Exhibit 10.5

SECOND LIEN INTELLECTUAL PROPERTY SECURITY AGREEMENT

SECOND LIEN INTELLECTUAL PROPERTY SECURITY AGREEMENT, dated as of August 20,
2009, among NORTH AMERICAN TECHNOLOGIES GROUP, INC., a Delaware corporation
(“NATK”), TIETEK TECHNOLOGIES, INC., a Texas corporation (“TTT”), and TieTek
LLC, a Delaware limited liability company (“TieTek” and together with NATK and
TTT, the “Debtors” and each individually a “Debtor”) (collectively and jointly
and severally, “Debtor”), and OPUS 5949 LLC (formerly known as Tie Investors,
LLC), a Texas limited liability company (the “Secured Party”).

Debtors and Secured Party hereby agree as follows:

1. Definitions; Interpretation.

(a) Terms Defined in Loan Agreement or Security Agreement. All capitalized terms
used in this Agreement and not otherwise defined herein shall have the meanings
assigned to them in the Loan Agreement and Security Agreement of even date
between the parties.

(b) Certain Defined Terms. As used in this Agreement, the following terms shall
have the following meanings:

“Collateral” has the meaning set forth in Section 2.

“Loan Agreement” means the Second Lien Loan Agreement of even date herewith
between Secured Party and Debtors pursuant to which the Loan is being made.

“Obligations” means all of the obligations of Debtors to the Secured Party
pursuant to the Loan Documents, (including, without limitation, the Loans) and
all other obligations and liabilities of Debtors under this Agreement.

“Patent License” means any written agreement, now or hereafter in effect,
granting to any third party any right to make, use or sell any invention on
which a Patent, now or hereafter owned by any Debtor or that any Debtor
otherwise has the right to license, is in existence, or granting to any Debtor
any right to make, use or sell any invention on which a patent, now or hereafter
owned by any third party, is in existence, and all rights of any Debtor under
any such agreement.

“Patents” means all of the following now owned or hereafter acquired by any
Debtor: (a) all letters patent of the United States or the equivalent thereof in
any other country, all registrations and recordings thereof, and all
applications for letters patent of the United States or the equivalent thereof
in any other country, including registrations, recordings and pending
applications in the PTO or any similar offices in any other country, including
those listed on Exhibit A hereto, and (b) all reissues, continuations,
divisions, continuations-in-part, renewals or extensions thereof, and the
inventions disclosed or claimed therein.

“PTO” means the United States Patent and Trademark Office.

 

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“Security Agreement” means that certain Second Lien Security Agreement of even
date herewith granting to Secured Party a lien on the assets of Debtors executed
pursuant to and defined in the Loan Agreement.

“Trademark License” means any written agreement, now or hereafter in effect,
granting to any third party any right to use any Trademark now or hereafter
owned by any Debtor or that any Debtor otherwise has the right to license, or
granting to any Debtor any right to use any Trademark now or hereafter owned by
any third party, and all rights of any Debtor under any such agreement.

“Trademarks” means all of the following now owned or hereafter acquired by any
Debtor: (a) all trademarks, service marks, trade names, domain names, corporate
names, company names, business names, fictitious business names, trade styles,
trade dress, logos, other source indicators or business identifiers, designs and
general intangibles of like nature, now existing or hereafter adopted or
acquired, all registrations and recordings thereof, and all registration and
recording applications filed in connection therewith, including registrations
and registration applications in the PTO or any similar offices in any State of
the United States or any other country or any political subdivision thereof, and
all extensions or renewals thereof, including those listed on Exhibit A hereto,
and (b) all goodwill associated therewith or symbolized thereby.

“UCC” means the Uniform Commercial Code as in effect in the state of Texas.

(c) Terms Defined in the UCC. Where applicable in the context of this Agreement
and except as otherwise defined herein, terms used in this Agreement shall have
the meanings assigned to them in the UCC.

(d) Construction. In this Agreement, the following rules of construction and
interpretation shall be applicable: (i) no reference to “proceeds” in this
Agreement authorizes any sale, transfer or other disposition of any Collateral
by Debtors; (ii) “includes” and “including” are not limiting; (iii) “or” is not
exclusive; and (iv) “all” includes “any” and “any” includes “all.” To the extent
not inconsistent with the foregoing, the rules of construction and
interpretation applicable to the Security Agreement shall also be applicable to
this Agreement and are incorporated herein by this reference.

