Document:

Exhibit 10.28

 

EMPLOYMENT AGREEMENT

 

This Employment Agreement (this “Agreement”) is entered into as of August 9,
2004, by and between OpBiz, L.L.C. (“Employer”), and Bruce Himelfarb (“Employee”).

 

1.                                       Employment.  Employer hereby employs Employee, and Employee
hereby accepts employment by the Employer, as Employer’s Vice President of
Casino Marketing to perform such executive, managerial or administrative
duties, commensurate with Employee’s position, as Employer may specify from
time to time, during the Specified Term as defined in Section 2.

 

2.                                       Effective
Date; Specified Term.  This Agreement
shall be effective as of Employee’s commencement date.  Subject to earlier termination as provided
herein, the term of the Employee’s employment hereunder shall commence on August 23,
2004, and terminate on the third (3rd)
anniversary thereof (the “Specified Term”). 
If Employee remains employed by Employer following the Specified Term,
any such employment shall be on an at-will basis, unless the parties agree in
writing to extend the Specified Term.

 

3.                                       Compensation.

 

a.                                       Base Salary.  During
the Specified Term, in consideration of the performance by Employee of Employee’s
obligations hereunder to Employer and its parents, subsidiaries, affiliates,
and joint ventures (collectively, the “Employer Group”), Employer shall pay
Employee an annual base salary (the “Base Salary”) as follows:  Year 1 of the Specified Term - $250,000.00;
Year 2 of the Specified Term - $275,000.00; Year 3 of the Specified Term -
$300,000.00.  Increases in Base Salary
for Years 2 and 3 shall be effective on the annual anniversary date under Section 2
hereof.  The Base Salary shall be payable
in accordance with the payroll practices of Employer as in effect from time to
time for Employer’s senior executives.

 

b.                                      Bonus
Compensation.  Employee is eligible to participate
in Employer’s bonus program as formulated from time to time by Employer’s Board
of Directors in its sole discretion (“Employer Bonus Program”).  Such Employer Bonus Program is primarily based
on achievement of Employer’s EBITDA goals and Employee’s performance as
determined by the Board of Directors. 
Notwithstanding the foregoing, Employee’s annual bonus for the time
period beginning on the commencement date and ending December 31, 2004,
shall not be less than $35,000.00.  The
annual bonus for the 2005 and 2006 calendar years shall not be less than
$100,000.00 in each such year and may be up to fifty percent (50%) of Employee’s
Base Salary.  Commencing January 1,
2007, Employee shall be eligible to receive such bonuses pursuant to the
Employer Bonus Program as may be determined in the sole discretion of Employer’s
Board of Directors, which may be up to fifty percent (50%) of Employee’s Base
Salary.

 

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c.                                       Employee
Benefit Programs.  During the
Specified Term, Employee shall be entitled to participate in Employer’s
employee benefit plans as are generally made available from time to time to
Employer’s senior executives, subject to the terms and conditions of such
plans, and subject to Employer’s right to amend, terminate or take other
similar actions with respect to such plans.

 

d.                                      Business
Expense Reimbursements.  Employer
will pay or reimburse Employee for all reasonable out-of-pocket expenses,
including travel expenses, Employee incurs during the Specified Term in the
course of performing Employee’s duties under this Agreement upon timely
submission of appropriate documentation to Employer, as prescribed from time to
time by Employer.

 

e.                                       Options.  Subject to the prior approval of the Nevada
Gaming Commission, the availability of an exemption from registration under
applicable securities laws, and the approval of appropriate members of the
Employer Group, employee is eligible to receive options to purchase .25%
(subject to dilution in the discretion of the Employer Group) of equity
interest (non-voting) in Mezzco, LLC (or such other entity as determined by the
Employer Group).  Employee’s options
shall carry a strike price based on a $100 million equity value, will vest in
three (3) equal installments on the annual anniversary dates of the
Specified Term, and will be subject to such terms and conditions as may be set
forth in the option grant.

 

4.                                       Extent of
Services.  Employee agrees that the duties and services
to be performed by Employee shall be performed exclusively for members of the
Employer Group.  Employee further agrees
to perform such duties in an efficient, trustworthy, lawful, and businesslike
manner.  Employee agrees not to render to
others any service of any kind whether or not for compensation, or to engage in
any other business activity whether or not for compensation, that is similar to
or conflicts with the performance of Employee’s duties under this Agreement,
without the prior written approval of the Board.  Such services shall be rendered primarily in
Las Vegas, Nevada.

 

5.                                       Policies and
Procedures.  In addition to the terms
herein, Employee agrees to be bound by Employer’s policies and procedures
including drug testing and background checks, as they may be established or
amended by Employer in its sole discretion from time to time.  In the event the terms in this Agreement
conflict with Employer’s policies and procedures, the terms herein shall take
precedence.  Employer recognizes that it
has a responsibility to see that its employees understand the adverse effects
that problem gambling and underage gambling can have on individuals and the
gaming industry as a whole.  Employee
agrees to read, understand, and comply with Employer’s policy prohibiting
underage gaming and supporting programs to treat compulsive gambling.

 

6.                                       Licensing
Requirements.  Employee acknowledges
that Employer is engaged in a business that is or may be subject to and exists
because of privileged licenses issued by

 

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governmental authorities in Nevada and other
jurisdictions in which Employer or Employer Group is engaged or has applied or,
during the Specified Term, may apply to engage in the gaming business.  If requested to do so by Employer or Employer
Group, Employee shall apply for and obtain any license, qualification,
clearance or the like that shall be requested or required of Employee by any
regulatory authority having jurisdiction over Employer or Employer Group.

 

7.                                       Failure to
Satisfy Licensing Requirement.  If
Employee fails to satisfy any licensing requirement referred to in Section 6
above, or if any governmental authority directs the Employer to terminate any
relationship it may have with Employee, or if Employer shall determine, in
Employer’s reasonable judgment, that Employee was, is or might be involved in,
or is about to be involved in, any activity, relationship(s) or circumstance
that could or does jeopardize the business of Employer or Employer’s Group,
reputation or such licenses, or if any such license is threatened to be, or is,
denied, curtailed, suspended or revoked, this Agreement may be terminated by
Employer and the parties’ obligations and responsibilities shall be determined
by the provisions of Section 11.

