EXHIBIT 4.12
FUNDS ESCROW AGREEMENT
This Agreement is dated as of the ____ day of September, 2005 among North
Texas Steel Company, Inc., a Texas corporation ("NTSCO"), American Technologies
Group, Inc., a Delaware corporation ("ATG"), Omaha Holdings Corp., a Delaware
corporation ("Omaha", and collectively with NTSCO and ATG, the "Companies" and
each a "Company, Laurus Master Fund, Ltd. (the "Purchaser"), and Loeb & Loeb LLP
(the "Escrow Agent"):
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Purchaser has advised Escrow Agent that (a) each Company and the
Purchaser have entered into a Security Agreement ("Security Agreement"), (b)
each Company has issued in favor of Purchaser the Secured Revolving Note,
Secured Convertible Minimum Borrowing Note, Secured Convertible Term Note A
("Term Note A") and Secured Convertible Term Note B (collectively, the "Notes"),
(c) ATG has issued to the Purchaser an option ("Option"), (d) ATG has issued to
the Purchaser a common stock purchase warrant ("Warrant") and (e) ATG and the
Purchaser have entered into a Registration Rights Agreement covering the
registration of ATG's common stock underlying Term Note A, the Option and the
Warrant ("Registration Rights Agreement"); and
WHEREAS, the Companies and the Purchaser wish the Purchaser to deliver to
the Escrow Agent copies of the Documents (as hereafter defined) and the Escrowed
Payment (as hereafter defined) to be held and released by Escrow Agent in
accordance with the terms and conditions of this Agreement; and
WHEREAS, the Escrow Agent is willing to serve as escrow agent pursuant to
the terms and conditions of this Agreement;
NOW THEREFORE, the parties agree as follows:
ARTICLE I
INTERPRETATION
1.1. Definitions. Whenever used in this Agreement, the following terms
shall have the meanings set forth below.
(a) "Agreement" means this Agreement, as amended, modified and
supplemented from time to time by written agreement among the parties hereto.
(b) "Closing Payment" means the closing payment to be paid to Laurus
Capital Management, L.L.C., the fund manager, as set forth on Schedule A hereto.
(c) "Documents" means copies of the Security Agreement, the Notes,
the Warrant, the Option and the Registration Rights Agreement.
(d) "Escrowed Payment" means $12,000,000.
1.2. Entire Agreement. This Agreement constitutes the entire agreement
among the parties hereto with respect to the matters contained herein and
supersedes all prior agreements, understandings, negotiations and discussions of
the parties, whether oral or written. There are no warranties, representations
and other agreements made by the parties in connection with the subject matter
hereof except as specifically set forth in this Agreement.
1.3. Extended Meanings. In this Agreement words importing the singular
number include the plural and vice versa; words importing the masculine gender
include the feminine and neuter genders. The word "person" includes an
individual, body corporate, partnership, trustee or trust or unincorporated
association, executor, administrator or legal representative.
1.4. Waivers and Amendments. This Agreement may be amended, modified,
superseded, cancelled, renewed or extended, and the terms and conditions hereof
may be waived, in each case only by a written instrument signed by all parties
hereto, or, in the case of a waiver, by the party waiving compliance. Except as
expressly stated herein, no delay on the part of any party in exercising any
right, power or privilege hereunder shall operate as a waiver thereof, nor shall
any waiver on the part of any party of any right, power or privilege hereunder
preclude any other or future exercise of any other right, power or privilege
hereunder.
1.5. Headings. The division of this Agreement into articles, sections,
subsections and paragraphs and the insertion of headings are for convenience of
reference only and shall not affect the construction or interpretation of this
Agreement.
