Document:

Unassociated Document

    
      

      

    

    Exhibit
      10.7

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    EXHIBIT
      D

    

    FORM
      OF ESCROW AGREEMENT

    
       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

    ESCROW
      AGREEMENT

    

    ESCROW
      AGREEMENT dated as of this 23rd day of March, 2007, by and among nCOAT Inc.,
      formerly Tylerstone Ventures Corporation., a Delaware corporation (the
“Company”), AMERICAN STOCK TRANSFER & TRUST COMPANY, a financial institution
      chartered under the laws of the State of New York (the “Agent”) and Knight
      Capital Markets, LLC, a Delaware limited liability company (the “Placement
      Agent”). All
      capitalized terms not herein defined shall have the meaning ascribed to them
      in
      that certain Securities Purchase Agreement dated as of ________, 2007, as
      amended or supplemented from time to time, including all attachments, schedules
      and exhibits thereto (the “Purchase Agreement”).

    

    W I T N E S S E T H:

    

    WHEREAS,
      pursuant to the terms of the Documents, the Company desires to sell (the
“Offering”)
      a
      maximum of, in the aggregate, $15,500,000 of securities (“Securities”)
      of the
      Company; and

     

    WHEREAS,
      the
      Offering will commence immediately and will terminate on the earlier to occur
      of: (i) the sale of all of the Securities; and (ii) May 15, 2007, (the
“Termination
      Date”);
      and

     

    WHEREAS,
      the
      Company and Placement Agent desire to establish an escrow account with the
      Agent
      into which the Placement Agent shall instruct purchasers in the Offering (the
      “Purchasers”)
      to
      deposit checks and other instruments for the payment of money made payable
      to
      the order of “American Stock Transfer & Trust Company as Escrow Agent -
      nCOAT Inc.” and Agent is willing to accept said checks and other instruments for
      the payment of money in accordance with the terms hereinafter set forth;
      and

     

    WHEREAS,
      each of
      the Company and Placement Agent, severally and not jointly, represents and
      warrants to the Agent that it has not stated to any individual or entity that
      the Agent’s duties will include anything other than those duties stated in this
      Agreement; and

     

    WHEREAS, proceeds
      received from subscriptions for the Securities shall be held in escrow by the
      Agent pending a Closing.

    

    NOW,
      THEREFORE, in consideration of the mutual promises herein contained and
      intending to be legally bound, the parties hereby agree as follows:

    

    1.   Appointment
      of Agent.
      The
      Company hereby appoints the Agent as escrow agent in accordance with the terms
      and conditions set forth herein, and the Agent hereby accepts such
      appointment.

    

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    2.   Delivery
      of Subscription Proceeds.
      All
      checks, drafts, or other instruments or wire transfer funds received from
      Purchasers as payment for the Securities will be delivered by the Company to
      the
      Agent, made payable to “American Stock Transfer & Trust Company, as Escrow
      Agent - nCOAT, Inc.” The Company or the Placement Agent will provide the Agent
      with a chart setting forth, as to each Purchaser, his name, address, social
      security number or employer identification number, amount of Securities
      purchased, and the amount paid in connection with such purchase. The Agent
      is
      hereby empowered on behalf of the Company to endorse and collect all checks,
      drafts, wire funds transfers, promissory notes or other instruments received
      on
      account of purchases of the Securities.

    

    3.   Agent
      to Hold and Disburse Funds.
      The
      Agent will hold in a special non-interest bearing account established for the
      benefit of the Company and disburse all funds received by it pursuant to the
      terms of this Escrow Agreement (“Escrow Funds”), as follows:

    

    3.1      
      In
      the
      event that the Company and Placement Agent advise the Agent in writing that
      the
      Offering has been terminated, the Agent shall promptly return the funds paid
      by
      each Purchaser to said Purchaser without interest, penalty or
      deduction.

     

    3.2      
      The
      Agent
      shall, upon receipt of written instructions, in form and substance satisfactory
      to the Agent, received from the Company and Placement Agent, pay the Escrow
      Funds in accordance with such written instructions, such payment or payments
      to
      be made by wire transfer within one (1) business day of receipt of such written
      instructions, provided that the Company’s counsel has confirmed in writing that
      all conditions for the release of the Escrow Funds have been met and that the
      securities have been issued and will be delivered to the Purchasers within
      two
      (2) business days of the Closing.

