Document:

Warrant

 EXHIBIT 4.2 
  
 THIS WARRANT AND THE SHARES PURCHASABLE HEREUNDER ARE SUBJECT TO 
 RESTRICTIONS ON TRANSFER AS SET FORTH HEREIN 
  
 WARRANT 
  

	 Warrant Number:
	  	#W 03-001
	 	  	 
	 Date:
	  	December 31, 2002
	 	  	 
	 Registered Holder:
	  	Avalanche Resources, Ltd.
	 	  	8 Saddlewood Estates
	 	  	Houston, Texas 77024
	 	  	 
	 Shares Purchasable:
	  	2,000,000
	 	  	 
	 Exercise Price:
	  	$ .60 per Share

  
 1.    Basic Terms.    This Warrant certifies that, for value received, the Registered Holder or the Registered Holder’s registered assigns (“Holder”) is entitled subject to the
terms and conditions of this Warrant to purchase the number of shares (the “Shares”) specified above of the common stock, par value $.001 per share (“the Common Stock”), of North American Technologies Group, Inc., a Delaware
corporation (the “Corporation”), from the Corporation at the exercise price specified above (the “Exercise Price”). The number of Shares purchasable under this Warrant and the Exercise Price are subject to adjustment as provided
below. All references in this Warrant to the Exercise Price and the number of Shares purchasable hereunder shall be to the Exercise Price and number of Shares after any adjustments are made thereto pursuant to this Warrant. 
  
 2.    Corporation’s
Representations/Covenants.    The Corporation represents and covenants that subject to paragraph 9, the Shares issuable upon the exercise of this Warrant shall at delivery be fully paid and nonassessable and free from taxes,
liens, encumbrances and charges with respect to their purchase. 
  
 3.    Method of Exercise; Fractional Shares.    This Warrant is exercisable at the option of Holder in whole at any time or in part from time to time on any business day during the period (the
“Exercise Period”) beginning on January 1, 2004 and ending on December 31, 2008 at 5:00 p.m., Houston, Texas time. This Warrant may be exercised only by the surrender of this Warrant during the Exercise Period at the principal office
of the Corporation or that of the transfer agent for the Common Stock, together with the executed exercise form (attached hereto), together with payment for the Shares purchased under this Warrant. The principal office of the Corporation is located
at the address specified on the signature page of this Warrant; provided, however, that the Corporation may change its principal office upon notice to Holder. Payment for the Shares 

 shall be made either in cash or by bank cashier’s check payable to the order of the Corporation. Upon the partial
exercise of this Warrant, the Corporation shall issue to Holder a new Warrant of like tenor for the number of Shares not purchased upon such partial exercise and any previous exercises. This Warrant is not exercisable with respect to a fraction of a
Share. In lieu of issuing a fraction of a Share remaining after exercise of this Warrant as to all full Shares covered by this Warrant, the Corporation shall pay for the fractional Share cash equal to the same fraction at the Exercise Price for such
Share. 
  
 4.    Adjustment of Exercise
Price. 
  
 (a)    The
Exercise Price shall be adjusted as provided in paragraph 4(b) if at any time or from time to time after the date of this Warrant, any of the following events occurs: 
  
 (i)    the Corporation distributes shares of Common Stock as a dividend with respect to
its outstanding shares of capital stock; 
  
 (ii)    subdivides its outstanding shares of Common Stock into a larger number of shares; or 
  
 (iii)    combines its outstanding shares of Common Stock into a smaller number of shares. 
  
 (b) Upon the occurrence of any event described in paragraph
4(a), the Exercise Price shall be adjusted to that price determined by multiplying the Exercise Price in effect immediately prior to such event by a fraction, the numerator of which is the total number of outstanding shares of Common Stock
immediately prior to such event and the denominator of which is the total number of outstanding shares of Common Stock immediately after such event. 
  
 5.    Dissolution.    If a voluntary or involuntary dissolution or winding up of the Corporation (other
than in connection with a consolidation or merger covered by paragraph 6 below) is at any time proposed during the Exercise Period, the Corporation shall give at least ninety days’ prior written notice to Holder. Such notice shall contain: (a)
the date on which the transaction is to take place; (b) the record date (which shall be at least ninety days after the giving of the notice) as of which holders of shares of common stock of the Corporation will be entitled to receive distributions
as a result of the transaction; (c) a brief description of the transaction; (d) a brief description of the distributions to be made to holders of Common Stock as a result of the transaction; and (e) an estimate of the fair value of the
distributions. On the date of the transaction, if it actually occurs and notwithstanding any other provision of this Warrant, the Exercise Period shall terminate. 
  