 

8.                                       Restrictive
Covenants.

 

a.                                       Competition. 
Employee acknowledges that, in the course of Employee’s responsibilities
hereunder, Employee will form relationships and become acquainted with certain
confidential and proprietary information as further described in Section 8(b).  Employee further acknowledges that such
relationships and information are and will remain valuable to the Employer and
Employer Group and that the restrictions on future employment, if any, are
reasonably necessary in order for Employer and Employer Group to remain
competitive in the gaming industry.  In
recognition of their heightened need for protection from abuse of relationships
formed or information garnered before and during the Specified Term of the
Employee’s employment hereunder, Employee covenants and agrees for the
three  (3) month period immediately
following termination of employment for any reason (the “Restrictive Period”),
not to directly or indirectly be employed by, provide consultation or other services
to, engage or participate in, provide advice, information or assistance to,
fund or invest in, or otherwise be connected or associated in any way or manner
with, any firm, person, corporation or other entity which is either directly,
indirectly or through an affiliated company or entity, engaged in gaming or
proposes to engage in gaming in Clark County, 
Nevada.   The covenants under this
Section 8(a) include but are not limited to Employee’s covenant not
to:

 

i.                                          Make known to any third party the names
and addresses of any of the customers of Employer or any member of Employer
Group, or any other information or data pertaining to those customers;

 

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ii.             Call on, solicit, induce to leave and/or take away, or
attempt to call on, solicit, induce to leave and/or take away, any of the
customers of Employer or any member of the Employer Group, either for Employee’s
own account or for any third party;

 

iii.            Call on, solicit and/or take away, any potential or prospective
customer of Employer or any member of the Employer Group, on whom the Employee
called or with whom Employee became acquainted during employment (either before
or during the Specified Term), either for Employee’s own account or for any
third party; and

 

iv.            Approach or solicit any employee or independent
contractor of Employer or any member of the Employer Group with a view towards
enticing such person to leave the employ or service of Employer or any member
of the Employer Group, or hire or contract with any employee or independent
contractor of Employer or any member of the Employer Group, without the prior
written consent of the Employer, such consent to be within Employer’s sole and
absolute discretion.

 

b.                                      Confidentiality. 
Employee covenants and agrees that Employee shall not at any time during
the Specified Term or thereafter, without Employer’s prior written consent,
such consent to be within Employer’s sole and absolute discretion, disclose or
make known to any person or entity outside of the Employer Group any Trade
Secret (as defined below), or proprietary or other confidential information
concerning Employer or any member of the Employer Group, including without
limitation, Employer’s customers and its casino, hotel, and marketing data practices,
procedures, management policies or any other information regarding Employer or
any member of the Employer Group, which is not already and generally known to
the public through no wrongful act of Employee or any other party.  Employee covenants and agrees that Employee
shall not at any time during the Specified Term, or thereafter, without the
Employer’s prior written consent, utilize any such Trade Secrets, proprietary
or confidential information in any way, including communications with or
contact with any such customer other than in connection with employment
hereunder.  For purposes of this Section 8,
Trade Secrets is defined as data or information, including a formula, pattern,
compilation, program, device, method, know-how, technique or process, that
derives any economic value, present or potential, from not being generally
known to, and not being readily ascertainable by proper means by, other persons
who may or could obtain any economic value from its disclosure or use.

 

c.                                       Former Employer Information. 
Employee will not intentionally, during the Specified Term, improperly
use or disclose any proprietary information or Trade Secrets of any former
employer or other person or entity and will not bring onto the premises of the
Employer any unpublished document or proprietary

 

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information belonging
to any such employer, person or entity unless consented to in writing by such
employer, person or entity.

 

d.                                      Third Party Information. 
Employee acknowledges that Employer and other members of the Employer
Group have received and in the future will receive from third parties their
confidential or proprietary information subject to a duty to maintain the
confidentiality of such information and to use it only for certain limited
purposes.  Employee will hold all such
confidential or proprietary information in the strictest confidence and will
not disclose it to any person or entity or to use it except as necessary in carrying
out Employee’s duties hereunder consistent with Employer’s (or such other
member of the Employer Group’s) agreement with such third party.

 

e.                                       Employer’s Property. 
Employee hereby confirms that Trade Secrets, proprietary or confidential
information and all information concerning customers who utilize the goods,
services or facilities of any hotel and/or casino owned, operated or managed by
Employer constitute Employer’s exclusive property (regardless of whether
Employee possessed or claims to have possessed such information prior to the date
hereof).  Employee agrees that upon
termination of employment, Employee shall promptly return to the Employer all
notes, notebooks, memoranda, computer disks, and any other similar repositories
of information (regardless of whether Employee possessed such information prior
to the date hereof) containing or relating in any way to the Trade Secrets or
proprietary or confidential information of each member of the Employer Group,
including but not limited to, the documents referred to in Section 8(b).  Such repositories of information also include
but are not limited to any so-called personal files or other personal data
compilations in any form, which in any manner contain any Trade Secrets or
proprietary or confidential information of Employer or any member of the
Employer Group.

 

f.                                         Notice to Employer. 
Employee agrees to notify Employer immediately of any employers for whom
Employee works or provides services (whether or not for remuneration to
Employee or a third party) during the Specified Term or within the Restrictive
Period.  Employee further agrees to
promptly notify Employer, during Employee’s employment with Employer, of any
contacts made by any gaming licensee that concern or relate to an offer of
future employment (or consulting services) to Employee.

 

9.                                       Representations.  Employee hereby represents, warrants and
agrees with Employer that:

 

a.                                       The covenants and agreements
contained in Sections 4 and 8 above are reasonable, appropriate and suitable in
their geographic scope, duration and content; the Employer’s agreement to
employ the Employee and a portion of the compensation and consideration to be
paid to Employee hereunder is separate and

 

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partial consideration
for such covenants and agreements; the Employee shall not, directly or
indirectly, raise any issue of the reasonableness, appropriateness and
suitability of the geographic scope, duration or content of such covenants and
agreements in any proceeding to enforce such covenants and agreements; and such covenants and agreements shall
survive the termination of this Agreement, in accordance with their terms;

 

b.                                      The enforcement of any remedy under
this Agreement will not prevent Employee from earning a livelihood, because
Employee’s past work history and abilities are such that Employee can
reasonably expect to find work in other geographic areas and lines of business;

 

c.                                       The covenants and agreements stated
in Sections 4, 6, 7, and 8 above are essential for the Employer’s reasonable
protection;

 

d.                                      Employer has reasonably relied on
these covenants and agreements by Employee; and

 

e.                                       Employee has the full right to enter
into this Agreement and by entering into and performance of this Agreement will
not violate or conflict with any arrangements or agreements Employee may have
or agreed to have with any other person or entity.

 

f.                                         Employee acknowledges and warrants
to Employer the receipt and sufficiency of separate consideration for the
assignment by Employer of Employer’s rights and Employee’s obligation under Section 8.

