Document:

THIS
      NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
      OR
      ANY STATE SECURITIES LAWS. THIS NOTE MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED
      OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT 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.

     

    AMENDED
      AND RESTATED

    SECURED
      REVOLVING NOTE

    

    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, Ugland House, South Church Street,
      George Town, Grand Cayman, Cayman Islands, Fax: 345-949-8080 (the “Holder”)
      or its
      registered assigns or successors in interest, the sum of Seven Million Dollars
      ($7,000,000), without duplication of any amounts owing by the Companies to
      the
      Holder under the Minimum Borrowing Note (as defined in the Security Agreement
      referred to below), or, if different, the aggregate principal amount of all
      Loans (as defined in the Security Agreement referred to below), together with
      any accrued and unpaid interest hereon, on September 6, 2008 (the “Maturity
      Date”)
      if not
      sooner indefeasibly paid in full.

     

    This
      Amended and Restated Secured Revolving 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 Amended and Restated Security Agreement dated as of
      January 31, 2007 by and among the Companies and the Holder (as amended,
      restated, modified and/or supplemented from time to time, the “Security
      Agreement”).

     

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

     

    The
      following terms shall apply to this Note:

     

    ARTICLE
      I

    CONTRACT
      RATE AND MINIMUM BORROWING NOTE

     

    1.1  Contract
      Rate.
      Subject
      to Sections 2.2 and 3.9, interest payable on the outstanding principal amount
      of
      this Note (the “Principal
      Amount”)
      shall
      accrue at a rate per annum equal to the “prime rate” published in The
      Wall Street Journal
      from
      time to time (the “Prime
      Rate”),
      plus
      two percent (2%) (the “Contract
      Rate”).
      The
      Contract Rate shall be increased or decreased as the case may be for each
      increase or decrease in the Prime Rate in an amount equal to such increase
      or
      decrease in the Prime Rate; each change to be effective as of the day of the
      change in the Prime Rate. The Contract Rate shall not at any time be less than
      eight and one-quarter of one percent (8.25%). 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  Contract
      Rate Adjustments and Payments.
      The
      Contract Rate shall be calculated on the last business day of each calendar
      month hereafter (other than for increases or decreases in the Prime Rate which
      shall be calculated and become effective in accordance with the terms of Section
      1.1) until the Maturity Date (each a “Determination
      Date”)
      and
      shall be subject to adjustment as set forth herein. 

     

    ARTICLE
      II

    EVENTS
      OF DEFAULT AND DEFAULT RELATED PROVISIONS

     

    2.1  Events
      of Default.
      The
      occurrence of an Event of Default under the Security Agreement shall constitute
      an event of default (“Event
      of Default”)
      hereunder. 

     

    2.2  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.

     

    2.3  Default
      Payment.
      Following the occurrence and during the continuance of an Event of Default,
      the
      Holder, at its option, may elect, in addition to all rights and remedies of
      the
      Holder under the Security Agreement and the other Ancillary Agreements and
      all
      obligations and liabilities of each Company under the Security Agreement and
      the
      other Ancillary Agreements, to require the Companies, jointly and severally,
      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 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 2.3.

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    ARTICLE
      III

    MISCELLANEOUS

     

    3.1  Cumulative
      Remedies.
      The
      remedies under this Note shall be cumulative.

     

    3.2  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.

     

    3.3  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.

     

    3.4  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.

     

    3.5  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 not 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.

     

    3.6  Cost
      of Collection.
      In case
      of any Event of Default under this Note, the Companies shall, jointly and
      severally, pay the Holder the Holder’s reasonable costs of collection, including
      reasonable attorneys’ fees.

     

    3.7  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, THE SECURITY
      AGREEMENT OR ANY OF THE OTHER ANCILLARY AGREEMENTS OR TO ANY MATTER ARISING
      OUT
      OF OR RELATED TO THIS NOTE, THE SECURITY AGREEMENT OR ANY OF THE OTHER 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

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

    (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, THE SECURITY
      AGREEMENT, ANY OTHER ANCILLARY AGREEMENT OR THE TRANSACTIONS RELATED HERETO
      OR
      THERETO.

     

    3.8  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.

     

    3.9  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.

     

    3.10  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 and (ii) pursuant
      to
      the Stock Pledge Agreement dated as of the date hereof. 

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    3.11  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.

     

    3.12  Amendment
      and Restatement.
      This
      Note amends and restates in its entirety (and is given in substitution for
      but
      not in satisfaction of) that certain $7,000,000 Secured Revolving Note dated
      as
      of September 7, 2005 executed by the Companies in favor of the Holder (the
      “Prior
      Note”).
      This
      Note does not effect a refinancing of all or any portion of the Obligations
      heretofore evidenced by the Prior Note, it being the intention of the Companies
      and the Holder to avoid effectuating a novation of such
      Obligations.

     

    [Balance
      of page intentionally left blank; signature page follows]

    
      
         

      

      
        5

        
          

        

      

       

    

    IN
      WITNESS WHEREOF,
      each
      Company has caused this Amended and Restated Secured Revolving 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: 	 	 
	 	 	 
	
              
 	 	 

    

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

     

    EXHIBIT
      A

     

    OTHER
      COMPANIES

     

    North
      Texas Steel Company, Inc., a Texas corporation

     

    Omaha
      Holdings Corp., a Delaware corporation

     

    
      
         

      

      
        7THIS
      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.

     

    AMENDED
      AND RESTATED

    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, Ugland House, South Church Street,
      George Town, Grand Cayman, Cayman Islands, Fax: 345-949-8080 (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
      Amended and Restated Secured Convertible Term Note B (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 Amended and Restated Security Agreement dated as of
      January 31, 2007 by and among the Companies and the Holder (as amended,
      restated, 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

        
          

        

      

      
        
        

      

    

     

    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
      $0.333.

     

    (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 Holder’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.

     

    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.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    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.

     

    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.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    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.

     

    (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.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    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.

     

    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.

     

    5.13  Amendment
      and Restatement.
      This
      Note amends and restates in its entirety (and is given in substitution for
      but
      not in satisfaction of) that certain $2,000,000 Secured Convertible Term Note
      B
      dated as of September 7, 2005 executed by the Companies in favor of the Holder
      (the “Prior
      Note”).
      This
      Note does not effect a refinancing of all or any portion of the Obligations
      heretofore evidenced by the Prior Note, it being the intention of the Companies
      and the Holder to avoid effectuating a novation of such
      Obligations.

     

    [Balance
      of page intentionally left blank; signature page follows]

    
      
        
        

      

      
        8

        
          

        

      

       

    

     

    IN
      WITNESS WHEREOF,
      the
      Companies have caused this Amended and Restated 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:	 
	
            	 
	
              

            	 

    

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      A

     

    OTHER
      COMPANIES

     

    North
      Texas Steel Company, Inc., a Texas corporation

     

    Omaha
      Holdings Corp., a Delaware corporation

    
      
        
        

      

      
        1

        
          

        

      

       

    

     

    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 Amended and Restated Secured Convertible
      Term Note B effective 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:

              

            	
              

            
	 	 	
              

            

    

     

    
      
        
        

      

      
        2

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