FORBEARANCE AGREEMENT

EXHIBIT 10.1

FORBEARANCE AGREEMENT

This Forbearance Agreement (this “Agreement” ), dated as of May 9, 2005, is entered into by and among the following parties:

(a) TIETEK LLC, a Delaware limited liability company (the “Borrower”);

(b) NORTH AMERICAN TECHNOLOGIES, INC., a Texas corporation (the “Company”); and TIETEK TECHNOLOGIES, INC., a Texas corporation (“TTT”) (the Company and TTT shall be collectively referred to as the “Borrower Affiliates” and the Borrower Affiliates and the Borrower shall be collectively referred to as the “Borrower Group”); and

(c) OPUS 5949 LLC (fka Tie Investors, LLC), a Texas limited liability company (the “Lender”). (The Borrower Affiliates and the Lender shall be collectively referred to as the “Parties”).

PRELIMINARY STATEMENTS

A. The Borrower, the Borrower Affiliates, and the Lender have entered into that certain Construction Loan Agreement, dated as of February 5, 2004, as amended by that certain Release, dated February 22, 2005, by and among the Parties, that certain Letter Agreement, dated April 6, 2005, and that certain Letter Agreement dated April 29, 2005, by and among the Parties (as amended, the “Construction Loan Agreement”), pursuant to which the Lender agreed to make available to the Borrower Group certain financial accommodations.

B. The Borrower and the Borrower Affiliates acknowledge and agree that a principal and interest payment was due to the Lender on April 1, 2005, that such payment has not yet been made, and that but for the 30-day extension of the due date for such payment contained in the April 6, 2005 letter agreement between TieTek and the Lender, and the extension to May 9, 2005 contained in the April 29, 2005 letter agreement among the parties, TieTek would currently be in default under the Construction Loan Agreement and other documents arising out of the Construction Loan Agreement (collectively, the “Loan Documents”).

C. The Borrower and the Borrower Affiliates have not made the required principal and interest payment due under the Construction Loan Agreement on April 1, 2005 (which due date was extended to May 1, 2005, by letter dated April 6, 2005, and further extended to May 9, 2005 by letter dated April 29, 2005), and do not anticipate making any subsequent payment of principal or interest prior to December 31, 2005 (the “ Pending Defaults ”) other than the execution and delivery of the promissory notes provided for in Section 2(b) of this Agreement.

D. The Borrower, the Borrower Affiliates and the Lender have engaged in good faith negotiations with the objective of reaching an agreement with regard to certain aspects of the Loan Documents.

E. The Borrower, the Borrower Affiliates and the Lender now desire to implement a forbearance period during which time the Borrower and the Borrower Affiliates will attempt to refinance the Construction Loan Agreement, and generate new funds and the Lender will forbear in enforcing its rights thereunder.

STATEMENT OF AGREEMENT

In consideration of the premises and the mutual covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, agree as follows:

1. Agreements of Lender .

(a) Ownership . The Lender represents and warrants that, as of the date hereof, (i) the Lender is the sole legal and beneficial owner of the entire amount of the debt outstanding under the Construction Loan Agreement (the “Debt” ) and all related claims, rights, powers and causes of action arising out of or in connection with or otherwise relating to such Debt (the “Claims” ), in each case free and clear of all claims, liens and encumbrances and (ii) the Lender has full power and authority to vote on and consent to such matters concerning such Debt and Claims and to exchange, assign and transfer such Debt and Claims.

(b) Agreement to Forbear . The Lender agrees that until this Agreement has been terminated in accordance with Section 3 , it shall not, with respect to any of the Pending Defaults (i) take any action or otherwise pursue any right or remedy under (A) the Construction Loan Agreement or (B) any of the Loan Documents, or (ii) initiate, or have initiated on its behalf, any litigation or proceeding of any kind with respect to the Debt or Claims other than to enforce this Agreement.

(c) Agreement to Defer Missed Principal Payments . Lender hereby agrees that the payments of principal that would otherwise have been due and payable on April 1, 2005, July 1, 2005, and October 1, 2005, under the Construction Loan Agreement shall be deferred until, and shall be due and payable on, January 1, 2006.

