Document:

EXHIBIT 4.3

THIS NOTE AND THE COMMON SHARES  ISSUABLE UPON  CONVERSION OF THIS NOTE HAVE NOT
BEEN  REGISTERED  UNDER THE  SECURITIES  ACT OF 1933,  AS AMENDED,  OR ANY STATE
SECURITIES  LAWS.  THIS NOTE AND THE COMMON SHARES  ISSUABLE UPON  CONVERSION OF
THIS NOTE MAY NOT BE SOLD,  OFFERED  FOR SALE,  PLEDGED OR  HYPOTHECATED  IN THE
ABSENCE OF AN  EFFECTIVE  REGISTRATION  STATEMENT AS TO THIS NOTE UNDER SAID ACT
AND ANY APPLICABLE  STATE  SECURITIES  LAWS OR AN OPINION OF COUNSEL  REASONABLY
SATISFACTORY TO AMERICAN  TECHNOLOGIES GROUP, INC. THAT SUCH REGISTRATION IS NOT
REQUIRED.

                   SECURED CONVERTIBLE MINIMUM BORROWING NOTE

      FOR VALUE RECEIVED,  each of AMERICAN  TECHNOLOGIES  GROUP, INC., a Nevada
corporation (the "Parent"), and the other companies listed on Exhibit A attached
hereto (such other  companies  together  with the Parent,  each a "Company"  and
collectively, the "Companies"), jointly and severally, promises to pay to LAURUS
MASTER FUND, LTD., c/o M&C Corporate  Services Limited,  P.O. Box 309 GT, Ugland
House,  South Church Street,  George Town,  Grand Cayman,  Cayman Islands,  Fax:
345-949-8080 (the "Holder") or its registered assigns or successors in interest,
the sum of Three Million Dollars ($3,000,000),  or, if different,  the aggregate
principal amount of all Loans (as defined in the Security  Agreement referred to
below),  together with any accrued and unpaid interest hereon, on September ___,
2008 (the "Maturity Date") if not sooner paid.

      This Secured  Convertible Minimum Borrowing Note (this "Note") is intended
to be a registered  obligation within the meaning of Treasury Regulation Section
1.871-14(c)(1)(i)  and each Company (or its agent) shall register this Note (and
thereafter shall maintain such registration) as to both principal and any stated
interest. Notwithstanding any document, instrument or agreement relating to this
Note to the  contrary,  transfer  of this Note (or the right to any  payments of
principal or stated  interest  thereunder) may only be effected by (i) surrender
of this Note and either the  reissuance  by the  Company of this Note to the new
holder or the issuance by the Company of a new instrument to the new holder,  or
(ii)  transfer  through a book entry  system  maintained  by the Company (or its
agent), within the meaning of Treasury Regulation Section 1.871-14(c)(1)(i)(B).

      Capitalized  terms used herein without  definition shall have the meanings
ascribed to such terms in that certain  Security  Agreement dated as of the date
hereof by and among the  Companies and the Holder (as amended,  modified  and/or
supplemented from time to time, the "Security Agreement").

      The following terms shall apply to this Note:

<PAGE>

                                    ARTICLE I

                                  CONTRACT RATE

      1.1 Contract Rate.  Subject to Sections 4.2 and 5.10,  interest payable on
the outstanding  principal  amount of this Note (the  "Principal  Amount") shall
accrue at a rate per  annum  equal to the  "prime  rate"  published  in The Wall
Street Journal from time to time (the "Prime Rate"),  plus two percent (2%) (the
"Contract Rate").  The Contract Rate shall be increased or decreased as the case
may be for each  increase or  decrease  in the Prime Rate in an amount  equal to
such  increase or decrease in the Prime Rate;  each change to be effective as of
the day of the change in the Prime Rate.  Subject to Section  1.2,  the Contract
Rate shall not at any time be less than  eight and  one-quarter  of one  percent
(8.25%).  Interest  shall be (i)  calculated on the basis of a 360 day year, and
(ii) payable monthly,  in arrears,  commencing on September 1, 2005 on the first
business day of each consecutive calendar month thereafter through and including
the  Maturity  Date  and  on the  Maturity  Date,  whether  by  acceleration  or
otherwise.

      1.2 Contract Rate  Adjustments  and  Payments.  The Contract Rate shall be
calculated on the last business day of each calendar month hereafter (other than
for  increases  or  decreases  in the Prime Rate which shall be  calculated  and
become effective in accordance with the terms of Section 1.1) until the Maturity
Date (each a  "Determination  Date") and shall be subject to  adjustment  as set
forth herein.  If (i) the Parent shall have  registered the shares of the Common
Stock underlying the conversion of each Minimum Borrowing Note, each Warrant and
each Option on a registration statement declared effective by the Securities and
Exchange  Commission (the "SEC"), and (ii) the market price (the "Market Price")
of the Common Stock as reported by Bloomberg,  L.P. on the Principal  Market for
the five (5) trading days immediately preceding a Determination Date exceeds the
then applicable Fixed Conversion  Price by at least  twenty-five  percent (25%),
the Contract  Rate for the  succeeding  calendar  month shall  automatically  be
reduced by 200 basis  points  (200 b.p.) (2%) for each  incremental  twenty-five
percent  (25%)  increase in the Market  Price of the Common Stock above the then
applicable Fixed Conversion Price.  Notwithstanding  the foregoing (and anything
to the contrary  contained  herein),  in no event shall the Contract Rate at any
time be less than zero percent (0%).

                                   ARTICLE II

                         LOANS; PAYMENTS UNDER THIS NOTE

      2.1 Loans.  All  Revolving  Loans  evidenced by this Note shall be made in
accordance with the terms and provisions of the Security Agreement.

      2.2 No Effective  Registration.  Notwithstanding  anything to the contrary
herein,  the Holder  shall not be required to accept  shares of Common  Stock as
payment  following  a  conversion  by the  Holder  if  there  fails  to exist an
effective current Registration  Statement (as defined in the Registration Rights
Agreement)  covering the shares of Common Stock to be issued,  or if an Event of
Default hereunder exists and is continuing, unless such requirement is otherwise
waived in writing by the Holder in whole or in part at the Holder's option.

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      2.3 Optional  Redemption in Cash.  The  Companies  will have the option of
prepaying  this Note  ("Optional  Redemption")  by paying to the Holder a sum of
money equal to one hundred twenty percent (120%) of the principal amount of this
Note  together  with accrued but unpaid  interest  thereon and any and all other
sums due, accrued or payable to the Holder arising under this Note, the Security
Agreement,   or  any  other  Ancillary   Agreement  (the  "Redemption   Amount")
outstanding on the Redemption  Payment Date (as defined below). The Parent shall
deliver  to  the  Holder  a  written  notice  of  redemption   (the  "Notice  of
Redemption")  specifying the date for such Optional  Redemption (the "Redemption
Payment Date"),  which date shall be seven (7) days after the date of the Notice
of Redemption (the  "Redemption  Period").  A Notice of Redemption  shall not be
effective  with  respect  to any  portion  of this Note for which the Holder has
previously  delivered a Notice of Conversion (defined below) pursuant to Section
3.1, or for conversions elected to be made by the Holder pursuant to Section 3.1
during the Redemption  Period.  The Redemption  Amount shall be determined as if
such Holder's conversion  elections had been completed  immediately prior to the
date of the Notice of Redemption. On the Redemption Payment Date, the Redemption
Amount (plus any  additional  interest and fees accruing on the Notes during the
Redemption  Period) must be irrevocably  paid in full in  immediately  available
funds to the  Holder.  In the event  the  Companies  fail to pay the  Redemption
Amount on the Redemption Payment Date, then such Redemption Notice shall be null
and void.

