SHARE EXCHANGE AGREEMENT Between and Among TYLERSTONE VENTURES CORPORATION, NCOAT, INC., and CERTAIN NCOAT, INC. SHAREHOLDERS Dated as of February 3, 2007
Between
and Among
TYLERSTONE
VENTURES CORPORATION,
and
CERTAIN
NCOAT, INC. SHAREHOLDERS
Dated
as
of February 3, 2007
THIS
SHARE EXCHANGE AGREEMENT (hereinafter referred to as this "Agreement") is
entered into as of this 3rd day of February, 2007, by and between
TYLERSTONE VENTURES CORPORATION,
a
Delaware corporation (hereinafter referred to as “Tylerstone”),
with
offices at 0000
Xxxx
Xxxxx, Xxxxxxxx, XX 00000;
nCOAT,
INC.,
a
Delaware corporation (hereinafter referred to as "nCoat"),
with
offices at 0000 Xxxx Xxxxx, Xxxxxxxx, XX 00000 and each of the voting
shareholders of nCoat listed below on Exhibit A (the “Accepting
Shareholders”).
RECITALS
WHEREAS,
Tylerstone is a publicly held corporation organized under the laws of the
State
of Delaware with no significant operations;
WHEREAS,
nCoat
is a privately held corporation organized under the laws of
Delaware;
WHEREAS,
Tylerstone agrees to acquire up to 100% of the issued and outstanding securities
of nCoat in exchange for the issuance of certain shares of Tylerstone common
stock to the nCoat shareholders (the "Exchange")
and
the shareholders of nCoat (the "nCoat
Shareholders")
agree
to exchange their shares of nCoat on the terms described herein;
and
WHEREAS,
a
material inducement to nCoat and the nCoat Shareholders to enter into and
proceed with the transactions described in this Agreement is the covenant
set
forth below that Tylerstone will complete a financing of between $7,500,000
and
$12,500,000 in connection with the closing of the transactions described
in this
Agreement.
AGREEMENT
NOW
THEREFORE,
based
on the foregoing recitals and for and in consideration of the mutual covenants
and agreements hereinafter set forth and the mutual benefits to the parties
to
be derived here from, and intending to be legally bound hereby, it is hereby
agreed as follows:
ARTICLE
I
REPRESENTATIONS,
COVENANTS, AND WARRANTIES OF nCOAT
As
an
inducement to, and to obtain the reliance of Tylerstone, except as set forth
in
the nCoat Schedules (as hereinafter defined), nCoat represents and warrants
as
of the date hereof and as of the Closing Date, as defined below, as
follows:
Section
1.01 Organization;
Authorization.
nCoat is a corporation duly organized, validly existing, and in good
standing under the laws of the State of Delaware and has the corporate power
and
is duly authorized under all applicable laws, regulations, ordinances, and
orders of public authorities to carry on its business in all material respects
as it is now being conducted. Included in the nCoat Schedules are complete
and
correct copies of the certificate of incorporation, and bylaws of nCoat as
in
effect on the date hereof. The execution and delivery of this Agreement does
not, and the consummation of the transactions contemplated hereby will not,
violate any provision of nCoat’s certificate of incorporation or bylaws. nCoat
has taken all actions required by law, its certificate of incorporation,
or
otherwise to authorize the execution and delivery of this Agreement. nCoat
has
full power, authority, and legal right and has taken all action required
by law,
its certificate of incorporation, and otherwise to consummate the transactions
herein contemplated.
1
Section
1.02 Capitalization. The
authorized capitalization of nCoat consists of Fifteen Million (15,000,000)
shares of common stock, par value of $0.0001 per share. There are Eleven
Million
Five Hundred Fifty-Four Thousand Five Hundred Forty-Five (11,554,545) shares
of
common stock currently issued and outstanding. The issued and outstanding
shares
are legally issued, fully paid, and non-assessable and not issued in violation
of the preemptive or other rights of any person. A portion of the shares
that
have been issued to employees of nCoat, Inc. and others are subject to
restrictions (“Restricted Shares”). A small portion of the Restricted Shares
have restrictions
only
under
rule 144 of the U.S. Securities and Exchange Commission, however the majority
of
these shares have more restrictions, including some or all of the following:
vesting schedules requiring the individual employee to whom the stock may
be
issued to continue his or her employment for a period of time previously
determined by the management of nCoat; restrictions on relocating by the
employee to such nCoat office location or locations as shall be required
by the
management of nCoat; restrictions on objective performance levels expected
of
the employee; restrictions dependent on the possible transactions of the
Company
in closing a sale, merger or other combination such as the one contemplated
herein, and other
similar restrictions. The Restricted Share Certificates bear a restricted
legend
that includes the specific set of restrictions for those shares and in
connection with their issue, if there is a restriction that remains in place,
among other things, the owners of those shares have assigned any and all
voting
powers by grant of a power of attorney to the Voting Shareholders to
collectively vote the Restricted Shares’ vote.
Section
1.03 Legal
Actions.
There
are no legal actions against nCoat or directors in their role as directors
of
nCoat, nor does nCoat know of any threatened legal actions against it or
any of
its directors in their role as directors of nCoat. Additionally, nCoat is
not
engaged in any legal actions against other parties, and is current in all
filings with tax and regulatory authorities, non-compliance with which would
have a material adverse affect upon nCoat.
Section
1.04 Status
of Business Condition.
Until
the Closing (as defined below), nCoat’s business and financial condition shall
remain materially unchanged from the time of any due diligence or financial
statement documentation provided to Tylerstone prior to Closing.
Section
1.05 Ownership
of Intellectual Property.
nCoat
owns 100% of the beneficial right, title and interest in and to all of its
intellectual property and other assets (the “Assets”)
as set
forth in the Disclosure Schedules subject to any liens, charges,
securitizations, UCC filings or debts disclosed in the Disclosure Schedules
or
financial statements of nCoat provided to Tylerstone prior to
Closing.
Section
1.06 Use
of
Proceeds.
nCoat
intends to use any Bridge Loan or Additional Financing (as those terms are
defined below) funds substantially in the manner disclosed in the Disclosure
Schedules entitled “Use of Proceeds.”
ARTICLE
II
REPRESENTATIONS,
COVENANTS, AND WARRANTIES OF TYLERSTONE
As
an
inducement to, and to obtain the reliance of nCoat and the nCoat Shareholders,
except as set forth in the Tylerstone Schedules (as hereinafter defined),
Tylerstone represents and warrants, as of the date hereof and as of the Closing
Date, as follows:
Section
2.01 Organization;
Authorization.