2. Agreements of the Borrower and the Borrower Affiliates . The Borrower and the Borrower Affiliates hereby agree:

(a) that the Construction Loan Agreement (as amended to date as described in the preamble to this Agreement) and the Loan Documents remain in full force and effect and that the Borrower and the Borrower Affiliates have no defense, offset or counterclaim against the Lender that would prevent the Lender from enforcing the Construction Loan Agreement or any Loan Document in accordance with its terms;

(b) that upon execution of this Agreement, at Lender’s option, TieTek shall execute a promissory note for the interest payment that was due on April 1, 2005 in the form attached hereto as Exhibit A-1 and on July 1, 2005 and October 1, 2005, at Lender’s option, TieTek shall execute a promissory note for each interest payment due on that date in the forms attached hereto on Exhibit A-2 and A-3, respectively;

(c) that at Lender’s option, TieTek shall exchange the promissory notes executed and delivered pursuant to Section 2(b) above in exchange for a combination of securities deemed fair by the investment advisor and acceptable to other investment groups;

(d) to select special counsel and select, by no later than May 25, 2005, an investment banker to determine the feasibility of refinancing, with another lender, the Construction Loan, and/or to determine the feasibility of Borrower and the Borrower Affiliates obtaining, a bridge loan, a working capital loan or a permanent loan, and if it is feasible to do so, to determine the terms and conditions under which each type of loan may be obtained. It is the Borrower’s and the Borrower Affiliates’ intent that the investment banker selected by the Borrower and the Borrower Affiliates shall be one that is experienced in matters such as obtaining financing for manufacturing facilities, financing for bridge and working capital loans and refinancing of loans such as the Construction Loan;

(e) to solicit accredited investors, from a group of large shareholders, (generally that are required to file form 13(d) with the Securities Exchange Commission) or their affiliates, of North American Technologies Group, Inc., to obtain financing for the Borrower’s cash needs during the period that is necessary to for TieTek to achieve stabilization of its manufacturing processes;

(f) after selecting the parties set forth in section (d) immediately above, to provide to the Lender, the Borrower’s and its selected investment banker’s suggested plans for obtaining a bridge loan, subordinated debt and/or alternative refinancing of the Construction Loan;

(g) to obtain a commitment for additional financing on or before July 30, 2005;

(h) on or before May 25, 2005, the Borrower and the Borrower Affiliates shall engage the services of one or more consultants for the Borrower, chosen by the Borrower and the Borrower Affiliates, (the “ Consultant(s) ”), for the purposes of assisting the Borrower and the Borrower Affiliates in improving their operations and stabilizing the manufacturing processes, with a completion date of July 1, 2005, with the Consultant and the Company providing interim comments with respect to such matters and timely development of a strategic plan to effect the foregoing;

(i) to provide weekly, beginning May 13, 2005, Lender the same or substantially similar information that Borrower and the Borrower Affiliates provide to the members of its Board of Directors and to its management including without limitation, specific performance reports or measurements, financial plans and budgets, and any other information reasonably requested by Lender. Such reports shall be substantially in the form of the reports and items set forth on Exhibit B attached hereto and made a part hereof and discussed in a weekly conference call with Lender’s representative as Borrower works to achieve its operating goals;

(j) to have certain members, as determined by Lender, of Borrower’s and the Borrower Affiliates’ management and/or board members, to meet with Lender, but not more than frequently than once a month, to discuss and review Borrower’s and the Borrower Affiliates’ business affairs and plans provided, however, that in the event Lender has questions or concerns regarding the status of Borrower and the Borrower Affiliates, the Lender may request a conference call with Borrower and the Borrower Affiliates which shall occur within 48 hours of such request; and

(k) to provide the Lender complete access to the Borrower’s and the Borrower Affiliates’ books, records and facilities to confirm the information provided during the term hereof.