                                  ARTICLE III

                  CONVERSION RIGHTS AND FIXED CONVERSION PRICE

      3.1  Optional  Conversion.  Subject to the terms of this  Article III, the
Holder  shall  have the  right,  but not the  obligation,  at any time until the
Maturity  Date,  or during an Event of Default (as defined in Article IV),  and,
subject to the  limitations  set forth in Section 3.2 hereof,  to convert all or
any portion of the outstanding Principal Amount and/or accrued interest and fees
due and payable into fully paid and nonassessable  shares of the Common Stock at
the Fixed Conversion Price. For purposes hereof,  subject to Section 3.6 hereof,
the initial "Fixed Conversion Price" means $0.00111.  The shares of Common Stock
to be issued upon such  conversion  are herein  referred  to as the  "Conversion
Shares."

      3.2 Conversion  Limitation.  Notwithstanding  anything contained herein to
the contrary,  the Holder shall not be entitled to convert pursuant to the terms
of this Note an amount that would be convertible  into that number of Conversion
Shares which would exceed the  difference  between (i) 4.99% of the  outstanding
shares  of  Common  Stock  and  (ii)  the  number  of  shares  of  Common  Stock
beneficially  owned by the Holder.  For  purposes of the  immediately  preceding
sentence,  beneficial  ownership  shall be determined in accordance with Section
13(d) of the Exchange Act and Regulation 13d-3 thereunder. The Conversion Shares
limitation  described  in this Section 3.2 shall  automatically  become null and
void  following  notice  to any  Company  upon the  occurrence  and  during  the
continuance of an Event of Default,  or upon 75 days prior notice to the Parent.
Notwithstanding  anything  contained  herein to the contrary,  the provisions of
this  Section  3.2 are  irrevocable  and may not be waived by the  Holder or any
Company.

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<PAGE>

      3.3 Mechanics of Holder's Conversion.  In the event that the Holder elects
to convert  this Note into  Common  Stock of the Parent,  the Holder  shall give
notice of such  election by  delivering  an  executed  and  completed  notice of
conversion  in  substantially  the  form  of  Exhibit  A  hereto  (appropriately
completed) ("Notice of Conversion") to such Notice of Conversion shall provide a
breakdown in reasonable  detail of the Principal  Amount,  accrued  interest and
fees that are being converted.  On each Conversion Date (as hereinafter defined)
and in  accordance  with its Notice of  Conversion,  the  Holder  shall make the
appropriate  reduction to the  Principal  Amount,  accrued  interest and fees as
entered in its records and shall provide  written  notice  thereof to the Parent
within two (2) Business  Days after the  Conversion  Date.  Each date on which a
Notice of Conversion is delivered or telecopied to the Parent in accordance with
the provisions hereof shall be deemed a Conversion Date (the "Conversion Date").
Pursuant  to the terms of the  Notice  of  Conversion,  the  Parent  will  issue
instructions  to the transfer agent  accompanied by an opinion of counsel within
one (1)  Business Day of the date of the delivery to the Parent of the Notice of
Conversion  and shall  cause the  transfer  agent to transmit  the  certificates
representing the Conversion Shares to the Holder by crediting the account of the
Holder's designated broker with the Depository Trust Corporation ("DTC") through
its  Deposit  Withdrawal  Agent  Commission  ("DWAC")  system  within  three (3)
Business  Days after  receipt by the  Parent of the  Notice of  Conversion  (the
"Delivery Date"). In the case of the exercise of the conversion rights set forth
herein the conversion  privilege  shall be deemed to have been exercised and the
Conversion  Shares  issuable upon such  conversion  shall be deemed to have been
issued upon the date of receipt by the Parent of the Notice of  Conversion.  The
Holder shall be treated for all purposes as the record holder of the  Conversion
Shares,  unless the Holder provides the applicable Company written  instructions
to the contrary.

      3.4 Late Payments.  Each Company  understands that a delay in the delivery
of the  Conversion  Shares in the form required  pursuant to this Article beyond
the Delivery Date could result in economic loss to the Holder.  As  compensation
to the Holder for such loss, in addition to all other rights and remedies  which
the Holder may have under this Note, applicable law or otherwise,  the Companies
shall,  jointly  and  severally,  pay late  payments  to the Holder for any late
issuance of Conversion  Shares in the form required pursuant to this Article III
upon conversion of this Note, in the amount equal to $500 per Business Day after
the Delivery Date. The Companies shall, jointly and severally, make any payments
incurred under this Section in immediately available funds upon demand.

      3.5  Conversion  Mechanics.  The  number of  shares of Common  Stock to be
issued upon each  conversion  of this Note shall be  determined by dividing that
portion of the principal  and interest and fees to be converted,  if any, by the
then applicable Fixed Conversion Price.

      3.6 Adjustment Provisions.  The Fixed Conversion Price and number and kind
of shares or other securities to be issued upon conversion  determined  pursuant
to  Section  3.1  shall be  subject  to  adjustment  from  time to time upon the
occurrence  of  certain  events  during the period  that this  conversion  right
remains outstanding, as follows:

            (a)   Reclassification.   If  the  Parent  at  any  time  shall,  by
reclassification  or  otherwise,  change  the  Common  Stock  into the same or a
different  number of  securities  of any class or classes,  this Note, as to the
unpaid Principal Amount and accrued interest thereon, shall thereafter be deemed
to evidence the right to purchase an adjusted number of such securities and kind
of  securities  as would have been  issuable  as the result of such  change with
respect to the Common Stock (i) immediately  prior to or (ii) immediately  after
such reclassification or other change at the sole election of the Holder.

            (b) Stock  Splits,  Combinations  and  Dividends.  If the  shares of
Common  Stock are  subdivided  or combined  into a greater or smaller  number of
shares of Common  Stock,  or if a dividend  is paid on the  Common  Stock or any
preferred  stock  issued by the  Parent in  shares  of Common  Stock,  the Fixed
Conversion  Price shall be  proportionately  reduced in case of  subdivision  of
shares or stock dividend or proportionately increased in the case of combination
of shares,  in each such case by the ratio  which the total  number of shares of
Common Stock outstanding  immediately after such event bears to the total number
of shares of Common Stock outstanding immediately prior to such event.

                                       4
<PAGE>

            (c) Share Issuances.  Subject to the provisions of this Section 3.6,
if the Parent shall at any time prior to the  conversion or repayment in full of
the  Principal  Amount  issue  any  shares  of its  Common  Stock or  securities
convertible  into  Common  Stock to a person  other than the Holder  (except (i)
pursuant to Sections 3.6(a) or (b) above; (ii) pursuant to options, warrants, or
other obligations to issue shares outstanding on the date hereof as disclosed to
the Holder in writing; or (iii) pursuant to options that may be issued under any
employee  incentive  stock option and/or any qualified stock option plan adopted
by the Parent) for a  consideration  per share (the "Offer Price") less than the
Fixed  Conversion  Price in effect at the time of such issuance,  then the Fixed
Conversion  Price  shall be  immediately  reset to such lower Offer  Price.  For
purposes hereof,  the issuance of any security of the Parent convertible into or
exercisable or  exchangeable  for its Common Stock shall result in an adjustment
to the Fixed Conversion Price upon the issuance of such securities.

