Document:

ncoat8ka061907ex10-2.htm

    
      

      

    

    
      EXHIBIT
        A

      

      Stockholders
        and Holdings

      

      

      
        	
                No.

              	 	
                Stockholders

              	 	
                Number
                  of Shares

                Owned

              
	
                1.

              	 	
                Michael
                  Novakovic

              	 	
                227,848

              
	
                2.

              	 	
                Michael
                  and Phebe Novakovic

              	 	
                681,717

              
	
                3.

              	 	 	 	 
	
                4.

              	 	 	 	 
	
                5.

              	 	 	 	 
	
                6.

              	 	 	 	 
	
                7.

              	 	 	 	 
	
                8.

              	 	 	 	 
	
                9.

              	 	 	 	 
	
                10.

              	 	 	 	 
	 	 	
                Total
                  Shares

              	 	
                909,565ncoat8ka061907ex10-3.htm

    
      

      

    

    
       

      EXHIBIT
        B

       

    

    
      ESCROW
        AGREEMENT

       

      This
        ESCROW AGREEMENT (the “Agreement”) is made and entered into this 29th day
        of June, 2007, by and among MCC, INC., a Pennsylvania
        corporation (the “Company”); nCoat, INC., a Delaware
        corporation, its successors or assigns, (“Buyer”); the stockholders of
        the Company (the “Stockholders”); and Durham Jones & Pinegar,
        PC, a Utah professional corporation (“Escrow
        Agent”).

       

      RECITALS

       

      A.         The
        Company, Buyer and the Stockholders are parties to a Stock Purchase Agreement
        dated as of June 19, 2007 (the “Stock Purchase Agreement”) pursuant to
        which Buyer agreed to purchase, and the Stockholders agreed to sell to Buyer,
        all issued and outstanding shares of common stock of the
        Company.  Unless otherwise defined herein, all capitalized terms shall
        have the meanings given them in the Stock Purchase Agreement.

       

      B.         Under
        the Stock Purchase Agreement, Buyer agreed to pay the Purchase Price for
        the
        Shares to the Stockholders by the payment of cash and common stock at
        Closing.

       

      C.         Pursuant
        to Section 8.2 of the Stock Purchase Agreement, the Stockholders agreed to
        indemnify Buyer as set forth therein.  In furtherance of such
        indemnity obligation, Buyer agreed pursuant to Section 1.5 of the Stock Purchase
        Agreement to deposit the Purchase Shares consisting of the Escrow Amount
        as the
        exclusive recourse of Buyer for satisfaction of the indemnity obligations
        of the
        Stockholders, if any, pursuant to Section 8.2 of the Stock Purchase Agreement,
        except as otherwise set forth in Section 8.3(c) of the Stock Purchase
        Agreement.

       

      D.         The
        parties hereto desire to arrange for such escrow and appoint Escrow Agent
        as
        escrow agent in accordance with the terms hereof.

       

      E.         Escrow
        Agent is willing to act as Escrow Agent pursuant to the terms of this Agreement
        with respect to the receipt and then delivery of the Escrow Amount.

       

      F.         Upon
        the occurrence of the events described in Section 4 below, Escrow Agent shall
        cause the distribution of the Escrow Amount in accordance with the terms
        set
        forth below.

       

      NOW,
        THEREFORE, IT IS AGREED:

       

      1.          Interpretation
        and Definitions.  This Agreement is being executed and delivered
        pursuant to Sections 1.5 and 8.5 of the Stock Purchase Agreement and is the
        Escrow Agreement referred to therein.  The provisions of this
        Agreement shall not in any event be construed so as to enlarge or diminish
        the
        rights of any of the parties hereto under the Stock Purchase
        Agreement.  Escrow Agent will not be responsible for the Stock
        Purchase Agreement.

       

      2.          Appointment
        of Escrow Agent.  Escrow Agent is hereby appointed to act as
        Escrow Agent in accordance with the terms hereof, and Escrow Agent hereby
        accepts such appointment.  Escrow Agent shall have all the rights,
        powers, duties and obligations provided herein.

       

      
        
          
          

        

        
          1

          
            

          

        

        
          
          

        

      

       

      
        	
                 

              	
                3.

              	
                Deposit
                  of Escrow Amount.

