Conversion Date relating to such Underlying Shares
      pursuant to Section 5(b); provided, the Holder has delivered to the
      Company all documents, correct in form and substance, necessary in order
      for the Company to properly deliver the Transfer Documents;

            (xii) any monetary judgment, writ or similar final process shall be
      entered or filed against the Company or any of its property or other
      assets for more than $2,000,000, and such judgment, writ or similar final
      process shall not be paid or shall remain unpaid, unvacated, unbonded or
      unstayed; or

            (xiii) provided, that, if and only if the IPO has occurred, at any
      time after the first to occur of: (1) the first anniversary of the IPO or
      (2) September 30, 2008, as of the end of any fiscal quarter or fiscal year
      of the Company, the Consolidated Net Asset Value of the Company, in the
      Company's Form 10-Q or Form 10-K filed with the Securities and Exchange
      Commission for such fiscal quarter or fiscal year, respectively, is less
      than $25,000,000.

      (b) Promptly after the occurrence of an Event of Default, the Company
shall deliver written notice thereof to the Holder. If an Event of Default with
respect to the Company described in Sections 4(a)(iii) or (vii) has occurred and
is then continuing, the full principal amount of this Debenture, together with
accrued but unpaid interest shall become immediately due and payable in cash
after such Event of Default. If an Event of Default with respect to the Company
described in any clause of Section 4(a) other than

                                       -8-
<PAGE>

clauses (i), (iii), (vii) and (xiii) has occurred and is then continuing, the
Holder(s) of 75% of the then outstanding principal amount of the Debenture (and
any Debentures issued in exchange or transfer thereof) may declare that the full
principal amount of this Debenture (together with all Debentures issued in
exchange or transfer therefore), together with interest shall become immediately
due and payable in cash on the 60th day after one of such Holders delivers to
the Company notice of such Event of Default. If an Event of Default with respect
to the Company described in Sections 4(a)(i) or (xiii) has occurred and is then
continuing, the Holder(s) of 75% of the then outstanding principal amount of the
Debenture (and any Debentures issued in exchange or transfer thereof) may
declare that the full principal amount of this Debenture (together with all
Debentures issued in exchange or transfer therefore), together with interest
shall become immediately due and payable in cash after one of such Holders
delivers to the Company notice of such Event of Default. Interest shall accrue
on the amounts due from the day of the Event of Default through the date of
repayment in full thereof in an amount equal to eight percent (8%) (or such
lower maximum amount of interest permitted to be charged under applicable law)
compounded annually, to accrue daily from the date of the Event of Default
through and including the date of payment. This Debenture, if the full repayment
price hereunder shall have been paid in accordance herewith, shall promptly be
surrendered to or as directed by the Company. The Holder need not provide and
the Company hereby waives any presentment, demand, protest or other notice of
any kind, and the Holder may immediately and without expiration of any grace
period (except as expressly provided in this Debenture) enforce any and all of
its rights and remedies hereunder and all other remedies available to it under
applicable law. Such declaration may be rescinded and annulled by Holder at any
time prior to payment hereunder and the Holder shall have all rights as a
Debenture holder until such time, if any, as the full payment under this Section
4(b) shall have been received by it. No such rescission or annulment shall
affect any subsequent Event of Default or impair any right consequent thereon.
Notwithstanding anything to the contrary herein, the occurrence or cure of any
Event of Default shall not impair the Holder's conversion rights under Section
5.

SECTION 5. CONVERSION.