1.6. Law Governing this Agreement; Consent to Jurisdiction. This Agreement
shall be governed by and construed in accordance with the laws of the State of
New York without regard to principles of conflicts of laws. With respect to any
suit, action or proceeding relating to this Agreement or to the transactions
contemplated hereby ("Proceedings"), each party hereto irrevocably submits to
the exclusive jurisdiction of the courts of the County of New York, State of New
York and the United States District court located in the County of New York in
the State of New York. Each party hereto hereby irrevocably and unconditionally
(a) waives trial by jury in any Proceeding relating to this Agreement and for
any related counterclaim and (b) waives any objection which it may have at any
time to the laying of venue of any Proceeding brought in any such court, waives
any claim that such Proceedings have been brought in an inconvenient forum and
further waives the right to object, with respect to such Proceedings, that such
court does not have jurisdiction over such party. As among the Companies and the
Purchaser, the prevailing party shall be entitled to recover from the other
party its reasonable attorneys' fees and costs. In the event that any provision
of this Agreement is determined by a court of competent jurisdiction to be
invalid or unenforceable, then the remainder of this Agreement shall not be
affected and shall remain in full force and effect.
1.7. Construction. Each party acknowledges that its legal counsel
participated in the preparation of this Agreement and, therefore, stipulates
that the rule of construction that ambiguities are to be resolved against the
drafting party shall not be applied in the interpretation of this Agreement to
favor any party against the other.
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ARTICLE II
APPOINTMENT OF AND DELIVERIES TO THE ESCROW AGENT
2.1. Appointment. Companies and Purchaser hereby irrevocably designate and
appoint the Escrow Agent as their escrow agent for the purposes set forth
herein, and the Escrow Agent by its execution and delivery of this Agreement
hereby accepts such appointment under the terms and conditions set forth herein.
2.2. Copies of Documents to Escrow Agent. On or about the date hereof, the
Purchaser shall deliver to the Escrow Agent copies of the Documents executed by
the Companies to the extent it is a party thereto.
2.3. Delivery of Escrowed Payment to Escrow Agent. On or about the date
hereof, the Purchaser shall deliver to the Escrow Agent the Escrowed Payment.
2.4. Intention to Create Escrow Over the Escrowed Payment. The Purchaser
and the Companies intend that the Escrowed Payment shall be held in escrow by
the Escrow Agent and released from escrow by the Escrow Agent only in accordance
with the terms and conditions of this Agreement.
ARTICLE III
RELEASE OF ESCROW
3.1. Release of Escrow. Subject to the provisions of Section 4.2, the
Escrow Agent shall release the Escrowed Payment from escrow as follows:
(a) Promptly following receipt by the Escrow Agent of (i) copies of
the fully executed Documents and this Agreement, (ii) the Escrowed Payment in
immediately available funds, (iii) joint written instructions ("Joint
Instructions") executed by the Companies and the Purchaser setting forth the
payment direction instructions with respect to the Escrowed Payment and (iv)
Escrow Agent's verbal instructions from Xxxxx Grin and/or Xxxxxx Grin (each of
whom is a director of the Purchaser) indicating that all closing conditions
relating to the Documents have been satisfied and directing that the Escrowed
Payment be disbursed by the Escrow Agent in accordance with the Joint
Instructions, then the Escrowed Payment shall be deemed released from escrow and
shall be promptly disbursed in accordance with the Joint Instructions. The Joint
Instructions shall include, without limitation, Escrow Agent's authorization to
retain from the Escrowed Payment Escrow Agent's fee for acting as Escrow Agent
hereunder and the Closing Payment for delivery to Laurus Capital Management,
L.L.C. in accordance with the Joint Instructions.
(b) Upon receipt by the Escrow Agent of a final and non-appealable
judgment, order, decree or award of a court of competent jurisdiction (a "Court
Order") relating to the Escrowed Payment, the Escrow Agent shall remit the
Escrowed Payment in accordance with the Court Order. Any Court Order shall be
accompanied by an opinion of counsel for the party presenting the Court Order to
the Escrow Agent (which opinion shall be satisfactory to the Escrow Agent) to
the effect that the court issuing the Court Order is a court of competent
jurisdiction and that the Court Order is final and non-appealable.
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3.2. Acknowledgement of Companies and Purchaser; Disputes. The Companies
and the Purchaser acknowledge that the only terms and conditions upon which the
Escrowed Payment are to be released from escrow are as set forth in Sections 3
and 4 of this Agreement. The Companies and the Purchaser reaffirm their
agreement to abide by the terms and conditions of this Agreement with respect to
the release of the Escrowed Payment. Any dispute with respect to the release of
the Escrowed Payment shall be resolved pursuant to Section 4.2 or by written
agreement between the Companies and Purchaser.