              

      

       

      3.1.      At
        the Closing, the Escrow Amount shall be deposited with the Escrow Agent,
        such
        deposit to constitute the escrow fund (the "Escrow Fund") and to be
        governed by the terms set forth herein.  The Escrow Fund shall be
        available to compensate Buyer pursuant to the indemnification obligations
        of the
        Stockholders as set forth in Section 8.2 of the Stock Purchase
        Agreement.  The Escrow Fund shall be the exclusive recourse of Buyer
        in the event said indemnification obligations exceed the amount of the Escrow
        Fund, except as otherwise set forth in Section 8.3(c) of the Stock Purchase
        Agreement.

       

      3.2.      The
        Escrow Amount shall be delivered to Escrow Agent at its address for notice
        indicated in Section 7.1.

       

      
        	
                 

              	
                4.

              	
                Terms
                  of Escrow.

              

      

       

      4.1       The
        Escrow Agent shall hold the Escrow Fund (or any then remaining portion thereof),
        subject to any earlier releases of any portion of the Escrow Fund pursuant
        to
        Section 4.4 below, in escrow until that the date on which the Escrow Agent
        receives instructions to terminate the escrow and distribute the Escrow Fund
        signed by Buyer and the Stockholders, or, if the Escrow Agent has not received
        such instructions, the Escrow Fund shall be released and paid out on the
        eighteen (18th)
        month anniversary of the Stock Purchase Agreement; provided, however,
        that the Escrow Fund shall be net of (a) any amounts paid in connection with
        the
        Stockholders’ indemnification obligations under the Stock Purchase Agreement,
        and (b) any amounts claimed in any Indemnification Claim Notice which have
        not
        been resolved at the time of such payment (such amount being referred to
        as the
        "Disputed Claim Amount").

      

      4.2       Within
        three (3) Business Days after the date of the eighteen (18th) month
        anniversary
        of the Stock Purchase Agreement (which shall constitute the “Release
        Date”), the Escrow Agent shall release from escrow to the Stockholders all
        or any then remaining portion of the Escrow Fund, less the Disputed Claim
        Amount, if applicable.  The Escrow Agent shall in all events release
        all of the remaining Escrow Fund (including the Disputed Claim Amount) on
        or
        before that date that shall be three (3) months after the Release Date (the
        "Disputed Claim Release Date") unless on or prior to the Disputed Claim
        Release Date, the parties to this Agreement (other than the Escrow Agent)
        shall
        have (i) resolved any dispute by settlement and provided the Escrow Agent
        with
        mutually executed delivery instructions with respect to the portion of the
        Escrow Fund then held by the Escrow Agent, of (ii) any party shall have
        commenced a legal action or arbitration to resolve such dispute, in which
        case
        the Escrow Agent shall continue to hold any then remaining portion of the
        Escrow
        Fund (including the Disputed Claim Amount) until such action or arbitration
        is
        concluded.

      

      4.3       The
        Escrow Fund, or any beneficial interest therein, may not be pledged, sold,
        assigned or transferred, including by operation of law, by any Stockholders
        or
        be taken or reached by any legal or equitable process in satisfaction of
        debt or
        other liability of any Stockholders, prior to the delivery to the Stockholders
        of the Escrow Fund by the Escrow Agent as provided herein.

      

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

      4.4       (A)  At
        any time after the Closing, Buyer may give written notice to the Stockholders
        and Escrow Agent that Buyer claims all or any part of the Escrow Fund in
        satisfaction of any damages for which Buyer is entitled to be indemnified
        pursuant to the Stock Purchase Agreement (such claim is herein referred to
        as an
        "Indemnification Claim" and any such written notice of a claim is
        hereinafter referred to as an "Indemnification Claim Notice"). The
        Indemnification Claim Notice shall set forth in reasonable detail: (i) the
        nature of the Indemnification Claim; and (ii) the amount of the Indemnification
        Claim (hereinafter referred to as the "Indemnification Claim Amount"). In
        the event Buyer gives any Indemnification Claim Notice to Escrow Agent, Buyer
        shall also give such Notice to the Stockholders at the same time such Notice
        is
        given to the Escrow Agent.

      

      (B)  Within
        fifteen (15) calendar days following receipt of an Indemnification Claim
        Notice
        which specifies the amount of the Indemnification Claim, Escrow Agent shall
        charge the Escrow Fund for the Indemnification Claim Amount and pay to Buyer
        the
        Indemnification Claim Amount unless Escrow Agent receives a written notice
        from
        the Stockholders (the“Stockholders' Notice") objecting to such charge and
        payment and disputing the Indemnification Claim. The Stockholders’ Notice shall
        be given to Buyer and Buyer's counsel at the same time the Stockholders’ Notice
        is given to the Escrow Agent, and shall set forth (i) the amount of the
        Indemnification Claim Amount in dispute, (ii) the amount of the Indemnification
        Claim not in dispute, and (iii) in reasonable detail the basis for the
        dispute.