 

Notwithstanding Section 21 Employee agrees that in the event of
Employee’s breach or threatened breach of any covenants and agreements set
forth in Sections 4 and 8 above, Employer may seek to enforce such covenants
and agreements in court through any equitable remedy, including specific
performance or injunction, without waiving any claim for damages.  In any such event, Employee waives any claim
that the Employer has an adequate remedy at law or for the posting of a bond.

 

10.           Termination
for Death or Disability.  Employee’s
employment hereunder shall terminate upon Employee’s death or Disability (as
defined below).  In the event of Employee’s
death or Disability, Employee (or Employee’s estate or beneficiaries in the
case of death) shall have no right to receive any compensation or benefit
hereunder or otherwise from Employer or any member of the Employer Group on and
after the effective date of termination of employment other than (1) unpaid
Base Salary earned to the date of termination of employment (which shall be
paid on Employer’s next scheduled payroll date), (2) any earned but unpaid
bonus then payable to Employee (which shall be paid on Employer’s next
scheduled payroll date), (3) business expense reimbursement pursuant to Section 3(d),
and (4) benefits provided pursuant to Section 3(c), subject to the
terms and

 

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conditions applicable thereto. For purposes
of this Section 10, Disability is defined as Employee’s incapacity, certified
by a licensed physician selected by Employer (“Employer’s Physician”), which
precludes Employee from performing the essential functions of Employee’s duties
hereunder for sixty (60) days or more. 
In the event Employee disagrees with the conclusions of the Employer’s
Physician, Employee (or Employee’s representative) shall designate a physician
(“Employee’s Physician”), and Employer’s Physician and Employee’s Physician
shall jointly select a third physician (“Third Physician”), who shall make the
determination which determination shall be final and binding on the parties
hereto.  Employee hereby consents to any
examination or to provide or authorize access to any medical records that may
be reasonably required by Employer’s Physician or the Third Physician in
connection with any determination to be made pursuant to this Section 10.

 

11.                                 (a)                                  Termination
by Employer for Cause.  Employer may
terminate Employee’s employment hereunder for Cause (as defined below) at any
time.  If Employer terminates Employee’s
employment for Cause, Employee shall have no right to receive any compensation
or benefit hereunder or otherwise from Employer or any member of the Employer
Group on and after the effective date of termination of employment other than (1) unpaid
Base Salary earned to the date of termination of employment (which shall be
paid on Employer’s next scheduled payroll date), (2) business expense
reimbursement pursuant to Section 3(d), and (3) benefits provided
pursuant to Section 3(c), subject to the terms and conditions applicable
thereto.  For purposes of this Section 11
(a), Cause is defined as Employee’s (i) failure to abide by Employer’s
policies and procedures, (ii) misconduct, insubordination, or inattention
to Employer’s business, (iii) failure to perform the duties required of
Employee up to the standards established by the Board, or other material breach
of this Agreement (other than as a result of a Disability), or (iv) failure
or inability to satisfy the requirements stated in Section 7 above.   Prior to a termination for cause under this
paragraph 11(a), the Employer must provide a written letter of deficiency to
Employee which details Employee’s deficient conduct and thereafter provide
Employee 30 days to cure such deficiency. 
If after 30 days, Employer continues to believe cause exists to
terminate the Employee, then Employer shall send a second letter to Employee
terminating Employee that memorializes the failure of Employee to cure the
asserted deficiency.

 

(b)  At Will Termination by Employer.
 Employer may terminate Employee at will
at any time upon fifteen (15) days prior written notice, or, in the Employer’s
sole discretion, the equivalent of two weeks of Base Salary in lieu of notice.

 

If Employer terminates Employee at will under
this Section 11 (b), Employee shall have no right to receive any
compensation or benefit hereunder or otherwise from Employer or any member of
the Employer Group on and after the effective date of termination of employment
other than (1) unpaid Base Salary earned to the date of termination of
employment (which shall be paid on Employer’s next scheduled payroll date), (2) business
expense reimbursement pursuant to Section 3(d), and (3) benefits
provided

 

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pursuant to Section 3(c), subject to the
terms and conditions applicable thereto, and (4) twelve (12) months of
Base Salary if Employee is terminated in any year of the Specified Term;
provided that severance pay shall  not
exceed an amount equivalent to Base Salary from the date of termination to the
date this Employment Agreement would otherwise expire but for earlier
termination.

 

(c)  Lisencing Contingency.  Employer acknowledges that Employee must
relinquish other employment to enter into this Employment Agreement.  Various state licensing requirements have not
yet been finalized with Employer and may not be granted.  In the event Employee resigns his position
with his current employer (The Venetian) and a gaming license is not granted to
the Employer, Employer agrees to compensate Employee under this Agreement until
such time as Employee finds suitable replacement employment, but under no
circumstance for a period of time greater than ninety (90) days after Employee
ceases employment with Employer due solely to the failure of Employer to obtain
gaming licenses, due to no fault of Employee.

 

12.           Termination
by Employee.  Employee may terminate
Employee’s employment hereunder upon thirty (30) days’ prior written notice to
Employer.  If Employee shall terminate
his employment other than for (a) death, (b) Disability, (c) failure
of Employer to pay Employee’s compensation when due, or (d) material
reductions in Employee’s duties and responsibilities without his consent,
Employee shall have no right to receive any compensation or benefit hereunder
or make any other claims against Employer or any member of the Employer Group
on and after the effective date of termination of employment other than (1) unpaid
Base Salary earned to the date of termination of employment (which shall be
paid on Employer’s next scheduled payroll date), (2) any earned but unpaid
bonus then payable to Employee (which shall be paid on Employer’s next
scheduled payroll date), (3) business expense reimbursement pursuant to Section 3(d),
and (4) benefits provided pursuant to Section 3(c), subject to the
terms and conditions applicable thereto.

 

13.           Cooperation
Following Termination.  Following
termination of employment of Employee’s employment hereunder for any reason,
Employee agrees to reasonably cooperate with Employer upon the reasonable
request of the Board and to be reasonably available to Employer with respect to
matters arising out of Employee’s services to any member of the Employer
Group.  Employer shall reimburse, or at
Employee’s request, advance Employee for expenses reasonably incurred in
connection with such matters.

 

14.           Interpretation;
Each Party the Drafter.  Each of the
parties was represented by or had the opportunity to consult with counsel who
either participated in the formulation and documentation of, or was afforded
the opportunity to review and provide comments on, this Agreement.  Accordingly,
this Agreement and the provisions contained in it shall not be construed or
interpreted for or against any party to this agreement because that party
drafted or caused that party’s legal representative to draft any of its
provisions.

