THIS NOTE AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS. THIS NOTE AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF
THIS NOTE MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS NOTE UNDER SAID ACT
AND ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO AMERICAN TECHNOLOGIES GROUP, INC. THAT SUCH REGISTRATION IS NOT
REQUIRED.
SECURED CONVERTIBLE TERM NOTE B
FOR VALUE RECEIVED, each of AMERICAN TECHNOLOGIES GROUP, INC., a Nevada
corporation (the "PARENT"), and the other Companies listed on Exhibit A attached
hereto (such other companies together with the Parent, each a "COMPANY" and
collectively, the "COMPANIES"), jointly and severally, promises to pay to LAURUS
MASTER FUND, LTD., c/o M&C Corporate Services Limited, P.O. Box 309 GT, Xxxxxx
House, South Church Street, Xxxxxx Town, Grand Cayman, Cayman Islands, Fax:
000-000-0000 (the "HOLDER") or its registered assigns or successors in interest,
the sum of Two Million Dollars ($2,000,000), together with any accrued and
unpaid interest hereon, on March 6, 2007 (the "MATURITY DATE") if not sooner
paid.
This Secured Convertible Term Note (this "NOTE") is intended to be a
registered obligation within the meaning of Treasury Regulation Section
1.871-14(c)(1)(i) and each Company (or its agent) shall register this Note (and
thereafter shall maintain such registration) as to both principal and any stated
interest. Notwithstanding any document, instrument or agreement relating to this
Note to the contrary, transfer of this Note (or the right to any payments of
principal or stated interest thereunder) may only be effected by (i) surrender
of this Note and either the reissuance by the Company of this Note to the new
holder or the issuance by the Company of a new instrument to the new holder, or
(ii) transfer through a book entry system maintained by the Company (or its
agent), within the meaning of Treasury Regulation Section 1.871-14(c)(1)(i)(B).
Capitalized terms used herein without definition shall have the meanings
ascribed to such terms in that certain Security Agreement dated as of the date
hereof by and among the Companies and the Holder (as amended, modified and/or
supplemented from time to time, the "SECURITY AGREEMENT").
The following terms shall apply to this Note:
ARTICLE I
CONTRACT RATE AND AMORTIZATION
1.1 Contract Rate. Subject to Sections 4.2 and 5.10, interest payable on
the outstanding principal amount of this Note (the "PRINCIPAL AMOUNT") shall
accrue at a rate per annum equal to (the "CONTRACT RATE"): (a) twelve percent
(12%) from the date hereof through the date immediately preceding the first
anniversary of the date hereof and (b) eighteen percent (18%) from the first
anniversary of the date hereof and at all times thereafter. Interest shall be
(i) calculated on the basis of a 360 day year, and (ii) payable monthly, in
arrears, commencing on October 1, 2005 on the first business day of each
consecutive calendar month thereafter through and including the Maturity Date,
and on the Maturity Date, whether by acceleration or otherwise.
1.2 Principal Payments. The total outstanding Principal Amount together
with any accrued and unpaid interest and any and all other unpaid amounts which
are then owing by the Companies to the Holder under this Note, the Security
Agreement and/or any other Ancillary Agreement shall be due and payable on the
Maturity Date.
ARTICLE II
CONVERSION AND REDEMPTION
2.1 Payment of Principal Amount.
(a) Payment in Cash or Common Stock. If the Principal Amount (or a
portion of the Principal Amount if not all of the Principal Amount may be
converted into shares of Common Stock pursuant to Section 3.2) is required to be
paid in cash pursuant to Section 2.1(b), then the Companies shall, jointly and
severally, pay the Holder an amount in cash equal to 100% of the Principal
Amount (or such portion of the Principal Amount to be paid in cash) due and
owing to the Holder on the Maturity Date. If the Principal Amount (or a portion
of the Principal Amount if not all of the Principal Amount may be converted into
shares of Common Stock pursuant to Section 3.2) is required to be paid in shares
of Common Stock pursuant to Section 2.1(b), the number of such shares to be
issued by the Parent to the Holder on the Maturity Date (in respect of such
portion of the Principal Amount converted into shares of Common Stock pursuant
to Section 2.1(b)), shall be the number determined by dividing (i) the portion
of the Principal Amount converted into shares of Common Stock, by (ii) the then
applicable Fixed Conversion Price. For purposes hereof, subject to Section 3.6
hereof, the initial "FIXED CONVERSION PRICE" means $0.00111.