3. Termination of Agreement .

This Agreement may be terminated by the Lender if any of the following events (any such event, a “Termination Event” ) occurs and is not waived: (i) the Borrower or the Borrower Affiliates shall have materially breached any of their obligations or failed to satisfy in any material respect any of the terms or conditions under this Agreement; (ii) the Borrower or the Borrower Affiliates shall have defaulted under the Loan Documents, other than any of the Pending Defaults, and such default shall not have been cured within any applicable grace period; or (iii) December 31, 2005.

4. Cooperation; Further Assurances; Acknowledgment; Definitive Documents . To the extent reasonably practicable and to the extent that cooperation of the Parties does not

materially adversely affect their respective interests or breach any fiduciary duty that either Party may have, the Parties shall cooperate with each other in matters concerning the Borrower’s and the Borrower Affiliates’ attempt to structure bridge and working capital loans and to refinance the Construction Loan. Furthermore, subject to the terms hereof, each of the Parties shall take such action as may be reasonably necessary to carry out the purposes and intent of this Agreement, including making and filing any required regulatory filings and voting any equity securities of the Borrower and the Borrower Affiliates in favor of the restructuring or refinancing the Construction Loan, and shall refrain from taking any action that would frustrate the purposes and intent of this Agreement.

5. Representations and Warranties . Each Party, severally (and not jointly), represents and warrants to the other Parties that the following statements are true, correct and complete as of the date hereof:

(a) it has all requisite corporate, partnership, limited liability company or similar authority to enter into this Agreement and carry out the transactions contemplated hereby and perform its obligations contemplated hereunder; and the execution and delivery of this Agreement and the performance of such Party’s obligations hereunder have been duly authorized by all necessary corporate, limited liability, partnership or other similar action on its part;

(b) the execution, delivery, and performance by such Party of this Agreement does not and shall not (i) violate any provision of law, rule or regulation applicable to it or any of its subsidiaries or its charter or bylaws (or other similar governing documents) or those of any of its subsidiaries, or (ii) conflict with, result in a breach of or constitute (with due notice or lapse of time or both) a default under any material contractual obligation to which it or any of its subsidiaries is a party; and

(c) the execution, delivery, and performance by such Party of this Agreement does not and shall not require any registration or filing with, consent or approval of, or notice to, or other action to, with or by, any federal, state or governmental authority or regulatory body; and

(d) this Agreement is a legally valid and binding obligation of the Parties, enforceable in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or limiting creditors’ rights generally or by equitable principles relating to enforceability or a ruling of the Bankruptcy Court.

6. Additional Agreements .

(a) Default Interest . The Borrower and Borrower Affiliates agree and acknowledge that from and after May 9, 2005, and continuing until all events of default as defined in the Construction Loan Agreement (including each of the specific events of default) have been cured or waived in writing (other than pursuant to this Forbearance Agreement) by the Lender, the Debt will accrue interest at the “Default Rate” of interest as provided in the Loan Documents.

(b) Review by Borrower and Borrower Affiliates . This Forbearance Agreement was reviewed by the Borrower and the Borrower Affiliates, who acknowledge and agree that the Borrower and the Borrower Affiliates (i) understand fully the terms of this Forbearance Agreement and the consequences of the issuance hereof, (ii) have been afforded an opportunity to have this Forbearance Agreement reviewed by, and to discuss this Forbearance Agreement with, such attorneys and other persons as the Borrower or the

(c) Ratification of Liens and Security Interests . The Borrower and the Borrower Affiliates hereby acknowledge and agree that the liens and security interests of the Construction Loan Agreement and the Loan Documents are valid and subsisting liens and security interests and are superior to all liens and security interests other than those exceptions approved by the Lender in writing and as otherwise permitted under the Construction Loan Agreement or the Loan Documents.

7. Amendments and Waivers . This Agreement may not be modified, amended or supplemented except in a writing signed by the Borrower, the Borrower Affiliates and Lender and a Termination Event may not be waived except in a writing signed by the Borrower, the Borrower Affiliates and the Lender.

No failure on the part of Lender to provide a notice hereunder or otherwise exercise, and no delay in providing any notice or otherwise exercising, any right, power, remedy or privilege under this Forbearance Agreement, shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power, remedy or privilege under this Forbearance Agreement preclude any other or further exercise thereof or the exercise of any other right, power, remedy or privilege.