 

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15.           Indemnification.  Employer shall indemnify Employee to the
fullest extent permitted by Nevada law and the articles of incorporation and
bylaws of the Employer.  Such
indemnification shall include, without limitation, the following:

 

a.                                       Indemnification Involving Third
Party Claims.  Employer shall indemnify Employee if Employee
is a party to or is threatened to be made a party to or otherwise involved in
any threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (each a “Claim”), other than a Claim
by or in the name of Employer or any entity in the Employer Group, by reason of
the fact that Employee is or was serving as an employee or agent of Employer or
any entity in the Employer Group (each an “Indemnifiable Event”), against all
expenses, including attorneys’ fees, judgments, fines, and amounts paid in
settlement (collectively, “Expenses”) actually and reasonably incurred by
Employee in connection with the investigation, defense, settlement or appeal of
such Claim, if Employee either is not liable pursuant to NRS Section 78.138
or acted in good faith and in a manner Employee reasonably believed to be in or
not opposed to the best interests of Employer and, in the case of a criminal
Claim, in addition had no reasonable cause to believe that his or her conduct
was unlawful.

 

b.                                      Determination of Appropriateness of
Indemnification.  Notwithstanding the foregoing, the
obligations of Employer under Section 16 shall be subject to the condition
that, unless ordered by a court, a determination shall have been made that
indemnification is proper under the specific circumstances, pursuant to and in
accordance with NRS Section 78.751, as in effect from time to time.

 

c.                                       Indemnification for Defense Only. 
The indemnification authorized by this Section 16 does not include
any actions, suits or proceedings initiated by Employee against Employer or any
entity in the Employer Group.

 

d.                                      Settlement of Claims. 
Neither Employee nor Employer shall settle any Claim without the prior
written consent of the other (such consent not to be unreasonably withheld or
delayed).

 

16.           Severability.  If any provision hereof is unenforceable,
illegal or invalid for any reason whatsoever, such fact shall not affect the
remaining provisions hereof, except in the event a law or court decision,
whether on application for declaration, or preliminary injunction or upon final
judgment, declares one or more of the provisions of this Agreement that impose
restrictions on Employee unenforceable or invalid because of the geographic
scope or time duration of such restriction. 
In such event, Employer shall have the option:

 

(A)                              To
deem the invalidated restrictions retroactively modified to provide for the
maximum geographic scope and time duration that would make such provisions
enforceable and valid.

 

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Exercise of this option shall not affect Employer’s right to seek
damages or such additional relief as may be allowed by law in respect to any
breach by Employee of the enforceable provisions of this Agreement.

 

17.           Survival.  Notwithstanding anything in this Agreement to
the contrary, to the extent applicable, Sections 8 through and including Section 17
shall survive the termination of this Agreement.

 

18.           Notice.  For purposes of this Agreement, notices and
all other communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given (i) when personally delivered, (ii) the
business day following the day when deposited with a reputable and established
overnight express courier (charges prepaid), or (iii) five (5) days
following mailing by certified or registered mail, postage prepaid and return
receipt requested.  Unless another
address is specified, notices shall be sent to the addresses indicated below:

 

To Employer:

 

 

 

 

With a copy to:

 

 

 

 

To Employee:

 

 

 

 

 

or to such other address as either party
shall have furnished to the other in writing in accordance herewith.

 

19.           Tax
Withholding.  Notwithstanding any
other provision of this Agreement, Employer may withhold from any amounts
payable under this Agreement, or any other benefits received pursuant hereto,
such Federal, state, local and other taxes as shall be required to be withheld
under any applicable law or regulation.

 

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20.           Dispute
Resolution.

 

a.                                       Any dispute, claim or controversy
arising from or related in any way to this Agreement or the interpretation,
application, breach, termination or validity thereof, including any claim of
inducement of this Agreement by fraud, or arising from or related in any way to
Employee’s employment with Employer will be submitted first to mediation to be
exclusively paid for by Employer up to a maximum of $5,000 in mediation fees
and costs, with each party to bear its own attorney’s fees and costs.  If the parties wish to engage in mediation,
which mediator’s fee and costs exceeds $5,000, the parties shall, after payment
of the first $5,000 by Employer, thereafter equally share the mediator’s fee
and costs.  If the parties are not
successful in resolving disputes pursuant to mediation, the parties agree that
any claim or controversy arising from or in any way related to this Agreement
to the interpretation, application, breach, termination or validity thereof,
including any claim of inducement of this Agreement by fraud or arising from or
related in any way to Employee’s employment with Employer, will be submitted
for final resolution by private arbitration before a single arbitrator and in
accordance with the National Rules for the Resolution of Employment
Disputes and practices then in effect of, the American Arbitration Association,
or any successors thereto (“AAA”), except where those rules conflict with
these provisions, in which case these provisions control; provided, however,
that Employer shall have the right to seek in court equitable relief, including
a temporary restraining order, preliminary or permanent injunction or an
injunction in aid of arbitration, to enforce its rights set forth in Section 8.  The arbitration will be held in Las Vegas,
Nevada.

 

b.                                      Giving recognition to the
understanding of the parties hereto that they contemplate reasonable discovery,
including document demands and depositions, the arbitrator shall provide for
discovery in accordance with the Nevada Rules of Civil Procedure as
reasonably applicable to this private arbitration.

 

c.                                       To the extent possible, the
arbitration hearings and award will be maintained in confidence, except as may
be required by law or for the purpose of enforcement of an arbitral award.

 

d.                                      Each party shall bear its own
attorney’s fees, costs and expenses incurred in connection with arbitration
proceedings pursuant to this Agreement to arbitrate.  The fees, costs, and expenses of the
arbitrators and related expenses shall be paid by the Employer up to a maximum
of $5,000.  Any fees, costs and expenses
of the arbitrators shall thereafter be shared equally between Employer, on one
hand, and Employee on the other hand.

 

e.                                       Each party hereto waives, to the
fullest extent permitted by law, any claim to punitive or exemplary or liquidated
or multiplied damages from the other.

 

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21.                                 No Waiver of Breach
or Remedies.  No failure or delay on
the part of Employer or Employee in exercising any right, power or remedy
hereunder shall operate as a waiver thereof nor shall any single or partial
exercise of any such right, power or remedy preclude any other or further
exercise thereof or the exercise of any other right, power or remedy
hereunder.  The remedies herein provided
are cumulative and not exclusive of any remedies provided by law.

 

22.                                 Amendment or
Modification.  No amendment,
modification, termination or waiver of any provision of this Agreement shall be
effective unless the same shall be in writing and signed by a member of the
Board (other than Employee), and Employee, nor consent to any departure by the
Employee from any of the terms of this Agreement shall be effective unless the
same is signed by a member of the Board (other than Employee).  Any such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given.