(b) Principal Amount Conversion Conditions. Subject to Sections 2.1(a),
2.2, and 3.2 hereof, the Holder shall convert into shares of Common Stock all or
a portion of the Principal Amount due on the Maturity Date if the following
conditions (the "CONVERSION CRITERIA") are satisfied: (i) the average closing
price of the Common Stock as reported by Bloomberg, L.P. on the Principal Market
for the five (5) trading days immediately preceding the Maturity Date shall be
greater than or equal to 120% of the Fixed Conversion Price and (ii) the amount
of such conversion does not exceed twenty-five percent (25%) of the aggregate
dollar trading volume of the Common Stock for the period of twenty-two (22)
trading days immediately preceding the Maturity Date. If subsection (i) of the
Conversion Criteria is met but subsection (ii) of the Conversion Criteria is not
met as to the entire Principal Amount, the Holder shall convert only such part
of the Principal Amount that meets subsection (ii) of the Conversion Criteria.
Any portion of the Principal Amount due on the Maturity Date that the Holder has
not been able to convert into shares of Common Stock due to the failure to meet
the Conversion Criteria, shall be paid in cash by the Companies on the Maturity
Date at the rate of 100% of the Principal Amount otherwise due on the Maturity
Date.
2
2.2 No Effective Registration. Notwithstanding anything to the contrary
herein, none of the Companies' obligations to the Holder may be converted into
Common Stock unless (a) either (i) an effective current Registration Statement
(as defined in the Registration Rights Agreement) covering the shares of Common
Stock to be issued in connection with satisfaction of such obligations exists or
(ii) an exemption from registration for resale of all of the Common Stock issued
and issuable is available pursuant to Rule 144 of the Securities Act and (b) no
Event of Default (as hereinafter defined) exists and is continuing, unless such
Event of Default is cured within any applicable cure period or otherwise waived
in writing by the Holder.
2.3 Optional Redemption in Cash. The Companies may prepay this Note
("OPTIONAL REDEMPTION") by paying to the Holder a sum of money equal to one
hundred percent (100%) of the Principal Amount outstanding at such time together
with accrued but unpaid interest thereon and any and all other sums due, accrued
or payable to the Holder arising under this Note (the "REDEMPTION AMOUNT")
outstanding on the Redemption Payment Date (as defined below). The Companies
shall deliver to the Holder a written notice of redemption (the "NOTICE OF
REDEMPTION") specifying the date for such Optional Redemption (the "REDEMPTION
PAYMENT DATE"), which date shall be seven (7) business days after the date of
the Notice of Redemption (the "REDEMPTION PERIOD"). A Notice of Redemption shall
not be effective with respect to any portion of this Note for which the Holder
has previously delivered a Notice of Conversion (as hereinafter defined) or for
conversions elected to be made by the Holder pursuant to Section 3.3 during the
Redemption Period. The Redemption Amount shall be determined as if the Holder's
conversion elections had been completed immediately prior to the date of the
Notice of Redemption. On the Redemption Payment Date, the Redemption Amount must
be paid in good funds to the Holder. In the event the Companies fail to pay the
Redemption Amount on the Redemption Payment Date as set forth herein, then such
Redemption Notice will be null and void.
ARTICLE III
HOLDER'S CONVERSION RIGHTS
3.1 Optional Conversion. Subject to the terms set forth in this Article
III, the Holder shall have the right, but not the obligation, to convert all or
any portion of the issued and outstanding Principal Amount and/or accrued
interest and fees due and payable into fully paid and nonassessable shares of
Common Stock at the Fixed Conversion Price. The shares of Common Stock to be
issued upon such conversion are herein referred to as, the "CONVERSION Shares."
