Document:

Unassociated Document

     

    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.

     

    AMENDED
      AND RESTATED

    SECURED
      CONVERTIBLE TERM NOTE A

     

    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 Three Million Dollars
      ($3,000,000), together with any accrued and unpaid interest hereon, on September
      6, 2008 (the “Maturity
      Date”)
      if not
      sooner paid.

     

    This
      Amended and Restated 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 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 “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. 

     

    1.3  Principal
      Payments.
      Amortizing payments of the aggregate principal amount outstanding under this
      Note at any time (the “Principal
      Amount”)
      shall
      be made, jointly and severally, by the Companies on January 1, 2005 and on
      the
      first business day of each succeeding month thereafter through and including
      the
      Maturity Date (each, an “Amortization
      Date”).
      Subject to Article III below, commencing on the first Amortization Date, the
      Companies shall, jointly and severally, make monthly payments to the Holder
      on
      each Repayment Date, each such payment in the amount of (a) $50,000 on the
      first
      Business Day of each month from January, 2006 through March, 2006, (b) $98,275
      on the first Business Day of April, 2006 and May, 2006 and (c) $98,275 on the
      first Business Day of each month from March, 2007 through the Maturity Date,
      in
      each case, together with any accrued and unpaid interest on such portion of
      the
      Principal Amount plus any and all other unpaid amounts which are then owing
      under this Note, the Security Agreement and/or any other Ancillary Agreement
      (collectively, the “Monthly
      Amount”).
      Any
      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 Monthly Amount.

     

    (a)  Payment
      in Cash or Common Stock.
      If the
      Monthly Amount (or a portion of such Monthly Amount if not all of the Monthly
      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 Monthly Amount (or such portion of such Monthly Amount to be paid in cash)
      due and owing to the Holder on the Amortization Date. If the Monthly Amount
      (or
      a portion of such Monthly Amount if not all of the Monthly 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 such Amortization Date (in
      respect of such portion of the Monthly 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 Monthly 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
      $0.99.

     

    (b)  Monthly
      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 Monthly Amount due on each
      Amortization 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 such Amortization 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 such Amortization Date. If subsection (i) of the Conversion Criteria
      is met but subsection (ii) of the Conversion Criteria is not met as to the
      entire Monthly Amount, the Holder shall convert only such part of the Monthly
      Amount that meets subsection (ii) of the Conversion Criteria. Any portion of
      the
      Monthly Amount due on an Amortization 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 at the rate of 100% of the
      Monthly Amount otherwise due on such Amortization Date, within three (3)
      business days of such Amortization Date. 

     

    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 twenty percent (120%)
      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 Security Agreement or any other
      Ancillary Agreement (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  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.
      In
      the event of any conversions of a portion of the outstanding Principal Amount
      pursuant to this Article III, such conversions shall be deemed to constitute
      conversions of the outstanding Principal Amount applying to Monthly Amounts
      for
      the remaining Amortization Dates in chronological order.

     

    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:

     

    (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.

     

    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.

     

    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.

     

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

     

    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 $3,000,000 Secured Convertible Term Note
      A
      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]

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    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:

      
        
          

        

      

       

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT
      A

     

    OTHER
      COMPANIES

     

    North
      Texas Steel Company, Inc., a Texas corporation

     

    Omaha
      Holdings Corp., a Delaware corporation

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    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 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:AMENDED
      AND RESTATED

    REGISTRATION
      RIGHTS AGREEMENT

     

    This
      Amended and Restated Registration Rights Agreement (this “Agreement”) is made
      and entered into as of January 31, 2007, by and between American Technologies
      Group, Inc., a Nevada corporation (the “Company”), and Laurus Master Fund, Ltd.
      (the “Purchaser”). 

     

    This
      Agreement is made pursuant to the Amended and Restated Security Agreement,
      dated
      as of the date hereof, by and among the Purchaser, the Company and various
      subsidiaries of the Company (as amended, restated, modified or supplemented
      from
      time to time, the “Security Agreement”), and pursuant to the Convertible Notes,
      the Options and the Warrants referred to therein.

     

    The
      Company and the Purchaser are parties to a Registration Rights Agreement dated
      as of September 7, 2005 (as amended, restated, modified and/or supplemented
      from
      time to time, the “Original Registration Rights Agreement”). The Company and the
      Purchaser desire to amend and restate the Original Registration Rights Agreement
      on the terms and conditions set forth herein.

     

    The
      Company and the Purchaser are parties to a Waiver Agreement dated as of December
      12, 2006 (as amended, restated, modified and/or supplemented from time to time,
      the “Waiver Agreement”) pursuant to which the Purchaser agreed to waive certain
      liquidated damages due and owing by the Company to the Purchaser under the
      Original Registration Rights Agreement.

     

    The
      Company and the Purchaser hereby agree as follows: 

     

    1. Definitions.
      Capitalized terms used and not otherwise defined herein that are defined in
      the
      Security Agreement shall have the meanings given such terms in the Security
      Agreement. As used in this Agreement, the following terms shall have the
      following meanings: 

     

    “Commission”
      means
      the Securities and Exchange Commission.

     

    “Common
      Stock”
      means
      shares of the Company’s common stock, par value $0.01 per share. 

     

    “Effectiveness
      Date”
      means,
      (i) with respect to the initial Registration Statement required to be filed
      hereunder, on or prior to April 16, 2007 and (ii) with respect to each
      additional Registration Statement required to be filed hereunder, a date no
      later than thirty (30) days following the applicable Filing Date. 

     

    “Effectiveness
      Period”
      has the
      meaning set forth in Section 2(a). 