 

23.                                 Governing Law;
Venue.  The laws of the State of
Nevada shall govern the validity, construction, and interpretation of this
Agreement, without regard to conflict of law principles.  Each party irrevocably submits to the
exclusive jurisdiction of the courts of the State of Nevada located in Clark
County in any action, suit or proceeding arising out of or relating to this
Agreement or any matters contemplated hereby, and agrees that any such action,
suit or proceeding shall be brought only in such court.

 

24.                                 Headings.  The headings in this Agreement have been
included solely for convenience of reference and shall not be considered in the
interpretation or construction of this Agreement.

 

25.                                 Assignment.  This Agreement is personal to Employee and
may not be assigned by Employee.

 

26.                                 Prior Agreements.  This Agreement shall supersede and replace
any and all other prior discussions and negotiations as well as any and all
agreements and arrangements that may have been entered into by and between
Employee or any predecessor thereof, on the one hand, and Employee, on the
other hand, prior to the Closing Date relating to the subject matter
hereof.  Employee acknowledges that all
rights under such prior agreements and arrangements shall be extinguished.

 

IN WITNESS WHEREOF,
Employer and Employee have entered into this Agreement in Las Vegas, Nevada, as
of the date first written above.

 

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  “EMPLOYEE”

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  BRUCE
  HIMELFARB

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Signature

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  “EMPLOYER”

  
	
   

  	
   

  
	
   

  	
  OpBiz,
  L.L.C.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Its:

  	
   

  	
   

  
	
   

  	
   

  	
  Title

  

 

13Exhibit 4.4

 

NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH
THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON
AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR
PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO,
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO
THE TRANSFEROR REASONABLY ACCEPTABLE TO THE COMPANY TO SUCH EFFECT, THE
SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.  THIS SECURITY MAY BE PLEDGED IN CONNECTION
WITH A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN
WITH A FINANCIAL INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN
RULE 501(a) UNDER THE SECURITIES ACT.

 

PREFERRED
STOCK PURCHASE WARRANT

 

To Purchase
        Shares of 0% Series CC Convertible
Preferred Stock of

 

North
American Technologies Group, Inc.

 

THIS PREFERRED STOCK PURCHASE WARRANT (the “Warrant”)
CERTIFIES that, for value received,                               
(the “Holder”), is entitled, upon the terms and subject to the limitations on
exercise and the conditions hereinafter set forth, at any time on or after the
date of issuance of this Warrant (the “Initial Exercise Date”) and on or prior
to the fifth anniversary of the Initial Exercise Date (the “Termination Date”)
but not thereafter, to subscribe for and purchase from North American
Technologies Group, Inc., a Delaware corporation (the “Company”), up to          
shares (the “Warrant Shares”) of 0% Series CC Convertible Preferred Stock, par
value $0.001 per share, of the Company (the “Preferred Stock”).  The purchase price of one share of Preferred
Stock (the “Exercise Price”) under this Warrant shall be $925.926 subject to
adjustment hereunder.

 

Title to Warrant. 
Prior to the Termination Date and subject to compliance with applicable
laws and Section 7 of this Warrant, this Warrant and all rights hereunder
are transferable, in whole or in part, at the office or agency of the Company
by the Holder in person or by duly authorized attorney, upon surrender of this
Warrant together with the Assignment Form annexed hereto properly
endorsed.  The transferee shall sign an
investment letter in form and substance reasonably satisfactory to the Company.

 

Authorization of Shares. 
The Company covenants that all Warrant Shares which may be issued upon
the exercise of the purchase rights represented by this Warrant will, upon
exercise of the purchase rights represented by this Warrant, be duly
authorized, validly issued, fully paid and nonassessable and free from all
taxes, liens and charges in respect of the issue thereof (other than taxes in
respect of any transfer occurring contemporaneously with such issue).

 

Exercise of Warrant.

 

Exercise
of the purchase rights represented by this Warrant may be made at any time or
times on or after the Initial Exercise Date and on or before the Termination
Date by delivery to the Company of a duly executed facsimile copy of the Notice
of Exercise Form annexed hereto (or such other office or agency of the Company
as it may designate by notice in writing to the registered Holder at the
address of such Holder appearing on the books of the Company); provided,
however, within 3 Trading Days (as defined below) of the date said Notice of
Exercise is delivered to the Company, the Holder shall have surrendered this
Warrant to the Company and the Company shall have received payment of the
aggregate Exercise Price of the shares thereby purchased by wire transfer or
cashier’s check drawn on a United States bank. 
Certificates for shares purchased hereunder shall be delivered to the
Holder within 3 Trading Days from the delivery to the Company of the Notice of
Exercise Form, surrender of this Warrant and payment of the aggregate Exercise Price as set forth above (“Warrant
Share Delivery Date”).  This Warrant shall be deemed to have been exercised on the later of the
date the Notice of Exercise

 

 

is
delivered to the Company by facsimile copy and the date the Exercise Price is
received by the Company.  The Warrant
Shares shall be deemed to have been issued, and Holder or any other person so
designated to be named therein shall be deemed to have become a holder of
record of such shares for all purposes, as of the date the Warrant has been
exercised by payment to the Company of the Exercise Price and all taxes
required to be paid by the Holder, if any, pursuant to Section 5 prior to
the issuance of such shares, have been paid. 
If the Company fails to deliver to the Holder a certificate or
certificates representing the Warrant Shares pursuant to this Section 3(a)
by the Warrant Share Delivery Date, then the Holder will have the right to
rescind such exercise.

 

If
this Warrant shall have been exercised in part, the Company shall, at the time
of delivery of the certificate or certificates representing Warrant Shares,
deliver to Holder a new Warrant evidencing the rights of Holder to purchase the
unpurchased Warrant Shares called for by this Warrant, which new Warrant shall
in all other respects be identical with this Warrant.

 

If
at any time after one year from the date of issuance of this Warrant there is
no effective registration statement registering the resale under the Securities
Act of the Company’s Common Stock, par value $0.001 per share (the “Common
Stock”), issuable upon conversion of the Warrant Shares by the Holder, during
any such periods this Warrant may also be exercised at such time by means of a “cashless
exercise” in which the Holder shall be entitled to receive a certificate for
the number of Warrant Shares equal to the quotient obtained by dividing [(A-B)
(X)] by (A), where:

 

(A)
= the variable weighted average price of the Common Stock on the Trading Day
immediately preceding the date of such election multiplied by the number of
shares of Common Stock issuable upon conversion of one Warrant Share;

 

(B)
= the Exercise Price of this Warrant, as adjusted; and

 

(X)
= the number of Warrant Shares issuable upon exercise of this Warrant in
accordance with the terms of this Warrant by means of a cash exercise rather
than a cashless exercise.