      (a) Voluntary Conversion. At any time after the Conversion Price is
established pursuant to Section 5(c), this Debenture shall be convertible, in
whole or in part (in minimum increments of at least $2,000,000 principal amount
or the remaining principal amount outstanding), into shares of Common Stock at
the option of the Holder at any time and from time to time. The Holder shall
effect conversions by delivering to the Company a Notice of Conversion, the form
of which is attached hereto as Annex A (a "Notice of Conversion"), specifying
therein the principal amount of the Debenture to be converted and the date on
which such conversion is to be effected (a "Conversion Date"). If no Conversion
Date is specified in a Notice of Conversion, the Conversion Date shall be the
date that such Notice of Conversion is deemed delivered hereunder. To effect
conversions hereunder, the Holder shall not be required to physically surrender
the Debenture to the Company unless the entire principal amount of this
Debenture plus all accrued and unpaid interest thereon has been or is being so
converted. Conversions hereunder shall have the effect of first reducing the
outstanding principal of this Debenture and second the accrued interest in an
amount equal to the applicable

                                       -9-
<PAGE>

conversion. The Holder and the Company shall maintain records showing the
principal and interest amounts converted and the date of such conversions. The
Company shall deliver any objection to any Notice of Conversion within three
Business Days of receipt of such notice. The Holder and any assignee, by
acceptance of this Debenture, acknowledge and agree that, by reason of the
provisions of this paragraph, following conversion of a portion of this
Debenture, the unpaid and unconverted principal amount of this Debenture may be
less than the amount stated on the face hereof.

      (b) Mechanics of Conversion.

            (i) Underlying Shares Issuable Upon Conversion. The number of shares
      of Common Stock issuable upon a conversion shall be determined by the
      quotient obtained by dividing (x) the outstanding principal amount of this
      Debenture to be converted plus the aggregate amount of interest then
      accrued thereon by (y) the Conversion Price then in effect.

            (ii) Delivery of Certificate Upon Conversion. Not later than five
      (5) Trading Days after any Conversion Date, the Company will deliver to
      the Holder a certificate or certificates representing the Underlying
      Shares which shall be free of restrictive legends and trading restrictions
      (other than those required hereby) representing the number of shares of
      Common Stock being acquired upon the conversion of the Debenture,
      including the shares of Common Stock representing the payment of accrued
      interest. The Company shall, if requested by the Holder, and if available
      and allowed under applicable securities laws, use its reasonable efforts
      to deliver any certificate or certificates required to be delivered by the
      Company under this Section electronically through the Depository Trust
      Corporation or another established clearing corporation performing similar
      functions. If in the case of any Notice of Conversion such certificate or
      certificates are not delivered to or as directed by the applicable Holder
      by the fifth Trading Day after a Conversion Date, the Holder shall be
      entitled by written notice to the Company at any time on or before its
      receipt of such certificate or certificates thereafter, to rescind such
      conversion, in which event the Company shall immediately return the
      certificates representing the principal amount of the Debenture tendered
      for conversion.

            (iii) Obligation Absolute. The Company's obligations to issue and
      deliver the Underlying Shares upon conversion of this Debenture in
      accordance with the terms hereof are absolute and unconditional,
      irrespective of any action or inaction by the Holder to enforce the same,
      any waiver or consent with respect to any provision hereof, the recovery
      of any judgment against any Person or any action to enforce the same, or
      any setoff, counterclaim, recoupment, limitation or termination, or any
      breach or alleged breach by the Holder or any other Person of any
      obligation to the Company or any violation or alleged violation of law by
      the Holder or any other person, and irrespective of any other circumstance
      which might otherwise limit such obligation of the Company to the Holder
      in connection with the issuance of such Underlying Shares; provided,
      however, such delivery

<PAGE>

            shall not operate as a waiver by the Company of any such action the
            Company may have against the Holder.

                  (iv)  Reservation of Shares Issuable. The Company covenants
            that it will at all times reserve and keep available out of its
            authorized and unissued shares of Common Stock solely for the
            purpose of issuance upon conversion of the Debenture and payment of
            interest on the Debenture, each as herein provided, free from
            preemptive rights or any other actual contingent purchase rights of
            persons other than the Holder, not less than such number of shares
            of the Common Stock as shall be issuable (taking into account the
            adjustments and restrictions of this Section 5) upon the conversion
            of the outstanding principal amount of the Debenture and interest
            hereunder. The Company covenants that all shares of Common Stock
            that shall be so issuable shall, upon issue, be duly authorized,
            validly issued, fully paid and nonassessable.