      

      (C)  In
        the event of such a dispute, the Escrow Agent shall pay to Buyer that portion
        of
        the Indemnification Claim Amount which is not in dispute, if any, and Buyer
        and
        the Stockholders shall use reasonable efforts to mutually resolve the dispute
        within ten (10) days of Buyer's receipt of the Stockholders’ Notice. In the
        event such resolution does not occur within said ten-day time period, the
        dispute shall be promptly submitted to binding arbitration, conducted in
        accordance with the Commercial Rules of the American Arbitration Association,
        to
        determine which Party is entitled to the disputed portion of the Indemnification
        Claim Amount; provided, however, that if the disputed amount is
        greater than $500,000, either Party shall have the option, prior to the
        commencement of arbitration proceedings, to pursue and obtain resolution
        of such
        dispute and determination through litigation. The disputed portion of the
        Indemnification Claim Amount shall then be paid by the Escrow Agent pursuant
        to
        the arbitrators' award or judgment of the court, as the case may be. In
        resolving such dispute, the arbitrator or the court, as the case may be,
        shall
        determine the "prevailing party" for purposes of Section 12.5
        below.

      

      (D)  Any
        amount paid to Buyer from the Escrow Fund pursuant to the foregoing provisions
        of this Agreement shall be deemed a reduction in the Purchase
        Price.

       

      
        	
                 

              	
                5.

              	
                Duties
                  and Obligations of Escrow
                  Agent.

              

      

       

      5.1.      The
        parties hereto agree that the duties and obligations of Escrow Agent are
        only
        such as are herein specifically provided and no other.  Escrow Agent’s
        duties are as a depositary only, and Escrow Agent shall incur no liability
        whatsoever, except as a direct result of its willful misconduct or gross
        negligence.

       

       

      

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

       

      5.2.      Escrow
        Agent shall be entitled to consult with competent and responsible counsel
        of its
        choice with respect to the interpretation of the provisions hereof, and any
        other legal matters relating hereto, and shall be fully protected in taking
        any
        action or omitting to take any action in good faith in accordance with the
        advice of such legal counsel.  As to any matter not specifically
        provided for in this Agreement, Escrow Agent shall be entitled to request
        written instructions mutually executed by the Company, Buyer, and the
        Stockholders, and shall have the right to refrain from acting until it has
        received such written instructions.

       

       

      5.3.      Escrow
        Agent shall not be bound in any way by the terms of any other agreement to
        which
        the Stockholders, Buyer, and the Company are or may be parties, whether or
        not
        it has knowledge thereof, and Escrow Agent shall not in any way be required
        to
        determine whether or not any other agreement has been complied with by the
        Stockholders, Buyer, and/or the Company, or any other party
        thereto.  Escrow Agent shall not be bound by any modification,
        amendment, termination, cancellation, rescission or supersession of this
        Agreement unless the same shall be in writing and signed by each of the
        Stockholders or the Stockholders on behalf of all of the Stockholders, Buyer,
        and the Company, and agreed to in writing by Escrow Agent.

       

       

      5.4.      If
        at any time during the term of this Agreement, Escrow Agent shall be uncertain
        as to its duties or rights hereunder or shall receive instructions, claims
        or
        demands which, in its opinion, are in conflict with any of the provisions
        of
        this Agreement, it shall be entitled to refrain from taking any action, other
        than to keep safely, the Escrow Amount held in escrow until it shall jointly
        be
        directed otherwise in writing by the Stockholders, Buyer, and the Company
        or by
        a final judgment of a court of competent jurisdiction.

       

       

      5.5.      Escrow
        Agent shall be fully protected in relying upon any written notice, demand,
        certificate or document which it, in good faith, believes to be
        genuine.  Escrow Agent shall not be responsible for the sufficiency or
        accuracy of the form, execution, validity or genuineness of documents or
        securities now or hereafter deposited hereunder, or of any endorsement thereon,
        or for any lack of endorsement thereon, or for any description therein; nor
        shall Escrow Agent be responsible or liable in any respect on account of
        the
        identity, authority or rights of the persons executing or delivering or
        purporting to execute or deliver any such document, security or
        endorsement.