2. Security Interest.

(a) Grant of Security Interest. As security for the payment and performance of
the Obligations, each Debtor hereby grants, assigns, conveys, mortgages and
transfers to Secured Party a continuing security interest in all of such
Debtor’s right, title, and interest in, to, and under the following property, in
each case whether now or hereafter existing or arising or in which such Debtor
now has or hereafter owns, acquires or develops an interest and wherever located
(collectively, the “Collateral”):

 

  (i) all of its Patents and Patent Licenses together with all registrations and
recordings thereof, including, without limitation, applications, registrations
and recordings in the PTO or in any similar office of any country or political
subdivision thereof, to which it is a party including those referred to on
Exhibit A hereto;

 

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  (ii) all reissues, continuations or extensions of the foregoing; and

 

  (iii) all of its Trademarks and Trademark Licenses together with all prints
and labels on which said Trademarks have appeared or appear, designs and general
intangibles of like nature now existing or hereinafter adopted or acquired and
the applications, registrations and recordings in the PTO or in any similar
office or agency of the United States of America, any states thereof, or any
other country or subdivision thereof, to which it is a party including those
referred to on Exhibit A hereto;

 

  (iv) all reissues, continuations or extensions of the foregoing;

 

  (v) all goodwill of the business connected with the use of, and symbolized by,
each Trademark and each Trademark License; and

 

  (iv) all products and proceeds of any and all of the foregoing Collateral
(including, without limitation, income, license royalties, rights and payment
and accounts), any claim/or proceeds by any Debtor against third parties for
past, present or future infringement or dilution of any Patent or any Patent
licensed under any Patent License or any Trademark or Trademark licensed under
any Trademark License and any injury to the goodwill associated with any
Trademark or any Trademark license under any Trademark License and, to the
extent not otherwise included, all payments under insurance (whether or not
Secured Party is the loss payee thereof) or any indemnity, warranty or guaranty
payable by reason of loss or damage to or otherwise with respect to the
foregoing Collateral.

(b) Continuing Security Interest. Each Debtor agrees that this Agreement shall
create a continuing security interest in the Collateral.

3. Supplement to Security Agreement. This Agreement has been entered into in
conjunction with the security interests granted to Secured Party under the
Security Agreement or other security documents referred to in the Loan
Documents. The rights and remedies of Secured Party with respect to the security
interests granted herein are without prejudice to, and are in addition to those
set forth in the Security Agreement or any other security documents referred to
in the Loan Documents, all terms and provisions of which are incorporated herein
by reference.

4. Representation and Warranties. Each Debtor represents and warrants to Secured
Party that a true and correct list of all the existing Collateral, consisting of
U.S. patents and patent applications or registrations, trademarks, and trade
names owned by such Debtor, in whole or in part, is set forth in Exhibit A. Each
Debtor also represents and warrants to Secured Party that it has good and
merchantable title to the patents identified in Exhibit A, that such patents are
free and clear of any security interests, liens or other encumbrances except as
set forth on Exhibit B, that such patents have been properly maintained in
effect by such Debtor and that such patents do not infringe on other patents.
Each Debtor also represents and warrants that it has not granted any license to
third parties with respect to the Collateral other than the Australian License.

 

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5. Protection of Collateral. Each Debtor shall take all steps required to
preserve and protect the Collateral including, but not limited to, timely paying
all royalties, license fees, filing fees or registration fees and diligently
defending all threats of infringement thereon and upon challenges to the
validity thereof. In the Secured Party’s discretion, if any Debtor fails to do
so, the Secured Party may take any of the foregoing steps and make any of the
foregoing payments. Each Debtor agrees to reimburse the Secured Party on demand
for all expenditures so made. These expenses will bear interest from the date of
the advance at the rate of eighteen percent (18%) per annum and are payable on
demand at the place where the Obligations are payable. These expenses and
interest are part of the Obligations and are secured by this Agreement and the
other Loan Documents, as applicable. The Secured Party shall have no obligation
to any Debtor to make any such expenditures, nor shall the making thereof be
construed as the waiver or cure of any Event of Default.

6. Further Acts. On a continuing basis, each Debtor shall make, execute,
acknowledge, and deliver, and file and record in the proper filing and recording
places, all such instruments and documents, and take all such action as may be
necessary or advisable or may be requested by Secured Party to carry out the
intent and purposes of this Agreement, or for assuring, confirming or protecting
the grant or perfection of the security interest granted or purported to be
granted hereby, to ensure such Debtor’s compliance with this Agreement or to
enable Secured Party to exercise and enforce its rights and remedies hereunder
with respect to the Collateral, including any documents for filing with the PTO
or any applicable state office. Secured Party may record this Agreement, an
abstract thereof, or any other document describing Secured Party’s interest in
the Collateral with the PTO, at the expense of Debtors. In addition, each Debtor
authorizes Secured Party to file financing statements describing the Collateral
in any UCC filing office deemed appropriate by Secured Party. If any Debtor
shall at any time hold or acquire a commercial tort claim arising with respect
to the Collateral, such Debtor shall immediately notify Secured Party in a
writing signed by such Debtor of the brief details thereof and grant to Secured
Party in such writing a security interest therein and in the proceeds thereof,
all upon the terms of this Agreement, with such writing to be in form and
substance satisfactory to Secured Party.