 6.    Merger/Consolidation.    If the Corporation consolidates with or merges
into another corporation, Holder shall thereafter be entitled to purchase on exercise of this Warrant, with respect to each Share purchasable under this Warrant immediately before the consolidation or merger becomes effective, the securities or
other consideration to which a holder of one share of Common Stock of the Corporation is entitled in the consolidation or merger without any change in or payment in addition to the aggregate Exercise Price for all such Shares in effect 

 immediately prior to the merger or consolidation. A sale or lease of all or substantially all the assets of the
Corporation for a consideration (apart from the assumption of obligations) consisting primarily of securities is a consolidation or merger for the foregoing purposes. The Exercise Price for the shares of the successor shall be proportionately
adjusted consistent with such conversion ratio. The Corporation shall provide Holder written notice of such merger or consolidation at least thirty days prior to the effective date thereof. Upon the effective date of such merger or consolidation the
term “Corporation” hereunder shall refer to Corporation’s successor. 
  
 7.    Notice of Adjustment.    On the occurrence of an event requiring an adjustment of the Exercise Price or the Shares purchasable under this Warrant, the Corporation
shall give written notice to Holder stating the adjusted Exercise Price and the adjusted number and kind of securities or other property purchasable under this Warrant resulting from the event and setting forth in reasonable detail the method of
calculation and the facts upon which the calculation is based. 
  
 8.    Rights of Holder.    This Warrant does not entitle Holder to any voting rights or any other rights as a shareholder of the Corporation. No dividends are payable or will accrue on this
Warrant or the Shares purchasable under this Warrant until, and except to the extent that, this Warrant is exercised. Upon the surrender of this Warrant and payment of the Exercise Price, Holder shall be treated as the record holder of such Shares
as of the close of business on the date of the surrender of this Warrant for exercise. 
  
 9.    Transfer. 
  
 (a)    NEITHER THIS WARRANT NOR ANY SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THIS DEBENTURE HAS BEEN TAKEN BY THE
REGISTERED OWNER FOR INVESTMENT, AND WITHOUT A VIEW TO RESALE OR DISTRIBUTION THEREOF, AND MAY NOT BE TRANSFERRED OR DISPOSED OF WITHOUT AN OPINION OF COUNSEL SATISFACTORY TO THE CORPORATION THAT SUCH TRANSFER OR DISPOSITION DOES NOT VIOLATE THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE RULES AND REGULATIONS THEREUNDER OR THE SECURITIES LAWS OF ANY STATE. 
  
 (b)    No Shares may be transferred or disposed of without an opinion of counsel satisfactory to the Corporation that
such transfer does not violate the Securities Act of 1933, as amended, or the rules and regulations thereunder, or the securities laws of any state. All certificates evidencing any Shares shall bear the following legend, in addition to any other
legend required by law or otherwise: 
  
 “THE SECURITIES
REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN TAKEN BY THE REGISTERED OWNER FOR INVESTMENT, AND WITHOUT A VIEW TO RESALE OR
DISTRIBUTION THEREOF, AND 

 MAY NOT BE TRANSFERRED OR DISPOSED OF WITHOUT AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER THAT SUCH
TRANSFER OR DISPOSITION DOES NOT VIOLATE THE SECURITIES ACT OF 1933, AS AMENDED, OR THE RULES AND REGULATIONS THEREUNDER OR THE LAWS OF ANY STATE.” 
  
 (c)    Subject to the foregoing, this Warrant is transferable only on surrender of this Warrant to the Corporation
with an assignment of this Warrant (in a form reasonably acceptable to the Corporation) duly executed by Holder. 
  
 10.    Substitution.    The Corporation will issue and deliver a new Warrant of like tenor to Holder upon
receipt by the Corporation of evidence reasonably satisfactory to the Corporation of the ownership of and the loss, theft or destruction or mutilation of this Warrant, and (in the case or loss, theft or destruction) of an indemnity reasonably
satisfactory to the Corporation, and (in the case of mutilation) upon the surrender and cancellation of this Warrant. 
  