ARTICLE IV
CONCERNING THE ESCROW AGENT
4.1. Duties and Responsibilities of the Escrow Agent. The Escrow Agent's
duties and responsibilities shall be subject to the following terms and
conditions:
(a) The Purchaser and the Companies acknowledge and agree that the
Escrow Agent (i) shall not be required to inquire into whether the Purchaser,
the Companies or any other party is entitled to receipt of any Document or all
or any portion of the Escrowed Payment; (ii) shall not be called upon to
construe or review any Document or any other document, instrument or agreement
entered into in connection therewith; (iii) shall be obligated only for the
performance of such duties as are specifically assumed by the Escrow Agent
pursuant to this Agreement; (iv) may rely on and shall be protected in acting or
refraining from acting upon any written notice, instruction, instrument,
statement, request or document furnished to it hereunder and believed by the
Escrow Agent in good faith to be genuine and to have been signed or presented by
the proper person or party, without being required to determine the authenticity
or correctness of any fact stated therein or the propriety or validity or the
service thereof; (v) may assume that any person purporting to give notice or
make any statement or execute any document in connection with the provisions
hereof has been duly authorized to do so; (vi) shall not be responsible for the
identity, authority or rights of any person, firm or company executing or
delivering or purporting to execute or deliver this Agreement or any Document or
any funds deposited hereunder or any endorsement thereon or assignment thereof;
(vii) shall not be under any duty to give the property held by Escrow Agent
hereunder any greater degree of care than Escrow Agent gives its own similar
property; and (viii) may consult counsel satisfactory to Escrow Agent
(including, without limitation, Loeb & Loeb, LLP or such other counsel of Escrow
Agent's choosing), the opinion of such counsel to be full and complete
authorization and protection in respect of any action taken, suffered or omitted
by Escrow Agent hereunder in good faith and in accordance with the opinion of
such counsel.
(b) The Purchaser and the Companies acknowledge that the Escrow
Agent is acting solely as a stakeholder at their request and that the Escrow
Agent shall not be liable for any action taken by Escrow Agent in good faith and
believed by Escrow Agent to be authorized or within the rights or powers
conferred upon Escrow Agent by this Agreement. The Purchaser and the Companies
hereby, jointly and severally, indemnify and hold harmless the Escrow Agent and
any of Escrow Agent's partners, employees, agents and representatives from and
against any and all actions taken or omitted to be taken by Escrow Agent or any
of them hereunder and any and all claims, losses, liabilities, costs, damages
and expenses suffered and/or incurred by the Escrow Agent arising in any manner
whatsoever out of the transactions contemplated by this Agreement and/or any
transaction related in any way hereto, including the fees of outside counsel and
other costs and expenses of defending itself against any claims, losses,
liabilities, costs, damages and expenses arising in any manner whatsoever out
the transactions contemplated by this Agreement and/or any transaction related
in any way hereto, except for such claims, losses, liabilities, costs, damages
and expenses incurred by reason of the Escrow Agent's gross negligence or
willful misconduct. The Escrow Agent shall owe a duty only to the Purchaser and
Companies under this Agreement and to no other person.
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(c) The Purchaser and the Companies shall jointly and severally
reimburse the Escrow Agent for its reasonable out-of-pocket expenses (including
counsel fees (which counsel may be Loeb & Loeb LLP or such other counsel of the
Escrow Agent's choosing) incurred in connection with the performance of its
duties and responsibilities hereunder, which shall not (subject to Section
4.1(b)) exceed $2,500.
(d) The Escrow Agent may at any time resign as Escrow Agent
hereunder by giving five (5) business days prior written notice of resignation
to the Purchaser and the Companies. Prior to the effective date of resignation
as specified in such notice, the Purchaser and Companies will issue to the
Escrow Agent a Joint Instruction authorizing delivery of the Documents, the
Escrowed Payment to a substitute Escrow Agent selected by the Purchaser and the
Companies. If no successor Escrow Agent is named by the Purchaser and the
Companies, the Escrow Agent may apply to a court of competent jurisdiction in
the State of New York for appointment of a successor Escrow Agent, and deposit
the Documents, the Escrowed Payment with the clerk of any such court and/or
otherwise commence an interpleader or similar action for a determination of
where to deposit the same.