3.2 Conversion Limitation. Notwithstanding anything contained herein to
the contrary, the Holder shall not be entitled to convert pursuant to the terms
of this Note an amount that would be convertible into that number of Conversion
Shares which would exceed the difference between (i) 4.99% of the issued and
outstanding shares of Common Stock and (ii) the number of shares of Common Stock
beneficially owned by the Holder For purposes of the immediately preceding
sentence, beneficial ownership shall be determined in accordance with Section
13(d) of the Exchange Act and Regulation 13d-3 thereunder. The Conversion Share
limitation described in this Section 3.2 shall automatically become null and
void following notice to the Company upon the occurrence and during the
continuance of an Event of Default, or upon 75 days prior notice to the Parent.
Notwithstanding anything contained herein to the contrary, the provisions of
this Section 3.2 are irrevocable and may not be waived by the Holder or the
Parent.
3
3.3 Mechanics of Xxxxxx's Conversion. In the event that the Holder
elects to convert this Note into Common Stock, the Holder shall give notice of
such election by delivering an executed and completed notice of conversion in
substantially the form of Exhibit B hereto (appropriate completed) ("NOTICE OF
CONVERSION") to the Parent and such Notice of Conversion shall provide a
breakdown in reasonable detail of the Principal Amount, accrued interest and
fees that are being converted. On each Conversion Date (as hereinafter defined)
and in accordance with its Notice of Conversion, the Holder shall make the
appropriate reduction to the Principal Amount, accrued interest and fees as
entered in its records and shall provide written notice thereof to the Parent
within two (2) business days after the Conversion Date. Each date on which a
Notice of Conversion is delivered or telecopied to the Parent in accordance with
the provisions hereof shall be deemed a Conversion Date (the "CONVERSION DATE").
Pursuant to the terms of the Notice of Conversion, the Parent will issue
instructions to the transfer agent accompanied by an opinion of counsel within
one (1) business day of the date of the delivery to the Parent of the Notice of
Conversion and shall cause the transfer agent to transmit the certificates
representing the Conversion Shares to the Holder by crediting the account of the
Holder's designated broker with the Depository Trust Corporation ("DTC") through
its Deposit Withdrawal Agent Commission ("DWAC") system within three (3)
business days after receipt by the Parent of the Notice of Conversion (the
"DELIVERY DATE"). In the case of the exercise of the conversion rights set forth
herein the conversion privilege shall be deemed to have been exercised and the
Conversion Shares issuable upon such conversion shall be deemed to have been
issued upon the date of receipt by the Parent of the Notice of Conversion. The
Holder shall be treated for all purposes as the record holder of the Conversion
Shares, unless the Holder provides the Parent written instructions to the
contrary.
3.4 Late Payments. Each Company understands that a delay in the delivery
of the Conversion Shares in the form required pursuant to this Article beyond
the Delivery Date could result in economic loss to the Holder. As compensation
to the Holder for such loss, in addition to all other rights and remedies which
the Holder may have under this Note, applicable law or otherwise, the Companies
shall, jointly and severally, pay late payments to the Holder for any late
issuance of Conversion Shares in the form required pursuant to this Article II
upon conversion of this Note, in the amount equal to $500 per business day after
the Delivery Date. The Company shall make any payments incurred under this
Section in immediately available funds upon demand.
3.5 Conversion Mechanics. The number of shares of Common Stock to be
issued upon each conversion of this Note shall be determined by dividing that
portion of the principal and interest and fees to be converted, if any, by the
then applicable Fixed Conversion Price.
3.6 Adjustment Provisions. The Fixed Conversion Price and number and
kind of shares or other securities to be issued upon conversion determined
pursuant to this Note shall be subject to adjustment from time to time upon the
occurrence of certain events during the period that this conversion right
remains outstanding, as follows:
4
(a) Reclassification. If the Parent at any time shall, by
reclassification or otherwise, change the Common Stock into the same or
a different number of securities of any class or classes, this Note, as
to the unpaid Principal Amount and accrued interest thereon, shall
thereafter be deemed to evidence the right to purchase an adjusted
number of such securities and kind of securities as would have been
issuable as the result of such change with respect to the Common Stock
(i) immediately prior to or (ii) immediately after, such
reclassification or other change at the sole election of the Holder.