8. GOVERNING LAW; JURISDICTION . THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF TEXAS, WITHOUT REGARD TO ANY CONFLICTS OF LAW PROVISIONS WHICH WOULD REQUIRE THE APPLICATION OF THE LAW OF ANY OTHER JURISDICTION. BY ITS EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE PARTIES HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ANY LEGAL ACTION, SUIT OR PROCEEDING AGAINST IT WITH RESPECT TO ANY MATTER UNDER OR ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT RENDERED IN ANY SUCH ACTION, SUIT OR PROCEEDING, MAY BE BROUGHT IN ANY FEDERAL OR STATE COURT IN DALLAS COUNTY, TEXAS, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE PARTIES HEREBY IRREVOCABLY ACCEPTS AND SUBMITS ITSELF TO THE NONEXCLUSIVE JURISDICTION OF EACH SUCH COURT, GENERALLY AND UNCONDITIONALLY, WITH RESPECT TO ANY SUCH ACTION, SUIT OR PROCEEDING.

9. Survival . Notwithstanding (i) any sale of the Debt or Claims or (ii) the termination of this Agreement pursuant to Section 3 , the agreements and obligations of the Parties in Sections 2(a) & (b) , 8,12 , 14 , 17 , and 20 and in the Loan Documents shall survive such sale and/or termination and shall continue in full force and effect for the benefit of the Lender.

10. Headings . The headings of the Sections, paragraphs and subsections of this Agreement are inserted for convenience only and shall not affect the interpretation hereof.

11. Successors and Assigns; Severability; Several Obligations . This Agreement is intended to bind and inure to the benefit of the Parties and their respective successors, assigns, heirs, executors, administrators and representatives. The invalidity or unenforceability at any

time of any provision hereof shall not affect or diminish in any way the continuing validity and enforceability of the remaining provisions hereof. The agreements, representations and obligations of the Lender under this Agreement are, in all respects, several and not joint.

12. No Third-Party Beneficiaries . Unless expressly stated herein, this Agreement shall be solely for the benefit of the Parties and no other person or entity shall be a third party beneficiary hereof.

13. Prior Negotiations; Entire Agreement . This Agreement constitutes the entire agreement of the Parties, and supersedes all other prior negotiations, with respect to the subject matter hereof, except that the Parties acknowledge that all Loan Documents shall continue in full force and effect.

14. Counterparts . This Agreement may be executed in one or more counterparts, each of which shall be deemed an original and all of which shall constitute one and the same agreement.

15. Notices . All notices and other communications under this Agreement shall be in writing, sent contemporaneously to all of the Parties, and deemed given when delivered by hand or by facsimile during standard business hours (from 8:00 a.m. to 6:00 p.m.) at the place of receipt at the addresses and facsimile numbers set forth on the Construction Loan Agreement, with a copy to each person identified thereon.

16. Reservation of Rights . Except as expressly provided in this Agreement, nothing herein is intended to, or does, in any manner waive, limit, impair or restrict the ability of the Lender to protect and preserve its rights, remedies and interests, including its claims against the Borrower and the Borrower Affiliates. Nothing herein shall be deemed an admission of any kind. If the transactions contemplated herein are not consummated, or this Agreement is terminated for any reason, the parties hereto fully reserve any and all of their rights. Pursuant to Rule 408 of the Federal Rule of Evidence, any applicable state rules of evidence and any other applicable law, foreign or domestic, this Agreement and all negotiations relating thereto shall not be admissible into evidence in any proceeding other than a proceeding to enforce its terms.

17. Prevailing Party . If any Party brings an action or proceeding against any other Party based upon a breach by such Party of its obligations hereunder, the prevailing Party shall be entitled to all reasonable expenses incurred, including reasonable attorneys’, accountants’ and financial advisors fees in connection with such action or proceeding.