 

“Trading Day” means (i) a day
on which the Common Stock is traded on a Trading Market, or (ii) if the Common
Stock is not quoted on a Trading Market, a day on which the Common Stock is
quoted in the over-the-counter market as reported by the National Quotation
Bureau Incorporated (or any similar organization or agency succeeding its
functions of reporting prices).  “Trading
Market” means the following markets or exchanges on which the Common Stock is
listed or quoted for trading on the date in question:  the OTC Bulletin Board, the American Stock
Exchange, the New York Stock Exchange, the Nasdaq National Market or the Nasdaq
Small-Cap Market.

 

No Fractional Shares or Scrip.  No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of this Warrant.  As to any fraction of a share which Holder
would otherwise be entitled to purchase upon such exercise, the Company shall
pay a cash adjustment in respect of such final fraction in an amount equal to
such fraction multiplied by the Exercise Price.

 

Charges, Taxes and
Expenses.  Issuance of certificates for
Warrant Shares shall be made without charge to the Holder for any issue or
transfer tax or other incidental expense in respect of the issuance of such
certificate, all of which taxes and expenses shall be paid by the Company, and
such certificates shall be issued in the name of the Holder or in such name or
names as may be directed by the Holder; provided, however, that in the event
certificates for Warrant Shares are to be issued in a name other than the name
of the Holder, this Warrant when surrendered for exercise shall be accompanied
by the Assignment Form attached hereto duly executed by the Holder; and the
Company may require, as a condition thereto, the payment of a sum sufficient to
reimburse it for any transfer tax incidental thereto.

 

Closing of Books.  The Company will not close its stockholder
books or records in any manner which prevents the timely exercise of this
Warrant, pursuant to the terms hereof.

 

Transfer, Division and
Combination. Subject to compliance with any applicable securities laws and the
conditions set forth in Sections 1 and 7(e) hereof, this Warrant and all rights
hereunder are transferable, in whole or in part, upon surrender of this Warrant
at the principal office of the Company, together with a written assignment of
this Warrant substantially in the form attached hereto duly executed by the
Holder or its agent or attorney and funds sufficient to pay any transfer taxes
payable upon the making of such transfer. 
Upon such surrender and, if required, such payment, the Company shall
execute and deliver a new Warrant or Warrants in the name of the assignee or
assignees and in the denomination or denominations specified in such instrument
of assignment, and shall issue to the assignor a new Warrant evidencing the
portion of this Warrant not so assigned, and this Warrant shall promptly be
cancelled.  A Warrant, if properly assigned,
may be exercised

 

 

by a new holder for the
purchase of Warrant Shares without having a new Warrant issued.

 

This Warrant may be divided or
combined with other Warrants upon presentation hereof at the aforesaid office
of the Company, together with a written notice specifying the names and
denominations in which new Warrants are to be issued, signed by the Holder or
its agent or attorney.  Subject to
compliance with Section 7(a), as to any transfer which may be involved in
such division or combination, the Company shall execute and deliver a new
Warrant or Warrants in exchange for the Warrant or Warrants to be divided or
combined in accordance with such notice.

 

The Company shall prepare,
issue and deliver at its own expense (other than transfer taxes) the new
Warrant or Warrants under this Section 7.

 

The Company agrees to maintain,
at its aforesaid office, books for the registration and the registration of
transfer of the Warrants.

 

If, at the time of the
surrender of this Warrant in connection with any transfer of this Warrant, the
transfer of this Warrant shall not be registered pursuant to an effective
registration statement under the Securities Act and under applicable state
securities or blue sky laws, the Company may require, as a condition of
allowing such transfer (i) that the Holder or transferee of this Warrant, as
the case may be, furnish to the Company a written opinion of counsel (which
opinion shall be in form, substance and scope customary for opinions of counsel
in comparable transactions) to the effect that such transfer may be made
without registration under the Securities Act and under applicable state
securities or blue sky laws, (ii) that the holder or transferee execute and
deliver to the Company an investment letter in form and substance acceptable to
the Company and (iii) that the transferee be an “accredited investor” as
defined in Rule 501 (a)(l), (a)(2), (a)(3), (a)(7), or (a)(8) promulgated under
the Securities Act or a qualified institutional buyer as defined in Rule l44A(a)
under the Securities Act.

 

No Rights as Shareholder until
Exercise.  This Warrant does not entitle
the Holder to any voting rights or other rights as a shareholder of the Company
prior to the exercise hereof.  Upon the
surrender of this Warrant and the payment of the aggregate Exercise Price (or
by means of a cashless exercise), the Warrant Shares so purchased shall be and
be deemed to be issued to such Holder as the record owner of such shares as of
the close of business on the later of the date of such surrender or payment.

 

Loss, Theft, Destruction or
Mutilation of Warrant.  The Company
covenants that upon receipt by the Company of evidence reasonably satisfactory
to it of the loss, theft, destruction or mutilation of this Warrant or any
stock certificate relating to the Warrant Shares, and in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to it (which, in
the case of the Warrant, shall not include the posting of any bond), and upon
surrender and cancellation of such Warrant or stock certificate, if mutilated,
the Company will make and deliver a new Warrant or stock certificate of like
tenor and dated as of such cancellation, in lieu of such Warrant or stock
certificate.

 

Saturdays, Sundays, Holidays,
etc.  If the last or appointed day for
the taking of any action or the expiration of any right required or granted
herein shall be a Saturday, Sunday or a legal holiday, then such action may be
taken or such right may be exercised on the next succeeding day not a Saturday,
Sunday or legal holiday.

 

Adjustments of Exercise Price
and Number of Warrant Shares. The number and kind of securities purchasable
upon the exercise of this Warrant and the Exercise Price shall be subject to
adjustment from time to time upon the happening of any of the following. In
case the Company shall (i) pay a dividend in shares of Preferred Stock or make
a distribution in shares of Preferred Stock to holders of its outstanding
Preferred Stock, (ii) subdivide its outstanding shares of Preferred Stock into
a greater number of shares, (iii) combine its outstanding shares of Preferred
Stock into a smaller number of shares of Preferred Stock, or (iv) issue any
shares of its capital stock in a reclassification of the Preferred Stock, then
the number of Warrant Shares purchasable upon exercise of this Warrant
immediately prior thereto shall be adjusted so that the Holder shall be
entitled to receive the kind and number of Warrant Shares or other securities
of the Company which it would have owned or have been entitled to receive had
such Warrant been exercised in advance thereof. 
Upon each such adjustment of the kind and number of Warrant Shares or
other securities of the Company which are purchasable hereunder, the Holder
shall thereafter be entitled to purchase the number of Warrant Shares or other
securities resulting from such adjustment at an Exercise Price per Warrant
Share or other security obtained
by multiplying the Exercise Price in effect immediately prior to such
adjustment by the number of Warrant Shares purchasable pursuant hereto
immediately prior to such adjustment and dividing by the number of Warrant
Shares or other securities of the Company that are purchasable pursuant hereto
immediately after such adjustment.  An
adjustment made pursuant to this paragraph shall become effective immediately
after the effective date of such event retroactive to the record date, if any,
for such event.