(b) Stock Splits, Combinations and Dividends. If the shares of
Common Stock are subdivided or combined into a greater or smaller number
of shares of Common Stock, or if a dividend is paid on the Common Stock
or any preferred stock issued by the Parent in shares of Common Stock,
the Fixed Conversion Price shall be proportionately reduced in case of
subdivision of shares or stock dividend or proportionately increased in
the case of combination of shares, in each such case by the ratio which
the total number of shares of Common Stock outstanding immediately after
such event bears to the total number of shares of Common Stock
outstanding immediately prior to such event.
(c) Share Issuances. Subject to the provisions of this Section
3.6, if the Parent shall at any time prior to the conversion or
repayment in full of the Principal Amount issue any shares of Common
Stock or securities convertible into Common Stock to a Person other than
the Holder (except (i) pursuant to Sections 3.6(a) or (b) above; (ii)
pursuant to options, warrants, or other obligations to issue shares
outstanding on the date hereof as disclosed to the Holder in writing; or
(iii) pursuant to options that may be issued under any employee
incentive stock option and/or any qualified stock option plan adopted by
the Parent) for a consideration per share (the "OFFER PRICE") less than
the Fixed Conversion Price in effect at the time of such issuance, then
the Fixed Conversion Price shall be immediately reset to such lower
Offer Price. For purposes hereof, the issuance of any security of the
Parent convertible into or exercisable or exchangeable for Common Stock
shall result in an adjustment to the Fixed Conversion Price upon the
issuance of such securities.
(d) Computation of Consideration. For purposes of any
computation respecting consideration received pursuant to Section 3.6(c)
above, the following shall apply:
(i) in the case of the issuance of shares of Common
Stock for cash, the consideration shall be the amount of such
cash, provided that in no case shall any deduction be made for
any commissions, discounts or other expenses incurred by the
Parent for any underwriting of the issue or otherwise in
connection therewith;
(ii) in the case of the issuance of shares of Common
Stock for a consideration in whole or in part other than cash,
the consideration other than cash shall be deemed to be the fair
market value thereof as determined in good faith by the Board of
Directors of the Parent (irrespective of the accounting
treatment thereof); and
(iii) upon any such exercise, the aggregate
consideration received for such securities shall be deemed to be
the consideration received by the Parent for the issuance of
such securities plus the additional minimum consideration, if
any, to be received by the Parent upon the conversion or
exchange thereof (the consideration in each case to be
determined in the same manner as provided in subsections (i) and
(ii) of this Section 3.6(d)).
5
3.7 Reservation of Shares. During the period the conversion right
exists, the Parent will reserve from its authorized and unissued Common Stock a
sufficient number of shares to provide for the issuance of Conversion Shares
upon the full conversion of this Note, the Warrants and the Options. Each
Company represents that upon issuance, the Conversion Shares will be duly and
validly issued, fully paid and non-assessable. Each Company agrees that its
issuance of this Note shall constitute full authority to its officers, agents,
and transfer agents who are charged with the duty of executing and issuing stock
certificates to execute and issue the necessary certificates for the Conversion
Shares upon the conversion of this Note.
3.8 Registration Rights. The Holder has been granted registration rights
with respect to the Conversion Shares as set forth in the Registration Rights
Agreement.
3.9 Issuance of New Note. Upon any partial conversion of this Note, a
new Note containing the same date and provisions of this Note shall, at the
request of the Holder, be issued by the Companies to the Holder for the
principal balance of this Note and interest which shall not have been converted
or paid. Subject to the provisions of Article IV of this Note, no Company shall
pay any costs, fees or any other consideration to the Holder for the production
and issuance of a new Note.
ARTICLE IV
EVENTS OF DEFAULT
4.1 Events of Default. The occurrence of an Event of Default under the
Security Agreement shall constitute an event of default ("EVENT OF DEFAULT")
hereunder.