 11.    Attorney Fees.    The prevailing party in any suit brought to enforce or interpret this Warrant
shall be entitled to recover reasonable attorneys fees and court and other costs in addition to any other relief awarded. 
  
 12.    Applicable Law.    THIS WARRANT SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
TEXAS, EXCLUDING CONFLICTS-OF-LAW PROVISIONS THEREOF. 
  
 13.    Notices.    Any notice required or permitted to be sent hereunder shall be effective when: (a) actually delivered, or (b) whether or not actually received, when deposited in the United
States mail, postage prepaid, certified mail, return receipt requested, and addressed in the case of the Corporation, to the Corporation’s principal office, Attention: The President, and addressed in the case of Holder, to Holder’s last
known address as shown on the books and records of the Corporation. Each party may change its address for notice by notice to the other party. 
  
 14.    Entire Agreement.    This written document, together with any other written document executed
contemporaneously herewith, represents the final agreement of the parties with respect to the subject matter of this document and may not be contradicted by evidence of prior or contemporaneous oral agreements of the parties. There are no unwritten
oral agreements between the Corporation and Holder regarding the subject matter of this document. 
  
 15.    Miscellaneous.    This Warrant may not be amended except by an instrument in writing signed by the
Corporation and Holder. 
  
 NORTH AMERICAN
TECHNOLOGIES GROUP, INC 
  
 14315 West Hardy Road 
  

 Houston, TX 77060 
 ATTENTION: The President 
  

	 
		
	 By:
	 	 /s/    Henry W. Sullivan

	 	 	 Henry W. Sullivan, President

  

 EXERCISE FORM 
  
 (To be executed by Holder to purchase 
 Shares
of Common Stock pursuant to the Warrant) 
  
 The undersigned
Holder of the attached Warrant hereby irrevocably: 
  
 (1)    Elects to purchase                              Shares of Common Stock of
North American Technologies Group, Inc. pursuant to this Warrant and encloses payment of $                         therefor (by
certified or bank cashier’s check); and 
  
 (2)    If the foregoing number of Shares is not all of the Shares purchasable under this Warrant, requests that a new Warrant of like tenor for the balance of the remaining Shares purchasable under this Warrant.

  

	 	 	 	 	 
				
	
	 	 	 	 	 	

	 Date
	 	 	 	 	 	 Holder’s SignatureSecurities Purchase Agreement

 EXHIBIT 10.1 
  
 SECURITIES PURCHASE AGREEMENT 
  

This Agreement, dated effective December 31, 2002, is between North American Technologies Group, Inc., a Delaware corporation (the
“Company”), and Avalanche Resources, Ltd., a Texas limited partnership (“Purchaser”). 
  
 1.    Sale and Purchase of Securities.    The Company sells and agrees to issue to Purchaser, and Purchaser
purchases from the Company, a Convertible Debenture (the “Debenture”) and a Warrant (the “Warrant”) in the form of that previously approved by the parties. The Debenture and the Warrant are referred to collectively as the
“Securities.” The purchase price for the Securities is $2,000,000.00 which shall be payable upon the full execution hereof via Purchaser’s check or other means of payment acceptable to the Company. 
  
 2.    Other Transactions. 
  
 (a)    The Debenture shall be secured by
a lien and security interest in all assets of the Company and its subsidiary TieTek, Inc. (“TieTek”) pursuant to a security agreement in the form previously approved by such parties, which the Company and Purchaser (and which the Company
shall cause TieTek to execute), as applicable upon full execution of this Agreement. 
  
 (b)    At the closing the Company and Purchaser parties shall execute the Registration Rights Agreement in the form
previously approved by the parties. 
  
 3.    Closing.    The closing of the purchase and sale of the Securities hereunder shall occur on the full execution of this Agreement. At the closing, the Company and Purchaser shall execute
all documents and take all other actions as required by this Agreement or as may otherwise be necessary or appropriate to further evidence or effectuate the transaction contemplated hereby. 
  
 4.    Representations and Warranties of
Purchaser.    Purchaser represents and warrants to the Company as follows: 
  
 (a)    Purchaser is a duly organized and validly existing limited partnership in good standing under the laws of Texas
with adequate power and authority to conduct the business in which it is now engaged and has the corporate power and authority to enter into this Agreement and any document to be executed pursuant to this Agreement, and is duly qualified and
licensed to do business as a foreign limited partnership in such other states or jurisdictions as is necessary to enable it to carry on its business, except where failure to do so would not have a material adverse effect on its business. 