     

    “Exchange
      Act”
      means
      the Securities Exchange Act of 1934, as amended, and any successor
      statute.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    “Filing
      Date”
      means,
      with respect to (1) the Loans evidenced by the Minimum Borrowing Note, on or
      prior to January 31, 2007, (2) the shares of Common Stock issued to the
      Purchaser upon exercise of the Options, on or prior to January 31, 2007, (3)
      the
      shares of Common Stock issuable to the Purchaser upon exercise of the Warrants,
      on or prior to January 31, 2007, (4) the Loans evidenced by Term Note A, on
      or
      prior to January 31, 2007, (5) the Loans evidenced by Term Note B, on or prior
      to January 31, 2007 and (6) the shares of Common Stock issuable to the Holder
      as
      a result of adjustments to the Fixed Conversion Price made pursuant to Section
      3.6 of the Minimum Borrowing Note, Section 3.6 of Term Note A, Section 3.6
      of
      Term Note B, Section 4 of the Warrant, Section 4 of the Option or otherwise,
      in
      each case forty-five (45) days after the occurrence of such event or the date
      of
      the adjustment of the Fixed Conversion Price.

     

    “Holder”
      or
“Holders”
      means
      the Purchaser or any of its affiliates or transferees to the extent any of
      them
      hold Registrable Securities, other then those purchasing Registrable Securities
      in a market transaction.

     

    “Indemnified
      Party”
      has the
      meaning set forth in Section 5(c).

     

    “Indemnifying
      Party”
      has the
      meaning set forth in Section 5(c).

     

    “Proceeding”
      means an
      action, claim, suit, investigation or proceeding (including, without limitation,
      an investigation or partial proceeding, such as a deposition), whether commenced
      or threatened. 

     

    “Prospectus”
      means
      the prospectus included in a Registration Statement (including, without
      limitation, a prospectus that includes any information previously omitted from
      a
      prospectus filed as part of an effective registration statement in reliance
      upon
      Rule 430A promulgated under the Securities Act), as amended or supplemented
      by
      any prospectus supplement, with respect to the terms of the offering of any
      portion of the Registrable Securities covered by such Registration Statement,
      and all other amendments and supplements to the Prospectus, including
      post-effective amendments, and all material incorporated by reference or deemed
      to be incorporated by reference in such Prospectus. 

     

    “Registrable
      Securities”
      means
      the shares of Common Stock issuable upon the conversion of the Convertible
      Term
      Notes or upon exercise of the Options and the Warrants.

     

    “Registration
      Statement”
      means
      each registration statement required to be filed hereunder, including the
      Prospectus therein, amendments and supplements to such registration statement
      or
      Prospectus, including pre- and post-effective amendments, all exhibits thereto,
      and all material incorporated by reference or deemed to be incorporated by
      reference in such registration statement. 

     

    “Rule
      144”
      means
      Rule 144 promulgated by the Commission pursuant to the Securities Act, as such
      Rule may be amended from time to time, or any similar rule or regulation
      hereafter adopted by the Commission having substantially the same effect as
      such
      Rule.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    “Rule
      415”
      means
      Rule 415 promulgated by the Commission pursuant to the Securities Act, as such
      Rule may be amended from time to time, or any similar rule or regulation
      hereafter adopted by the Commission having substantially the same effect as
      such
      Rule.

     

    “Securities
      Act”
      means
      the Securities Act of 1933, as amended, and any successor statute.

     

    “Security
      Agreement”
      has the
      meaning given to such term in the Preamble hereto.

     

    “Trading
      Market”
      means
      any of the NASD OTC Bulletin Board, NASDAQ SmallCap Market, the Nasdaq National
      Market, the American Stock Exchange or the New York Stock Exchange 

     

    “Warrants”
      means
      the Common Stock purchase warrants issued pursuant to the Security
      Agreement.

     

    2. Registration.

     

    (a) On
      or
      prior to each Filing Date, the Company shall prepare and file with the
      Commission a Registration Statement covering the Registrable Securities for
      a
      selling stockholder resale offering to be made on a continuous basis pursuant
      to
      Rule 415. Each Registration Statement shall be on Form S-3 (except if the
      Company is not then eligible to register for resale the Registrable Securities
      on Form S-3, in which case such registration shall be on another appropriate
      form in accordance herewith). The Company shall cause each Registration
      Statement to become effective and remain effective as provided herein. The
      Company shall use its reasonable commercial efforts to cause each Registration
      Statement to be declared effective under the Securities Act as promptly as
      possible after the filing thereof, but in any event no later than the
      Effectiveness Date. The Company shall use its reasonable commercial efforts
      to
      keep each Registration Statement continuously effective under the Securities
      Act
      until the date which is the earlier date of when (i) all Registrable Securities
      covered by such Registration Statement have been sold or (ii) all Registrable
      Securities covered by such Registration Statement may be sold immediately
      without registration under the Securities Act and without volume restrictions
      pursuant to Rule 144(k), as determined by the counsel to the Company pursuant
      to
      a written opinion letter to such effect, addressed and acceptable to the
      Company’s transfer agent and the affected Holders (each, an “Effectiveness
      Period”).