7. Authorization to Supplement. If any Debtor shall obtain rights to any new
patentable inventions or become entitled to the benefit of any patent
application or patent for any reissue, division, or continuation, of any patent,
the provisions of this Agreement shall automatically apply thereto. Each Debtor
shall give prompt notice in writing to Secured Party with respect to any such
new patent rights. Without limiting any Debtor’s obligations under this
Section 7, each Debtor authorizes Secured Party unilaterally to modify this
Agreement by amending Exhibit A to include any such new patent rights.
Notwithstanding the foregoing, no failure to so modify this Agreement or amend
Exhibit A shall in any way affect, invalidate or detract from Secured Party’s
continuing security interest in all Collateral, whether or not listed on Exhibit
A.

8. Binding Effect. This Agreement shall be binding upon the parties and their
respective successors and assigns. No Debtor may, however, assign, transfer,
hypothecate or other wise convey its rights, benefits, obligations, or duties
hereunder except as specifically permitted in writing by Secured Party.

 

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9. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the law of the state of Texas, except as required by mandatory
provisions of law or to the extent the perfection or priority of the security
interests hereunder, or the remedies hereunder, in respect of any Collateral are
governed by the law of a jurisdiction other than the State of Texas.

10. Entire Agreement; Amendment. This Agreement and the other Loan Documents,
together with schedules hereto and thereto, contains the entire agreement of the
parties with respect to the subject matter hereof and supersedes all prior
drafts and communications relating to such subject matter. Neither this
Agreement nor any provision hereof may be modified, amended or waived except by
the written agreement of the parties. Notwithstanding the foregoing, Secured
Party unilaterally may modify, amend or supplement Exhibit A hereto as provided
in Section 7 hereof. To the extent that any provision of this Agreement
conflicts with any provision of the Security Agreement or Loan Documents, the
provision giving Secured Party greater rights or remedies shall govern, it being
understood that the purpose of this Agreement is to add to, and not detract
from, the rights granted to Secured Party under the Security Agreement and Loan
Documents.

11. Counterparts. This Agreement may be executed in any number of counterparts
and by different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together shall
constitute but one and the same agreement. Delivery of an executed counterpart
of this Agreement by facsimile shall be equally as effective as delivery of a
manually executed counterpart. Any party hereto delivering a counterpart of this
Agreement by facsimile shall also deliver a manually executed counterpart, but
the failure to so deliver a manually executed counterpart shall not affect the
validity, enforceability or binding effect hereof.

12. No Inconsistent Requirements. Each Debtor acknowledges that this Agreement
and the other documents, agreements, and instruments entered into or executed in
connection herewith may contain covenants and other terms, and provisions
variously stated regarding the same or similar matters, and each Debtor agrees
that all such covenants, terms and provisions are cumulative and all shall be
performed and satisfied in accordance with their respective terms.

13. Severability. If one or more provisions contained in this Agreement shall be
invalid, illegal or unenforceable in any respect in any jurisdiction or with
respect to any party such invalidity, illegality or unenforceability in such
jurisdiction or with respect to such party shall, to the fullest extent
permitted by applicable law, not invalidate or render illegal or unenforceable
any such provision in any other jurisdiction or with respect to any other party,
or any other provision of this Agreement.

14. Notices. All notices and other communications hereunder shall be in writing
and shall be mailed, sent or delivered in accordance with the Settlement
Agreement.

[Signature Page To Follow]

 

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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement, as of
the date first above written.

 

    DEBTORS:       NORTH AMERICAN TECHNOLOGIES GROUP, INC., a Delaware
corporation Attest:        

Joe B. Dorman

    By:  

/s/

      Name:  

D. Patrick Long

      Its:  

Chief Executive Officer

      TIETEK TECHNOLOGIES, INC., a Texas corporation Attest:        

Joe B. Dorman

    By:  

/s/

      Name:  

D. Patrick Long

      Its:  

Chief Executive Officer

      TIETEK LLC, a Delaware limited liability company Attest:        

Joe B. Dorman

    By:  

/s/

      Name:  

D. Patrick Long

      Title:  

Chief Executive Officer

      Federal ID #:  

52-2440303

 

 

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     SECURED PARTY:        OPUS 5949 LLC (formerly known as TIE INVESTORS, LLC),
a Texas limited liability company      By: SAMMONS VPC, INC., a Delaware
corporation, Manager Attest:         

        Yolanda Brown

     By:  

/s/

       Name:  

Heather Kreager

       Its:  

Sr. Vice President

 

 

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EXHIBIT A

TO THE SECOND LIEN INTELLECTUAL PROPERTY SECURITY AGREEMENT

Patents:

 

Company

  

Title

   Patent/Application
Number    Registration Date Tietek, LLC    Railroad tie and method for making
same    6,828,372    12/07/04 Tietek, LLC    Polymeric compositions and methods
for making construction materials from them    5,886,078    03/23/99

Trademarks:

 

Company

  

Title

   Registration/Serial Number    Registration Date

Tietek, LLC

  

Tietek

   3,188,514    12/26/06

 

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EXHIBIT B

TO THE SECOND LIEN INTELLECTUAL PROPERTY SECURITY AGREEMENT

Security Interests, Liens or Encumbrances

The Collateral is subject to the obligations to pay royalties under the NATK
Royalty Agreement and the TieTek Royalty Agreement, as such terms are defined in
the Loan Agreement.