 
 (b)    The execution of this Agreement
and the documents to be executed by Purchaser pursuant to this Agreement and the transactions contemplated thereby have been duly 

 authorized by all required partnership action and will not constitute or result in a breach or default under, or conflict
with, any order, ruling or regulation of any court or other tribunal or of any governmental commission or agency, or any agreement or other undertaking, to which Purchaser is a party or by which Purchaser is bound, and, will not violate the
partnership agreement of Purchaser. When duly executed by the parties hereto, this Agreement and each document to be executed by Purchaser pursuant to this Agreement will constitute a valid and legally binding obligation of Purchaser enforceable
against it in accordance with its terms, except as such enforceability may be limited by (i) bankruptcy, insolvency, moratorium, reorganization or other similar laws and legal and equitable principles limiting or affecting the rights of creditors
generally; and/or (ii) general principles of equity, regardless of whether considered in a proceeding in equity or at law. 
  
 (c)    Purchaser has such knowledge and experience in business and financial matters such that Purchaser is capable of
evaluating the merits and risks of purchasing the Securities. Purchaser is an “accredited investor” as that term is defined in Rule 501 of Regulation D of the Securities Act and satisfies the suitability standards identified in this
Agreement. 
  
 (d)    Purchaser has relied solely upon the advice of its own tax and legal advisors with respect to the tax and other legal aspects of this investment. 
  
 (e)    Purchaser has had access to all material and relevant information concerning the
Company, its management, financial condition, capitalization, market information, properties and prospects necessary to enable Purchaser to make an informed investment decision with respect to its investment in the Securities. Purchaser has
carefully read and reviewed, and is familiar with and understands the contents thereof and hereof, including, without limitation, the risk factors described in this Agreement. Purchaser acknowledges that it has had the opportunity to ask questions
of and receive answers from, and to obtain additional information from, representatives of the Company concerning the terms and conditions of the acquisition of the Securities and the present and proposed business and financial condition of the
Company, and has had all such questions answered to its satisfaction and has been supplied all information requested. 
  
 (f)    Purchaser has been advised of the availability of and has carefully reviewed a copy of the Company’s
Annual Report on Form 10-KSB for the year ended December 31, 2001 and its Quarterly Report on Form 10-QSB for the three months ended September 30, 2002 (collectively, the “SEC Reports”). 
  
 (g)    Purchaser acknowledges that the
Securities have not been approved or disapproved by the SEC or any state securities commissions nor has the SEC or any state securities commission passed upon the adequacy, or accuracy of this Agreement or any document to be executed pursuant to
this Agreement. Prior to making an investment in the Securities, Purchaser has fully considered, among other things, the business risks discussed in the Company’s SEC Reports. 

 (h)    Purchaser is acquiring the Securities for Purchaser’s own
account and not on behalf of any other person, for investment purposes only and not with a view towards distribution or resale to others. 
  
 5.    Representations and Warranties of the Company.    The Company hereby represents and warrants to
Purchaser as follows: 
  
 (a)    The Company is a duly organized and validly existing corporation in good standing under the laws of Delaware with adequate power and authority to conduct the business in which it is now engaged and has the
corporate power and authority to enter into this Agreement and perform its obligations under this Agreement. The Company is duly qualified and licensed to do business as a foreign corporation in such other states or jurisdictions as is necessary to
enable it to carry on its business, except where failure to do so would not have a material adverse effect on its business. 
  
 (b)    The execution of this Agreement and the documents to be executed by the Company pursuant to this Agreement and
the transactions contemplated thereby have been duly authorized by the Board of Directors of the Company. No other corporate act or proceeding on the part of the Company is necessary to authorize this Agreement or the consummation of the
transactions contemplated thereby. When duly executed by the parties hereto, this Agreement and each document to be delivered by the Company pursuant to this Agreement will constitute a valid and legally binding obligation of the Company enforceable
against it in accordance with its terms, except as such enforceability may be limited by (i) bankruptcy, insolvency, moratorium, reorganization or other similar laws and legal and equitable principles limiting or affecting the rights of creditors
generally; and/or (ii) general principles of equity, regardless of whether considered in a proceeding in equity or at law. 
  
 (c)    Upon their issuance, the Securities shall be duly and validly issued, fully paid and nonassessable. 