     

    (b) If:
      (i)
      any Registration Statement is not filed on or prior to the applicable Filing
      Date for such Registration Statement; (ii) a Registration Statement filed
      hereunder is not declared effective by the Commission by the applicable
      Effectiveness Date; (iii) after a Registration Statement is filed with and
      declared effective by the Commission, a Discontinuation Event (as hereafter
      defined) shall occur and be continuing, or such Registration Statement ceases
      to
      be effective (by suspension or otherwise) as to all Registrable Securities
      to
      which it is required to relate at any time prior to the expiration of the
      Effectiveness Period applicable to such Registration Statement (without being
      succeeded immediately by an additional Registration Statement filed and declared
      effective), for a period of time which shall exceed 30 days in the aggregate
      per
      year or more than 20 consecutive calendar days (defined as a period of 365
      days
      commencing on the date such Registration Statement is declared effective);
      or
      (iv) the Common Stock is not listed or quoted, or is suspended from trading
      on
      any Trading Market for a period of three (3) consecutive Trading Days (provided
      the Company shall not have been able to cure such trading suspension within
      30
      days of the notice thereof or list the Common Stock on another Trading Market);
      (any such failure or breach being referred to as an “Event,” and for purposes of
      clause (i) or (ii) the date on which such Event occurs, or for purposes of
      clause (iii) the date which such 30 day or 20 consecutive day period (as the
      case may be) is exceeded, or for purposes of clause (iv) the date on which
      such
      three (3) Trading Day period is exceeded, being referred to as “Event Date”),
      then as partial relief for the damages to the Purchaser by reason of the
      occurrence of any such Event (which remedy shall not be exclusive of any other
      remedies available at law or in equity), the Company shall pay to the Purchaser,
      as liquidated damages and not as a penalty, for each day that an Event has
      occurred and is continuing, an amount in cash equal to one-thirtieth
      (1/30th)
      of the
      product of (A) the original aggregate principal amount of the Convertible Notes
      multiplied by (B) the Applicable Percentage (as hereafter defined). For purposes
      hereof, the term “Applicable Percentage” means (i) for the first thirty (30) day
      period following the occurrence and during the continuance of such Event, one
      percent (1%), (ii) for the second thirty (30) day period following the
      occurrence and during the continuance of such Event, one and one-half percent
      (1.5%) and (iii) thereafter, two percent (2%). In the event the Company fails
      to
      make any payments pursuant to this Section 2(b) in a timely manner, such
      payments shall bear interest at the rate of 1.5% per month (prorated for partial
      months) until paid in full. Notwithstanding anything to the contrary set forth
      herein, the maximum aggregate amount of liquidated damages that may be charged
      to the Company pursuant to this Section 2(b) shall not exceed 24% of the
      original aggregate principal amount of the Convertible Notes.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (c) Within
      three business days of the Effectiveness Date, the Company shall cause its
      counsel to issue a blanket opinion in the form attached hereto as Exhibit A,
      to
      the transfer agent stating that the shares are subject to an effective
      registration statement and can be reissued free of restrictive legend upon
      notice of a sale by the Purchaser and confirmation by the Purchaser that it
      has
      complied with the prospectus delivery requirements, provided that the Company
      has not advised the transfer agent orally or in writing that the opinion has
      been withdrawn. Copies of the blanket opinion required by this Section 2(c)
      shall be delivered to the Purchaser within the time frame set forth above.
      

     

    3. Registration
      Procedures.
      If and
      whenever the Company is required by the provisions hereof to effect the
      registration of any Registrable Securities under the Securities Act, the Company
      will, as expeditiously as possible: 

     

    (a) prepare
      and file with the Commission a Registration Statement with respect to such
      Registrable Securities, respond as promptly as possible to any comments received
      from the Commission, and use its best efforts to cause such Registration
      Statement to become and remain effective for the Effectiveness Period with
      respect thereto, and promptly provide to the Purchaser copies of all filings
      and
      Commission letters of comment relating thereto;

     

    (b) prepare
      and file with the Commission such amendments and supplements to such
      Registration Statement and the Prospectus used in connection therewith as may
      be
      necessary to comply with the provisions of the Securities Act with respect
      to
      the disposition of all Registrable Securities covered by such Registration
      Statement and to keep such Registration Statement effective until the expiration
      of the Effectiveness Period applicable to such Registration
      Statement;

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (c) furnish
      to the Purchaser such number of copies of the Registration Statement and the
      Prospectus included therein (including each preliminary Prospectus) as the
      Purchaser reasonably may request to facilitate the public sale or disposition
      of
      the Registrable Securities covered by such Registration Statement;

     

    (d) use
      its
      commercially reasonable efforts to register or qualify the Purchaser’s
      Registrable Securities covered by such Registration Statement under the
      securities or “blue sky” laws of such jurisdictions within the United States as
      the Purchaser may reasonably request, provided, however, that the Company shall
      not for any such purpose be required to qualify generally to transact business
      as a foreign corporation in any jurisdiction where it is not so qualified or
      to
      consent to general service of process in any such jurisdiction;

     

    (e) list
      the
      Registrable Securities covered by such Registration Statement with any
      securities exchange on which the Common Stock of the Company is then listed;
      

     

    (f) immediately
      notify the Purchaser at any time when a Prospectus relating thereto is required
      to be delivered under the Securities Act, of the happening of any event of
      which
      the Company has knowledge as a result of which the Prospectus contained in
      such
      Registration Statement, as then in effect, includes an untrue statement of
      a
      material fact or omits to state a material fact required to be stated therein
      or
      necessary to make the statements therein not misleading in light of the
      circumstances then existing; and

     

    (g) make
      available for inspection by the Purchaser and any attorney, accountant or other
      agent retained by the Purchaser, all publicly available, non-confidential
      financial and other records, pertinent corporate documents and properties of
      the
      Company, and cause the Company’s officers, directors and employees to supply all
      publicly available, non-confidential information reasonably requested by the
      attorney, accountant or agent of the Purchaser.

     

    4. Registration
      Expenses.
      All
      expenses relating to the Company’s compliance with Sections 2 and 3 hereof,
      including, without limitation, all registration and filing fees, printing
      expenses, fees and disbursements of counsel and independent public accountants
      for the Company, fees and expenses (including reasonable counsel fees) incurred
      in connection with complying with state securities or “blue sky” laws, fees of
      the NASD, transfer taxes, fees of transfer agents and registrars, fees of,
      and
      disbursements incurred by, one counsel for the Holders (not to exceed $7,500)
      are called “Registration Expenses”. All selling commissions applicable to the
      sale of Registrable Securities, including any fees and disbursements of any
      special counsel to the Holders beyond those included in Registration Expenses,
      are called “Selling Expenses.” The Company shall only be responsible for all
      Registration Expenses.