Tylerstone is a public corporation incorporated in the State of Delaware,
it is
in good standing with all agencies, has filed all reports required to be
filed
by it under applicable securities laws and the rules and regulations of with
the
United States Securities and Exchange Commission (the “SEC”)
and
the common stock shares are listed but not presently trading on the OTC Bulletin
Board under the symbol “TYLV.” Included in the Tylerstone Schedules are complete
and correct copies of the certificate of incorporation, and bylaws of Tylerstone
as in effect on the date hereof. The execution and delivery of this Agreement
does not, and the consummation of the transactions contemplated hereby will
not,
violate any provision of Tylerstone’s certificate of incorporation or bylaws.
Tylerstone has taken all actions required by law, its certificate of
incorporation, or otherwise to authorize the execution and delivery of this
Agreement.
Section
2.02 Legal
Proceedings.
There
are no legal actions against Tylerstone or its directors, officers, or
shareholders, and Tylerstone knows of no threatened legal actions against
Tylerstone, its directors, officers, or shareholders, nor is Tylerstone engaged
in any legal actions against other parties.
2
Section
2.03 Business
and Financial Condition.
The
business and financial condition of Tylerstone are as set forth in its filings
with the SEC, on the XXXXX database, and Tylerstone is current in its filings
as
of the date hereof.
Section
2.04 No
Mergers Contemplated.
There
are no outstanding mergers, acquisitions, financial commitments, obligations,
liabilities, etc., other than those contemplated in this
transaction.
Section
2.05 Capitalization.
As of
the date of this Agreement, Tylerstone's authorized capitalization consists
of
(a) 25,000,000 shares of common stock, par value $0.001 per share (“Tylerstone
Common Stock”), of which 2,610,000 shares are issued and outstanding. All issued
and outstanding shares are legally issued, fully paid, and non-assessable
and
not issued in violation of the preemptive or other rights of any person.
Tylerstone will deliver to nCoat at Closing a complete and accurate list
of
shareholders
ARTICLE
III
PLAN
OF EXCHANGE
Section
3.01 The
Exchange.
(a) Exchange
by nCoat Shareholders.
On the terms and subject to the conditions set forth in this Agreement, the
voting nCoat Shareholders who have elected to accept the exchange offer
described herein (the "Accepting
nCoat Shareholders")
by
executing this Agreement, shall assign, transfer and deliver, free and clear
of
all liens, pledges, encumbrances, charges, restrictions or known claims of
any
kind, nature, or description, the number of shares of common stock of nCoat
(the
“nCoat
Tendered Shares”)
set
forth on Schedule A attached hereto, constituting the voting shares of common
stock, of nCoat held by such Accepting nCoat Shareholder. In addition, and
again
on the terms and subject to the conditions set forth in this Agreement, the
Accepting nCoat Shareholders who hold the powers of attorney for all of the
remaining outstanding Restricted Shares of nCoat accept, as attorneys-in-fact,
the exchange offer for those shares and by executing this Agreement, shall
assign, transfer and deliver, free and clear of all liens, pledges,
encumbrances, charges, or known claims of any kind, nature, or description,
the
balance of all of the remaining Restricted Shares of common stock of nCoat
(the
“Restricted
nCoat Tendered Shares”);
the
objective of such exchange (the “Exchange”)
being
the acquisition by Tylerstone of not less than 100% of the issued and
outstanding common stock of nCoat.
(b) In
exchange for the transfer of such securities by the Accepting nCoat
Shareholders, Tylerstone shall issue to the Accepting nCoat Shareholders
an
aggregate of 1,870,000 pre-split shares, or 37,400,000 post-split shares
for the
Accepting nCoat Shareholder’s stock (assuming the effectiveness of the forward
split approved by the board of directors of Tylerstone on January 25, 2006
(the
“Required
Stock Split”))
(the
“Tylerstone
New Shares”),
for
the nCoat Tendered Shares. In addition, Tylerstone shall issue, with similar
restrictions, vesting schedules and other terms as those surrendered, 672,000
pre-split shares or 13,440,000 post-split shares for the Restricted Shares
to
the remaining shareholders of nCoat (the “Tylerstone
New Restricted Shares”) for
the
shares of Restricted nCoat Common Stock.
(c) In
consideration for the Closing of the Exchange (the “Closing”),
certain Tylerstone shareholders will tender an aggregate of 750,000 pre-split
shares of Tylerstone common stock (the “Tylerstone
Tendered Shares”)
to
Tylerstone for Cancellation.
(d) The
tender of the Tylerstone Tendered Shares, the issuance of the Tylerstone
New
Shares and Tylerstone New Restricted Shares, and the tender of the nCoat
Tendered Shares and Restricted nCoat Tendered Shares shall occur at
Closing.
(e) It
is the
intention of the parties that immediately following the Closing, on the date
of
the Closing (the “Closing
Date”):
3
(i) There
will be an aggregate of 4,402,000 pre-split shares or 88,040,000 post-split
shares of Tylerstone Common Stock issued and outstanding;
(ii) Of
those
4,402,000 pre-split shares or 88,040,000 post-split shares, the Accepting
nCoat
Shareholders will hold an aggregate of 1,870,000 pre-split shares or 37,200,000
post-split shares of Tylerstone Common Stock, the remaining Tylerstone
shareholders will hold an aggregate of 1,860,000 pre-split shares or 37,200,000
post-split shares of Tylerstone Common Stock, and the remaining 672,000
pre-split shares or 13,440,000 post split shares of Tylerstone Common Stock
shall be held as Tylerstone New Restricted Shares surrendered by the remaining
nCoat shareholders .
(f)
At
the
Closing, on surrender by the nCoat shareholders of their certificate or
certificates representing the nCoat Tendered Shares and Restricted nCoat
Tendered Shares to Tylerstone or its registrar or transfer agent, each nCoat
Shareholders shall receive a certificate or certificates evidencing his or
her
proportionate interest in the Tylerstone New Shares and Tylerstone New
Restricted Shares, respectively.
(g) It
is not
the intention of the Parties to create a new class of Tylerstone Common Stock
in
connection with the restrictive nature of a portion of the stock issued,
only to
denote that some of the issued stock bears restrictions and vesting
schedules.
Section
3.02 Anti-Dilution.
The
number of shares of Tylerstone Common Stock issuable upon the Exchange pursuant
to Section 3.01 shall be appropriately adjusted to take into account any
stock
split, stock dividend, reverse stock split, recapitalization, or similar
change
in the Tylerstone Common Stock which may occur, other than the Required Stock
Split, between the date of the execution of this Agreement and the Closing
Date.
Section
3.03 Closing
Events.
At the
Closing, Tylerstone, the Tylerstone shareholders, nCoat, the Accepting
Shareholders and the holders of the Restricted nCoat Tendered Shares shall
execute, acknowledge, and deliver (or shall ensure to be executed, acknowledged,
and delivered), any and all certificates, opinions, financial statements,
schedules, agreements, resolutions, rulings or other instruments required
by
this Agreement to be so delivered at or prior to the Closing, as applicable,
together with such other items as may be reasonably requested by the parties
hereto and their respective legal counsel in order to effectuate or evidence
the
transactions contemplated hereby.