            (d)  Computation of  Consideration.  For purposes of any computation
respecting   consideration  received  pursuant  to  Section  3.6(c)  above,  the
following shall apply:

                  (i) in the case of the  issuance  of  shares  of the  Parent's
            Common Stock for cash, the consideration shall be the amount of such
            cash,  provided  that in no case shall any deduction be made for any
            commissions,  discounts or other expenses incurred by the Parent for
            any underwriting of the issue or otherwise in connection therewith;

                  (ii) in the case of the  issuance  of shares  of the  Parent's
            Common  Stock for a  consideration  in whole or in part  other  than
            cash,  the  consideration  other than cash shall be deemed to be the
            fair market value  thereof as  determined in good faith by the Board
            of Directors of the Parent (irrespective of the accounting treatment
            thereof); and

                  (iii)  upon any such  exercise,  the  aggregate  consideration
            received for such securities shall be deemed to be the consideration
            received by the Parent for the issuance of such  securities plus the
            additional  minimum  consideration,  if any,  to be  received by the
            Parent upon the conversion or exchange thereof (the consideration in
            each  case to be  determined  in the  same  manner  as  provided  in
            subsections (i) and (ii) of this Section 2.5).

      3.7 Reservation of Shares.  During the period the conversion right exists,
the  Parent  will  reserve  from its  authorized  and  unissued  Common  Stock a
sufficient  number of shares to provide for the  issuance of  Conversion  Shares
upon the full conversion of this Note, the Warrants and the Options.  The Parent
represents  that upon issuance,  the Conversion  Shares will be duly and validly
issued,  fully paid and  non-assessable.  The Parent agrees that its issuance of
this Note shall constitute full authority to its officers,  agents, and transfer
agents who are charged with the duty of executing and issuing stock certificates
to execute and issue the necessary  certificates for the Conversion  Shares upon
the conversion of this Note.

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<PAGE>

      3.8 Registration  Rights. The Holder has been granted  registration rights
with  respect to the  Conversion  Shares as set forth in a  Registration  Rights
Agreement.

      3.9 Issuance of New Note. Upon any partial  conversion of this Note, a new
Note  containing the same date and provisions of this Note shall, at the request
of the  Holder,  be issued by the  Companies  to the  Holder  for the  principal
balance of this Note and interest  which shall not have been  converted or paid.
Subject to the  provisions of Article IV of this Note,  the Companies  shall not
pay any costs, fees or any other  consideration to the Holder for the production
and issuance of a new Note.

                                   ARTICLE IV

                EVENTS OF DEFAULT AND DEFAULT RELATED PROVISIONS

      4.1 Events of Default.  The  occurrence  of an Event of Default  under the
Security  Agreement  shall  constitute an event of default  ("Event of Default")
hereunder.

      4.2 Default Interest.  Following the occurrence and during the continuance
of an  Event of  Default,  the  Companies  shall,  jointly  and  severally,  pay
additional  interest  on the  outstanding  principal  balance of this Note in an
amount  equal to the  Contract  Rate plus ten percent  (10%) per annum,  and all
outstanding  Obligations,  including unpaid  interest,  shall continue to accrue
interest at such additional interest rate from the date of such Event of Default
until the date such Event of Default is cured or waived.

      4.3 Default  Payment.  Following the occurrence and during the continuance
of an Event of Default, the Holder, at its option, may elect, in addition to all
rights and remedies of the Holder under the Security Agreement and the Ancillary
Agreements and all obligations of each Company under the Security  Agreement and
the Ancillary Agreements,  to require the Companies,  jointly and severally,  to
make a Default Payment ("Default Payment"). The Default Payment shall be 130% of
the outstanding  principal amount of the Note, plus accrued but unpaid interest,
all other fees then remaining unpaid,  and all other amounts payable  hereunder.
The Default  Payment  shall be applied  first to any fees due and payable to the
Holder  pursuant to the Notes and/or the Ancillary  Agreements,  then to accrued
and unpaid  interest due on the Notes,  the Security  Agreement  and then to the
outstanding principal balance of the Notes. The Default Payment shall be due and
payable  immediately  on the date  that the  Holder  has  exercised  its  rights
pursuant to this Section 4.3.

                                   ARTICLE V

                                  MISCELLANEOUS

      5.1 Conversion Privileges.  The conversion privileges set forth in Article
III shall remain in full force and effect immediately from the date hereof until
the date this Note is indefeasibly paid in full and irrevocably terminated.

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

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<PAGE>

      5.3 Failure or Indulgence  Not Waiver.  No failure or delay on the part of
the Holder  hereof in the exercise of any power,  right or  privilege  hereunder
shall operate as a waiver thereof,  nor shall any single or partial  exercise of
any such power, right or privilege preclude other or further exercise thereof or
of any other  right,  power or  privilege.  All  rights  and  remedies  existing
hereunder  are  cumulative  to, and not  exclusive  of,  any rights or  remedies
otherwise available.

      5.4 Notices.  Any notice herein required or permitted to be given shall be
in writing and provided in accordance with the terms of the Security Agreement.

      5.5 Amendment  Provision.  The term "Note" and all references  thereto, as
used  throughout  this  instrument,  shall mean this  instrument  as  originally
executed,  or  if  later  amended  or  supplemented,   then  as  so  amended  or
supplemented,  and any successor  instrument as such successor instrument may be
amended or supplemented.

      5.6  Assignability.  This Note shall be binding  upon each Company and its
successors  and  assigns,  and shall  inure to the benefit of the Holder and its
successors and assigns, and may be assigned by the Holder in accordance with the
requirements  of the  Security  Agreement.  No  Company  may  assign  any of its
obligations under this Note without the prior written consent of the Holder, any
such purported assignment without such consent being null and void.

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

      5.8 Governing Law, Jurisdiction and Waiver of Jury Trial.

            (a) THIS NOTE SHALL BE GOVERNED  BY AND  CONSTRUED  AND  ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,  WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAW.