     

    5. Indemnification.

     

    (a) In
      the
      event of a registration of any Registrable Securities under the Securities
      Act
      pursuant to this Agreement, the Company will indemnify and hold harmless each
      Holder, and its officers, directors and each other person, if any, who controls
      such Holder within the meaning of the Securities Act, against any losses,
      claims, damages or liabilities, joint or several, to which such Holder, or
      such
      persons may become subject under the Securities Act or otherwise, insofar as
      such losses, claims, damages or liabilities (or actions in respect thereof)
      arise out of or are based upon any untrue statement or alleged untrue statement
      of any material fact contained in any Registration Statement under which such
      Registrable Securities were registered under the Securities Act pursuant to
      this
      Agreement, any preliminary Prospectus or final Prospectus contained therein,
      or
      any amendment or supplement thereof, or arise out of or are based upon the
      omission or alleged omission to state therein a material fact required to be
      stated therein or necessary to make the statements therein not misleading,
      and
      will reimburse such Holder, and each such person for any reasonable legal or
      other expenses incurred by them in connection with investigating or defending
      any such loss, claim, damage, liability or action; provided,
      however,
      that
      the Company will not be liable in any such case if and to the extent that any
      such loss, claim, damage or liability arises out of or is based upon an untrue
      statement or alleged untrue statement or omission or alleged omission so made
      in
      conformity with information furnished by or on behalf of the Purchaser or any
      such person in writing specifically for use in any such document.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (b) In
      the
      event of a registration of the Registrable Securities under the Securities
      Act
      pursuant to this Agreement, the Purchaser will indemnify and hold harmless
      the
      Company, and its officers, directors and each other person, if any, who controls
      the Company within the meaning of the Securities Act, against all losses,
      claims, damages or liabilities, joint or several, to which the Company or such
      persons may become subject under the Securities Act or otherwise, insofar as
      such losses, claims, damages or liabilities (or actions in respect thereof)
      arise out of or are based upon any untrue statement or alleged untrue statement
      of any material fact which was furnished in writing by the Purchaser to the
      Company expressly for use in (and such information is contained in) the
      Registration Statement under which such Registrable Securities were registered
      under the Securities Act pursuant to this Agreement, any preliminary Prospectus
      or final Prospectus contained therein, or any amendment or supplement thereof,
      or arise out of or are based upon the omission or alleged omission to state
      therein a material fact required to be stated therein or necessary to make
      the
      statements therein not misleading, and will reimburse the Company and each
      such
      person for any reasonable legal or other expenses incurred by them in connection
      with investigating or defending any such loss, claim, damage, liability or
      action, provided,
      however,
      that
      the Purchaser will be liable in any such case if and only to the extent that
      any
      such loss, claim, damage or liability arises out of or is based upon an untrue
      statement or alleged untrue statement or omission or alleged omission so made
      in
      conformity with information furnished in writing to the Company by or on behalf
      of the Purchaser specifically for use in any such document. Notwithstanding
      the
      provisions of this paragraph, the Purchaser shall not be required to indemnify
      any person or entity in excess of the amount of the aggregate net proceeds
      received by the Purchaser in respect of Registrable Securities in connection
      with any such registration under the Securities Act.

     

    (c) Promptly
      after receipt by a party entitled to claim indemnification hereunder (an
“Indemnified Party”) of notice of the commencement of any action, such
      Indemnified Party shall, if a claim for indemnification in respect thereof
      is to
      be made against a party hereto obligated to indemnify such Indemnified Party
      (an
“Indemnifying Party”), notify the Indemnifying Party in writing thereof, but the
      omission so to notify the Indemnifying Party shall not relieve it from any
      liability which it may have to such Indemnified Party other than under this
      Section 5(c) and shall only relieve it from any liability which it may have
      to
      such Indemnified Party under this Section 5(c) if and to the extent the
      Indemnifying Party is prejudiced by such omission. In case any such action
      shall
      be brought against any Indemnified Party and it shall notify the Indemnifying
      Party of the commencement thereof, the Indemnifying Party shall be entitled
      to
      participate in and, to the extent it shall wish, to assume and undertake the
      defense thereof with counsel satisfactory to such Indemnified Party, and, after
      notice from the Indemnifying Party to such Indemnified Party of its election
      so
      to assume and undertake the defense thereof, the Indemnifying Party shall not
      be
      liable to such Indemnified Party under this Section 5(c) for any legal expenses
      subsequently incurred by such Indemnified Party in connection with the defense
      thereof; if the Indemnified Party retains its own counsel, then the Indemnified
      Party shall pay all fees, costs and expenses of such counsel, provided,
      however,
      that,
      if the defendants in any such action include both the Indemnified Party and
      the
      Indemnifying Party and the Indemnified Party shall have reasonably concluded
      that there may be reasonable defenses available to it which are different from
      or additional to those available to the Indemnifying Party or if the interests
      of the Indemnified Party reasonably may be deemed to conflict with the interests
      of the Indemnifying Party, the Indemnified Party shall have the right to select
      one separate counsel and to assume such legal defenses and otherwise to
      participate in the defense of such action, with the reasonable expenses and
      fees
      of such separate counsel and other expenses related to such participation to
      be
      reimbursed by the Indemnifying Party as incurred. 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (d) In
      order
      to provide for just and equitable contribution in the event of joint liability
      under the Securities Act in any case in which either (i) the Purchaser, or
      any
      officer, director or controlling person of the Purchaser, makes a claim for
      indemnification pursuant to this Section 5 but it is judicially determined
      (by
      the entry of a final judgment or decree by a court of competent jurisdiction
      and
      the expiration of time to appeal or the denial of the last right of appeal)
      that
      such indemnification may not be enforced in such case notwithstanding the fact
      that this Section 5 provides for indemnification in such case, or (ii)
      contribution under the Securities Act may be required on the part of the
      Purchaser or such officer, director or controlling person of the Purchaser
      in
      circumstances for which indemnification is provided under this Section 5; then,
      and in each such case, the Company and the Purchaser will contribute to the
      aggregate losses, claims, damages or liabilities to which they may be subject
      (after contribution from others) in such proportion so that the Purchaser is
      responsible only for the portion represented by the percentage that the public
      offering price of its securities offered by the Registration Statement bears
      to
      the public offering price of all securities offered by such Registration
      Statement, provided,
      however,
      that,
      in any such case, (A) the Purchaser will not be required to contribute any
      amount in excess of the public offering price of all such securities offered
      by
      it pursuant to such Registration Statement; and (B) no person or entity guilty
      of fraudulent misrepresentation (within the meaning of Section 10(f) of the
      Act)
      will be entitled to contribution from any person or entity who was not guilty
      of
      such fraudulent misrepresentation.