     

    3.3      
      If
      by
      3:00 p.m. New York City time on the Termination Date, the Agent has not received
      written instructions from the Company and Placement Agent regarding the
      disbursement of the Escrow Funds, then the Agent shall promptly return the
      Escrow Funds to the Purchasers without interest or offset. The Escrow Funds
      returned to each Purchaser shall be free and clear of any and all claims of
      the
      Agent.

     

    3.4      
      Following
      the distribution of the Escrow Funds by the Agent in accordance with Section
      3.2
      through the Termination Date, the Agent shall from time to time distribute
      any
      additional Escrow Funds, by wire transfer or bank check, in accordance with
      written instructions received from the Placement Agent and the Company in form
      and substance satisfactory to the Agent.

     

    3.5      
      The
      Escrow Agent shall not be required to pay any uncollected funds or any funds
      that are not available for withdrawal.

     

    

    
      	 	
              4.

            	
              Exculpation
                and Indemnification of Agent.

            

    

    

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    4.1      
      The
      Agent
      shall have no duties or responsibilities other than those expressly set forth
      herein. The Agent shall have no duty to enforce any obligation of any person
      to
      make any payment or delivery, or to direct or cause any payment or delivery
      to
      be made, or to enforce any obligation of any person to perform any other act.
      The Agent shall be under no liability to the other parties hereto or to anyone
      else by reason of any failure on the part of any party hereto or any maker,
      guarantor, endorser or other signatory of any document or any other person
      to
      perform such person’s obligations under any such document. Except for amendments
      to this Agreement referred to below, and except for instructions given to the
      Agent by the Company and the Placement Agent relating to the funds deposited
      with the Agent under this Agreement, the Agent shall not be obligated to
      recognize any agreement between any and all of the persons referred to herein,
      notwithstanding that references thereto may be made herein and whether or not
      it
      has knowledge thereof.

    

    4.2      
      The
      Agent
      shall not be liable to the Company or to anyone else for any action taken or
      omitted by it, or any action suffered by it to be taken or omitted, in good
      faith and in the exercise of its own best judgment, except for its willful
      misconduct and gross negligence. The Agent may rely conclusively and shall
      be
      protected in acting upon any order, notice, demand, certificate, opinion or
      advice of counsel (including counsel chosen by the Agent), statement,
      instrument, report or other paper or document (not only as to its due execution
      and the validity and effectiveness of its provisions, but also as to the truth
      and acceptability of any information therein contained), which is believed
      by
      the Agent to be genuine and to be signed or presented by the proper person
      or
      persons. The Agent shall not be bound by any notice or demand, or any waiver,
      modification, termination or rescission of this Agreement or any of the terms
      thereof, unless evidenced by a writing delivered to the Agent signed by the
      proper party or parties and, if the duties or rights of the Agent are affected,
      unless it shall give its prior written consent thereto.

    

    4.3      
      The
      Agent
      shall not be responsible for the sufficiency or accuracy of the form of, or
      the
      execution, validity, value or genuineness of, any document or property received,
      held or delivered by it hereunder, or of any signature or endorsement thereon,
      or for any lack of endorsement thereon, or for any description therein; nor
      shall the Agent be responsible or liable to the other parties hereto or to
      anyone else in any respect on account of the identity, authority or rights
      of
      the persons executing or delivering or purporting to execute or deliver any
      document or property or this Agreement. The Agent shall have no responsibility
      with respect to the use or application of any funds or other property paid
      or
      delivered by the Agent pursuant to the provisions hereof. The Agent shall not
      be
      liable to the Company or to anyone else for any loss which may be incurred
      by
      reason of any investment of any monies which it holds hereunder provided the
      Agent has complied with the provisions of Section 3.2 hereunder.

    

    4.4      
      The
      Agent
      shall have the right to assume in the absence of written notice to the contrary
      from the proper person or persons that a fact or an event by reason of which
      an
      action would or might be taken by the Agent does not exist or has not occurred,
      without incurring liability to the other parties hereto or to anyone else for
      any action taken or omitted, or any action suffered by it to be taken or
      omitted, in good faith and in the exercise of its own best judgment, in reliance
      upon such assumption.