       

       

      5.6.      Escrow
        Agent shall not be required to institute legal proceedings of any kind and
        shall
        not be required to defend any legal proceedings which may be instituted against
        it or in respect to the Escrow Amount, any dividends thereon and any other
        property deposited with Escrow Agent pursuant to this Agreement.

       

       

      

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

       

      5.7.      If
        Escrow Agent at any time, in its sole discretion, deems it necessary or
        advisable to relinquish custody of the Escrow Stock or other deposited property,
        it may do so by giving five (5) days’ written notice to the parties of its
        intention and thereafter delivering the Escrow Amount or other property to
        any
        other escrow agent mutually agreeable to the Stockholders,  Buyer, and
        the Company and, if no such escrow agent shall be selected within three (3)
        days
        of Escrow Agent’s notification to the Stockholders, Buyer, and the Company of
        its desire to so relinquish custody of the Escrow Amount or other property,
        then
        Escrow Agent may do so by delivering the Escrow Amount or other property
        (a) to
        any bank or trust company in North Carolina, which is willing to act as escrow
        agent hereunder in place and instead of Escrow Agent, or (b) to the clerk
        or
        other proper officer of a court of competent jurisdiction as may be permitted
        by
        law within North Carolina.  The fee of any such bank or
        trust company or court officer shall be borne one-half by the Stockholders
        and
        one-half by Buyer.  Upon such delivery, Escrow Agent shall be
        discharged from any and all responsibility or liability with respect to the
        Escrow Amount or other property and the Company and the Stockholders shall
        promptly pay to Escrow Agent all monies which may be owed it for its services
        hereunder, including, but not limited to, reimbursement of its out-of-pocket
        expenses pursuant to Section 5.9 below.

       

      5.8.      This
        Agreement shall not create any fiduciary duty on Escrow Agent’s part to the
        Stockholders, Buyer, or the Company, nor disqualify Escrow Agent from
        representing any party hereto (or any affiliate of any party hereto) in any
        dispute with the other, including any dispute with respect to the Escrow
        Amount
        or other property deposited with Escrow Agent or otherwise.

       

      5.9.      The
        reasonable out-of-pocket expenses paid or incurred by Escrow Agent in the
        administration of its duties hereunder, including, but not limited to, all
        counsel and advisors’ and agents’ fees
        and all taxes
        or other governmental charges, if any, shall be paid by one-half by the
        Stockholders and one-half by Buyer.

       

      6.         Indemnification.
        The Stockholders, Buyer, and the Company, jointly and severally, hereby
        indemnify and hold Escrow Agent harmless from and against any and all losses,
        damages, taxes, liabilities and expenses that may be incurred, directly or
        indirectly, by Escrow Agent, arising out of or in connection with its acceptance
        of appointment as Escrow Agent hereunder and/or the performance of its duties
        pursuant to this Agreement, including, but not limited to, all legal costs
        and
        expenses of Escrow Agent incurred defending itself against any claim or
        liability in connection with its performances hereunder and the costs of
        recovery of amounts pursuant to this Section 6.

       

      7.         Miscellaneous.

       

      7.1.      Notices.  All
        notices, requests, demands and other communications hereunder shall be in
        writing, with copies to all the other parties hereto, and shall be deemed
        to
        have been duly given or delivered when (i) if delivered by hand, upon receipt,
        (ii) if sent by facsimile, upon receipt of proof of sending thereof, (iii)
        if
        sent by nationally recognized overnight delivery service (receipt requested),
        the next Business Day or (iv) if mailed by first-class registered or certified
        mail, return receipt requested, postage prepaid, four days after posting
        in the
        U.S. mails, in each case if delivered to the following addresses:

       

      

      
        	
                If
                  to the Company:

              	
                MCC,
                  Inc.