     

    6. Representations
      and Warranties.

     

    (a) The
      Common Stock is registered pursuant to Section 12(b) or 12(g) of the Exchange
      Act and, except with respect to certain matters which the Company has disclosed
      to the Purchaser on Schedule 12(u) to the Security Agreement, the Company has
      timely filed all proxy statements, reports, schedules, forms, statements and
      other documents required to be filed by it under the Exchange Act. The Company
      has filed (i) its Annual Report on Form 10-K for the fiscal year ended December
      31, 2004 and (ii) its Quarterly Report on Form 10-Q (collectively, the “SEC
      Reports”). Each SEC Report was, at the time of its filing, in substantial
      compliance with the requirements of its respective form and none of the SEC
      Reports, nor the financial statements (and the notes thereto) included in the
      SEC Reports, as of their respective filing dates, contained any untrue statement
      of a material fact or omitted to state a material fact required to be stated
      therein or necessary to make the statements therein, in light of the
      circumstances under which they were made, not misleading. The financial
      statements of the Company included in the SEC Reports comply as to form in
      all
      material respects with applicable accounting requirements and the published
      rules and regulations of the Commission or other applicable rules and
      regulations with respect thereto. Such financial statements have been prepared
      in accordance with generally accepted accounting principles (“GAAP”) applied on
      a consistent basis during the periods involved (except (i) as may be otherwise
      indicated in such financial statements or the notes thereto or (ii) in the
      case
      of unaudited interim statements, to the extent they may not include footnotes
      or
      may be condensed) and fairly present in all material respects the financial
      condition, the results of operations and the cash flows of the Company and
      its
      subsidiaries, on a consolidated basis, as of, and for, the periods presented
      in
      each such SEC Report.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (b) The
      Common Stock is listed for trading on the Over the Counter Bulletin Board and
      satisfies all requirements for the continuation of such listing. The Company
      has
      not received any notice that its Common Stock will be delisted from the Over
      the
      Counter Bulletin Board or that the Common Stock does not meet all requirements
      for the continuation of such listing. 

     

    (c) Neither
      the Company, nor any of its affiliates, nor any person acting on its or their
      behalf, has directly or indirectly made any offers or sales of any security
      or
      solicited any offers to buy any security under circumstances that would cause
      the offering of the Securities pursuant to the Security Agreement to be
      integrated with prior offerings by the Company for purposes of the Securities
      Act which would prevent the Company from selling the Common Stock pursuant
      to
      Rule 506 under the Securities Act, or any applicable exchange-related
      stockholder approval provisions, nor will the Company or any of its affiliates
      or subsidiaries take any action or steps that would cause the offering of the
      Common Stock to be integrated with other offerings (other than such concurrent
      offering to the Purchaser).

     

    (d) The
      Options, Warrants, the Convertible Notes and the shares of Common Stock which
      the Purchaser may acquire pursuant to the Options, Warrants and the Convertible
      Notes are all restricted securities under the Securities Act as of the date
      of
      this Agreement. The Company will not issue any stop transfer order or other
      order impeding the sale and delivery of any of the Registrable Securities at
      such time as such Registrable Securities are registered for public sale or
      an
      exemption from registration is available, except as required by federal or
      state
      securities laws.

     

    (e) The
      Company understands the nature of the Registrable Securities issued on the
      Closing Date and issuable upon the conversion of the Convertibles Notes and
      the
      exercise of each Warrant and Option and recognizes that the issuance of such
      Registrable Securities may have a potential dilutive effect. The Company
      specifically acknowledges that its obligation to issue the Registrable
      Securities is binding upon the Company and enforceable regardless of the
      dilution such issuance may have on the ownership interests of other shareholders
      of the Company.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (f) Except
      for agreements made in the ordinary course of business, there is no agreement
      that has not been filed with the Commission as an exhibit to a registration
      statement or to a form required to be filed by the Company under the Exchange
      Act, the breach of which could reasonably be expected to have a material and
      adverse effect on the Company and its subsidiaries, or would prohibit or
      otherwise interfere with the ability of the Company to enter into and perform
      any of its obligations under this Agreement in any material
      respect.

     

    (g) The
      Company will at all times have authorized and reserved a sufficient number
      of
      shares of Common Stock for the full conversion of the Convertible Notes and
      exercise of the Warrants and the Options.