 

 

Reorganization,
Reclassification, Merger, Consolidation or Disposition of Assets.  In case the Company shall reorganize its
capital, reclassify its capital stock, consolidate or merge with or into
another corporation (where the Company is not the surviving corporation or
where there is a change in or distribution with respect to the Preferred Stock
of the Company), or sell, transfer or otherwise dispose of its property, assets
or business to another corporation and, pursuant to the terms of such
reorganization, reclassification, merger, consolidation or disposition of
assets, shares of Preferred Stock of the successor or acquiring corporation, or
any cash, shares of stock or other securities or property of any nature
whatsoever (including warrants or other subscription or purchase rights) in
addition to or in lieu of Preferred Stock of the successor or acquiring
corporation (“Other Property”), are to be received by or distributed to the
holders of Preferred Stock of the Company, then the Holder shall have the right
thereafter to receive, at the option of the Holder, upon exercise of this
Warrant, the number of shares of Preferred Stock of the successor or acquiring corporation or of the Company, if
it is the surviving corporation, and Other Property receivable upon or as a
result of such reorganization, reclassification, merger, consolidation or
disposition of assets by a Holder of the number of shares of Preferred Stock
for which this Warrant is exercisable immediately prior to such event.  In case of any such reorganization,
reclassification, merger, consolidation or disposition of assets, the successor
or acquiring corporation (if other than the Company) shall expressly assume the
due and punctual observance and performance of each and every covenant and
condition of this Warrant to be performed and observed by the Company and all
the obligations and liabilities hereunder, subject to such modifications as may
be deemed appropriate (as determined in good faith by resolution of the Board
of Directors of the Company) in order to provide for adjustments of Warrant
Shares for which this Warrant is exercisable which shall be as nearly
equivalent as practicable to the adjustments provided for in this Section 12.  The foregoing provisions of this Section 12
shall similarly apply to successive reorganizations, reclassifications,
mergers, consolidations or disposition of assets.

 

Voluntary Adjustment by the
Company.  The Company may at any time
during the term of this Warrant reduce the then current Exercise Price to any
amount and for any period of time deemed appropriate by the Board of Directors
of the Company.

 

Notice of Adjustment.  Whenever the number of Warrant Shares or
number or kind of securities or other property purchasable upon the exercise of
this Warrant or the Exercise Price is adjusted, as herein provided, the Company
shall give notice thereof to the Holder, which notice shall state the number of
Warrant Shares (and other securities or property) purchasable upon the exercise
of this Warrant and the Exercise
Price of such Warrant Shares (and other securities or property) after such
adjustment, setting forth a brief statement of the facts requiring such
adjustment and setting forth the
computation by which such adjustment
was made.

 

Notice of Corporate
Action.  If at any time:

 

the Company shall take a record
of the holders of its Preferred Stock for the purpose of entitling them to
receive a dividend or other distribution, or any right to subscribe for or
purchase any evidences of its indebtedness, any shares of stock of any class or
any other securities or property, or to receive any other right, or

 

there shall be any capital reorganization of
the Company, any reclassification or recapitalization of the capital stock of
the Company or any consolidation or merger of the Company with, or any sale,
transfer or other disposition of all
or substantially all the property, assets or business of the Company to, another corporation or,there shall be a voluntary or involuntary dissolution, liquidation or winding up of the
Company;

 

then, in any one or more of
such cases, the Company shall give to Holder (i) at least 20 days’ prior
written notice of the date on which a record date shall be selected for such
dividend, distribution or right or for determining rights to vote in respect of
any such reorganization, reclassification, merger, consolidation, sale,
transfer, disposition, liquidation or winding up, and (ii) in the case of any
such reorganization, reclassification, merger, consolidation, sale, transfer,
disposition, dissolution, liquidation or winding up, at least 20 days’ prior
written notice of the date when the same shall take place.  Such notice in accordance with the foregoing
clause also shall specify (i) the date on which any such record is to be taken
for the purpose of such dividend, distribution or right, the date on which the
holders of Preferred Stock shall be entitled to any such dividend, distribution
or right, and the amount and character thereof, and (ii) the date on which any
such reorganization, reclassification, merger, consolidation, sale, transfer,
disposition, dissolution, liquidation or winding up is to take place and the
time, if any such time is to be fixed, as of which the holders of Preferred
Stock shall be entitled to exchange their Warrant Shares for securities or
other property deliverable upon such disposition, dissolution, liquidation or winding
up.  Each such written notice shall be
sufficiently given if addressed to Holder at the last address of Holder
appearing on the books of the Company and delivered in accordance with Section 17(d).

 

Authorized Shares. 
The Company covenants that during the period the Warrant is outstanding,
it will reserve from its

 

 

authorized and unissued Preferred Stock a sufficient number
of shares to provide for the issuance of the Warrant Shares upon the exercise
of any purchase rights under this Warrant. 
The Company further covenants that its issuance of this Warrant shall
constitute full authority to its officers who are charged with the duty of
executing stock certificates to execute and issue the necessary certificates
for the Warrant Shares upon the exercise of the purchase rights under this
Warrant.  The Company will take all such
reasonable action as may be necessary to assure that such Warrant Shares may be
issued as provided herein without violation of any applicable law or
regulation, or of any requirements of the Principal Market upon which the
Preferred Stock may be listed.

 

Except and to the
extent as waived or consented to by the Holder, the Company shall not by any
action, including, without limitation, amending its certificate of
incorporation or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms of
this Warrant, but will at all times in good faith assist in the carrying out of
all such terms and in the taking of all such actions as may be necessary or
appropriate to protect the rights of Holder as set forth in this Warrant
against impairment.  Without limiting the
generality of the foregoing, the Company will (a) not increase the par value of
any Warrant Shares above the amount payable therefor upon such exercise
immediately prior to such increase in par value, (b) take all such action as
may be necessary or appropriate in order that the Company may validly and
legally issue fully paid and nonassessable Warrant Shares upon the exercise of
this Warrant, and (c) use commercially reasonable efforts to obtain all such
authorizations, exemptions or consents from any public regulatory body having
jurisdiction thereof as may be necessary to enable the Company to perform its
obligations under this Warrant.

 

Before taking any
action which would result in an adjustment in the number of Warrant Shares for
which this Warrant is exercisable or in the Exercise Price, the Company shall
obtain all such authorizations or exemptions thereof, or consents thereto, as
may be necessary from any public regulatory body or bodies having jurisdiction
thereof.