            (b) EACH  COMPANY  HEREBY  CONSENTS  AND  AGREES  THAT THE  STATE OR
FEDERAL COURTS  LOCATED IN THE COUNTY OF NEW YORK,  STATE OF NEW YORK SHALL HAVE
EXCLUSIVE  JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN ANY
COMPANY, ON THE ONE HAND, AND THE HOLDER, ON THE OTHER HAND,  PERTAINING TO THIS
NOTE, THE SECURITY AGREEMENT OR ANY OF THE OTHER ANCILLARY  AGREEMENTS OR TO ANY
MATTER ARISING OUT OF OR RELATED TO THIS NOTE, THE SECURITY  AGREEMENT OR ANY OF
THE OTHER ANCILLARY  AGREEMENTS;  PROVIDED,  THAT EACH COMPANY ACKNOWLEDGES THAT
ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF
THE COUNTY OF NEW YORK, STATE OF NEW YORK; AND FURTHER PROVIDED, THAT NOTHING IN
THIS NOTE SHALL BE DEEMED OR OPERATE TO PRECLUDE THE HOLDER FROM  BRINGING  SUIT
OR  TAKING  OTHER  LEGAL  ACTION  IN  ANY  OTHER  JURISDICTION  TO  COLLECT  THE
OBLIGATIONS,  TO  REALIZE  ON THE  COLLATERAL  OR ANY  OTHER  SECURITY  FOR  THE
OBLIGATIONS,  OR TO  ENFORCE A  JUDGMENT  OR OTHER  COURT  ORDER IN FAVOR OF THE
HOLDER.  EACH  COMPANY  EXPRESSLY  SUBMITS  AND  CONSENTS  IN  ADVANCE  TO  SUCH
JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND EACH COMPANY
HEREBY  WAIVES  ANY  OBJECTION  WHICH IT MAY HAVE  BASED  UPON LACK OF  PERSONAL
JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS. EACH COMPANY HEREBY WAIVES
PERSONAL SERVICE OF THE SUMMONS,  COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH
ACTION OR SUIT AND AGREES  THAT  SERVICE OF SUCH  SUMMONS,  COMPLAINT  AND OTHER
PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED  MAIL ADDRESSED TO THE COMPANY AT
THE ADDRESS SET FORTH IN THE SECURITY  AGREEMENT  AND THAT SERVICE SO MADE SHALL
BE DEEMED  COMPLETED UPON THE EARLIER OF THE COMPANY'S ACTUAL RECEIPT THEREOF OR
THREE (3) DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE PREPAID.

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<PAGE>

            (c) EACH  COMPANY  DESIRES  THAT ITS DISPUTES BE RESOLVED BY A JUDGE
APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE
BENEFITS OF THE JUDICIAL SYSTEM AND OF  ARBITRATION,  EACH COMPANY HERETO WAIVES
ALL  RIGHTS TO TRIAL BY JURY IN ANY  ACTION,  SUIT,  OR  PROCEEDING  BROUGHT  TO
RESOLVE ANY DISPUTE, WHETHER ARISING IN CONTRACT, TORT, OR OTHERWISE BETWEEN THE
HOLDER, AND/OR ANY COMPANY ARISING OUT OF, CONNECTED WITH, RELATED OR INCIDENTAL
TO THE RELATIONSHIP  ESTABLISHED  BETWEEN THEM IN CONNECTION WITH THIS NOTE, THE
SECURITY AGREEMENT,  ANY OTHER ANCILLARY  AGREEMENT OR THE TRANSACTIONS  RELATED
HERETO OR THERETO.

      5.9 Severability.  In the event that any provision of this Note is invalid
or  unenforceable  under  any  applicable  statute  or rule of  law,  then  such
provision  shall  be  deemed  inoperative  to the  extent  that it may  conflict
therewith  and shall be deemed  modified to conform with such statute or rule of
law. Any such provision which may prove invalid or  unenforceable  under any law
shall not affect the validity or  enforceability  of any other provision of this
Note.

      5.10  Maximum  Payments.  Nothing  contained  herein  shall be  deemed  to
establish  or require  the  payment of a rate of  interest  or other  charges in
excess of the maximum permitted by applicable law. In the event that the rate of
interest  required to be paid or other charges hereunder exceed the maximum rate
permitted  by such law,  any  payments in excess of such  maximum  rate shall be
credited  against  amounts owed by the Companies to the Holder and thus refunded
to the Companies.

      5.11 Security  Interest.  The Holder has been granted a security  interest
(i) in certain  assets of the Companies as more fully  described in the Security
Agreement and (ii) pursuant to the Stock Pledge  Agreement  dated as of the date
hereof.

      5.12  Construction.   Each  party  acknowledges  that  its  legal  counsel
participated in the preparation of this Note and, therefore, stipulates that the
rule of construction  that  ambiguities are to be resolved  against the drafting
party shall not be applied in the interpretation of this Note to favor any party
against the other.

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

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      IN WITNESS  WHEREOF,  each  Company  has caused this  Secured  Convertible
Minimum  Borrowing Note to be signed in its name effective as of this ___ day of
September, 2005.

                                       AMERICAN TECHNOLOGIES GROUP, INC.

                                       By:__________________________________
                                          Name:
                                          Title:

WITNESS:

----------------------------------

                                       NORTH TEXAS STEEL COMPANY, INC.

                                       By:__________________________________
                                          Name:
                                          Title:

WITNESS:

----------------------------------

                                       OMAHA HOLDINGS CORP.

                                       By:__________________________________
                                          Name:
                                          Title:

WITNESS:

----------------------------------

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                                    EXHIBIT A

                                 OTHER COMPANIES

              North Texas Steel Company, Inc., a Texas corporation

                  Omaha Holdings Corp., a Delaware corporation

                                       10
<PAGE>

                                    EXHIBIT B

                              NOTICE OF CONVERSION

              (To be executed by the Holder in order to convert the
                   Secured Convertible Minimum Borrowing Note)

      The undersigned  hereby elects to convert  $_________ of the principal and
$_________ of the interest due on the Secured Convertible Minimum Borrowing Note
dated as of September  ___,  2005 (the "Note")  issued by American  Technologies
Group,  Inc. (the "Parent") and the other Companies named and as defined therein
into shares of Common  Stock of the Parent  ("Shares")  in  accordance  with the
terms and conditions set forth in the Note, as of the date written below.

Date of Conversion:         ____________________________________________________

Conversion Price:           ____________________________________________________

Shares To Be Delivered:     ____________________________________________________

Signature:                  ____________________________________________________

Print Name:                 ____________________________________________________

Address:                    ____________________________________________________

Holder DWAC instructions    ____________________________________________________

                                       11THIS NOTE AND THE COMMON SHARES  ISSUABLE UPON  CONVERSION OF THIS NOTE HAVE NOT
BEEN  REGISTERED  UNDER THE  SECURITIES  ACT OF 1933,  AS AMENDED,  OR ANY STATE
SECURITIES  LAWS.  THIS NOTE AND THE COMMON SHARES  ISSUABLE UPON  CONVERSION OF
THIS NOTE MAY NOT BE SOLD,  OFFERED  FOR SALE,  PLEDGED OR  HYPOTHECATED  IN THE
ABSENCE OF AN  EFFECTIVE  REGISTRATION  STATEMENT AS TO THIS NOTE UNDER SAID ACT
AND ANY APPLICABLE  STATE  SECURITIES  LAWS OR AN OPINION OF COUNSEL  REASONABLY
SATISFACTORY TO AMERICAN  TECHNOLOGIES GROUP, INC. THAT SUCH REGISTRATION IS NOT
REQUIRED.

                         SECURED CONVERTIBLE TERM NOTE A

      FOR VALUE RECEIVED,  each of AMERICAN  TECHNOLOGIES  GROUP, INC., a Nevada
corporation (the "Parent"), and the other Companies listed on EXHIBIT A attached
hereto (such other  companies  together  with the Parent,  each a "COMPANY"  and
collectively, the "COMPANIES"), jointly and severally, promises to pay to LAURUS
MASTER FUND, LTD., c/o M&C Corporate  Services Limited,  P.O. Box 309 GT, Ugland
House,  South Church Street,  George Town,  Grand Cayman,  Cayman Islands,  Fax:
345-949-8080 (the "HOLDER") or its registered assigns or successors in interest,
the sum of Three  Million  Dollars  ($3,000,000),  together with any accrued and
unpaid interest hereon, on September 6, 2008 (the "MATURITY DATE") if not sooner
paid.