                  (v)   Fractional Shares. Upon a conversion hereunder the
            Company shall not be required to issue stock certificates
            representing fractions of shares of the Common Stock, but may if
            otherwise permitted, make a cash payment in respect of any final
            fraction of a share based on the VWAP. If the Company elects not, or
            is unable, to make such cash payment, the Holder shall be entitled
            to receive, in lieu of the final fraction of a share, one whole
            share of Common Stock.

                  (vi)  Transfer Taxes. The issuance of certificates for shares
            of the Common Stock on conversion of this Debenture shall be made
            without charge to the Holder hereof for any documentary stamp or
            similar taxes that may be payable in respect of the issue or
            delivery of such certificate, provided that the Company shall not be
            required to pay any tax that may be payable in respect of any
            transfer involved in the issuance and delivery of any such
            certificate upon conversion in a name other than that of the Holder
            of this Debenture so converted and the Company shall not be required
            to issue or deliver such certificates unless or until the person or
            persons requesting the issuance thereof shall have paid to the
            Company the amount of such tax or shall have established to the
            satisfaction of the Company that such tax has been paid.

                  (vii) "Market Stand-off" Agreement. The Holder hereby agrees
            that it will not, without the prior written consent of the managing
            underwriter for the IPO, during the period commencing on the date of
            the final prospectus relating to the IPO, and ending on the date
            specified by the Company and the managing underwriter (such period
            not to exceed one hundred eighty (180) days, which period may be
            extended upon the request of the managing underwriter for an
            additional period of up to thirty (30) days if the Company issues or
            proposes to issue an earnings or other public release within thirty
            (30) days of the expiration of the 180-day lockup period), (A) lend;
            offer; pledge; sell; contract to sell; sell any option or contract
            to purchase; purchase any option or contract to sell; grant any
            option, right, or warrant to purchase; or otherwise transfer or
            dispose of, directly or indirectly, any shares of Common Stock or
            any securities convertible into or exercisable or exchangeable
            (directly or indirectly) for Common Stock

                                      -11-
<PAGE>

            (whether such shares or any such securities are then owned by the
            Holder or are thereafter acquired) or (B) enter into any swap or
            other arrangement that transfers to another, in whole or in part,
            any of the economic consequences of ownership of such securities,
            whether any such transaction described in clause (A) or (B) above is
            to be settled by delivery of Common Stock or other securities, in
            cash, or otherwise. The foregoing provisions of this Section
            5(b)(vii) shall not apply to the sale of any shares to an
            underwriter pursuant to an underwriting agreement, and shall be
            applicable to the Holder only if all officers, directors, and
            stockholders individually owning more than five percent (5%) of the
            Company's outstanding Common Stock are subject to the same
            restrictions. The underwriters in connection with such registration
            are intended third party beneficiaries of this Section 5(b)(vii) and
            shall have the right, power, and authority to enforce the provisions
            hereof as though they were a party hereto. The Holder further agrees
            to execute such agreements as may be reasonably requested by the
            underwriters in connection with such registration that are
            consistent with this Section 5(b)(vii) or that are necessary to give
            further effect thereto. Any discretionary waiver or termination of
            the restrictions of any such agreements by the Company or the
            underwriters shall apply to all Holders subject to such agreements,
            pro rata based on the number of such shares subject to such
            agreements.

                  (viii) Rights as Stockholder. Until the conversion of this
            Debenture, the Holder shall not have or exercise any rights by
            virtue hereof as a stockholder of the Company.

            (c)   Conversion Price. The conversion price of the Debenture shall
      be established upon the first to occur of the closing of the IPO or a
      Private Equity Financing (as so established, the "Conversion Price") and
      unless and until either of such events occurs, this Debenture shall not be
      convertible. If the Conversion Price is established as a result of the
      IPO, the Conversion Price shall be equal to 110% of the per share price at
      which the Company's Common Stock was sold to the public in the IPO (as
      disclosed on the cover page of the final prospectus relating to the IPO).
      If the Conversion Price is established as a result of a Private Equity
      Financing, the Conversion Price shall be equal to 100% of the per share
      price at which the Company's Common Stock was sold (or the per share price
      at which the security sold is convertible, exercisable or exchangeable
      into Common Stock) in the Private Equity Financing (as disclosed in the
      applicable agreement relating to such transaction). Notwithstanding the
      foregoing, in the event that the Maturity Date Extension occurs, the
      Conversion Price shall be equal to 120% of the per share price at which
      the Company's Common Stock was sold to the public in the IPO or 110% of
      the per share price at which the Company's Common Stock was sold in the
      Private Equity Financing, as applicable.