 
 (d)    The Company has timely filed
all reports required to be filed with the SEC pursuant to the Securities Act or the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the rules promulgated thereunder, and has previously advised Purchaser of the
availability of true and complete copies of such SEC Reports. Such SEC Reports, as of their respective dates, complied in all materials respects with the applicable requirements of the Securities Act and the Exchange Act, as the case may be, and
none of such SEC Reports 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. Except as set forth in the SEC Reports, there has not been any fact, event, circumstance or change affecting or relating to the Company which has had or is reasonably likely to have, individually or in the aggregate, a material adverse
effect on the Company; provided, however, that a material adverse effect shall not include any adverse effect following the date of this Agreement which is solely attributable to (i) the announcement or pendency of the transactions contemplated by
this Agreement or (ii) changes in national economic conditions or industry conditions generally. 

 6.    Restrictions on Securities. 
  
 (a)    Purchaser acknowledges that: The
offering of the Securities (the “Offering”) has not been registered with, or reviewed by, the Securities and Exchange Commission (“SEC”) because the Offering is intended to be a non-public offering and a private placement
transaction pursuant to Section 4(2) and Rule 506 of Regulation D of the Securities Act. 
  
 (b)    The Securities are “restricted securities” as that term is defined under Rule 144 of the Securities
Act of 1933, as amended (the “Securities Act”) and accordingly may not be offered for sale or sold or otherwise transferred in a transaction which would constitute a sale thereof within the meaning of the Securities Act unless: (i) such
security has been registered for sale under the Securities Act and registered or qualified under applicable state securities laws relating to the offer and sale of securities; or (ii) exemptions from the registration requirements of the Securities
Act and the registration or qualification requirements of applicable state securities laws are available and the Company shall have received an opinion of counsel that the proposed sale or other disposition of such securities may be effected without
registration under the Securities Act and would not result in any violation of any applicable state securities laws relating to the registration or qualification of securities for sale, such counsel and such opinion to be satisfactory to the
Company. 
  
 (c)    For so
long as the foregoing restrictions on transfer are applicable, the Securities (and any shares into which the Debenture is convertible or which may be purchased pursuant to the exercise of the Warrant) and the certificates evidencing the Securities
(and such shares) shall bear the following legend, in addition to any other legend required by law or otherwise: 
  
 “THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE SECURITIES REPRESENTED BY
THIS CERTIFICATE HAVE BEEN TAKEN BY THE REGISTERED OWNER FOR INVESTMENT, AND WITHOUT A VIEW TO RESALE OR DISTRIBUTION THEREOF, AND MAY NOT BE TRANSFERRED OR DISPOSED OF WITHOUT AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER THAT SUCH TRANSFER OR
DISPOSITION DOES NOT VIOLATE THE SECURITIES ACT OF 1933, AS AMENDED, OR THE RULES AND REGULATIONS THEREUNDER.” 
  
 7.    Survival.    The representations and warranties contained herein shall survive the execution of this
Agreement and the closing. 
  
 8.    Parties in Interest.    This Agreement, including the representations, warranties and agreements of each party in this Agreement, shall be binding upon and inure to the benefit of and be
enforceable by the respective successors and assigns of the parties hereto. 

 9.    Attorneys Fees.    The prevailing party in any suit
brought to enforce or interpret this Agreement shall be entitled to recover a reasonable attorneys fee and necessary disbursements in addition to any other relief awarded. 
  
 10.    Entire Agreement.    This Agreement, and any other documents executed
contemporaneously herewith, constitute the entire agreement between the parties, and supersede any prior agreement and understanding, relating to the subject matter of this Agreement. There are no unwritten oral representations, warranties,
agreements or understandings between the parties. 
  
 11.    Headings.    The headings in this Agreement are for reference purposes only and shall not be considered in any construction or interpretation of this Agreement. 
  
 12.    Governing Law.    THIS
AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED IN ALL RESPECTS BY THE INTERNAL LAWS OF TEXAS (WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAWS). 
  

	NORTH AMERICAN TECHNOLOGIES GROUP, INC.
		
	 By:
	 	 /s/    Henry W. Sullivan

	 	 	 Henry W. Sullivan, President

  

	AVALANCHE RESOURCES, LTD.
		
	 By:
	 	AVALANCHE MANAGEMENT CORPORATION, General Partner
	 	 	 

  

	 
		
	 By:
	 	 /s/    Kevin Maddox

	 	 	 Kevin Maddox, President

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