      This  Secured  Convertible  Term Note (this  "NOTE") is  intended  to be a
registered   obligation  within  the  meaning  of  Treasury  Regulation  Section
1.871-14(c)(1)(i)  and each Company (or its agent) shall register this Note (and
thereafter shall maintain such registration) as to both principal and any stated
interest. Notwithstanding any document, instrument or agreement relating to this
Note to the  contrary,  transfer  of this Note (or the right to any  payments of
principal or stated  interest  thereunder) may only be effected by (i) surrender
of this Note and either the  reissuance  by the  Company of this Note to the new
holder or the issuance by the Company of a new instrument to the new holder,  or
(ii)  transfer  through a book entry  system  maintained  by the Company (or its
agent), within the meaning of Treasury Regulation Section 1.871-14(c)(1)(i)(B).

      Capitalized  terms used herein without  definition shall have the meanings
ascribed to such terms in that certain  Security  Agreement dated as of the date
hereof by and among the  Companies and the Holder (as amended,  modified  and/or
supplemented from time to time, the "SECURITY AGREEMENT").

      The following terms shall apply to this Note:

                                    ARTICLE I
                         CONTRACT RATE AND AMORTIZATION

      1.1 CONTRACT RATE.  Subject to Sections 4.2 and 5.10,  interest payable on
the outstanding  principal  amount of this Note (the  "PRINCIPAL  AMOUNT") shall
accrue at a rate per  annum  equal to the  "prime  rate"  published  in THE WALL
STREET JOURNAL from time to time (the "PRIME RATE"),  plus two percent (2%) (the
"CONTRACT RATE").  The Contract Rate shall be increased or decreased as the case
may be for each  increase or  decrease  in the Prime Rate in an amount  equal to
such  increase or decrease in the Prime Rate;  each change to be effective as of
the day of the change in the Prime Rate.  Subject to Section  1.2,  the Contract
Rate shall not at any time be less than  eight and  one-quarter  of one  percent
(8.25%).  Interest  shall be (i)  calculated on the basis of a 360 day year, and
(ii) payable  monthly,  in arrears,  commencing  on October 1, 2005 on the first
business day of each consecutive calendar month thereafter through and including
the  Maturity  Date,  and on the  Maturity  Date,  whether  by  acceleration  or
otherwise.

<PAGE>

      1.2 CONTRACT RATE  ADJUSTMENTS  AND  PAYMENTS.  The Contract Rate shall be
calculated on the last business day of each calendar month hereafter (other than
for  increases  or  decreases  in the Prime Rate which shall be  calculated  and
become effective in accordance with the terms of Section 1.1) until the Maturity
Date (each a  "DETERMINATION  DATE") and shall be subject to  adjustment  as set
forth herein.  If (i) the Parent shall have  registered the shares of the Common
Stock  underlying the conversion of this Note, each Warrant and each Option on a
registration  statement  declared  effective  by  the  Securities  and  Exchange
Commission  (the "SEC"),  and (ii) the market price (the "MARKET  PRICE") of the
Common Stock as reported by Bloomberg, L.P. on the Principal Market for the five
(5) trading days  immediately  preceding a  Determination  Date exceeds the then
applicable  Fixed Conversion  Price by at least  twenty-five  percent (25%), the
Contract Rate for the succeeding  calendar month shall  automatically be reduced
by 200 basis  points (200 b.p.) (2%) for each  incremental  twenty-five  percent
(25%) increase in the Market Price of the Common Stock above the then applicable
Fixed  Conversion  Price.  Notwithstanding  the  foregoing  (and anything to the
contrary contained  herein),  in no event shall the Contract Rate at any time be
less than zero percent (0%).

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

                                       2
<PAGE>

                                   ARTICLE II

                            CONVERSION AND REDEMPTION

      2.1 PAYMENT OF MONTHLY AMOUNT.

            (a) PAYMENT IN CASH OR COMMON  STOCK.  If the  Monthly  Amount (or a
portion of such Monthly Amount if not all of the Monthly Amount may be converted
into shares of Common  Stock  pursuant to Section 3.2) is required to be paid in
cash  pursuant  to  Section  2.1(b),  then  the  Companies  shall,  jointly  and
severally,  pay the Holder an amount in cash equal to 100% of the Monthly Amount
(or such portion of such Monthly Amount to be paid in cash) due and owing to the
Holder on the  Amortization  Date.  If the Monthly  Amount (or a portion of such
Monthly  Amount if not all of the Monthly Amount may be converted into shares of
Common Stock pursuant to Section 3.2) is required to be paid in shares of Common
Stock pursuant to Section 2.1(b),  the number of such shares to be issued by the
Parent to the Holder on such  Amortization  Date (in respect of such  portion of
the Monthly  Amount  converted  into shares of Common Stock  pursuant to Section
2.1(b)),  shall be the number  determined  by  dividing  (i) the  portion of the
Monthly  Amount  converted  into  shares  of  Common  Stock,  by (ii)  the  then
applicable Fixed Conversion  Price. For purposes hereof,  subject to Section 3.6
hereof, the initial "FIXED CONVERSION PRICE" means $0.0033.

            (b)  MONTHLY  AMOUNT  CONVERSION  CONDITIONS.  Subject  to  Sections
2.1(a),  2.2,  and 3.2 hereof,  the Holder  shall  convert into shares of Common
Stock all or a portion of the Monthly  Amount due on each  Amortization  Date if
the following  conditions  (the  "CONVERSION  CRITERIA") are satisfied:  (i) the
average closing price of the Common Stock as reported by Bloomberg,  L.P. on the
Principal  Market  for the five (5)  trading  days  immediately  preceding  such
Amortization Date shall be greater than or equal to 120% of the Fixed Conversion
Price and (ii) the amount of such conversion does not exceed twenty-five percent
(25%) of the aggregate  dollar trading volume of the Common Stock for the period
of twenty-two (22) trading days immediately preceding such Amortization Date. If
subsection  (i) of the  Conversion  Criteria is met but  subsection  (ii) of the
Conversion Criteria is not met as to the entire Monthly Amount, the Holder shall
convert only such part of the Monthly Amount that meets  subsection  (ii) of the
Conversion  Criteria.  Any portion of the Monthly Amount due on an  Amortization
Date that the Holder has not been able to convert  into  shares of Common  Stock
due to the failure to meet the Conversion Criteria, shall be paid in cash by the
Companies  at the  rate of  100% of the  Monthly  Amount  otherwise  due on such
Amortization Date, within three (3) business days of such Amortization Date.

      2.2 NO EFFECTIVE  REGISTRATION.  Notwithstanding  anything to the contrary
herein,  none of the Companies'  obligations to the Holder may be converted into
Common Stock unless (a) either (i) an effective current  Registration  Statement
(as defined in the Registration  Rights Agreement) covering the shares of Common
Stock to be issued in connection with satisfaction of such obligations exists or
(ii) an exemption from registration for resale of all of the Common Stock issued
and issuable is available  pursuant to Rule 144 of the Securities Act and (b) no
Event of Default (as hereinafter defined) exists and is continuing,  unless such
Event of Default is cured within any applicable cure period or otherwise  waived
in writing by the Holder.