Section
3.04 Deadline.
The
Parties agree that the Closing shall occur on or before February 15, 2007,
unless otherwise agreed by the Parties.
Section
3.05 Termination.
This
Agreement may be terminated by the Board of Directors of nCoat or Tylerstone
only in the event that Tylerstone or nCoat do not meet the conditions precedent
set forth in Articles V and VI. If this Agreement is terminated pursuant
this
section, this Agreement shall be of no further force or effect, and no
obligation, right or liability shall arise hereunder.
Section
3.06 Additional
Termination Right.
In
addition to those rights set forth above in Section 3.05, in the event that
within the later of April 30, 2007 or thirty (30) days of active public market
trading days of Tylerstone after Closing. Tylerstone has not secured an
additional Five Million Five Hundred Thousand Dollars ($5,500,000) in funding
(the “Additional
Funding”)
on
terms as set forth in Sections 6.03 and 6.05 below, nCoat and the Accepting
nCoat Shareholders shall be entitled, in their exclusive discretion, to
either:
(a) Terminate
this Agreement, return for cancellation the New Tylerstone Shares and Tylerstone
New Restricted Shares to Tylerstone and receive back from Tylerstone the
nCoat
Tendered Shares and Restricted nCoat Tendered Shares; or
(b) Forego
any right of termination under this Section 3.06 in exchange for the issuance
by
Tylerstone to the Accepting nCoat Shareholders of additional shares of
restricted common stock (the “New
Additional Shares”).
The
aggregate number of New Additional Shares to be issued to the Accepting nCoat
Shareholders shall be determined by dividing the difference between $5,500,000
and the actual aggregate amount of the Additional Funding by .25
4
ARTICLE
IV
SPECIAL
COVENANTS
Section
4.01 Access
to Properties and Records.
Tylerstone and nCoat will each afford to the officers and authorized
representatives of the other full access to the properties, books and records
of
Tylerstone or nCoat, as the case may be, in order that each may have a full
opportunity to make such reasonable investigation as it shall desire to make
of
the affairs of the other, and each will furnish the other with such additional
financial and operating data and other information as to the business and
properties of Tylerstone or nCoat, as the case may be, as the other shall
from
time to time reasonably request. Without limiting the foregoing, as soon
as
practicable after the end of each fiscal quarter (and in any event through
the
last fiscal quarter prior to the Final Closing Date), each party shall provide
the other with quarterly internally prepared and unaudited financial
statements.
Section
4.02 Delivery
of Books and Records.
At the
Closing, nCoat shall deliver to Tylerstone the originals of the corporate
minute
books, books of account, contracts, records, and all other books or documents
of
nCoat now in the possession of nCoat or its representatives. Tylerstone shall
deliver to nCoat the originals of the corporate minute books, books of account,
contracts, records, and all other books or documents of Tylerstone now in
the
possession of Tylerstone or its representatives.
Section
4.03 Third
Party Consents and Certificates.
Tylerstone and nCoat agree to cooperate with each other in order to obtain
any
required third party consents to this Agreement and the transactions herein
contemplated.
Section
4.04 Tylerstone
Shareholder Approval.
Tylerstone shall promptly contact its shareholders and ask that a majority
of
the shareholders of Tylerstone approve, and Tylerstone's Board of Directors
shall recommend approval of, the terms of this Agreement and such other matters
as shall be required under Delaware State law for approval hereunder. In
addition, Tylerstone shall continue to promptly file with the SEC necessary
disclosure statements required by federal securities law.
Section
4.05 Forward
Stock Split.
Prior
to the Closing, Tylerstone shall effectuate the Required Stock Split. Tylerstone
shall take all necessary steps to amend its Certificate of Incorporation
to
reflect the Required Stock Split.
Section
4.06 Increase
in Authorized Capital.
Prior
to Closing, Tylerstone shall effectuate an amendment to its Certificate of
Incorporation to increase its authorized capital from 25,000,000 shares of
common stock to 500,000,000 shares of common stock. Tylerstone shall take
all
necessary steps to amend its Certificate of Incorporation to reflect the
increase in authorized capital.
Section
4.07 Name
Change.
Prior
to Closing, Tylerstone shall effectuate an amendment to its Certificate of
Incorporation to change its name to nCoat, Inc. Tylerstone shall take all
necessary steps to amend its Certificate of Incorporation to reflect the
name
change.
Section
4.08 Additional Actions
Prior to Closing.
(a) From
and after the date
of this Agreement until the Closing and except as set forth in the Tylerstone
Schedules or nCoat Schedules or as permitted or contemplated by this Agreement,
Tylerstone (subject to paragraph (iv) below) and nCoat, respectively, will
each:
(i) carry
on its business in substantially the same manner as it has
heretofore;
5
(ii) maintain
and keep its properties in states of good repair and condition as at present,
except for depreciation due to ordinary wear and tear and damage due to
casualty;
(iii) maintain
in full force and effect insurance comparable in amount and in scope of coverage
to that now maintained by it;
(iv) perform
in all material respects all of its obligations under material contracts,
leases, and instruments relating to or affecting its assets, properties,
and
business;
(v) use
commercially reasonable care, diligence and skill to
maintain and preserve its business organization intact, to retain its key
employees, and to maintain its relationship with its material suppliers and
customers; and
(vi) fully
comply with and perform in all material respects all obligations and duties
imposed on it by all federal and state laws and all rules, regulations, and
orders imposed by federal or state governmental authorities.
(b) From
and after the date
of this Agreement until the Closing, neither Tylerstone nor nCoat
will:
(i) make
any changes in their respective certificate of incorporation or bylaws except
as
contemplated by this Agreement;
(ii) enter
into or amend any contract, agreement, or other instrument of any of the
types
described in such party's schedules, except that a party may enter into or
amend
any contract, agreement, or other instrument in the ordinary course of business
involving the sale of goods or services; or
(iii) sell
any assets or discontinue any operations, sell any shares of capital stock
or
conduct any similar transactions other than in the ordinary course of
business.
Section
4.09 Indemnification.
(a) nCoat
hereby agrees to
indemnify Tylerstone and each of the officers, agents and directors of
Tylerstone as of the date of execution of this Agreement against any loss,
liability, claim, damage, or expense (including, but not limited to, any
and all
expense whatsoever reasonably incurred in investigating, preparing, or defending
against any litigation, commenced or threatened, or any claim whatsoever)
(“Loss”),
to
which it or they may become subject arising out of or based on any material
inaccuracy appearing in or misrepresentations made under Article I of this
Agreement. The indemnification provided for in this paragraph shall survive
the
Closing and consummation of the transactions contemplated hereby and termination
of this Agreement for one year following the Final Closing.