18. Fiduciary Duties . Notwithstanding anything to the contrary herein, nothing in this Agreement shall require (a) the Borrower, the Borrower Affiliates or any of their respective directors or officers (in such person’s capacity as a director or officer of the Borrower or the Borrower Affiliates) to take any action, or to refrain from taking any action, to the extent it or they are required to do otherwise to comply with its or their fiduciary obligations under applicable law, or (b) the Lender or representative of the Lender that is also a director or officer of the Borrower or the Borrower Affiliates to take any action, or to refrain from taking any action, in such person’s capacity as a director or officer of the Borrower or the Borrower Affiliates to the extent it or they are required to do otherwise to comply with their fiduciary obligations under law applicable to such director or officer. Nothing herein will limit or affect, or give rise to any liability, to the extent required for the discharge of the fiduciary obligations described in this Section 17 .

19. Release . Each of the Borrower and the Borrower Affiliates hereby acknowledge that as of the date hereof it has no defense, counterclaim, offset, cross-complaint, claim or demand of any kind or nature whatsoever that can be asserted to

reduce or eliminate all or any part of the liability of the Borrower to repay the obligations or to seek affirmative relief or damages of any kind or nature from the Lender or its respective affiliates, partners, participants, agents, attorneys, officers, directors, agents, employees, successors, assigns, and predecessors, and each of the Borrower and the Borrower Affiliates hereby voluntarily and knowingly release and forever discharge the Lender and its affiliates, participants, predecessors, partners, agents, officers, directors, employees, successors and assigns, from all possible claims, demands, actions, causes of action, damages, costs, expenses and liabilities whatsoever, known or unknown, anticipated or unanticipated, suspected or unsuspected, fixed, contingent, or conditional, at law or in equity, originating in whole or in part on or before the date this Forbearance Agreement is executed, in each case which either the Borrower or any of the Borrower Affiliates may now or hereafter have against the Lender, and its respective affiliates, partners, participants, agents, officers, directors, employees, attorneys, successors, assigns, and predecessors, if any, and irrespective of whether any such claims arise out of contract, tort, violation of law or regulations, or otherwise, and arising from the obligations, the exercise of any rights and remedies under the Loan Agreement or the Loan Documents, and negotiation for and execution of this Forbearance Agreement. The Borrower and the Borrower Affiliates hereby covenant and agree never to institute any action or suit at law or in equity, nor institute, prosecute, or in any way aid in the institution or prosecution of any claim, action or cause of action, rights to recover debts or demands of any nature against the Lender, and its respective affiliates, participants, agents, attorneys, partners, officers, directors, employees, successors, assigns, and predecessors arising out of or related to the Lender’s actions, omissions, statement, requests or demands originating on or prior to the date hereof in administering, enforcing, monitoring, collection or attempting to collect the indebtedness of the Borrower to the Lender, which indebtedness was evidenced by the Construction Loan Agreement and the Loan Documents.

20. Fees and Expenses . Borrower and the Borrower Affiliates shall pay all reasonable expenses, including legal and consulting fees incurred by Lender in connection with the matters leading to the preparation and consummation of this Agreement and reasonable fees related to Lender’s review of Borrower’s and the Borrower Affiliates’ performance of this Agreement.

IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed as of the date first written above.

OPUS 5949 LLC (f/k/a TIE

INVESTORS, LLC)

By: /s/ Joe A. Ethridge

Its: Joe A. Ethridge, Vice President

TIETEK LLC

By: /s/ Henry W. Sullivan

      Henry W. Sullivan, President

TIETEK TECHNOLOGIES, INC.

By: /s/ Henry W. Sullivan

      Henry W. Sullivan, President

NORTH AMERICAN TECHNOLOGIES

GROUP, INC.

By: /s/ Henry W. Sullivan

      Henry W. Sullivan, President

EXHIBIT A-1

PROMISSORY NOTE

FOR VALUE RECEIVED, the undersigned, TIETEK, INC., a Delaware corporation (herein called “ Maker ”), hereby promises to pay to the order of OPUS 5949 LLC, a Texas limited liability company (herein sometimes called “ Payee ”), the principal sum of Four Hundred Seven Thousand Nine Hundred Forty-four and 45/100 Dollars ($407,944.45), or so much thereof from time to time outstanding as shall be advanced, with interest on the unpaid balance thereof from date hereof until maturity at the rate or rates hereinaft