 

Miscellaneous.

 

Governing Law;
Jurisdiction.  This Warrant and the
rights and obligations related hereto shall be interpreted and enforced in
accordance with and governed by the laws of the State of Texas applicable to
agreements made and to be performed wholly within that jurisdiction.  In addition, each of the Holder and the
Company (i) irrevocably consents to submit itself to the exclusive jurisdiction
of any Federal court located in the Southern District of Texas or any state
court located in the State of Texas in the event any dispute arises out of this
Agreement, (ii) agrees that it will not bring any action relating to this
Warrant in any court other than any Federal court sitting in the Southern
District of Texas or any state court sitting in the State of Texas and (iii)
agrees that it will not attempt to deny or defeat such personal jurisdiction by
motion or other request for leave from any such court or to assert any rights
it may have to transfer or change the venue of any action relating to this
Warrant brought in accordance with this Section 17.

 

Restrictions.  The Holder acknowledges that the Warrant
Shares  acquired upon the exercise of
this Warrant, if not registered, will have 
restrictions upon resale imposed by state and federal securities laws.

 

Nonwaiver
and Expenses.  No course of dealing or any
delay or failure to exercise any right hereunder on the part of Holder shall
operate as a waiver of such right or otherwise prejudice Holder’s rights,
powers or remedies, notwithstanding all rights hereunder terminate on the
Termination Date.  If the Company
willfully and knowingly fails to comply with any provision of this Warrant,
which results in any material damages to the Holder, the Company shall pay to
Holder such amounts as shall be sufficient to cover any costs and expenses
including, but not limited to, reasonable attorneys’ fees, including those of
appellate proceedings, incurred by Holder in collecting any amounts due
pursuant hereto or in otherwise enforcing any of its rights, powers or remedies
hereunder.

 

Notices.  Any notice, request or other document
required or permitted to be given or delivered to the Holder by the Company
shall be delivered personally, telecopied or sent by certified or registered
mail, postage prepaid, as follows:

 

If
to the Company:

 

NORTH AMERICAN TECHNOLOGIES GROUP, INC.

14315
West Hardy Road

Houston,
TX 77060

Attn:
Henry W. Sullivan

TEL: (281) 827-0029

FAX: (281) 847-1791

 

 

With
a copy to:

Boyer
& Ketchand

9
Greenway Plaza, Suite 3100

Houston,
Texas 77046

Attn:
Rita Leader

TEL: (713) 871-2025

FAX:                   (713) 871-2024

 

If
to Holder:

 

With
a copy to:

 

or such other address or
fax number as such party may hereafter specify for the purpose by notice to the
other parties hereto.  All such notices,
requests and other communications shall be deemed received on the date delivered
personally, telecopied or, if mailed, five business days after the date of
mailing if received prior to 5 p.m. in the place of receipt and such day is a
business day in the place of receipt. 
Otherwise, any such notice, request or communication shall be deemed not
to have been received until the next succeeding business day in the place of
receipt.

 

Limitation
of Liability.  No provision hereof, in
the absence of any affirmative action by Holder to exercise this Warrant or
purchase Warrant Shares, and no enumeration herein of the rights or privileges
of Holder, shall give rise to any liability of Holder for the purchase price of
any Preferred Stock or as a stockholder of the Company, whether such liability
is asserted by the Company or by creditors of the Company.

 

Remedies.  Holder, in addition to being entitled to
exercise all rights granted by law, including recovery of damages, will be
entitled to specific performance of its rights under this Warrant.  The Company agrees that monetary damages
would not be adequate compensation for any loss incurred by reason of a breach
by it of the provisions of this Warrant and hereby agrees to waive the defense
in any action for specific performance that a remedy at law would be adequate.

 

Successors
and Assigns.  Subject to applicable
securities laws, this Warrant and the rights and obligations evidenced hereby
shall inure to the benefit of and be binding upon the successors of the Company
and the successors and permitted assigns of Holder.  The provisions of this Warrant are intended
to be for the benefit of all Holders from time to time of this Warrant and
shall be enforceable by any such Holder or holder of Warrant Shares.

 

Amendment.  This Warrant may be modified or amended or
the provisions hereof waived with the written consent of the Company and the
Holder.

 

Severability.  Wherever possible, each provision of this
Warrant shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Warrant shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provisions or the remaining provisions of this Warrant.

 

Headings.  The headings used in this Warrant are for the
convenience of reference only and shall not, for any purpose, be deemed a part
of this Warrant.

 

* * * * * * *

 

IN WITNESS WHEREOF, the Company has caused this
Warrant to be executed by its officer thereunto duly authorized.

 

Dated:  February 22,
2005

 

NORTH AMERICAN TECHNOLOGIES GROUP, INC.

 

	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Henry W. Sullivan,

  	
   

  
	
   

  	
   

  	
  President and Chief
  Executive Officer

  	
   

  

 

 

NOTICE
OF EXERCISE

 

To:  North
American Technologies Group, Inc.

 

(1)  The undersigned hereby elects to purchase               
Warrant Shares of the Company pursuant to the terms of the attached Warrant
(only if exercised in full), and tenders herewith payment of the exercise price
in full, together with all applicable transfer taxes, if any.

 

(2)  Payment shall take the form of  in lawful money of the United States.

 

 (3) 
Please issue a certificate or certificates representing said Warrant
Shares in the name of the undersigned or in such other name as is specified
below:

 

 

The Warrant Shares shall be delivered to the following:

 

 

(4)  Accredited Investor.  The undersigned is an “accredited investor”
as defined in Regulation D under the Securities Act of 1933, as amended.

 

	
   

  	
  [PURCHASER]

  
	
   

  	
   

  
	
   

  	
  By: 

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  Dated:

  	
   

  	
   

  
						

 

 

ASSIGNMENT
FORM

 

(To
assign the foregoing warrant, execute

this
form and supply required information.

Do
not use this form to exercise the warrant.)

 

FOR
VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are
hereby assigned to

 

	
   

  	
   whose address is

  
	
   

  
	
   

  	
  .

  
	
   

  	
   

  
	
   

  	
   

  
			

 

	
   

  	
  Dated:

  	
   

  
	
   

  	
  Holder’
  s Signature:

  	
   

  	
   

  
	
   

  	
  Holder’s
  Address:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
					

 

 

	
  Signature
  Guaranteed:

  	
   

  	
   

  

 

NOTE:  The signature to this Assignment Form must
correspond with the name as it appears on the face of the Warrant, without
alteration or enlargement or any change whatsoever, and must be guaranteed by a
bank or trust company.  Officers of
corporations and those acting in a fiduciary or other representative capacity
should file proper evidence of authority to assign the foregoing Warrant.

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