                                       3
<PAGE>

      2.3  OPTIONAL  REDEMPTION  IN CASH.  The  Companies  may prepay  this Note
("OPTIONAL  Redemption")  by  paying to the  Holder a sum of money  equal to one
hundred twenty percent (120%) of the Principal  Amount  outstanding at such time
together  with  accrued but unpaid  interest  thereon and any and all other sums
due,  accrued or payable to the Holder  arising  under this Note,  the  Security
Agreement or any other Ancillary Agreement (the "REDEMPTION AMOUNT") outstanding
on the Redemption  Payment Date (as defined below).  The Companies shall deliver
to the  Holder a written  notice of  redemption  (the  "NOTICE  OF  REDEMPTION")
specifying  the date for  such  Optional  Redemption  (the  "REDEMPTION  PAYMENT
DATE"), which date shall be seven (7) business days after the date of the Notice
of Redemption (the  "REDEMPTION  PERIOD").  A Notice of Redemption  shall not be
effective  with  respect  to any  portion  of this Note for which the Holder has
previously  delivered a Notice of  Conversion  (as  hereinafter  defined) or for
conversions  elected to be made by the Holder pursuant to Section 3.3 during the
Redemption  Period. The Redemption Amount shall be determined as if the Holder's
conversion  elections had been  completed  immediately  prior to the date of the
Notice of Redemption. On the Redemption Payment Date, the Redemption Amount must
be paid in good funds to the Holder.  In the event the Companies fail to pay the
Redemption Amount on the Redemption Payment Date as set forth herein,  then such
Redemption Notice will be null and void.

                                   ARTICLE III
                           HOLDER'S CONVERSION RIGHTS

      3.1  OPTIONAL  CONVERSION.  Subject to the terms set forth in this Article
III, the Holder shall have the right, but not the obligation,  to convert all or
any  portion of the issued  and  outstanding  Principal  Amount  and/or  accrued
interest  and fees due and payable into fully paid and  nonassessable  shares of
Common  Stock at the Fixed  Conversion  Price.  The shares of Common Stock to be
issued upon such conversion are herein referred to as, the "CONVERSION SHARES."

      3.2 CONVERSION  LIMITATION.  Notwithstanding  anything contained herein to
the contrary,  the Holder shall not be entitled to convert pursuant to the terms
of this Note an amount that would be convertible  into that number of Conversion
Shares  which would  exceed the  difference  between (i) 4.99% of the issued and
outstanding shares of Common Stock and (ii) the number of shares of Common Stock
beneficially  owned by the  Holder For  purposes  of the  immediately  preceding
sentence,  beneficial  ownership  shall be determined in accordance with Section
13(d) of the Exchange Act and Regulation 13d-3 thereunder.  The Conversion Share
limitation  described  in this Section 3.2 shall  automatically  become null and
void  following  notice  to the  Company  upon the  occurrence  and  during  the
continuance of an Event of Default,  or upon 75 days prior notice to the Parent.
Notwithstanding  anything  contained  herein to the contrary,  the provisions of
this  Section  3.2 are  irrevocable  and may not be waived by the  Holder or the
Parent.

      3.3 MECHANICS OF HOLDER'S CONVERSION.  In the event that the Holder elects
to convert  this Note into Common  Stock,  the Holder  shall give notice of such
election by  delivering  an  executed  and  completed  notice of  conversion  in
substantially the form of EXHIBIT B hereto  (appropriate  completed) ("NOTICE OF
Conversion")  to the  Parent  and such  Notice  of  Conversion  shall  provide a
breakdown in reasonable  detail of the Principal  Amount,  accrued  interest and
fees that are being converted.  On each Conversion Date (as hereinafter defined)
and in  accordance  with its Notice of  Conversion,  the  Holder  shall make the
appropriate  reduction to the  Principal  Amount,  accrued  interest and fees as
entered in its records and shall provide  written  notice  thereof to the Parent
within two (2) business  days after the  Conversion  Date.  Each date on which a
Notice of Conversion is delivered or telecopied to the Parent in accordance with
the provisions hereof shall be deemed a Conversion Date (the "CONVERSION DATE").
Pursuant  to the terms of the  Notice  of  Conversion,  the  Parent  will  issue
instructions  to the transfer agent  accompanied by an opinion of counsel within
one (1)  business day of the date of the delivery to the Parent of the Notice of
Conversion  and shall  cause the  transfer  agent to transmit  the  certificates
representing the Conversion Shares to the Holder by crediting the account of the
Holder's designated broker with the Depository Trust Corporation ("DTC") through
its  Deposit  Withdrawal  Agent  Commission  ("DWAC")  system  within  three (3)
business  days after  receipt by the  Parent of the  Notice of  Conversion  (the
"DELIVERY Date"). In the case of the exercise of the conversion rights set forth
herein the conversion  privilege  shall be deemed to have been exercised and the
Conversion  Shares  issuable upon such  conversion  shall be deemed to have been
issued upon the date of receipt by the Parent of the Notice of  Conversion.  The
Holder shall be treated for all purposes as the record holder of the  Conversion
Shares,  unless  the Holder  provides  the Parent  written  instructions  to the
contrary.

                                       4
<PAGE>

      3.4 LATE PAYMENTS.  Each Company  understands that a delay in the delivery
of the  Conversion  Shares in the form required  pursuant to this Article beyond
the Delivery Date could result in economic loss to the Holder.  As  compensation
to the Holder for such loss, in addition to all other rights and remedies  which
the Holder may have under this Note, applicable law or otherwise,  the Companies
shall,  jointly  and  severally,  pay late  payments  to the Holder for any late
issuance of Conversion  Shares in the form required  pursuant to this Article II
upon conversion of this Note, in the amount equal to $500 per business day after
the  Delivery  Date.  The Company  shall make any payments  incurred  under this
Section in immediately available funds upon demand.

      3.5  CONVERSION  MECHANICS.  The  number of  shares of Common  Stock to be
issued upon each  conversion  of this Note shall be  determined by dividing that
portion of the principal  and interest and fees to be converted,  if any, by the
then  applicable  Fixed  Conversion  Price. In the event of any conversions of a
portion of the outstanding  Principal  Amount pursuant to this Article III, such
conversions  shall  be  deemed  to  constitute  conversions  of the  outstanding
Principal  Amount  applying to Monthly  Amounts for the  remaining  Amortization
Dates in chronological order.

      3.6 ADJUSTMENT PROVISIONS.  The Fixed Conversion Price and number and kind
of shares or other securities to be issued upon conversion  determined  pursuant
to this  Note  shall  be  subject  to  adjustment  from  time to time  upon  the
occurrence  of  certain  events  during the period  that this  conversion  right
remains outstanding, as follows:

            (a)   RECLASSIFICATION.   If  the  Parent  at  any  time  shall,  by
reclassification  or  otherwise,  change  the  Common  Stock  into the same or a
different  number of  securities  of any class or classes,  this Note, as to the
unpaid Principal Amount and accrued interest thereon, shall thereafter be deemed
to evidence the right to purchase an adjusted number of such securities and kind
of  securities  as would have been  issuable  as the result of such  change with
respect to the Common Stock (i) immediately prior to or (ii) immediately  after,
such reclassification or other change at the sole election of the Holder.