    

    4.5      
      To
      the
      extent that the Agent becomes liable for the payment of taxes, including
      withholding taxes, in respect of income derived from the investment of funds
      held hereunder or any payment made hereunder, the Agent may pay such taxes.
      The
      Agent shall be indemnified and held harmless against any liability for taxes
      and
      for any penalties or interest in respect of taxes, on such investment income
      or
      payments in the manner provided in Section 4.6.

    

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    4.6      
      The
      Agent
      will be indemnified and held harmless by the Company from and against any and
      all expenses, including reasonable counsel fees and disbursements, or loss
      suffered by the Agent in connection with any action, suit or other proceeding
      involving any claim, or in connection with any claim or demand, which in any
      way, directly or indirectly, arises out of or relates to this Agreement, the
      services of the Agent hereunder, the monies or other property held by it
      hereunder or any income earned from investment of such monies, except for the
      Escrow Agent’s gross negligence or misconduct. Promptly after the receipt by the
      Agent or notice of any demand or claim or the commencement of any action, suit
      or proceeding, the Agent shall, if a claim in respect thereof is to be made
      against the Company, notify the Company thereof in writing, but the failure
      by
      the Agent to give such notice shall not relieve the Company from any liability
      which the Company may have to the Agent hereunder.

    

    4.7      
      For
      the
      purposes hereof, the term “expense or loss” shall include all amounts paid or
      payable to satisfy any claim, demand or liability, or in settlement of any
      claim, demand, action, suit or proceeding settled with the express written
      consent of the Agent, and all costs and expenses, including, but not limited
      to,
      reasonable counsel fees and disbursements, paid or incurred in investigating
      or
      defending against any such claim, demand, action, suit or
      proceeding.

    

    
      	 	
              5.

            	
              Termination
                of Agreement and Resignation of Agent.

            

    

    

    5.1      
      This
      Escrow Agreement shall terminate on the final disposition of the monies and
      property held in escrow hereunder, provided that the rights of the Agent and
      the
      obligations of the other parties hereto under Sections 4 and 7 shall survive
      the
      termination hereof.

    

    5.2      
      The
      Agent
      may resign at any time and be discharged from its duties as Agent hereunder
      by
      giving the Company and the Placement Agent at least 30 days notice thereof.
      As
      soon as practicable after its resignation, the Agent shall turn over to a
      successor escrow agent appointed by the Company all monies and property held
      hereunder upon presentation of the document appointing the new escrow agent
      and
      its acceptance thereof. If no new Agent is so appointed within the 60-day period
      following such notice of resignation, the Agent may deposit the aforesaid monies
      and property with any court it deems appropriate.

    

    
      	 	
              6.

            	
              Form
                of Payments by Agent.

            

    

    

    6.1      
      Any
      payments by the Agent to Purchasers or to persons other than the Company
      pursuant to the terms of this Agreement shall be made by check or wire transfer,
      payable to the order of each respective subscriber or other person.

    

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    6.2      
      All
      amounts referred to herein are expressed in United States Dollars and all
      payments by the Agent shall be made in such dollars.

    

    7.   Compensation
      of Agent.
      For
      services rendered, the Agent shall receive as compensation $5,000, $2,500 of
      which shall be paid by the Company promptly following the signing of this
      Agreement and the remaining $2,500 to be paid on the date that the Escrow Funds
      are released to the Company. The Agent shall also be entitled to reimbursement
      from the Company for all expenses paid or incurred by it in the administration
      of its duties hereunder, including, but not limited to, all counsel, advisors’
and Agents’ fees and disbursements and all reasonable taxes or other
      governmental charges. It is anticipated that such disbursement shall not exceed
      $500.00 barring any unforeseen circumstances.

    

    8.   Notices.
      All
      notices, requests, demands and other communications provided for herein shall
      be
      in writing, shall be delivered by hand or by first-class mail, shall be deemed
      given when received and shall be addressed to the parties hereto at their
      respective addresses listed below or to such other persons or addresses as
      the
      relevant party shall designate as to itself from time to time in writing
      delivered in like manner.

    

    If
      to the
      Company:

    

    nCOAT,
      Inc.