              

      

      100
        Ross
        Road

      King
        of
        Prussia, Pennsylvania  19406

      Attn:  President

      Facsimile
        No.:  (610) 265-0110

      

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

      
        	
                With
                  a copy to:

              	
                Buckley,
                  Brion, Mcguire, Morris & Sommer,
                  LLP

              

      

      304
        North
        High Street

      West
        Chester, Pennsylvania 19380

      Attn:  Stephen
        Mcguire

      Facsimile
        No.:  (610) 436-8305

      

      

      
        	
                If
                  to the Stockholders:

              	
                Michael
                  Novakovic

              

      

      113
        North
        Spring Mill Road

      Villanova,
        Pennsylvania 19085

      

      
        	
                With
                  a copy to:

              	
                Buckley,
                  Brion, Mcguire, Morris & Sommer,
                  LLP

              

      

      304
        North
        High Street

      West
        Chester, Pennsylvania 19380

      Attn:  Stephen
        Mcguire

      Facsimile
        No.:  (610) 436-8305

      

      

      
        	
                If
                  to Buyer:

              	
                nCoat,
                  Inc.

              

      

      7237
        Pace
        Drive

      P.O.
        Box
        38

      Whitsett,
        NC  27377

      Attn:  Paul
        Clayson or Terry Holmes

      Facsimile
        No.:  336-447-2020

      

      
        	
                With
                  a copy to:

              	
                Durham
                  Jones & Pinegar

              

      

      111
        East
        Broadway

      Suite
        900

      Salt
        Lake
        City, Utah 84111

      Attn:  Jeffrey
        Jones, Esq.

      Facsimile
        No.:  801-415-3500

      

      

      
        	
                If
                  to Escrow Agent:

              	
                Durham
                  Jones & Pinegar, PC

              

      

      
        	
                (to
                  receive copies

              	
                111
                  East Broadway, Suite 900

              

      

      
        	
                of
                  all communications

              	
                Salt
                  Lake City, Utah  84111

              

      

      
        	
                pursuant
                  to this Agreement)

              	
                ATTN:
                  President

              

      

      Facsimile
        No.: (801) 415-3500

      

      or
        at
        such other address as any of the parties to this Agreement may hereafter
        designate in the manner set forth above to the others.  Notices shall
        be effective when mailed, sent or dispatched to the addressee.

      

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

       

      7.2.       Choice
        of Law; Jurisdiction.  This Agreement shall be construed and
        enforced in accordance with the laws of the State of Delaware applicable
        to
        contracts entered into and performed entirely within the State of
        Delaware.  In any action in which Escrow Agent is a party, whether as
        plaintiff, defendant or third party, the exclusive jurisdiction in which
        such
        action may be brought shall be the federal or state courts located in the
        County
        and State in which the principal office of Escrow Agent is then
        located.

       

       

      7.3.       Counterparts.
        This Agreement may be executed in one or more counterparts, each of which
        shall
        be deemed an original but all of which together will constitute one and the
        same
        instrument.

       

       

      7.4.       Headings.  The
        section headings contained in this Agreement are inserted for convenience
        only
        and shall not affect in any way the meaning or interpretation of this
        Agreement.

       

       

      7.5.       Limited
        Effect; Integration.  The parties to this Agreement intend for
        this Agreement to be the final agreement between and among them as pertaining
        to
        the subject matter hereof, provided, however, that the parties do
        not intend hereby to modify or amend the Stock Purchase Agreement, but intend
        the provisions of this Agreement to supplement and otherwise to not affect
        in
        any way the Stock Purchase Agreement.

       

       

      7.6.       Incorporation
        of Recitals.  The recitals of this Agreement are hereby
        incorporated into and made part of this Agreement as if fully set forth
        herein.

       

      

      

      [Remainder
        of page intentionally left blank.

      Signature
        page follows.]

      

      

      

      

      

      

      

      

      

      

      

      

      

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

       

      IN
        WITNESS WHEREOF, the parties hereto have caused this Escrow Agreement to
        be
        signed the day and year first above written.

      

      
        	
                COMPANY:

                 

                MCC,
                  INC.

                 

                 

                 

                By:
                        /s/                                          
                          

                Name:
                  ________________________

                Title:  _________________________

              	
                ESCROW
                  AGENT:

                 

                Durham
                  Jones & Pinegar, PC

                 

                 

                 

                By:
                        /s/                                                  

                
                  Name:
                    ________________________

                  Title:  _________________________

                

              
	
                 

                STOCKHOLDER:

                 

                 

                 

                
                  By:
                          /s/                                                  

                

                Name:  Michael
                  Novakovic

              	
                 

                BUYER:

                 

                NCOAT,
                  INC.

                 

                
                  By:
                          /s/                                                  

                

                Name:
                  ________________________

                Title:   ________________________

                 

              
	
                 

                 

                
                  By:
                          /s/                                                  

                

                Name:
                  Phebe Novakovic

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