                                       5
<PAGE>

            (b) STOCK  SPLITS,  COMBINATIONS  AND  DIVIDENDS.  If the  shares of
Common  Stock are  subdivided  or combined  into a greater or smaller  number of
shares of Common  Stock,  or if a dividend  is paid on the  Common  Stock or any
preferred  stock  issued by the  Parent in  shares  of Common  Stock,  the Fixed
Conversion  Price shall be  proportionately  reduced in case of  subdivision  of
shares or stock dividend or proportionately increased in the case of combination
of shares,  in each such case by the ratio  which the total  number of shares of
Common Stock outstanding  immediately after such event bears to the total number
of shares of Common Stock outstanding immediately prior to such event.

            (c) SHARE ISSUANCES.  Subject to the provisions of this Section 3.6,
if the Parent shall at any time prior to the  conversion or repayment in full of
the Principal Amount issue any shares of Common Stock or securities  convertible
into Common  Stock to a Person  other than the Holder  (except  (i)  pursuant to
Sections  3.6(a) or (b) above;  (ii)  pursuant  to options,  warrants,  or other
obligations  to issue shares  outstanding on the date hereof as disclosed to the
Holder in writing;  or (iii)  pursuant to options  that may be issued  under any
employee  incentive  stock option and/or any qualified stock option plan adopted
by the Parent) for a  consideration  per share (the "OFFER PRICE") less than the
Fixed  Conversion  Price in effect at the time of such issuance,  then the Fixed
Conversion  Price  shall be  immediately  reset to such lower Offer  Price.  For
purposes hereof,  the issuance of any security of the Parent convertible into or
exercisable  or  exchangeable  for Common Stock shall result in an adjustment to
the Fixed Conversion Price upon the issuance of such securities.

            (d)  COMPUTATION OF  CONSIDERATION.  For purposes of any computation
respecting   consideration  received  pursuant  to  Section  3.6(c)  above,  the
following shall apply:

                  (i) in the case of the  issuance of shares of Common Stock for
            cash, the consideration  shall be the amount of such cash,  provided
            that in no case  shall any  deduction  be made for any  commissions,
            discounts  or  other  expenses   incurred  by  the  Parent  for  any
            underwriting of the issue or otherwise in connection therewith;

                  (ii) in the case of the issuance of shares of Common Stock for
            a   consideration   in  whole  or  in  part  other  than  cash,  the
            consideration  other than cash shall be deemed to be the fair market
            value  thereof as determined in good faith by the Board of Directors
            of the Parent  (irrespective of the accounting  treatment  thereof);
            and

                  (iii)  upon any such  exercise,  the  aggregate  consideration
            received for such securities shall be deemed to be the consideration
            received by the Parent for the issuance of such  securities plus the
            additional  minimum  consideration,  if any,  to be  received by the
            Parent upon the conversion or exchange thereof (the consideration in
            each  case to be  determined  in the  same  manner  as  provided  in
            subsections (i) and (ii) of this Section 3.6(d)).

      3.7 RESERVATION OF SHARES.  During the period the conversion right exists,
the  Parent  will  reserve  from its  authorized  and  unissued  Common  Stock a
sufficient  number of shares to provide for the  issuance of  Conversion  Shares
upon the full  conversion  of this Note,  the  Warrants  and the  Options.  Each
Company  represents that upon issuance,  the Conversion  Shares will be duly and
validly  issued,  fully paid and  non-assessable.  Each Company  agrees that its
issuance of this Note shall  constitute full authority to its officers,  agents,
and transfer agents who are charged with the duty of executing and issuing stock
certificates to execute and issue the necessary  certificates for the Conversion
Shares upon the conversion of this Note.

                                       6
<PAGE>

      3.8 REGISTRATION  RIGHTS. The Holder has been granted  registration rights
with respect to the Conversion  Shares as set forth in the  Registration  Rights
Agreement.

      3.9 ISSUANCE OF NEW NOTE. Upon any partial  conversion of this Note, a new
Note  containing the same date and provisions of this Note shall, at the request
of the  Holder,  be issued by the  Companies  to the  Holder  for the  principal
balance of this Note and interest  which shall not have been  converted or paid.
Subject to the  provisions  of Article IV of this Note, no Company shall pay any
costs,  fees or any other  consideration  to the Holder for the  production  and
issuance of a new Note.

                                   ARTICLE IV
                                EVENTS OF DEFAULT

      4.1 EVENTS OF DEFAULT.  The  occurrence  of an Event of Default  under the
Security  Agreement  shall  constitute an event of default  ("EVENT OF DEFAULT")
hereunder.

      4.2 DEFAULT INTEREST.  Following the occurrence and during the continuance
of an  Event of  Default,  the  Companies  shall,  jointly  and  severally,  pay
additional  interest  on the  outstanding  principal  balance of this Note in an
amount  equal to the  Contract  Rate plus ten percent  (10%) per annum,  and all
outstanding  Obligations,  including unpaid  interest,  shall continue to accrue
interest at such additional interest rate from the date of such Event of Default
until the date such Event of Default is cured or waived.

      4.3 DEFAULT  PAYMENT.  Following the occurrence and during the continuance
of an Event of Default,  the Holder, at its option, may demand repayment in full
of all  Obligations  and/or may elect, in addition to all rights and remedies of
the Holder under the Security  Agreement and the other Ancillary  Agreements and
all  Obligations  of the  Companies  under the Security  Agreement and the other
Ancillary Agreements, to require the Company to make a Default Payment ("DEFAULT
PAYMENT").  The Default Payment shall be 130%of the outstanding principal amount
of the Note,  plus accrued but unpaid  interest,  all other fees then  remaining
unpaid,  and all other amounts payable  hereunder.  The Default Payment shall be
applied  first to any fees due and payable to the Holder  pursuant to the Notes,
the Security Agreement,  and/or the other Ancillary Agreements,  then to accrued
and  unpaid  interest  due on the  Notes and then to the  outstanding  principal
balance of the Notes.  The Default Payment shall be due and payable  immediately
on the date that the Holder has  exercised  its rights  pursuant to this Section
4.3.

                                       7
<PAGE>

                                    ARTICLE V
                                  MISCELLANEOUS

      5.1 CONVERSION PRIVILEGES.  The conversion privileges set forth in Article
III shall remain in full force and effect immediately from the date hereof until
the date this Note is indefeasibly paid in full and irrevocably terminated.

      5.2 CUMULATIVE REMEDIES. The remedies under this Note shall be cumulative.

      5.3 FAILURE OR INDULGENCE  NOT WAIVER.  No failure or delay on the part of
the Holder  hereof in the exercise of any power,  right or  privilege  hereunder
shall operate as a waiver thereof,  nor shall any single or partial  exercise of
any such power, right or privilege preclude other or further exercise thereof or
of any other  right,  power or  privilege.  All  rights  and  remedies  existing
hereunder  are  cumulative  to, and not  exclusive  of,  any rights or  remedies
otherwise available.

      5.4 NOTICES.  Any notice herein required or permitted to be given shall be
in writing and provided in accordance with the terms of the Security Agreement.

      5.5 AMENDMENT  PROVISION.  The term "Note" and all references  thereto, as
used  throughout  this  instrument,  shall mean this  instrument  as  originally
executed,  or  if  later  amended  or  supplemented,   then  as  so  amended  or
supplemented,  and any successor  instrument as such successor instrument may be
amended or supplemented.