            (d)   Certain Adjustments. If the Company, at any time while the
      Debenture is outstanding but after the IPO: (A) shall pay a stock dividend
      or otherwise make a distribution or distributions payable in shares of
      Common Stock on shares of its Common Stock or any other equity or equity
      equivalent securities (which, for avoidance of doubt, shall not include
      any shares of Common Stock issued by the Company pursuant to this
      Debenture, including as interest thereon), (B) subdivide outstanding
      shares of Common

                                      -12-
<PAGE>

      Stock into a larger number of shares, (C) combine (including by way of
      reverse stock split) outstanding shares of Common Stock into a smaller
      number of shares, or (D) issue by reclassification of shares of the Common
      Stock any shares of capital stock of the Company, then the Conversion
      Price shall be multiplied by a fraction of which the numerator shall be
      the number of shares of Common Stock (excluding treasury shares, if any)
      outstanding before such event and of which the denominator shall be the
      number of shares of Common Stock outstanding after such event. Any
      adjustment made pursuant to this Section shall become effective
      immediately after the record date for the determination of stockholders
      entitled to receive such dividend or distribution and shall become
      effective immediately after the effective date in the case of a
      subdivision, combination or re-classification.

            (e)   Calculations. All calculations under this Section 5 shall be
      made to the nearest cent or the nearest 1/100th of a share, as the case
      may be. For purposes of this Section 5, the number of shares of Common
      Stock outstanding as of a given date shall be the sum of the number of
      shares of Common Stock (excluding treasury shares, if any) outstanding.

            (f)   Notice to the Holder.

                  (i)   Adjustment to Conversion Price. Whenever the Conversion
            Price is adjusted pursuant to Section 5(d), the Company shall
            promptly deliver to the Holder a notice setting forth the Conversion
            Price after such adjustment and setting forth a brief statement of
            the facts requiring such adjustment.

                  (ii)  Notice to Allow Conversion by Holder. If (A) the Company
            shall declare a stock dividend (or any other distribution) on, or
            subdivide or combine, the Common Stock; (B) the Company shall
            declare a special nonrecurring dividend of cash, indebtedness or
            assets on, or a redemption, repurchase or reclassification of, the
            Common Stock; (C) a tender offer or exchange offer for the Common
            Stock shall be announced; (D) the Company shall authorize the
            granting to all holders of the Common Stock rights or warrants to
            subscribe for or purchase any shares of capital stock of any class
            or of any rights; (E) the Company effects any reclassification of
            the Common Stock, any consolidation or merger to which the Company
            is a party, any sale or transfer of all or substantially all of the
            assets of the Company, of any compulsory share exchange whereby the
            Common Stock is converted into other securities, cash or property;
            or (F) the Company shall authorize the voluntary or involuntary
            dissolution, liquidation or winding up of the affairs of the
            Company; then, in each case, the Company shall cause to be filed at
            each office or agency maintained for the purpose of conversion of
            the Debenture, and shall cause to be delivered to the Holder at its
            last address as it shall appear upon the stock books of the Company,
            at least ten (10) calendar days prior to the applicable record or
            effective date hereinafter specified, a notice stating (x) the date
            on which a record is to be taken for the purpose of such dividend,
            distribution, redemption, rights or warrants, or if a record is not
            to be taken, the date as of which the holders of the Common Stock of
            record to be entitled to such dividend, distributions, redemption,
            rights or warrants

                                      -13-
<PAGE>

            are to be determined or (y) the date on which such reclassification,
            consolidation, merger, sale, transfer or share exchange is expected
            to become effective or close, and the date as of which it is
            expected that holders of the Common Stock of record shall be
            entitled to exchange their shares of the Common Stock for
            securities, cash or other property deliverable upon such
            reclassification, consolidation, merger, sale, transfer or share
            exchange; provided, that the failure to deliver such notice or any
            defect therein or in the delivery thereof shall not affect the
            validity of the corporate action required to be specified in such
            notice. The Holder is entitled to convert this Debenture during the
            10-day period commencing the date of such notice through the
            effective date of the event triggering such notice.