     

    (h) The
      Company shall provide written notice to each Holder of (i) the occurrence of
      each Discontinuation Event (as defined below) and (ii) the declaration of
      effectiveness by the SEC of each Registration Statement required to be filed
      hereunder within one (1) business day of the date of each such occurrence and/or
      declaration, as the case may be.

     

    7. Miscellaneous.

     

    (a) Remedies.
      In the
      event of a breach by the Company or by a Holder, of any of their respective
      obligations under this Agreement, each Holder or the Company, as the case may
      be, in addition to being entitled to exercise all rights granted by law and
      under this Agreement, including recovery of damages, will be entitled to
      specific performance of its rights under this Agreement.

     

    (b) No
      Piggyback on Registrations.
      Except
      as and to the extent set forth on Schedule 7(b) hereto, neither the Company
      nor
      any of its security holders (other than the Holders in such capacity pursuant
      hereto) may include securities of the Company in any Registration Statement
      other than the Registrable Securities, and the Company shall not after the
      date
      hereof enter into any agreement providing any such right for inclusion of shares
      in the Registration Statement to any of its security holders. Except as and
      to
      the extent specified in Schedule
      7(b)
      hereto,
      the Company has not previously entered into any agreement granting any
      registration rights with respect to any of its securities to any Person that
      have not been fully satisfied. 

     

    (c) Compliance.
      Each
      Holder covenants and agrees that it will comply with the prospectus delivery
      requirements of the Securities Act as applicable to it in connection with sales
      of Registrable Securities pursuant to any Registration Statement. 

     

    (d) Discontinued
      Disposition.
      Each
      Holder agrees by its acquisition of such Registrable Securities that, upon
      receipt of a notice from the Company of the occurrence of a Discontinuation
      Event (as defined below), such Holder will forthwith discontinue disposition
      of
      such Registrable Securities under the applicable Registration Statement until
      such Holder’s receipt of the copies of the supplemented Prospectus and/or
      amended Registration Statement or until it is advised in writing (the “Advice”)
      by the Company that the use of the applicable Prospectus may be resumed, and,
      in
      either case, has received copies of any additional or supplemental filings
      that
      are incorporated or deemed to be incorporated by reference in such Prospectus
      or
      Registration Statement. The Company may provide appropriate stop orders to
      enforce the provisions of this paragraph. For purposes of this Section 7(d),
      a
“Discontinuation Event” shall mean (i) when the Commission notifies the Company
      whether there will be a “review” of such Registration Statement and whenever the
      Commission comments in writing on such Registration Statement (the Company
      shall
      provide true and complete copies thereof and all written responses thereto
      to
      each of the Holders); (ii) any request by the Commission or any other Federal
      or
      state governmental authority for amendments or supplements to such Registration
      Statement or Prospectus or for additional information; (iii) the issuance by
      the
      Commission of any stop order suspending the effectiveness of such Registration
      Statement covering any or all of the Registrable Securities or the initiation
      of
      any Proceedings for that purpose; (iv) the receipt by the Company of any
      notification with respect to the suspension of the qualification or exemption
      from qualification of any of the Registrable Securities for sale in any
      jurisdiction, or the initiation or threatening of any Proceeding for such
      purpose; and/or (v) the occurrence of any event or passage of time that makes
      the financial statements included in such Registration Statement ineligible
      for
      inclusion therein or any statement made in such Registration Statement or
      Prospectus or any document incorporated or deemed to be incorporated therein
      by
      reference untrue in any material respect or that requires any revisions to
      such
      Registration Statement, Prospectus or other documents so that, in the case
      of
      such Registration Statement or Prospectus, as the case may be, it will not
      contain any untrue statement of a material fact or omit to state any material
      fact required to be stated therein or necessary to make the statements therein,
      in light of the circumstances under which they were made, not
      misleading.

     

    (e) Piggy-Back
      Registrations.
      If at
      any time during any Effectiveness Period there is not an effective Registration
      Statement covering all of the Registrable Securities required to be covered
      during such Effectiveness Period and the Company shall determine to prepare
      and
      file with the Commission a registration statement relating to an offering for
      its own account or the account of others under the Securities Act of any of
      its
      equity securities, other than on Form S-4 or Form S-8 (each as promulgated
      under the Securities Act) or their then equivalents relating to equity
      securities to be issued solely in connection with any acquisition of any entity
      or business or equity securities issuable in connection with stock option or
      other employee benefit plans, then the Company shall send to each Holder written
      notice of such determination and, if within fifteen (15) days after receipt
      of
      such notice, any such Holder shall so request in writing, the Company shall
      include in such registration statement all or any part of such Registrable
      Securities such Holder requests to be registered, to the extent the Company
      may
      do so without violating registration rights of others which exist as of the
      date
      of this Agreement, subject to customary underwriter cutbacks applicable to
      all
      holders of registration rights and subject to obtaining any required consent
      of
      any selling stockholder(s) to such inclusion under such registration
      statement.