      5.6  ASSIGNABILITY.  This Note shall be binding  upon each Company and its
successors  and  assigns,  and shall  inure to the benefit of the Holder and its
successors and assigns, and may be assigned by the Holder in accordance with the
requirements  of the  Security  Agreement.  No  Company  may  assign  any of its
obligations under this Note without the prior written consent of the Holder, any
such purported assignment without such consent being null and void.

      5.7 COST OF  COLLECTION.  In case of any Event of Default under this Note,
the Companies shall,  jointly and severally,  pay the Holder reasonable costs of
collection, including reasonable attorneys' fees.

      5.8 GOVERNING LAW, JURISDICTION AND WAIVER OF JURY TRIAL.

            (a) THIS NOTE SHALL BE GOVERNED  BY AND  CONSTRUED  AND  ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,  WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAW.

            (b) EACH  COMPANY  HEREBY  CONSENTS  AND  AGREES  THAT THE  STATE OR
FEDERAL COURTS  LOCATED IN THE COUNTY OF NEW YORK,  STATE OF NEW YORK SHALL HAVE
EXCLUSIVE  JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN ANY
COMPANY, ON THE ONE HAND, AND THE HOLDER, ON THE OTHER HAND,  PERTAINING TO THIS
NOTE OR ANY OF THE OTHER ANCILLARY AGREEMENTS OR TO ANY MATTER ARISING OUT OF OR
RELATED TO THIS NOTE OR ANY OF THE  ANCILLARY  AGREEMENTS;  PROVIDED,  THAT EACH
COMPANY  ACKNOWLEDGES THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY
A COURT  LOCATED  OUTSIDE  OF THE  COUNTY  OF NEW YORK,  STATE OF NEW YORK;  AND
FURTHER  PROVIDED,  THAT  NOTHING  IN THIS NOTE  SHALL BE DEEMED OR  OPERATE  TO
PRECLUDE THE HOLDER FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER
JURISDICTION  TO COLLECT THE  OBLIGATIONS,  TO REALIZE ON THE  COLLATERAL OR ANY
OTHER  SECURITY  FOR THE  OBLIGATIONS,  OR TO ENFORCE A JUDGMENT  OR OTHER COURT
ORDER IN FAVOR OF THE HOLDER.  EACH  COMPANY  EXPRESSLY  SUBMITS AND CONSENTS IN
ADVANCE TO SUCH  JURISDICTION  IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT
AND EACH COMPANY  HEREBY WAIVES ANY OBJECTION  WHICH IT MAY HAVE BASED UPON LACK
OF PERSONAL JURISDICTION,  IMPROPER VENUE OR FORUM NON CONVENIENS.  EACH COMPANY
HEREBY  WAIVES  PERSONAL  SERVICE OF THE SUMMONS,  COMPLAINT  AND OTHER  PROCESS
ISSUED IN ANY SUCH  ACTION OR SUIT AND  AGREES  THAT  SERVICE  OF SUCH  SUMMONS,
COMPLAINT  AND  OTHER  PROCESS  MAY BE  MADE BY  REGISTERED  OR  CERTIFIED  MAIL
ADDRESSED TO THE COMPANY AT THE ADDRESS SET FORTH IN THE SECURITY  AGREEMENT AND
THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF THE COMPANY'S
ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER
POSTAGE PREPAID.

                                       8
<PAGE>

            (c) EACH  COMPANY  DESIRES  THAT ITS DISPUTES BE RESOLVED BY A JUDGE
APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE
BENEFITS OF THE JUDICIAL SYSTEM AND OF  ARBITRATION,  EACH COMPANY HERETO WAIVES
ALL  RIGHTS TO TRIAL BY JURY IN ANY  ACTION,  SUIT,  OR  PROCEEDING  BROUGHT  TO
RESOLVE ANY DISPUTE, WHETHER ARISING IN CONTRACT, TORT, OR OTHERWISE BETWEEN THE
HOLDER AND/OR ANY COMPANY ARISING OUT OF, CONNECTED WITH,  RELATED OR INCIDENTAL
TO THE RELATIONSHIP  ESTABLISHED  BETWEEN THEM IN CONNECTION WITH THIS NOTE, ANY
OTHER ANCILLARY AGREEMENT OR THE TRANSACTIONS RELATED HERETO OR THERETO.

      5.9 SEVERABILITY.  In the event that any provision of this Note is invalid
or  unenforceable  under  any  applicable  statute  or rule of  law,  then  such
provision  shall  be  deemed  inoperative  to the  extent  that it may  conflict
therewith  and shall be deemed  modified to conform with such statute or rule of
law. Any such provision which may prove invalid or  unenforceable  under any law
shall not affect the validity or  enforceability  of any other provision of this
Note.

      5.10  MAXIMUM  PAYMENTS.  Nothing  contained  herein  shall be  deemed  to
establish  or require  the  payment of a rate of  interest  or other  charges in
excess of the maximum permitted by applicable law. In the event that the rate of
interest  required to be paid or other charges hereunder exceed the maximum rate
permitted  by such law,  any  payments in excess of such  maximum  rate shall be
credited  against  amounts owed by the Companies to the Holder and thus refunded
to the Companies.

                                       9
<PAGE>

      5.11 SECURITY  INTEREST.  The Holder has been granted a security  interest
(i) in certain  assets of the Companies as more fully  described in the Security
Agreement and (ii) pursuant to the Stock Pledge  Agreement  dated as of the date
hereof.

      5.12  CONSTRUCTION.   Each  party  acknowledges  that  its  legal  counsel
participated in the preparation of this Note and, therefore, stipulates that the
rule of construction  that  ambiguities are to be resolved  against the drafting
party shall not be applied in the interpretation of this Note to favor any party
against the other.

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

                                       10
<PAGE>

      IN WITNESS  WHEREOF,  the Companies  have caused this Secured  Convertible
Term Note to be signed in its name  effective  as of this 7th day of  September,
2005.

                                        AMERICAN TECHNOLOGIES GROUP, INC.

                                        By:__________________________________
                                             Name:
                                             Title:

WITNESS:

__________________________________

                                        NORTH TEXAS STEEL COMPANY, INC.

                                        By:__________________________________
                                             Name:
                                             Title:

WITNESS:

__________________________________

                                        OMAHA HOLDINGS CORP.

                                        By:__________________________________
                                             Name:
                                             Title:

WITNESS:

__________________________________

                                       11
<PAGE>

                                    EXHIBIT A

                                 OTHER COMPANIES

              North Texas Steel Company, Inc., a Texas corporation

                  Omaha Holdings Corp., a Delaware corporation

<PAGE>

                                    EXHIBIT B

                              NOTICE OF CONVERSION

              (To be executed by the Holder in order to convert all
         or part of the Secured Convertible Term Note into Common Stock)

[Name and Address of Company]

      The  undersigned  hereby  converts  $_________  of  the  principal  due on
[specify  applicable  Repayment  Date] under the Secured  Convertible  Term Note
dated as of  September  7, 2005 (the  "NOTE")  issued by  American  Technologies
Group,  Inc. (the "PARENT") and the other Companies named and as defined therein
by delivery of shares of Common Stock of the Parent ("SHARES") on and subject to
the conditions set forth in the Note.

1.    Date of Conversion _______________________

2.    Shares To Be Delivered: _______________________

                                       AMERICAN TECHNOLOGIES GROUP, INC.

                                       By:_______________________________
                                       Name:_____________________________
                                       Title:______________________________

                                       2

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