4.2 Default Interest. Following the occurrence and during the
continuance of an Event of Default, the Companies shall, jointly and severally,
pay additional interest on the outstanding principal balance of this Note in an
amount equal to the Contract Rate plus ten percent (10%) per annum, and all
outstanding Obligations, including unpaid interest, shall continue to accrue
interest at such additional interest rate from the date of such Event of Default
until the date such Event of Default is cured or waived.
4.3 Default Payment. Following the occurrence and during the continuance
of an Event of Default, the Holder, at its option, may demand repayment in full
of all Obligations and/or may elect, in addition to all rights and remedies of
the Holder under the Security Agreement and the other Ancillary Agreements and
all Obligations of the Companies under the Security Agreement and the other
Ancillary Agreements, to require the Company to make a Default Payment ("DEFAULT
PAYMENT"). The Default Payment shall be 130% of the outstanding principal amount
of the Note, plus accrued but unpaid interest, all other fees then remaining
unpaid, and all other amounts payable hereunder. The Default Payment shall be
applied first to any fees due and payable to the Holder pursuant to the Notes,
the Security Agreement, and/or the other Ancillary Agreements, then to accrued
and unpaid interest due on the Notes and then to the outstanding principal
balance of the Notes. The Default Payment shall be due and payable immediately
on the date that the Holder has exercised its rights pursuant to this Section
4.3.
6
ARTICLE V
MISCELLANEOUS
5.1 Conversion Privileges. The conversion privileges set forth in
Article III shall remain in full force and effect immediately from the date
hereof until the date this Note is indefeasibly paid in full and irrevocably
terminated.
5.2 Cumulative Remedies. The remedies under this Note shall be
cumulative.
5.3 Failure or Indulgence Not Waiver. No failure or delay on the part of
the Holder hereof in the exercise of any power, right or privilege hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such power, right or privilege preclude other or further exercise thereof or
of any other right, power or privilege. All rights and remedies existing
hereunder are cumulative to, and not exclusive of, any rights or remedies
otherwise available.
5.4 Notices. Any notice herein required or permitted to be given shall
be in writing and provided in accordance with the terms of the Security
Agreement.
5.5 Amendment Provision. The term "Note" and all references thereto, as
used throughout this instrument, shall mean this instrument as originally
executed, or if later amended or supplemented, then as so amended or
supplemented, and any successor instrument as such successor instrument may be
amended or supplemented.
5.6 Assignability. This Note shall be binding upon each Company and its
successors and assigns, and shall inure to the benefit of the Holder and its
successors and assigns, and may be assigned by the Holder in accordance with the
requirements of the Security Agreement. No Company may assign any of its
obligations under this Note without the prior written consent of the Holder, any
such purported assignment without such consent being null and void.
5.7 Cost of Collection. In case of any Event of Default under this Note,
the Companies shall, jointly and severally, pay the Holder reasonable costs of
collection, including reasonable attorneys' fees.
5.8 Governing Law, Jurisdiction and Waiver of Jury Trial.
(a) THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW.
(b) EACH COMPANY HEREBY CONSENTS AND AGREES THAT THE STATE OR
FEDERAL COURTS LOCATED IN THE COUNTY OF NEW YORK, STATE OF NEW YORK
SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR
DISPUTES BETWEEN ANY COMPANY, ON THE ONE HAND, AND THE HOLDER, ON THE
OTHER HAND, PERTAINING TO THIS NOTE OR ANY OF THE OTHER ANCILLARY
AGREEMENTS OR TO ANY MATTER ARISING OUT OF OR RELATED TO THIS NOTE OR
ANY OF THE ANCILLARY AGREEMENTS; PROVIDED, THAT EACH COMPANY
ACKNOWLEDGES THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY
A COURT LOCATED OUTSIDE OF THE COUNTY OF NEW YORK, STATE OF NEW YORK;
AND FURTHER PROVIDED, THAT NOTHING IN THIS NOTE SHALL BE DEEMED OR
OPERATE TO PRECLUDE THE HOLDER FROM BRINGING SUIT OR TAKING OTHER LEGAL
ACTION IN ANY OTHER JURISDICTION TO COLLECT THE OBLIGATIONS, TO REALIZE
ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO
ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF THE HOLDER. EACH
COMPANY EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION
IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT AND EACH COMPANY
HEREBY WAIVES ANY OBJECTION WHICH IT MAY HAVE BASED UPON LACK OF
PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS. EACH
COMPANY HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND
OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE
OF SUCH SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE MADE BY REGISTERED
OR CERTIFIED MAIL ADDRESSED TO THE COMPANY AT THE ADDRESS SET FORTH IN
THE SECURITY AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED
COMPLETED UPON THE EARLIER OF THE COMPANY'S ACTUAL RECEIPT THEREOF OR
THREE (3) DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE PREPAID.