      SECTION 6. NEGATIVE COVENANTS. As long as any portion of this Debenture
remains outstanding, the Company shall not, directly or indirectly:

            (a)   prior to the IPO, amend its charter documents, except for any
      amendment that is executed in connection with the IPO and described in the
      Registration Statement or in connection with any Private Financing, in any
      manner that materially and adversely affects any rights of the Holder;
      neither the authorization, establishment of terms of, nor issuance of any
      preferred stock or any class or series thereof, nor any agreement to do
      the same, be prohibited pursuant to this Section 6;

            (b)   enter into any agreement with respect to any of the foregoing.

      SECTION 7. NOTICES. Any and all notices or other communications or
deliveries to be provided by the Holder hereunder, including, without
limitation, any Notice of Conversion, shall be in writing and delivered
personally, by facsimile, sent by a nationally recognized overnight courier
service, addressed to the Company, at the address set forth above, facsimile
number: 716-853-8996, ATTN: Chief Executive Officer or such other address or
facsimile number as the Company may specify for such purposes by notice to the
Holder delivered in accordance with this Section 7. Any and all notices or other
communications or deliveries to be provided by the Company hereunder shall be in
writing and delivered personally, by facsimile, sent by a nationally recognized
overnight courier service addressed to the Holder at the facsimile telephone
number or address of the Holder appearing on the books of the Company, or if no
such facsimile telephone number or address appears, at the principal place of
business of the Holder. Any notice or other communication or deliveries
hereunder shall be deemed given and effective on the earliest of (i) the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile telephone number specified in this Section 7 prior to 5:30 p.m. (New
York City time), (ii) the date after the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile telephone number
specified in this Section 7 later than 5:30 p.m. (New York City time) on any
date and earlier than 11:59 p.m. (New York City time) on such date, (iii) the
second Business Day following the date of mailing, if sent by nationally
recognized overnight courier service, or (iv) upon actual receipt by the party
to whom such notice is required to be given.

      SECTION 8. LOST OR MUTILATED DEBENTURE. If this Debenture shall be
mutilated, lost, stolen or destroyed, the Company shall execute and deliver, in
exchange and

                                      -14-
<PAGE>

substitution for and upon cancellation of a mutilated Debenture, or in lieu of
or in substitution for a lost, stolen or destroyed Debenture, a new Debenture
for the principal amount of this Debenture so mutilated, lost, stolen or
destroyed but only upon receipt of evidence of such loss, theft or destruction
of such Debenture, and of the ownership hereof, and indemnity, if requested, all
reasonably satisfactory to the Company.

      SECTION 9. GOVERNING LAW. All questions concerning the construction,
validity, enforcement and interpretation of this Debenture shall be governed by
and construed and enforced in accordance with the internal laws of the State of
New York, without regard to the principles of conflicts of law thereof except to
the extent that the General Corporation Law of the State of Delaware is
mandatorily applicable thereto. Each party agrees that all legal proceedings
concerning the interpretations, enforcement and defense of the transactions
contemplated by any of the Transaction Documents (whether brought against a
party hereto or its respective affiliates, directors, officers, shareholders,
employees or agents) shall be commenced in the state and federal courts sitting
in the County of Manhattan in the State of New York (the "NY Courts"). Each
party hereto hereby irrevocably submits to the exclusive jurisdiction of the NY
Courts for the adjudication of any dispute hereunder or in connection herewith
or with any transaction contemplated hereby or discussed herein (including with
respect to the enforcement of the Purchase Agreement), and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, or such
New York Courts are improper or inconvenient venue for such proceeding. Each
party hereby irrevocably waives personal service of process and consents to
process being served in any such suit, action or proceeding by mailing a copy
thereof via registered or certified mail or overnight delivery (with evidence of
delivery) to such party at the address in effect for notices to it under this
Debenture and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law.
Each party hereto hereby irrevocably waives, to the fullest extent permitted by
applicable law, any and all right to trial by jury in any legal proceeding
arising out of or relating to this Debenture or the transactions contemplated
hereby. If either party shall commence an action or proceeding to enforce any
provisions of this Debenture, then the prevailing party in such action or
proceeding shall be reimbursed by the other party for its attorneys fees and
other costs and expenses incurred with the investigation, preparation and
prosecution of such action or proceeding.