(b) The
Accepting nCoat
Shareholders agree to indemnify Tylerstone and each of the officers, agents
and
directors of Tylerstone as of the date of execution of this Agreement against
any Loss to which it or they may become subject arising out of or based on
any
claim which is finally determined by a court of competent jurisdiction that
(i)
the Accepting nCoat Shareholder did not have good title to the nCoat Tendered
Shares or (ii) that the nCoat Tendered Shares where subject to a lien or
encumbrance.. The indemnification provided for in this paragraph shall survive
the Closing and consummation of the transactions contemplated hereby and
termination of this Agreement for one year following the Final
Closing.
6
(c) Tylerstone
hereby agrees
to indemnify nCoat and each of the officers, agents, and directors of nCoat
and
the nCoat Shareholders as of the date of execution of this Agreement against
any
Loss to which it or they may become subject arising out of or based on any
inaccuracy appearing in or misrepresentation made under Article II of this
Agreement. The indemnification provided for in this paragraph shall survive
the
Closing and consummation of the transactions contemplated hereby and termination
of this Agreement for one year following the Final Closing.
(d) Tylerstone
hereby agrees
to indemnify nCoat and each of the officers, agents, and directors of nCoat
and
the nCoat Shareholders as of the date of execution of this Agreement against
any
Loss to which it or they may become subject arising out of or based on any
claim
from the cancellation of the Tylerstone Shareholder’s stock as set forth in
Section 3.01 (c), including, but not limited to, any claim by any third party
asserting rights, ownership, liens or otherwise in connection with the stock
surrendered and cancelled. The indemnification provided for in this paragraph
shall survive the Closing and consummation of the transactions contemplated
hereby and termination of this Agreement for one year following the Final
Closing.
Section
4.10 The
Acquisition of Tylerstone Common Stock.
Tylerstone and nCoat understand and agree that the consummation of this
Agreement including the issuance of the Tylerstone New Shares, Tylerstone
New
Restricted Shares and, if applicable, the New Additional Shares, to the nCoat
Shareholders in the Exchange for the nCoat Shares as contemplated hereby
constitutes the offer and sale of securities under the Securities Act of
1933,
as amended (the “Securities
Act”)
and
applicable state statutes. Tylerstone and nCoat agree that such transactions
shall be consummated in reliance on exemptions from the registration and
prospectus delivery requirements of such statutes, which depend, among other
items, on the circumstances under which such securities are
acquired.
(a) In
order to provide
documentation for reliance upon the exemptions from the registration and
prospectus delivery requirements for such transactions, each Accepting nCoat
Shareholder and the holders of the Restricted nCoat Tendered Shares shall
execute and deliver to Tylerstone a Suitability Letter and an Investment
Representation Letter in substantially the same form as that attached hereto
as
Exhibit
SL
and
Exhibit IRL
,
respectively.
(b) In
connection with the
transaction contemplated by this Agreement, Tylerstone and nCoat shall each
file, with the assistance of the other and their respective legal counsel,
such
notices, applications, reports, or other instruments as may be deemed by
them to
be necessary or appropriate in an effort to document reliance on such
exemptions, and the appropriate regulatory authority in the states where
the
shareholders of nCoat reside unless an exemption requiring no filing is
available in such jurisdictions, all to the extent and in the manner as may
be
deemed by such parties to be appropriate.
(c) In
order to more fully
document reliance on the exemptions as provided herein, nCoat, the Accepting
nCoat Shareholders, the holders of the Restricted nCoat Tendered Shares and
Tylerstone shall execute and deliver to the other, at or prior to the Closing,
such further letters of representation, acknowledgment, suitability, or the
like
as nCoat or Tylerstone and their respective counsel may reasonably request
in
connection with reliance on exemptions from registration under such securities
laws.
(d) The
Accepting nCoat
Shareholders and the holders of the Restricted nCoat Tendered Shares acknowledge
that the basis for relying on exemptions from registration or qualifications
are
factual, depending on the conduct of the various parties, and that no legal
opinion or other assurance will be required or given to the effect that the
transactions contemplated hereby are in fact exempt from registration or
qualification.
Section
4.11 Sales
of Securities Under Rule 144, If Applicable.
7
(a) Tylerstone
will
use
commercially reasonable care, diligence and skill
at all
times satisfy the current public information requirements of Rule 144
promulgated under the Securities Act so that its shareholders can sell
restricted securities that have been held for one year or more or such other
restricted period as required by Rule 144 as it is from time to time
amended.
(b) Upon
being informed in
writing by any person holding restricted stock of Tylerstone that such person
intends to sell any shares under rule 144 promulgated under the Securities
Act
(including any rule adopted in substitution or replacement thereof), Tylerstone
will certify in writing to such person that it is in compliance with Rule
144
current public information requirement to enable such person to sell such
person's restricted stock under Rule 144, as may be applicable under the
circumstances.
(c) If
any certificate
representing any such restricted stock is presented to Tylerstone's transfer
agent for registration or transfer in connection with any sales theretofore
made
under Rule 144, provided such certificate is duly endorsed for transfer by
the
appropriate person(s) or accompanied by a separate stock power duly executed
by
the appropriate person(s) in each case with reasonable assurances that such
endorsements are genuine and effective, and is accompanied by a legal opinion
that such transfer has complied with the requirements of Rule 144, as the
case
may be, Tylerstone will promptly instruct its transfer agent to register
such
transfer and to issue one or more new certificates representing such shares
to
the transferee and, if appropriate under the provisions of Rule 144, as the
case
may be, free of any stop transfer order or restrictive legend.
(d) This
Section 4.11 shall
survive the closing of this Agreement for a period of two (2)
years.
Section
4.12 Financing.
Tylerstone shall have secured debt or equity or other financing in an aggregate
amount of between $7,500,000 and $12,500,000, in the form of debentures which
are convertible into common stock of Tylerstone, on terms equal to or
substantially similar to those set forth in Section 6.05 below, of which
at
least $7,500,000 (including the Bridge Loan and the Additional Financings
described below) will have closed on or before the later of April 30, 2007
or
thirty active public market trading days of Tylerstone after
Closing.
Section
4.13 Registration
of Stock.
The
Parties acknowledge and agree that Tylerstone New Shares, Tylerstone New
Restricted Shares and, if applicable, the New Additional Shares shall be
subject
to Rule 144 and subject to Section 4.11 herein. The Parties further acknowledge
and agree that Tylerstone has executed, and may continue to execute, debentures
with conversion rights to Tylerstone Common Stock. Such debentures contain
language imposing on Tylerstone the requirement that the shares represented
by
the conversion rights be registered for resale under the Securities Act.
After
Closing the Parties agree that registration for resale shall be governed
by the
debenture language and Rule 144 as required.
ARTICLE
V
CONDITIONS
PRECEDENT TO OBLIGATIONS OF TYLERSTONE
The
obligations of Tylerstone under this Agreement are subject to the satisfaction,
at or before Closing, of the following conditions:
Section
5.01 Accuracy
of Representations and Performance of Covenants.