7
(c) EACH COMPANY DESIRES THAT ITS DISPUTES BE RESOLVED BY A
JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST
COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION,
EACH COMPANY HERETO WAIVES ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION,
SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER ARISING IN
CONTRACT, TORT, OR OTHERWISE BETWEEN THE HOLDER AND/OR ANY COMPANY
ARISING OUT OF, CONNECTED WITH, RELATED OR INCIDENTAL TO THE
RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH THIS NOTE, ANY
OTHER ANCILLARY AGREEMENT OR THE TRANSACTIONS RELATED HERETO OR THERETO.
5.9 Severability. In the event that any provision of this Note
is invalid or unenforceable under any applicable statute or rule of law,
then such provision shall be deemed inoperative to the extent that it
may conflict therewith and shall be deemed modified to conform with such
statute or rule of law. Any such provision which may prove invalid or
unenforceable under any law shall not affect the validity or
enforceability of any other provision of this Note.
5.10 Maximum Payments. Nothing contained herein shall be deemed
to establish or require the payment of a rate of interest or other
charges in excess of the maximum permitted by applicable law. In the
event that the rate of interest required to be paid or other charges
hereunder exceed the maximum rate permitted by such law, any payments in
excess of such maximum rate shall be credited against amounts owed by
the Companies to the Holder and thus refunded to the Companies.
8
5.11 Security Interest. The Holder has been granted a security
interest (i) in certain assets of the Companies as more fully described
in the Security Agreement, (ii) pursuant to the Stock Pledge Agreement
dated as of the date hereof and (iii) in certain real property of the
Term Loan B Guarantors.
5.12 Construction. Each party acknowledges that its legal
counsel participated in the preparation of this Note 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 Note to favor any party against the other.
[Balance of page intentionally left blank; signature page follows]
9
IN WITNESS WHEREOF, the Companies have caused this Secured Convertible
Term Note to be signed in its name effective as of this 7th day of September,
2005.
AMERICAN TECHNOLOGIES GROUP, INC.
By:__________________________________
Name:
Title:
WITNESS:
----------------------------------
NORTH TEXAS STEEL COMPANY, INC.
By:__________________________________
Name:
Title:
WITNESS:
----------------------------------
OMAHA HOLDINGS CORP.
By:__________________________________
Name:
Title:
WITNESS:
----------------------------------
10
EXHIBIT A
OTHER COMPANIES
North Texas Steel Company, Inc., a Texas corporation
Omaha Holdings Corp., a Delaware corporation
11
EXHIBIT B
NOTICE OF CONVERSION
(To be executed by the Holder in order to convert all or part of the
Secured Convertible Term Note into Common Stock)
[Name and Address of Company]
The undersigned hereby converts $_________ of the principal due on
[specify applicable Repayment Date] under the Secured Convertible Term Note
dated as of September 7, 2005 (the "NOTE") issued by American Technologies
Group, Inc. (the "PARENT") and the other Companies named and as defined therein
by delivery of shares of Common Stock of the Parent ("SHARES") on and subject to
the conditions set forth in the Note.
1. Date of Conversion: _______________________
2. Shares To Be Delivered: _______________________
AMERICAN TECHNOLOGIES GROUP, INC.
By:_________________________________
Name:_______________________________
Title:______________________________
12
