LV ADMINISTRATIVE SERVICES, INC.
335 MADISON AVENUE, 10TH FLOOR
NEW YORK, NEW YORK 10017
VIA TELECOPY AND FEDERAL EXPRESS (Next Day Delivery)
----------------------------------------------------
January 31st, 2008
American Technologies Group, Inc.
412 West Bolt Street
Fort Worth, Texas 76113
Attention: Thomas E.
Durkin III
Dear Mr. Durkin,
LV Administrative Services, Inc. has been appointed as
administrative and
collateral agent for Laurus Master Fund, Ltd. ("Laurus"). In this
capacity,
reference is made to the (i) Secured Revolving Note in the amount
of
$7,000,000.00 dated September 7th, 2005 (as amended, modified or
supplemented
from time to time, the "Revolving Note"); (ii) Secured Convertible
Minimum
Borrowing Note in the amount of $3,000,000.00 dated September 7th,
2005 (as
amended, modified or supplemented from time to time, the ("Minimum
Borrowing
Note"), (iii) Secured Convertible Term Note A in the amount of
$3,000,000.00
dated September 7th, 2005 (as amended, modified or supplemented
from time to
time, the ("Term Note A"); (iv) Secured Convertible Term Note B in
the amount of
$2,000,000.00 dated September 7th, 2005 (as amended, modified or
supplemented
from time to time, the ("Term Note B"), (collectively, the "Notes")
made by
American Technologies Group, Inc., (the "Borrower"), to the Laurus.
All
capitalized terms used herein and not defined herein shall have the
meaning
ascribed to them in he Notes.
On January 31st, 2008, Laurus notified the Borrower that Events of
Default had
occurred and are continuing (beyond any applicable cure or grace
period) under
(i) Section 19(a) of the Security Agreement dated September 7th,
2005 as a
result of the Borrower's failure to make payment of Obligations (as
defined in
the Security Agreement) due and owing; (ii) Section 3.1 of the
Revolving Note as
a result of the occurrence of an Event of Default under the
Security Agreement;
(iii) Section 4.1 of the Minimum Borrowing Note as a result of the
occurrence of
an Event of Default under the Secu