      SECTION 10. WITHHOLDING TAXES. Any and all payments by the Company
hereunder to or for the account of the Holder shall be made free and clear of
and without deduction for any taxes; provided that the Holder shall deliver to
the Company on or prior to the date on which any such payment is made either:
(i) if the Holder is claiming an exemption under an income tax treaty to which
the United States is a party, Internal Revenue Service Form W-8BEN or any
successor form prescribed by the Internal Revenue Service, certifying that such
Holder is entitled to benefits under such treaty or (ii) if the Holder is
claiming the benefits of the exemption for portfolio interest under Section
881(c) of the Internal Revenue Code, (x) a certificate to the effect that the
Holder is not (A) a "bank" within the meaning of Section 881(c)(3)(A) of the
Internal Revenue Code, (B) a "10 percent shareholder" of the Company within the
meaning of Section 881(c)(3)(B) of the Internal Revenue Code, or (C) a
"controlled foreign corporation" related to the Company, as described in Section
881(c)(3)(C) of the Internal Revenue Code, (y) duly completed copies of Internal
Revenue Service Form W-8BEN, and (z)

                                      -15-
<PAGE>

any other form or certificate required by any taxing authority (including any
certificate required by Section 881(c) of the Internal Revenue Code), certifying
that the Holder is entitled to an exemption from tax on payments pursuant to
this Debenture.

      SECTION 11. WAIVER. Any waiver by the Company or the Holder of a breach of
any provision of this Debenture shall not operate as or be construed to be a
waiver of any other breach of such provision or of any breach of any other
provision of this Debenture. The failure of the Company or the Holder to insist
upon strict adherence to any term of this Debenture on one or more occasions
shall not be considered a waiver or deprive that party of the right thereafter
to insist upon strict adherence to that term or any other term of this
Debenture. Any waiver must be in writing.

      SECTION 12. SEVERABILITY. If any provision of this Debenture is invalid,
illegal or unenforceable, the balance of this Debenture shall remain in effect,
and if any provision is inapplicable to any person or circumstance, it shall
nevertheless remain applicable to all other persons and circumstances. If it
shall be found that any interest or other amount deemed interest due hereunder
violates any applicable laws governing usury, the applicable rate of interest
due hereunder shall automatically be lowered to equal the maximum permitted rate
of interest. The Company covenants (to the extent that it may lawfully do so)
that it shall not at any time insist upon, plead, or in any manner whatsoever
claim or take the benefit or advantage of, any stay, extension or usury law or
other law which would prohibit or forgive the Company from paying all or any
portion of the principal of or interest on the Debenture as contemplated herein,
wherever enacted, now or at any time hereafter in force, or which may affect the
covenants or the performance of this indenture, and the Company (to the extent
it may lawfully do so) hereby expressly waives all benefits or advantage of any
such law, and covenants that it will not, by resort to any such law, hinder,
delay or impeded the execution of any power herein granted to the Holder, but
will suffer and permit the execution of every such as though no such law has
been enacted.

      SECTION 13. NEXT BUSINESS DAY. Whenever any payment or other obligation
hereunder shall be due on a day other than a Business Day, such payment shall be
made on the next succeeding Business Day.