The
representations and warranties made by nCoat in this Agreement were true
when
made and shall be true at Closing with the same force and effect as if such
representations and warranties were made at and as of Closing (except for
changes therein permitted by this Agreement). nCoat shall have performed
or
complied with all covenants and conditions required by this Agreement to
be
performed or complied with by nCoat prior to or at the Closing. Tylerstone
shall
be furnished with a certificate, signed by a duly authorized executive officer
of nCoat and dated the Closing Date, to the foregoing effect.
8
Section
5.02 Information
Provided.
Tylerstone shall have been furnished with that information on the business
and
affairs of nCoat which it deems, in its sole and absolute discretion, to
be
necessary for it to meet its continuous disclosure obligations under the
Securities Exchange Act of 1934 upon Closing.
Section
5.03 No
Material Adverse Change.
As of
the Closing there shall not have occurred any material adverse change,
financially or otherwise, which materially impairs the ability of nCoat to
conduct its business or the earning power thereof.
Section
5.04 Financial
Statements.
nCoat
shall have completed audited pro forma consolidated financial statements
required to be filed upon Final Closing by Tylerstone as a reporting issuer
under the Securities Exchange Act of 1934.
Section
5.05 Opinion
of Counsel.
Tylerstone shall have received the opinion of counsel to Tylerstone that
the
Closing will not result in Tylerstone breaching any applicable securities
law,
rules and regulations.
ARTICLE
VI
CONDITIONS
PRECEDENT TO OBLIGATIONS OF nCOAT
AND
THE nCOAT SHAREHOLDER
The
obligations of nCoat and the Accepting nCoat Shareholders under this Agreement
are subject to the satisfaction, at or before the Closing
Date,
of the
following conditions:
Section
6.01 Accuracy
of Representations and Performance of Covenants.
The
representations and warranties made by Tylerstone in this Agreement were
true
when made and shall be true as of the Closing Date (except for changes therein
permitted by this Agreement) with the same force and effect as if such
representations and warranties were made at and as of the Closing Date.
Additionally, Tylerstone shall have performed and complied with all covenants
and conditions required by this Agreement to be performed or complied with
by
Tylerstone.
Section
6.02 Issuance
of Shares.
Shares
of Tylerstone common stock to be issued by Tylerstone to the Accepting nCoat
Shareholders and to the holders of the Restricted nCoat Tendered Shares at
Closing shall have been issued.
Section
6.03 Financing.
Tylerstone shall have secured debt or equity or other financing of between
$7,500,000 and $12,500,000, in the form of debentures which are convertible
into
common stock of Tylerstone, on terms equal to or substantially similar to
those
set forth in Section 6.05 below, of which at least $7,500,000 (including
the
Bridge Loan and the Additional Financings described below) will have closed
on
or before the later of April 30, 2007 or thirty active market trading days
of
Tylerstone after Closing.
Section
6.04 Bridge
Loan.
nCoat
and Tylerstone acknowledge that Tylerstone has provided a loan (the
“Bridge
Loan”)
to
nCoat in the aggregate amount of $2,000,000 prior to the Closing, pursuant
to a
line of credit which is to be repaid pursuant to its terms.
Section
6.05 Terms
of Bridge Loan.
The
Bridge Loan has been financed through the issuance of convertible debentures
(the “Debentures”)
by
Tylerstone to investors, with the Debentures having the following terms:
(i) the
Debentures shall be convertible to shares of post-split common stock of
Tylerstone at $0.50 per share, convertible at any time after the effective
date
of the Stock Split described above in Section 4.05; (ii) the Debentures shall
permit the investors to require, on or after Xxxxx 0, 0000, Xxxxxxxxxx to
register the resale, under the Securities Act, of any shares issued upon
conversion of the Debentures; (iii) the Debentures shall bear interest at
a rate
of .5 percent above the prime interest rate as reported by the Wall Street
Journal’s bank survey not to exceed 9.5% per annum until converted or paid; and
(iv) and the Debentures shall permit any interest due thereunder to be converted
on the same terms as the principal.
9
Section
6.06 Filing
with SEC.
The
Parties anticipate that within four business days of executing this Agreement,
Tylerstone will file with the SEC on Form 8-K, a report disclosing the execution
and terms of this Agreement. The Parties further anticipate that within four
business days from the date of filing the amendment to change the Article
of
Incorporation for Tylerstone, Tylerstone will file with the SEC an additional
Form 8-K report disclosing the changes. Finally, within four days of the
Closing, Tylerstone will file with the SEC a current report on Form 8-K to
provide all the required disclosures relating to the Closing, the Exchange,
financial and other information with respect to nCoat, and any other required
information.
ARTICLE
VII
MISCELLANEOUS
Section
7.01 Brokers.
Tylerstone, the Accepting nCoat Shareholders and nCoat agree that, except
as set
out on Schedule 7.01 of the Tylerstone Schedules and the nCoat Schedules,
there
were no finders or brokers involved in bringing the parties together or who
were
instrumental in the negotiation, execution or consummation of this Agreement.
Tylerstone and nCoat each agree to indemnify the other against any claim
by any
third person other than those described above for any commission, brokerage,
or
finder's fee arising from the transactions contemplated hereby based on any
alleged agreement or understanding between the indemnifying party and such
third
person, whether express or implied from the actions of the indemnifying
party.
Section
7.02 Governing
Law.
This
Agreement shall be governed by, enforced, and construed under and in accordance
with the laws of the United States of America and, with respect to the matters
of state law, with the laws of the State of Delaware. Venue for all matters
shall be in Delaware, without giving effect to principles of conflicts of
law
thereunder. Each of the parties (a) irrevocably consents and agrees that
any
legal or equitable action or proceedings arising under or in connection with
this Agreement shall be brought exclusively in the federal courts of the
United
States. By execution and delivery of this Agreement, each party hereto
irrevocably submits to and accepts, with respect to any such action or
proceeding, generally and unconditionally, the jurisdiction of the aforesaid
court, and irrevocably waives any and all rights such party may now or hereafter
have to object to such jurisdiction.
Section
7.03 Notices.
Any
notice or other communications required or permitted hereunder shall be in
writing and shall be sufficiently given if personally delivered to it or
sent by
telecopy, overnight courier or registered mail or certified mail, postage
prepaid, addressed as follows:
If
to nCoat, to:
|
Xxxx
X Xxxxxxx
0000
Xxxx Xxxx
Xxxxxxxx,
Xxxxx Xxxxxxxx
Tel:
(000) 000-0000
Fax:
(000) 000-0000
|
|
|
With
copies to:
|
Xxxxxxx
X. Xxxxx, Esq.
Durham
Xxxxx & Xxxxxxx, P.C.
