SECOND LIEN SECURITY AGREEMENT

Exhibit 10.4

SECOND LIEN SECURITY AGREEMENT

SECOND LIEN SECURITY AGREEMENT, dated as of August 20, 2009, between 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 ”), and Opus 5949 LLC (formerly known as Tie Investors, LLC), a Texas limited liability company (the “ Secured Party ”).

WHEREAS, the Debtors and Secured Party have entered into a Second Lien Loan Agreement (the “ Loan Agreement ”) of even date herewith pursuant to which the Secured Party has agreed to loan to Debtors certain funds on the terms and conditions set forth therein;

WHEREAS, pursuant to the Loan Agreement, the Debtors have agreed to execute and deliver this Second Lien Security Agreement (this “ Agreement ”) to secure the payment and performance of the Obligations (as defined below); and

WHEREAS, the Debtors wish to grant a security interest in favor of the Secured Party as herein provided.

NOW, THEREFORE, in consideration of the promises contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1. Definitions and Construction . All capitalized terms used herein without definitions shall have the respective meanings provided therefor in the Loan Agreement. The term “ State ,” as used herein, means the state of Texas. All terms defined in the Uniform Commercial Code of the State and used herein shall have the same definitions herein as specified therein. However, if a term is defined in Article 9 of the Uniform Commercial Code of the State differently than in another Article of the Uniform Commercial Code of the State, the term has the meaning specified in Article 9. The term “ Obligations ,” as used herein, means the Loans and all other obligations of the Debtors to the Secured Party to make the payment under the Loan Documents and all other obligations and liabilities of the Debtors under this Agreement.

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 any Debtor; (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 Intellectual Property Security Agreement shall also be applicable to this Agreement and are incorporated herein by this reference.

2. Grant of Security Interest . Each Debtor hereby grants, assigns, mortgages, pledges and transfers to the Secured Party, to secure the payment and performance in full of all of the Obligations, a Lien on and security interest in, each and all of such Debtor’s right, title and

interest in the following property and assets and all other personal property of such Debtor, whether now owned by such Debtor or hereafter acquired and whether now existing or hereafter coming into existence and wherever located (all being collectively referred to herein as “ Collateral ”), including, without limitation: (i) Accounts; (ii) Chattel Paper (whether tangible or electronic); (iii) Commercial Tort Claims set forth on Schedule II; (iv) Deposit Accounts and all other bank accounts and deposits therein; (v) Documents; (vi) Equipment; (vii) financial assets; (viii) Fixtures; (ix) General Intangibles; (x) Goods; (xi) Instruments; (xii) insurance claims and proceeds; (xiii) Inventory; (xiv) Investment Property; (xv) Supporting Obligations and Letter of Credit Rights; (xvi) Payment Intangibles; (xvii) Promissory Notes; (xviii) Intellectual Property, (xviv) money, cash or cash equivalents of such Debtor, and (xviv) all other tangible and intangible property of such Debtor, including, without limitation, all proceeds, tort claims, products, accessions, rents, profits, income, benefits, substitutions, additions and replacements of and to any of the foregoing (including, without limitation, any proceeds of insurance thereon, insurance claims and all rights, claims and benefits against any person relating thereto), other rights to payments not otherwise included in the foregoing and all books, correspondence, files, records, invoices and other papers, including without limitation all tapes, cards, computer runs, computer programs, computer files and other papers, documents and records in the possession or under the control of such Debtor or any computer bureau or service company from time to time acting for such Debtor, and all proceeds of the foregoing.

3. Authorization to File Financing Statements . Each Debtor hereby irrevocably authorizes the Secured Party at any time and from time to time to file in any filing office in any Uniform Commercial Code jurisdiction any initial financing statements and amendments thereto that (a) indicate the Collateral (i) as all assets of such Debtor now owned or hereafter acquired or words of similar effect, regardless of whether any particular asset comprised in the Collateral falls within the scope of Article 9 of the Uniform Commercial Code of the State or such jurisdiction, or (ii) as being of an equal or lesser scope or with greater detail and (b) provide any other information required by part 5 of Article 9 of the Uniform Commercial Code of the State, or such other jurisdiction, for the sufficiency or filing office acceptance of any financing statement or amendment, including (i) whether such Debtor is an organization, the type of organization and any organizational identification number issued to such Debtor and (ii) in the case of a financing statement filed as a fixture filing or indicating Collateral as as-extracted collateral or timber to be cut, a sufficient description of real property to which the Collateral relates. Each Debtor agrees to furnish any such information to the Secured Party promptly upon the Secured Party’s request.