    7237
      Pace
      Drive 

    Whitsett,
      NC 27377 

    Telephone:
      (336) 447-2000

    Facsimile:
      (336) 447-2020

    Attention:

    

    With
      a
      copy to:

    

    Durham
      Jones & Pinegar

    111
      East
      Broadway, Suite 900

    Salt
      Lake
      City, Utah 84111

    Telephone:
      (801) 415-3000 

    Facsimile:
      (801) 415-3500 

    Attention:
      Jeffery M. Jones, Esq.

    

    If
      to the
      Agent:

    

    American
      Stock Transfer & Trust Company 

    59
      Maiden
      Lane—Plaza Level  

    New
      York,
      New York 10038

    Attention:
      Herb Lemmer

    Tel.
      #
      (212) 936-5100

    Fax
      #
      (718) 234-5001

    

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    If
      to the
      Placement Agent:

    

    Knight
      Capital Markets, LLC

    100
      Manhattanville Road

    Purchase,
      New York 10577

    Attention:
      Joshua Jedwab, Director - Legal & Compliance Dept.

    Phone:
      (914) 251-5811

    Fax:
      (914) 251-5812

    

    With
      a
      Copy to:

    

    Richardson
      & Patel, LLP

    The
      Chrysler Building

    405
      Lexington Avenue

    New
      York,
      New York 10174

    Phone:
      (212) 907-6686

    Facsimile:
      (212) 907-6687

    Attention:
      Jody Samuels, Esq.

    

    

    9.   Further
      Assurances:
      From
      time to time on and after the date hereof, the Company shall deliver or cause
      to
      be delivered to the Agent such further documents and instruments and shall
      do
      and cause to be done such further acts as the Agent shall reasonably request
      (it
      being understood that the Agent shall have no obligation to make any such
      request) to carry out more effectively the provisions and purposes of this
      Agreement, to evidence compliance herewith or to assure itself that it is
      protected in acting hereunder.

    

    10.      
      Consent
      to Service of Process.
      Each of
      the Company and the Placement Agent hereby irrevocably consents to the
      jurisdiction of the courts of the State of New York and of any federal court
      located in such State in connection with any action, suit or other proceeding
      arising out of or relating to this Agreement or any action taken or omitted
      hereunder, and waives personal service of any summons, complaint or other
      process and agrees that the service thereof may be made by certified or
      registered mail directed to each of the Company and the Placement Agent at
      its
      address for purposes of notices hereunder.

    

    
      	 	
              11.

            	
              Miscellaneous.

            

    

    

    11.1    
      This
      Agreement shall be construed without regard to any presumption or other rule
      requiring construction against the party causing such instrument to be drafted.
      The terms “hereby”, “hereof”, “hereto”, “hereunder” and any similar terms, as
      used in this Agreement, refer to the Agreement in its entirety and not only
      to
      the particular portion of this Agreement where the term is used. The word
“person” shall mean any natural person, partnership, company, government and any
      other form of business or legal entity. All words or terms used in this
      Agreement, regardless of the number or gender, in which they are used, shall
      be
      deemed to include any other number and any other gender as the context may
      require. This Agreement shall not be admissible in evidence to construe the
      provisions of any prior agreement.

    

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    11.2    
      Succession
      and Assignment.
      This
      Agreement and the rights and obligations hereunder of the Company may be
      assigned by the Company only to a successor to the Company’s entire business.
      This Agreement and the rights and obligations hereunder of the Agent may be
      assigned by the Agent only to a successor to its entire business. This Agreement
      shall be binding upon and inure to the benefit of each party’s respective
      successors, heirs and permitted assigns. Except as set forth in Section 12
      below, no other person shall acquire or have any rights under or by virtue
      of
      this Agreement. This Agreement may not be changed orally or modified, amended
      or
      supplemented without an express written agreement executed by the Agent, the
      Company and the Placement Agent. This Agreement is intended to be for the sole
      benefit of the parties hereto, and (subject to the provisions of this Section
      11.2) their respective successors, heirs and assigns, and none of the provisions
      of this Agreement are intended to be, nor shall they be construed to be, for
      the
      benefit of any third person.

    

    11.3    
      Amendments
      and Waivers.
      This
      Agreement may be amended only with the written consent of the Agent, the Company
      and the Placement Agent. No waiver of any right or remedy hereunder shall be
      valid unless the same shall be in writing and signed by the party giving such
      waiver. No waiver by any party with respect to any condition, default or breach
      of covenant hereunder shall be deemed to extend to any prior or subsequent
      condition, default or breach of covenant hereunder or affect in any way any
      rights arising by virtue of any prior or subsequent such
      occurrence.