(e) The Escrow Agent does not have and will not have any interest in
the Documents, the Escrowed Payment, but is serving only as escrow agent, having
only possession thereof.
(f) The Escrow Agent shall not be liable for any action taken or
omitted by it in good faith and reasonably believed by it to be authorized
hereby or within the rights or powers conferred upon it hereunder, nor for
action taken or omitted by it in good faith, and in accordance with advice of
counsel (which counsel may be Loeb & Loeb, LLP or such other counsel of the
Escrow Agent's choosing), and shall not be liable for any mistake of fact or
error of judgment or for any acts or omissions of any kind except to the extent
any such liability arose from its own willful misconduct or gross negligence.
(g) This Agreement sets forth exclusively the duties of the Escrow
Agent with respect to any and all matters pertinent thereto and no implied
duties or obligations shall be read into this Agreement.
(h) The Escrow Agent shall be permitted to act as counsel for the
Purchaser or the Companies, as the case may be, in any dispute as to the
disposition of the Documents, the Escrowed Payment, in any other dispute between
the Purchaser and the Companies, whether or not the Escrow Agent is then holding
the Documents, the Escrowed Payment and continues to act as the Escrow Agent
hereunder.
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(i) The provisions of this Section 4.1 shall survive the resignation
of the Escrow Agent or the termination of this Agreement.
4.2. Dispute Resolution; Judgments. Resolution of disputes arising under
this Agreement shall be subject to the following terms and conditions:
(a) If any dispute shall arise with respect to the delivery,
ownership, right of possession or disposition of the Documents, the Escrowed
Payment, or if the Escrow Agent shall in good faith be uncertain as to its
duties or rights hereunder, the Escrow Agent shall be authorized, without
liability to anyone, to (i) refrain from taking any action other than to
continue to hold the Documents, the Escrowed Payment pending receipt of a Joint
Instruction from the Purchaser and the Companies, (ii) commence an interpleader
or similar action, suit or proceeding for the resolution of any such dispute;
and/or (iii) deposit the Documents, the Escrowed Payment with any court of
competent jurisdiction in the State of New York, in which event the Escrow Agent
shall give written notice thereof to the Purchaser and the Companies and shall
thereupon be relieved and discharged from all further obligations pursuant to
this Agreement. The Escrow Agent may, but shall be under no duty to, institute
or defend any legal proceedings which relate to the Documents, the Escrowed
Payment. The Escrow Agent shall have the right to retain counsel if it becomes
involved in any disagreement, dispute or litigation on account of this Agreement
or otherwise determines that it is necessary to consult counsel which such
counsel may be Loeb & Loeb LLP or such other counsel of the Escrow Agent's
choosing.
(b) The Escrow Agent is hereby expressly authorized to comply with
and obey any Court Order. In case the Escrow Agent obeys or complies with a
Court Order, the Escrow Agent shall not be liable to the Purchaser and Companies
or to any other person, firm, company or entity by reason of such compliance.
ARTICLE V
GENERAL MATTERS
5.1. Termination. This escrow shall terminate upon disbursement of the
Escrowed Payment in accordance with the terms of this Agreement or earlier upon
the agreement in writing of the Purchaser and Companies or resignation of the
Escrow Agent in accordance with the terms hereof.
5.2. Notices. All notices, requests, demands and other communications
required or permitted hereunder shall be in writing and shall be deemed to have
been duly given one (1) day after being sent by telecopy (with copy delivered by
overnight courier, regular or certified mail):
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If to any Company, to:
American Technologies Group, Inc.
XX Xxx 00
Xxxxxxxx, Xxxxxxxxxx 00000
Attention: Xx. Xxxx Xxxxx, CEO
Telephone: (000) 000-0000
Facsimile:___________________
With a copy to:
Sichenzia Xxxx Xxxxxxxx Xxxxxxx LLP
1065 Avenue of the Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to the Purchaser, to:
Laurus Master Fund, Ltd.
x/x Xxxxxx Xxxxxxx Xxxxxxxxxx, X.X.X.