000
Xxxx Xxxxxxxx, Xxxxx 000
Xxxx
Xxxx Xxxx, Xxxx 00000
Tel:
000-00000000
Fax:
000-000-0000
|
|
|
10
If
to Tylerstone, to:
|
Xxxx
X Xxxxxxx
0000
Xxxx Xxxx
Xxxxxxxx,
Xxxxx Xxxxxxxx
Tel:
(000) 000-0000
Fax:
(000) 000-0000
|
|
|
With
copies to:
|
Xxxxxxx
X. Xxxxx, Esq.
Durham
Xxxxx & Xxxxxxx, P.C.
000
Xxxx Xxxxxxxx, Xxxxx 000
Xxxx
Xxxx Xxxx, Xxxx 00000
Tel:
000-00000000
Fax:
000-000-0000
|
If
to an Accepting nCoat Shareholder:
|
At
the address listed next to such Accepting nCoat Shareholder on
Exhibit B
hereto.
|
or
such
other addresses as shall be furnished in writing by any party in the manner
for
giving notices hereunder, and any such notice or communication shall be deemed
to have been given (i) upon receipt, if personally delivered, (ii) on the
day
after dispatch, if sent by overnight courier, (iii) upon dispatch, if
transmitted by telecopy and receipt is confirmed by telephone and (iv) three
(3)
days after mailing, if sent by registered or certified mail.
Section
7.04 Attorney's
Fees.
In the
event that either party institutes any action or suit to enforce this Agreement
or to secure relief from any default hereunder or breach hereof, the prevailing
party shall be reimbursed by the losing party for all costs, including
reasonable attorney's fees, incurred in connection therewith and in enforcing
or
collecting any judgment rendered therein.
Section
7.05 Confidentiality.
Each
party hereto agrees with the other that, unless and until the transactions
contemplated by this Agreement have been consummated, it and its representatives
will hold in strict confidence all data and information obtained with respect
to
another party or any subsidiary thereof from any representative, officer,
director or employee, or from any books or records or from personal inspection,
of such other party, and shall not use such data or information or disclose
the
same to others, except (i) to the extent such data or information is published,
is a matter of public knowledge, or is required by law to be published; or
(ii)
to the extent that such data or information must be used or disclosed in
order
to consummate the transactions contemplated by this Agreement. In the event
of
the termination of this Agreement, each party shall return to the other party
all documents and other materials obtained by it or on its behalf and shall
destroy all copies, digests, work papers, abstracts or other materials relating
thereto, and each party will continue to comply with the confidentiality
provisions set forth herein.
Section
7.06 Public
Announcements and Filings.
Unless
required by applicable law or regulatory authority, none of the parties will
issue any report, statement or press release to the general public, to the
trade, to the general trade or trade press, or to any third party (other
than
its advisors and representatives in connection with the transactions
contemplated hereby) or file any document, relating to this Agreement and
the
transactions contemplated hereby, except as may be mutually agreed by the
parties. Copies of any such filings, public announcements or disclosures,
including any announcements or disclosures mandated by law or regulatory
authorities, shall be delivered to each party at least one (1) business day
prior to the release thereof.
11
Section
7.07 Schedules;
Knowledge.
Each
party is presumed to have full knowledge of all information set forth in
the
other party's schedules delivered pursuant to this Agreement.
Section
7.08 Third
Party Beneficiaries.
This
contract is strictly between Tylerstone, nCoat, and the Accepting nCoat
Shareholders, and, except as specifically provided, no director, officer,
stockholder (other than the Accepting nCoat Shareholders), employee, agent,
independent contractor or any other person or entity shall be deemed to be
a
third party beneficiary of this Agreement.
Section
7.09 Expenses.
Subject
to Section 7.04 above, whether or not the Exchange is consummated, each of
Tylerstone and nCoat will bear their own respective expenses, including legal,
accounting and professional fees, incurred in connection with the Exchange
or
any of the other transactions contemplated hereby.
Section
7.10 Entire
Agreement.
This
Agreement represents the entire agreement between the parties relating to
the
subject matter thereof and supersedes all prior agreements, understandings
and
negotiations, written or oral, with respect to such subject matter.
Section
7.11 Survival;
Termination.
The
representations, warranties, and covenants of the respective parties shall
survive the Closing Date and the consummation of the transactions herein
contemplated for a period of two years.
Section
7.12 Counterparts.
This
Agreement may be executed in multiple counterparts, each of which shall be
deemed an original and all of which taken together shall be but a single
instrument.
Section
7.13 Amendment
or Waiver.
Every
right and remedy provided herein shall be cumulative with every other right
and
remedy, whether conferred herein, at law, or in equity, and may be enforced
concurrently herewith, and no waiver by any party of the performance of any
obligation by the other shall be construed as a waiver of the same or any
other
default then, theretofore, or thereafter occurring or existing. At any time
prior to the Closing Date, this Agreement may by amended by a writing signed
by
all parties hereto, with respect to any of the terms contained herein, and
any
term or condition of this Agreement may be waived or the time for performance
may be extended by a writing signed by the party or parties for whose benefit
the provision is intended.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK.
SIGNATURE
PAGES FOLLOW.]
12
IN
WITNESS WHEREOF, the corporate parties hereto have caused this Agreement
to be
executed by their respective officers, hereunto duly authorized, as of the
date
first-above written.
TYLERSTONE
VENTURES CORPORATION
|
|
By: /s/
Xxxxx X.
Xxxxxx
|
|
Name:
Xxxxx X. Xxxxxx
|
|
Title:
President
|
|
By: /s/
Xxxx X
Xxxxxxx
|
|
Name:
Xxxx X Xxxxxxx
|
|
Title:
Chairman, CEO
|
|
13
ACCEPTING
NCOAT SHAREHOLDERS
The
undersigned Shareholders of nCoat hereby agree to participate in the Exchange
on
the terms set forth above. Subject to Section 7.11 above, the undersigned
hereby
represents and affirms that he has read each of the representations and
warranties of nCoat set out in Article I hereof and that, to the best of
his
knowledge, all of such representations and warranties are true and correct.
In
addition, as attorneys-in-fact for all of the holders of nCoat Restricted
Shares, we execute the Agreement on their behalf, and agree to participate
in
the Exchange on the terms set forth above
Name,
address and Signature
|
Number
of nCoat
Shares
Tendered
|
/s/
Xxxxx X.