     

    (f) Amendments
      and Waivers.
      The
      provisions of this Agreement, including the provisions of this sentence, may
      not
      be amended, modified or supplemented, and waivers or consents to departures
      from
      the provisions hereof may not be given, unless the same shall be in writing
      and
      signed by the Company and the Holders of the then outstanding Registrable
      Securities. Notwithstanding the foregoing, a waiver or consent to depart from
      the provisions hereof with respect to a matter that relates exclusively to
      the
      rights of certain Holders and that does not directly or indirectly affect the
      rights of other Holders may be given by Holders of at least a majority of the
      Registrable Securities to which such waiver or consent relates; provided,
      however,
      that
      the provisions of this sentence may not be amended, modified, or supplemented
      except in accordance with the provisions of the immediately preceding
      sentence.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (g) Notices.
      Any
      notice or request hereunder may be given to the Company or the Purchaser at
      the
      respective addresses set forth below or as may hereafter be specified in a
      notice designated as a change of address under this Section 7(g). Any notice
      or
      request hereunder shall be given by registered or certified mail, return receipt
      requested, hand delivery, overnight mail, Federal Express or other national
      overnight next day carrier (collectively, “Courier”) or telecopy (confirmed by
      mail). Notices and requests shall be, in the case of those by hand delivery,
      deemed to have been given when delivered to any party to whom it is addressed,
      in the case of those by mail or overnight mail, deemed to have been given three
      (3) business days after the date when deposited in the mail or with the
      overnight mail carrier, in the case of a Courier, the next business day
      following timely delivery of the package with the Courier, and, in the case
      of a
      telecopy, when confirmed. The address for such notices and communications shall
      be as follows:

     

    
      	
              If
                to the Company:

            	 	
              American
                Technologies Group, Inc.

            
	 	 	
              300
                Las Olas Place

            
	 	 	
              Fort
                Lauderdale, Florida 33301

            
	 	 	
              Attention:
                William N. Plamondon III, CEO

            
	 	 	
              Telephone:
                (954) 764-4774

            
	 	 	
              Facsimile:
                (954) 764-4030

            
	 	 	 
	
              with
                a copy to:

            	 	
              Erickson
                & Sederstrom, P.C.

            
	 	 	
              10330
                Regency Parkway Drive, Suite 100

            
	 	 	
              Omaha,
                Nebraska 68114

            
	
            	 	
              
                Attention:
                  Virgil K. Johnson, Esq.

              

            
	
            	 	
              
                Telephone:
                  (402) 390-7104

              

            
	
            	 	
              
                Facsimile:
                  (402) 390-7130

              

            
	 	 	 
	
              If
                to a Purchaser:

            	 	
              To
                the address set forth under such Purchaser name on the signature
                pages
                hereto.

            
	 	 	 
	
              If
                to any other Person who is 

            	 	 
	
              then
                the registered Holder:

            	 	
              To
                the address of such Holder as it appears in the stock transfer books
                of
                the Company

            

    

    

     

    or
      such
      other address as may be designated in writing hereafter in accordance with
      this
      Section 7(g) by such Person.

     

    (h) Successors
      and Assigns.
      This
      Agreement shall inure to the benefit of and be binding upon the successors
      and
      permitted assigns of each of the parties and shall inure to the benefit of
      each
      Holder. The Company may not assign its rights or obligations hereunder without
      the prior written consent of each Holder. Each Holder may assign their
      respective rights hereunder in the manner and to the Persons as permitted under
      the Notes and the Securities Purchase Agreement with the prior written consent
      of the Company, which consent shall not be unreasonably withheld. 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (i) Execution
      and Counterparts.
      This
      Agreement may be executed in any number of counterparts, each of which when
      so
      executed shall be deemed to be an original and, all of which taken together
      shall constitute one and the same agreement. In the event that any signature
      is
      delivered by facsimile transmission, such signature shall create a valid binding
      obligation of the party executing (or on whose behalf such signature is
      executed) the same with the same force and effect as if such facsimile signature
      were the original thereof.

     

    (j) Governing
      Law, Jurisdiction and Waiver of Jury Trial.
      This
      Agreement shall be governed by and construed and enforced in accordance with
      the
      laws of the State of New York applicable to contracts made and performed in
      such
      State, without regard to principles of conflicts of law. The Company hereby
      consents and agrees that the state or federal courts located in the County
      of
      New York, State of New York shall have exclusion jurisdiction to hear and
      determine any Proceeding between the Company, on the one hand, and the
      Purchaser, on the other hand, pertaining to this Agreement or to any matter
      arising out of or related to this Agreement; provided,
      that
      the Purchaser and the Company acknowledge 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 Agreement shall be deemed or operate to preclude the Purchaser
      from bringing a Proceeding 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 Purchaser. The Company
      expressly submits and consents in advance to such jurisdiction in any Proceeding
      commenced in any such court, and the Company hereby waives any objection which
      it may have based upon lack of personal jurisdiction, improper venue or
forum
      non conveniens.
      The
      Company hereby waives personal service of the summons, complaint and other
      process issued in any such Proceeding 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 Section 7(g) 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. The parties hereto desire that their 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, the parties hereto
      waive all rights to trial by jury in any Proceeding brought to resolve any
      dispute, whether arising in contract, tort, or otherwise between the Purchaser
      and/or the Company arising out of, connected with, related or incidental to
      the
      relationship established between then in connection with this Agreement. If
      either party hereto shall commence a Proceeding to enforce any provisions of
      this Agreement, the Security Agreement or any other Ancillary Agreement, then
      the prevailing party in such Proceeding shall be reimbursed by the other party
      for its reasonable attorneys’ fees and other costs and expenses incurred with
      the investigation, preparation and prosecution of such Proceeding.

     

    (k) Cumulative
      Remedies.
      The
      remedies provided herein are cumulative and not exclusive of any remedies
      provided by law.

     

    (l) Severability.
      If any
      term, provision, covenant or restriction of this Agreement is held by a court
      of
      competent jurisdiction to be invalid, illegal, void or unenforceable, the
      remainder of the terms, provisions, covenants and restrictions set forth herein
      shall remain in full force and effect and shall in no way be affected, impaired
      or invalidated, and the parties hereto shall use their reasonable efforts to
      find and employ an alternative means to achieve the same or substantially the
      same result as that contemplated by such term, provision, covenant or
      restriction. It is hereby stipulated and declared to be the intention of the
      parties that they would have executed the remaining terms, provisions, covenants
      and restrictions without including any of such that may be hereafter declared
      invalid, illegal, void or unenforceable.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (m) Headings.
      The
      headings in this Agreement are for convenience of reference only and shall
      not
      limit or otherwise affect the meaning hereof.