000 Xxxxx Xxxxxx, 00xx Xx.
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to the Escrow Agent, to:
Loeb & Loeb LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxxxxx, Esq.
or to such other address as any of them shall give to the others by notice made
pursuant to this Section 5.2.
5.3. Interest. The Escrowed Payment shall be held in an interest bearing
account nor will interest be payable in connection therewith.
5.4. Assignment; Binding Agreement. Neither this Agreement nor any right
or obligation hereunder shall be assignable by any party without the prior
written consent of the other parties hereto. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective legal
representatives, successors and assigns.
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5.5. Invalidity. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal, or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and of
the remaining provisions contained herein shall not be in any way impaired
thereby, it being intended that all of the rights and privileges of the parties
hereto shall be enforceable to the fullest extent permitted by law.
5.6. Counterparts/Execution. This Agreement may be executed in any number
of counterparts and by different signatories hereto on separate counterparts,
each of which, when so executed, shall be deemed an original, but all such
counterparts shall constitute but one and the same agreement. This Agreement may
be executed by facsimile transmission.
[Signature Page to Follow; Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties hereto have executed this Funds Escrow
Agreement as of the date and year first above written.
COMPANIES:
NORTH TEXAS STEEL COMPANY, INC.
By:_________________________________
Name:
Title:
AMERICAN TECHNOLOGIES GROUP, INC.
By:_________________________________
Name:
Title:
OMAHA HOLDINGS CORP.
By:_________________________________
Name:
Title:
PURCHASER:
LAURUS MASTER FUND, LTD.
By:_________________________________
Name:
Title:
ESCROW AGENT:
LOEB & LOEB LLP
By:_________________________________
Name:
Title:
SCHEDULE A TO FUNDS ESCROW AGREEMENT
-------------------------------------- ---------------------------------------
PURCHASER PRINCIPAL NOTE AMOUNT
-------------------------------------- ---------------------------------------
LAURUS MASTER FUND, LTD. $7,000,000 Secured Revolving Note
c/o M&C Corporate Services Limited
X.X. Xxx 000 GT $3,000,000 Secured Convertible Term
Xxxxxx House Note A
Xxxxxx Xxxx
Xxxxx Xxxxxx Xxxxxx $2,000,000 Secured Convertible Term
Grand Cayman, Cayman Islands Note B
Fax: 000-000-0000
-------------------------------------- ---------------------------------------
TOTAL $12,000,000
-------------------------------------- ---------------------------------------
-------------------------------------- ---------------------------------------
FUND MANAGER CLOSING PAYMENT
-------------------------------------- ---------------------------------------
LAURUS CAPITAL MANAGEMENT, L.L.C. Closing payment payable in connection
000 Xxxxx Xxxxxx, 00xx Xxxxx with investment by Laurus Master Fund,
Xxx Xxxx, Xxx Xxxx 00000 Ltd. for which Laurus Capital
Fax: 000-000-0000 Management, L.L.C. is the Manager
-------------------------------------- ---------------------------------------
TOTAL $450,000
-------------------------------------- ---------------------------------------
-------------------------------------- ---------------------------------------
WARRANT RECIPIENT WARRANTS IN CONNECTION WITH OFFERING
-------------------------------------- ---------------------------------------
LAURUS MASTER FUND, LTD. __________ Warrants in connection with
c/o M&C Corporate Services Limited investment by Laurus Master Fund, Ltd.
X.X. Xxx 000 XX
Xxxxxx House
Xxxxxx Town
South Church Street
Grand Cayman, Cayman Islands
Fax: 000-000-0000
-------------------------------------- ---------------------------------------
TOTAL ___________ Warrants
-------------------------------------- ---------------------------------------
-------------------------------------- ---------------------------------------
OPTION RECIPIENT OPTIONS IN CONNECTION WITH OFFERING
-------------------------------------- ---------------------------------------
LAURUS MASTER FUND, LTD. __________ Options issuable in
c/o M&C Corporate Services Limited connection with investment by Laurus
X.X. Xxx 000 GT Master Fund, Ltd.
Xxxxxx House
Xxxxxx Town
South Church Street
Grand Cayman, Cayman Islands
Fax: 000-000-0000
-------------------------------------- ---------------------------------------
TOTAL ______________ Options
-------------------------------------- ---------------------------------------
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