      SECTION 14. HEADINGS. The headings used in this Debenture are for the
convenience of reference only and shall not, for any purpose, be deemed a part
of this Debenture.

      SECTION 15. ASSUMPTION. Any successor to the Company shall (i) assume in
writing all of the obligations of the Company under this Debenture pursuant to
written agreements in form and substance satisfactory to the Holder (such
approval not to be unreasonably withheld or delayed) and (ii) to issue to the
Holder a new debenture of such successor entity evidenced by a written
instrument substantially similar in form and substance to this Debenture,
including, without limitation, having a principal amount and interest rate equal
to the principal amounts and the interest rates of this Debenture, having
similar ranking to this Debenture and insuring that this Debenture (or any such
replacement security) will be similarly adjusted upon any subsequent transaction
analogous, and satisfactory to the Holder (any such approval not to be
unreasonably withheld or delayed). The provisions of this Section 15 shall

                                      -16-
<PAGE>

apply similarly and equally to successive transactions and shall be applied
without regard to any limitations of this Debenture.

      SECTION 16. DISPUTE RESOLUTION. Any dispute, controversy or claim arising
from or relating to this Debenture shall be resolved as provided by Section 7.4
of the Purchase Agreement.

                              *********************

                                      -17-
<PAGE>

      IN WITNESS WHEREOF, the Company has caused this Debenture to be duly
executed by a duly authorized officer as of the date first above indicated.

                                              NANODYNAMICS, INC.

                                              By: /s/ KEITH BLAKELY
                                                  ------------------------------
                                                  Name: Keith Blakely
                                                  Title: Chief Executive Officer

                           Signature Page to Debenture
                                   NY663613.1
                                  210216-10001

<PAGE>

                                     ANNEX A

                              NOTICE OF CONVERSION

      The undersigned hereby elects to convert principal under the 6.0%
Convertible Debenture (the "Debenture") of NanoDynamics, Inc. (the "Company"),
due on the Maturity Date, into shares of common stock, $0.00l par value per
share (the "Common Stock"), of the Company according to the conditions hereof,
as of the date written below. If shares are to be issued in the name of a person
other than the undersigned, the undersigned will pay all transfer taxes payable
with respect thereto and is delivering herewith such certificates and opinions
as reasonably requested by the Company in accordance therewith. No fee will be
charged to the holder for any conversion, except for such transfer taxes, if
any.

      The undersigned agrees to comply with the prospectus delivery requirements
under the applicable securities laws in connection with any transfer of the
aforesaid shares of Common Stock.

Conversion calculations:

                                  Date to Effect Conversion:

                                  Principal Amount of Debenture to be Converted:

                                  Accrued Interest Amount to be Converted:

                                  Number of shares of Common Stock to be issued:

                                  Signature:

                                  Name:

                                  Delivery address for physical delivery:

                                  DTC Account for electronic delivery:

                                  Contact information in case of questions:

                              Annex A to Debenture
                                   NY663613.1
                                  210216-10001

<PAGE>

                                   SCHEDULE 1

                               CONVERSION SCHEDULE

      6.0% Convertible Debenture due on the Maturity Date, in the aggregate
principal amount of Ten Million Dollars ($10,000,000.00) issued by NanoDynamics,
Inc. This Conversion Schedule reflects conversions made under Section 5 of the
above referenced Debenture.

                                     Dated:

<TABLE>
<CAPTION>
                                                                 Amount Remaining
 Date of Conversion (or for       Amount of Conversion       Subsequent to Conversion
first entry, Original Issue      (Principal Amount Plus       (Principal Amount Plus
            Date                    Accrued Interest)            Accrued Interest)         Company Attest
<S>                               <C>                        <C>                           <C>

---------------------------                                                                --------------

---------------------------                                                                --------------

---------------------------                                                                --------------

---------------------------                                                                --------------

---------------------------                                                                --------------

---------------------------                                                                --------------

---------------------------                                                                --------------

---------------------------                                                                --------------
</TABLE>

                             Schedule 1 to Debenture
                                   NY663613.1
                                  210216-10001

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