     

    (n) Amendment
      and Restatement.
      This
      Agreement amends and restates in its entirety the Original Registration Rights
      Agreement; provided,
      however,
      solely
      for purposes of interpreting and enforcing the terms of the Waiver Agreement,
      the Original Registration Rights Agreement shall survive the execution of this
      Agreement. 

     

    (o) Waiver
      Agreement.
      The
      terms of the Waiver Agreement are hereby incorporated by reference into this
      Agreement.

     

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF, the parties have executed this Amended and Restated
      Registration Rights Agreement as of the date first written above.

     

    AMERICAN
      TECHNOLOGIES GROUP, INC.

     

    By:
      ________________________________

    Name:
      ______________________________

    Title:
      _______________________________

     

    LAURUS
      MASTER FUND, LTD. 

     

    By:
      ________________________________

    Name:
      ______________________________

    Title:
      _______________________________

     

    Address
      for Notices:

     

    825
      Third
      Avenue, 14th Floor

    New
      York,
      New York 10022

    Attention:
      David Grin

    Facsimile:
      212-541-4434

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      A

     

    ____________,
      200___

     

    [Continental
      Stock Transfer

    &
      Trust Company

    Two
      Broadway

    New
      York,
      New York 10004

    Attn:
      William Seegraber]

     

    
      	 	
              Re:

            	
              Registration
                Statement on Form [S-3]

            

    

     

    Ladies
      and Gentlemen:

     

    As
      counsel to American Technologies Group, Inc., a Nevada corporation (the
“Company”), we have been requested to render our opinion to you in connection
      with the resale by the individuals or entitles listed on Schedule
      A
      attached
      hereto (the “Selling Stockholders”), of an aggregate of __________ shares (the
“Shares”) of the Company’s Common Stock.

     

    A
      Registration Statement on Form [S-3] under the Securities Act of 1933, as
      amended (the “Act”), with respect to the resale of the Shares was declared
      effective by the Securities and Exchange Commission on [date]. Enclosed is
      the
      Prospectus dated [date]. We understand that the Shares are to be offered and
      sold in the manner described in the Prospectus.

     

    Based
      upon the foregoing, upon request by the Selling Stockholders at any time while
      the registration statement remains effective, it is our opinion that the Shares
      have been registered for resale under the Act and new certificates evidencing
      the Shares upon their transfer or re-registration by the Selling Stockholders
      may be issued without restrictive legend. We will advise you if the registration
      statement is not available or effective at any point in the future.

     

    Very
      truly yours,

     

    [Company
      counsel]

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Schedule
      A

    
      	
              Selling
                Stockholder

            	
              R/N/O

            	
              Shares

              Being
                Offered

            
	 	 	 
	 	 	 
	 	 	 
	 	 	 

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Schedule
      7(b)

     

    Piggyback
      on Registrations

     

    American
      Technologies Group, Inc. has agreed to register for resale shares of its Common
      Stock in the amounts and to the persons or entities identified
      below:

    

    
      	
              Person/Entity
                to be Registered

            	 	
              Number
                of Shares

            
	
              Gryphon
                Master Fund, L.P.

            	 	
              4,555,690

            
	
              GSSF
                Master Fund LP

            	 	
              4,555,690

            
	
              Nite
                Capital LP

            	 	
              449,991

            
	
              Charles
                and Patricia Matteson

            	 	
              1,963,506

            
	
              Luther
                Capital Management, Inc.

            	 	
              70,750

            
	
              Thomas
                E. Durkin, III

            	 	
              420,750

            
	
              Barbera
                Dritz Trust

            	 	
              350,000

            
	
              Mary
                Lou Anderson

            	 	
              275

            
	
              Michael
                Anderson

            	 	
              3,209

            
	
              Lawrence
                Brady

            	 	
              2,000

            
	
              BWN
                Nuchen Waste Elim

            	 	
              1,585

            
	
              Michael
                and Helena Kobin

            	 	
              10,134

            
	
              Yan
                Lin

            	 	
              6,662

            
	
              Yin
                Lo

            	 	
              6,411

            
	
              James
                Nicastro

            	 	
              8,256

            
	
              Chunsing
                Wang

            	 	
              8,326

            
	
              John
                Barringer

            	 	
              386

            
	
              Robert
                Dabney Eastham

            	 	
              1,377

            
	
              KNF
                Corporation

            	 	
              4,743

            
	
              Philip
                J. Carcara

            	 	
              79

            
	
              Gene
                H. Shoda

            	 	
              157

            
	
              Denis
                McCarthy

            	 	
              930

            
	
              Cliff
                Kennedy

            	 	
              930

            
	
              Bernadette
                Walsh

            	 	
              930

            
	
              Yvonne
                McKeown

            	 	
              930

            
	
              Merrill
                Communications, LLC

            	 	
              784

            
	
              Mountain
                Partners, LLC

            	 	
              6,738

            
	
              Otto
                Jeffrey

            	 	
              385

            
	
              Lawrence
                W. Schad

            	 	
              267

            
	
              Kyle
                J. Sikorsky

            	 	
              3,334

            
	
              Robert
                & Rogga Sikorsky

            	 	
              4,238

            
	
              I-Chu
                Lin

            	 	
              451

            
	
              The
                Spectrum Group

            	 	
              1,283

            
	
              Robert
                C. Thompson W.J. Byrnes & Co.

            	 	
              219

            
	
              Roger
                Pay Worldwide Scientific Pub Co.

            	 	
              65

            
	
              US
                Filter

            	 	
              79

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