Xxxxxx
|
|
Xxxxx
X. Xxxxxx, individually,
|
2,500,000
|
and
as attorney-in-fact for the holders
|
|
nCoat
Restricted Shares
|
|
0000
Xxxx Xxxx
|
|
Xxxxxxxxx,
XX 00000
|
|
/s/
Xxxx X
Xxxxxxx
|
|
Xxxx
X Xxxxxxx, individually,
|
2,500,000
|
and
as attorney-in-fact for the holders
|
|
nCoat
Restricted Shares
|
|
0000
Xxxx Xxxx
|
|
Xxxxxxxxx,
XX 00000
|
|
/s/ Xxxxx
Xxxxxxxx
|
|
Xxxxx
Xxxxxxxx, individually,
|
100,000
|
and
as attorney-in-fact for the holders
|
|
nCoat
Restricted Shares
|
|
000
Xxxxx Xxxxx
|
|
Xxxxxx,
XX 00000
|
|
/s/
Xxxx
Xxxxxx
|
|
Xxxx
Xxxxxx, individually,
|
3,400,000
|
and
as attorney-in-fact for the holders
|
|
nCoat
Restricted Shares
|
|
0000
Xxxxx 000 Xxxx
|
|
Xxxxx
000
|
|
Xxxxx,
Xxxx 00000
|
14
Exhibit
SL
SUITABILITY
LETTER
(TO
BE
COMPLETED BY EACH ACCEPTING NCOAT SHAREHOLDER)
TO: Tylerstone
Ventures Corporation
I
make
the following representations with the intent that they may be relied on
by
Tylerstone Ventures Corporation (the "Company"), in determining my suitability
as a purchaser of securities of the Company (the "Shares").
2. I
have had the opportunity to ask questions of, and receive answers and
information, from the officers of the Company and I deemed such information
sufficient to make an investment decision on the Company.
3. I
have such knowledge and experience in business and financial matters that
I am
capable of evaluating the Company, its business activities, and the risks
and
merits of this prospective investment, and I am
not
utilizing a purchaser representative (as defined in regulation D) in connection
with the evaluation of such risks and merits, except as set forth in paragraph
3.
4. I
shall provide a separate written statement from each purchaser representative
on
the Purchaser Representative Acknowledgment form available from the Company
in
which is disclosed (i) the relationship of the purchaser representative with
the
Company, if any, which has existed at any time during the previous two years,
and compensation received or to be received as a result of such relationship,
and (ii) the education, experience, and knowledge in financial and business
matters which enables the purchaser representative to evaluate the relative
merits and risks of an investment in the Company.
5. The
undersigned and the purchaser representatives listed above, if any, together
have such knowledge and experience in financial and business matters that
they
are capable of evaluating the Company and the proposed activities thereof
and
the merits and risks of this prospective investment.
6. I
have adequate means of providing for my current needs and possible personal
contingencies and have no need in the foreseeable future for liquidity of
an
investment in the Company.
7. Instructions:
Complete either (a) or (b) below, as applicable:
(a) FOR
ACCREDITED INVESTORS.
I
confirm that I am an "accredited investor" as defined under rule 501 of
regulation D promulgated under the Securities Act of 1933, as amended (the
"Securities Act"), as checked below:
(i) Any
bank as defined in section 3(a)(2) of the Securities Act or any savings and
loan
association or other institution as defined in section 3(a)(5)(A) of the
Securities Act whether acting in its individual or fiduciary capacity; any
broker or dealer registered pursuant to section 15 of the Securities Exchange
Act of 1934; any insurance company as defined in section 2(13) of the Securities
Act; any investment company registered under the Investment Company Act of
1940
or a business development company as defined in section 2(a)(48) of that
Act;
any small business investment company licensed by the U. S. Small Business
Administration under section 301(c) or (d) of the Small Business Investment
Act
of 1958; any plan established and maintained by a state, its political
subdivisions, or any agency or instrumentality of a state or its political
subdivisions, for the benefit of its employees, if such plan has total assets
in
excess of $5,000,000; any employee benefit plan within the meaning of the
Employee Retirement Income Security Act of 1974, if the investment decision
is
made by a plan fiduciary, as defined in section 3(21) of such Act, which
is
either a bank, savings and loan association, insurance company, or registered
investment adviser, or if the employee benefit plan has total assets in excess
of $5,000,000 or, if a self-directed plan, with investment decisions made
solely
by persons that are accredited investors;
15
o Yes o No
(ii) Any
private business development company as defined in section 302(a)(22) of
the
Investment Advisers Act of 1940;
o Yes o No
(iii) Any
organization described in section 501(c)(3) of the Internal Revenue Code,
corporation, Massachusetts or similar business trust, or partnership, not
formed
for the specific purpose of acquiring the securities offered, with total
assets
in excess of $5,000,000;
o Yes o No
(iv) Any
director, executive officer, or general partner of the issuer of the securities
being offered or sold, or any director, executive officer, or general partner
of
a general partner of that issuer;
o Yes o No
(v) Any
natural person whose individual net worth or joint net worth with that person's
spouse, at the time of his or her purchase exceeds $1,000,000;
o Yes o No
For
purposes of category (v), the term "net worth" means the excess of total
assets
over total liabilities. In computing net worth for the purposes of category
(v)
above, the undersigned's principal residence must be valued either at (A)
cost,
including the cost of improvements, net of current encumbrances upon the
property or (B) the appraised value of the property as determined upon a
written
appraisal used by an institutional lender making a loan to the individual
secured by the property, including the cost of subsequent improvements, net
of
current encumbrances upon the property.
(vi) Any
natural person who had an individual income in excess of $200,000 in each
of the
two most recent years or joint income with that person's spouse in excess
of
$300,000 in each of those years and has a reasonable expectation of reaching
the
same income level in the current year;
o Yes o No
In
determining income, the undersigned should add to his or her adjusted gross
income any amounts attributable to tax exempt income received, losses claimed
as
a limited partner in any limited partnership, deductions claimed for depletion,
contributions to an XXX or Xxxxx retirement plan, alimony payments, and any
amount by which income from long-term capital gains has been reduced in arriving
at adjusted gross income.
(vii) Any
trust, with total assets in excess of $5,000,000, not formed for the specific
purpose of acquiring the securities offered, whose purchase is directed by
a
sophisticated person as described in section 230.506(b)(2)(ii);
and
o Yes o No
(viii) Any
entity in which all of the equity owners are accredited investors.
o Yes o No
(b) FOR
NONACCREDITED INVESTORS.
I
am
not
an
accredited investor.
16
The
following information is being provided here in lieu of furnishing a personal
financial statement.
(i) My
net worth excluding principal residence, furnishings, and automobiles is
at
least _____ times the total investment I intend to make in the
Company;
(ii) My
annual disposable income, after excluding all of my personal and family living
expenses and other cash requirements for current obligations, is such that
the
loss of my entire investment in the Company would not materially alter my
standard of living;
o Yes o No
(iii) Considering
the foregoing and all other relevant factors in my financial and personal
circumstances, I am able to bear the economic risk of an investment in the
Company.
o Yes o No
7. I
have previously been advised that I would have an opportunity to review all
the
pertinent facts concerning the Company, and to obtain any additional information
which I might request, to the extent possible or obtainable, without
unreasonable effort and expense, in order to verify the accuracy of the
information provided me.
8. I
have personally communicated or been offered the opportunity to communicate
with
executive officers of the Company to discuss the business and financial affairs
of the Company, its products and activities, and its plans for the future.
