CONVERSION AGREEMENT AND AMENDMENT
This Conversion Agreement and Amendment (the \"Agreement\") is made as of
march __, 2007, among North American Technologies Group, Inc., a Delaware
corporation (the \"Company\"), and the holders of the 7% Convertible
Debentures due on July 1, 2008, as amended (the \"Debentures\"), of the
Company (each individually a \"Holder\" and collectively the \"Holders\").
Capitalized terms used but not defined herein shall have the meanings given
them in the Debenture.
1. Conversion. Each of the Holders hereby elects to convert the entire amount
of principal under the Debentures held by it into shares of Common Stock of the
Company according to the conditions of the Debentures and this Agreement. The
Conversion Date shall be the date on which the Company receives all of the
executed Promissory Notes from the respective Payees thereunder and executed
counterparts to this Agreement from the Holders of the Debentures, provided,
however, that if the Effective Date does not occur by March 30, 2007, this
Agreement will terminate and be of no further force or effect.
2. Waiver and Amendment. The requirement of Section 4(c) of the Debentures
that a Holder's ownership of the Common Stock not exceed the percentage set
forth therein is hereby waived and the Debentures are hereby amended to delete
that Section 4(c) in its entirety, and all references thereto in the Debentures.
3. Consideration. In consideration for the conversion by the Holders of the
Debentures on the Conversion Date, the Company will pay to the Holders on the
Conversion Date the number of shares of Common Stock equal to the quotient of
(i) the Interest Share Amount that would be due and owing to the Holders if the
Debentures were held through the Maturity Date divided by (ii) the Interest
Conversion Rate as of the Conversion Date. The Company will within ten Trading
Days of the Conversion Date, cause its transfer agent to deliver the
Conversion Shares in accordance with Section 4(d)(ii) of the Debentures.
4. Antidilution Adjustment. If the Company shall, in connection with its
proposed financing in the amount of no less than $11.6 million
(the \"Financing\"), sell or grant any option to purchase, or otherwise
dispose of or issue any Common Stock or Common Stock Equivalents entitling any
Person to acquire shares of Common Stock, at an effective price per share less
than the Conversion Price, as adjusted on the date of this Agreement
such lower price, the \"Base Price\"), then, upon consummation of the
Financing, the Company shall issue to the Holders, pro rata, the number of
shares of Common Stock equal to the difference between (i) the number of
shares of Common Stock received pursuant to this Agreement and (ii) the
number of shares of Common Stock to which the Holders would have been
entitled if the Conversion Price on the date of this Agreement had been equal
to the Base Price. The Company shall notify the Holder in writing, no later
than the Business Day following the issuance of any Common Stock or Common
Stock Equivalents subject to this provision, indicating therein the applicable
Base Price.
5. Prospectus Delivery. Each of the Holders agrees to comply with the
prospectus delivery requirements under the applicable securities laws
in connection with any transfer of the Conversion Shares.
6. Transfer Taxes. If any of the Conversion Shares are to be issued in the
name of a person other than the Holder thereof, that Holder will pay all
transfer taxes payable with respect thereto and will deliver such certificates
and opinions as reasonably requested by the Company in accordance therewith.
No fee will be charged to the Holder for any conversion, except for such
transfer taxes, if any.
NORTH AMERICAN TECHNOLOGIES GROUP, INC.
By: ____________________________________
Xxxx Xxxxxxx, Chief Executive Officer
AMOUNT OF DEBENTURES: HOLDERS:
$6,141,287.80 Sponsor Investments, LLC
By Herakles Investments, Inc.,
Managing Member
By: ________________________
Name: _____________________
Title: ______________________
$1,831,995.10 Crestview Capital Master, LLC
By: ________________________
Name: _____________________
Title: ______________________
$349,999.65 Enable Growth, L.P.
By: ________________________
Name: _____________________
Title: ______________________
$49,999.95 Enable Opportunity Partners, L.P.
By: ________________________
Name: _____________________
Title: ______________________
$594,318.30 Islandia, LP
By Xxxx Xxxx, Inc., General Partner
By: ________________________
Name: _____________________
Title: ______________________
$1,492,399.20 Midsummer Investment Ltd.
By Midsummer Capital, LLC, Investment Manager
By: ________________________
Name: _____________________
Title: ______________________
$50,000.00 Xxxxx X. and Xxxxxx X. Xxxxxxx Living Trust
By: ___________________________
____________________________
Names: _________________________
_________________________
Titles: __________________________
$50,000.00 ____________________________
Xxxxxxx Xxxxx
$940,000.00 Toibb Investment, LLC
By Toibb Management LLC, Manager
By: ________________________
Name: _____________________
Title: ______________________
