EXHIBIT D FORM OF ESCROW AGREEMENT
Exhibit
10.7
EXHIBIT
D
FORM
OF 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.
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4.
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Exculpation
and Indemnification of Agent.
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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.
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5.
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Termination
of Agreement and Resignation of Agent.
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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.
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6.
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Form
of Payments by Agent.
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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:
▇▇▇▇
▇▇▇▇
▇▇▇▇▇
▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Telephone:
(▇▇▇) ▇▇▇-▇▇▇▇
Facsimile:
(▇▇▇) ▇▇▇-▇▇▇▇
Attention:
With
a
copy to:
Durham
▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇
▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇
▇▇▇▇
▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Telephone:
(▇▇▇) ▇▇▇-▇▇▇▇
Facsimile:
(▇▇▇) ▇▇▇-▇▇▇▇
Attention:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
If
to the
Agent:
American
Stock Transfer & Trust Company
▇▇
▇▇▇▇▇▇
▇▇▇▇—▇▇▇▇▇ ▇▇▇▇▇
▇▇▇
▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention:
▇▇▇▇ ▇▇▇▇▇▇
Tel.
#
(▇▇▇) ▇▇▇-▇▇▇▇
Fax
#
(▇▇▇) ▇▇▇-▇▇▇▇
If
to the
Placement Agent:
Knight
Capital Markets, LLC
▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention:
▇▇▇▇▇▇ ▇▇▇▇▇▇, Director - Legal & Compliance Dept.
Phone:
(▇▇▇) ▇▇▇-▇▇▇▇
Fax:
(▇▇▇) ▇▇▇-▇▇▇▇
With
a
Copy to:
▇▇▇▇▇▇▇▇▇▇
& ▇▇▇▇▇, LLP
The
Chrysler Building
▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇
▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Phone:
(▇▇▇) ▇▇▇-▇▇▇▇
Facsimile:
(▇▇▇) ▇▇▇-▇▇▇▇
Attention:
▇▇▇▇ ▇▇▇▇▇▇▇, 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.
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11.
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Miscellaneous.
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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.
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AMERICAN
STOCK TRANSFER & TRUST COMPANY
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By:
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_________________________________
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Name:
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Title:
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nCOAT
INC.
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By:
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_________________________________
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Name:
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Title:
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KNIGHT
CAPITAL MARKETS, LLC
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By:
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_________________________________
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Name:
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Title:
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