I
acknowledge that if I would like to further avail myself of the opportunity
to
ask additional questions of the Company, the Company will make arrangements
for
such an opportunity on request.
9. I
have been advised that no accountant or attorney engaged by the Company is
acting as my representative, accountant, or attorney.
10. I
will hold title to my interest as follows:
o |
Community
Property
|
o
|
Separate
Property
|
|
|
|
|
o |
Joint
Tenants, with Right of Survivorship
|
o
|
Tenants
in Common
|
|
|
|
|
|
o
|
Other
(Single Person, Trust, Etc., Please Indicate.)
|
|
|
|
|
|
|
|
_________________________________
|
17
11. I
am a bona fide resident of the state of __________. The address below is
my true
and correct principal residence.
DATED
this ____ day of __________, 2007
Name
(Please Print)
|
|
Name
of Joint Subscriber, If Any
|
|
||
|
|
|
Signature |
|
Signature
|
|
|
|
|
|
|
Xxxxxx Xxxxxxx |
|
Xxxxxx
Xxxxxxx
|
|
|
|
|
|
|
Xxxx,
Xxxxx, and Zip Code
|
|
City,
State, and Zip Code
|
|
|
18
Exhibit
IRL
INVESTMENT
REPRESENTATION LETTER
(TO
BE
SIGNED BY EACH ACCEPTING NCOAT SHAREHOLDER)
Tylerstone
Ventures Corporation
Re: Purchase
of shares of Common Stock of Tylerstone Ventures Corporation
Gentlemen:
In
connection with the acquisition by the undersigned of shares of Common Stock
of
Tylerstone Ventures Corporation (the “Securities”), the undersigned represents
that the Securities are being acquired without a view to, or for, resale
in
connection with any distribution of such Securities or any interest therein
without registration or other compliance under the Securities Act of 1933,
as
amended (the "Securities Act"), and that the undersigned has no direct or
indirect participation in any such undertaking or in the underwriting of
such an
undertaking.
The
undersigned understands that the Securities have not been registered, but
are
being acquired by reason of a specific exemption under the Securities Act
as
well as under certain state statutes for transactions by an issuer not involving
any public offering and that any disposition of the subject Securities may,
under certain circumstances, be inconsistent with this exemption and may
make
the undersigned an "underwriter" within the meaning of the Securities Act.
It is
understood that the definition of an "underwriter" focuses on the concept
of
"distribution" and that any subsequent disposition of the subject Securities
can
only be effected in transactions which are not considered distributions.
Generally, the term "distribution" is considered synonymous with "public
offering" or any other offer or sale involving general solicitation or general
advertising. Under present law, in determining whether a distribution occurs
when securities are sold into the public market, under certain circumstances
one
must consider the availability of public information regarding the issuer,
a
holding period for the securities sufficient to assure that the persons desiring
to sell the securities without registration first bear the economic risk
of
their investment, and a limitation on the number of securities which the
stockholder is permitted to sell and on the manner of sale, thereby reducing
the
potential impact of the sale on the trading markets. These criteria are set
forth specifically in rule 144 promulgated under the Securities Act. After
one
year from the date the Securities are fully paid for and the subscription
is
accepted by the issuer, all as calculated in accordance with rule 144(d),
sales
of the Securities in reliance on rule 144 can only be made in limited amounts
in
accordance with the terms and conditions of that rule. After two year from
the
date the Securities are fully paid for, as calculated in accordance with
rule
144(d), it can generally be sold without meeting these conditions provided
the
holder is not (and has not been for the preceding three months) an affiliate
of
the issuer.
The
undersigned acknowledges that the Securities must be held and may not be
sold,
transferred, or otherwise disposed of for value unless it is subsequently
registered under the Securities Act or an exemption from such registration
is
available; the issuer is under no obligation to register the Securities under
the Securities Act or under section 12 of the Securities Exchange Act of
1934,
as amended, except as may be expressly agreed to by it in writing; if rule
144
is available, and no assurance is given that it will be, initially only routine
sales of such Securities in limited amounts can be made in reliance on rule
144
in accordance with the terms and conditions of that rule; the issuer is under
no
obligation to the undersigned to make rule 144 available, except as may be
expressly agreed to by it in writing; in the event rule 144 is not available,
compliance with regulation A or some other exemption may be required before
the
undersigned can sell, transfer, or otherwise dispose of such Securities without
registration under the Securities Act; the issuer's registrar and transfer
agent
will maintain a stop transfer order against the registration of transfer
of the
Securities; and the certificate representing the convertible promissory notes
and warrants composing the Securities will bear a legend in substantially
the
following form so restricting the sale of such Securities.
THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND ARE "RESTRICTED
SECURITIES" WITHIN THE MEANING OF RULE 144 PROMULGATED UNDER THE SECURITIES
ACT.
THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD OR
TRANSFERRED WITHOUT COMPLYING WITH RULE 144 IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION OR OTHER COMPLIANCE UNDER THE SECURITIES ACT.
19
The
issuer may refuse to register transfer of the Securities in the absence of
compliance with rule 144 unless the undersigned furnishes the issuer with
a
"no-action" or interpretative letter from the Securities and Exchange Commission
or an opinion of counsel reasonably acceptable to the issuer stating that
the
transfer is proper; further, unless such letter or opinion states that the
Securities are free of any restrictions under the Securities Act, the issuer
may
refuse to transfer the Securities to any transferee who does not furnish
in
writing to the issuer the same representations and agree to the same conditions
with respect to such Securities as are set forth herein. The issuer may also
refuse to transfer the Securities if any circumstances are present reasonably
indicating that the transferee's representations are not accurate.
|
Very
truly yours,
|
|
|
|
|
Dated:
________________________
|
________________________________
(Subscriber)
|
|
|
|
|
________________________________
(Joint
Subscriber)
|
||
|
|
20
EXHIBIT
A
ACCEPTING
NCOAT SHAREHOLDERS
Name
|
Number
of Shares of nCoat, Inc., Common
Stock to be Tendered
|
Xxxxx
X. Xxxxxx
|
2,500,000
|
Xxxx
X Xxxxxxx
|
2,500,000
|
Xxxxx
Xxxxxxxx
|
100,000
|
Xxxx
Xxxxxx
|
3,400,000
|
21
nCoat
Schedules
Exhibit
NS1 - Copy of Articles of Incorporation and Amendments
Exhibit
NS2 - Copy of nCoat, Inc. Bylaws
Exhibit
NS3 - Copy of Corporate Resolution specifically permitting the Execution
and
Delivery of the Share Exchange Agreement
22
Tylerstone
Schedules
Exhibit
TS1 - Copy of Articles of Incorporation and Amendments
Exhibit
TS2 - Copy of nCoat, Inc. Bylaws
Exhibit
TS3 - Copy of Corporate Resolution specifically permitting the Execution
and
Delivery of the Share Exchange Agreement
23