    

    11.4    
      Governing
      Law.
      This
      Agreement shall be governed by and construed in accordance with the internal
      laws of the State of New York. The representations and warranties contained
      in
      this Agreement shall survive the execution and delivery hereof and any
      investigations made by any party. The headings in this Agreement are for
      purposes of reference only and shall not limit or otherwise affect any of the
      terms hereof.

    

    12.      
      Execution
      in Counterparts.
      This
      Agreement may be executed in any number of counterparts, each of which shall
      be
      deemed to be an original as against any party whose signature appears thereon,
      and all of which shall together constitute one and the same instrument. This
      Agreement shall become binding when one or more counterparts hereof,
      individually or taken together, shall bear the signature of all of the parties
      reflected hereon as the signatures.

    

    IN
      WITNESS WHEREOF, the parties have executed and delivered this Agreement on
      the
      day and year first above written.

    

    
      	 	
              AMERICAN
                STOCK TRANSFER & TRUST COMPANY

            
	 	 	 
	 	 	 
	 	
              By:

            	
              _________________________________ 

            
	 	 	
              Name:
                

            
	 	 	
              Title:
                

            

    

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

     

    
      	 	
              nCOAT
                INC.

            
	 	 	 
	 	
              By:

            	
              _________________________________

            
	 	 	
              Name:

            
	 	 	
              Title:
                

            
	 	 	 
	 	 	 
	 	
              KNIGHT
                CAPITAL MARKETS, LLC

            
	 	 	 
	 	
              By:

            	
              _________________________________

            
	 	 	
              Name:
                

            
	 	 	
              Title:Unassociated Document

    
      

      

    

    Exhibit
      10.8

     

    ESCROW
      AGREEMENT AMENDED EFFECTIVE AS OF MAY 15, 2007

    

    

    

    May
      21, 2007

    

    Mr.
      Herb
      Lemmer

    American
      Stock Transfer & Trust Company

    59
      Maiden
      Lane

    New
      York,
      NY 10038

    

    Re:
      Amendment to the March 22, 2007 Escrow Agreement
      (“Agreement”)

    

    Dear
      Mr.
      Lemmer:

    

    Please
      consider the following an addendum to the above referenced Agreement.

    

    This
      Amendment (“Amendment”) to the Agreement by and between nCoat, Inc. (“nCoat”),
      Knight Capital Markets, LLC (“Knight”) and American Stock Transfer & Trust
      Company (“AST”), dated March 22, 2007 (the “Agreement”), is entered into
      effective as of May 15, 2007, and other than the specific amendments enumerated
      in the Amendment, all other terms of the Agreement shall remain in the full
      force and effect, and shall not be obviated or affected by this
      Amendment.

    

    Now
      therefore, for good and valuable consideration, the receipt and sufficiency
      of
      which is hereby acknowledged, the parties agree as follows:

    

    The
      Second WHEREAS clause shall be amended in its entirety to read:

    

    “WHEREAS,
      the
      Offering will commence immediately and will terminate on the earlier to occur
      of: (i) the sale of all of the Securities; and (ii) June 8, 2007, (the
“Termination
      Date”);
      and”

     

    The
      Amendment is agreed to and shall become effective as of the date first written
      above.

    

    [SIGNATURE
      PAGE FOLLOWS]

    

     

    

    

    

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    

    
      	 	
              Very
                truly yours, 

            
	 	 
	 	
              NCOAT,
                INC.

            
	 	 
	 	 
	 	
              By:
                ____________________

            
	 	 
	 	 
	 	 
	 	 
	 	
              KNIGHT
                CAPITAL MARKETS, LLC

            
	 	 
	 	 
	 	
              By:
                ____________________

            

    

    

    

    ACCEPTED
      AND AGREED TO

    AS
      OF THE
      DATE FIRST

    ABOVE
      WRITTEN:

    

    AMERICAN
      STOCK 

    TRANSFER
      & TRUST COMPANY

    

    

    By:
      ___________________________

    Name:
      

    Title:
      

    

    

    

    

    

    [SIGNATURE
      PAGE TO AMENDMENT DATED MAY 21, 2007]

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