4. Other Actions as to Any and All Collateral . Each Debtor further agrees, at the request and option of the Secured Party, to take, at such Debtor’s expense, any and all other actions the Secured Party may determine to be necessary or useful for the attachment, perfection and priority of, and the ability of the Secured Party to enforce, the Secured Party’s security interest in any and all of the Collateral, including, without limitation, (a) executing, delivering and, where appropriate, filing financing statements and amendments relating thereto under the Uniform Commercial Code, to the extent, if any, that such Debtor’s signature thereon is required therefor, (b) causing the Secured Party’s name to be noted as secured party on any certificate of title for a titled good if such notation is a condition to attachment, perfection or priority of, or ability of the Secured Party to enforce, the Secured Party’s security interest in such Collateral,

(c) complying with any provision of any statute, regulation or treaty of the United States as to any Collateral if compliance with such provision is a condition to attachment, perfection or priority of, or ability of the Secured Party to enforce, the Secured Party’s security interest in such Collateral, (d) obtaining governmental and other third party waivers, consents, and approvals in form and substance satisfactory to Secured Party, including, without limitation, any consent of any licensor, lessor or other person obligated on Collateral, (e) obtaining waivers from mortgagees and landlords in form and substance satisfactory to the Secured Party, and (f) taking all actions under any earlier versions of the Uniform Commercial Code or under any other law, as reasonably determined by the Secured Party to be applicable in any relevant Uniform Commercial Code or other jurisdiction, including any foreign jurisdiction. Unless delivered to Secured Party (as such term is defined in that certain Security Agreement dated as of February 5, 2004, by and among Debtors and such Secured Party (the “First Lien Security Agreement”)) or Secured Party shall otherwise consent in writing (which consent may be revoked), each Debtor shall deliver to Secured Party all Collateral (and take all other steps requested by Secured Party with respect to such Collateral) consisting of negotiable Documents, letters of credit (in which Debtor is the beneficiary thereof), certificated securities, Chattel Paper and Instruments (in each case, accompanied by stock powers, allonges or other instruments of transfer executed in blank) promptly after such Debtor receives the same. Each Debtor shall provide Secured Perty with prompt written notice if Debtor acquires any commercial tort claims (as defined in the Code) and unless otherwise consented by Secured Party, each Debtor shall enter into a supplement to this Agreement, granting to Secured Party a Lien in such commercial tort claim

5. Intellectual Property Security Agreement . Concurrently herewith, the Debtors are also executing and delivering to the Secured Party an Intellectual Property Security Agreement pursuant to which each Debtor is granting to the Secured Party security interests in certain Collateral consisting of, among other things, patents, patent rights and trademarks. The provisions of the Intellectual Property Security Agreement are supplemental to the provisions of this Agreement, and nothing contained in the Intellectual Property Security Agreement shall derogate from any of the rights or remedies of the Secured Party hereunder. Neither the delivery of, nor anything contained in, the Intellectual Property Security Agreement shall be deemed to prevent or postpone the time of attachment or perfection of any security interest in such Collateral created hereby.

6. Representations and Warranties Concerning Debtors’ Legal Status .

(a) North American Technologies Group, Inc. represents and warrants to the Secured Party as follows: (i) North American Technologies Group, Inc.’s exact legal name is North American Technologies Group, Inc., (ii) North American Technologies Group, Inc. is a Delaware corporation, (iii) North American Technologies Group, Inc.’s organizational identification number is 2112835, and (iv) North American Technologies Group, Inc.’s principal place of business is 429 Memory Lane, Marshall, Texas 75672.

(b) TieTek Technologies, Inc. represents and warrants to the Secured Party as follows: (i) TieTek Technologies, Inc.’s exact legal name is TieTek Technologies, Inc., (ii) TieTek Technologies, Inc. is a Texas corporation and a wholly-owned subsidiary of North American Technologies Group, Inc., (iii) TieTek Technologies, Inc.’s organizational identification number is 01373482-00, and (iv) TieTek Technologies, Inc.’s principal place of business is 429 Memory Lane, Marshall, Texas 75672.

(c) TieTek LLC represents and warrants to the Secured Party as follows: (i) TieTek, LLC’s exact legal name is TieTek LLC, (ii) TieTek LLC is a Delaware limited liability company and a wholly-owned subsidiary of TieTek Technologies, Inc., (iii) TieTek LLC’s organizational identification number is 3692537, and (iv) TieTek LLC’s principal place of business is 429 Memory Lane, Marshall, Texas 75672.

7. Covenants Concerning Debtors’ Legal Status . Debtors covenant with the Secured Party as follows: (a) No Debtor will change its name, its place of business, chief executive office or its mailing address; (b) if any Debtor does not have an organizational identification number and later obtains one, such Debtor shall forthwith notify the Security Party of such organizational identification number; and (c) no Debtor will change its type of organization, jurisdiction or organization or other legal structure.

8. Representations and Warranties Concerning Collateral, etc. Debtors further represent and warrant to the Secured Party as follows: (a) Debtors are the owners of or have other rights in or power to transfer the Collateral, free from any right or claim of any person or any adverse lien, security interest or other encumbrance, except for the security interest created by this Agreement and other liens disclosed on Schedule I; (b) none of the Collateral constitutes, or is the proceeds of, “farm products” as defined in Section 9-102(a)(34) of the Uniform Commercial Code of the State; (c) none of the account debtors or other persons obligated on any of the Collateral is a governmental authority covered by the Federal Assignment of Claims Act or like federal, state or local statute or rule in respect of such Collateral; (d) Debtors have at all times operated their business in compliance with all applicable provisions of the federal Fair Labor Standards Act, as amended, and with all applicable provisions of federal, state, and local statutes and ordinances dealing with the control, shipment, storage or disposal of hazardous materials or substances; and (e) all other information set forth herein or otherwise provided to the Secured Party pertaining to the Collateral is accurate and complete.

9. Covenants Concerning Collateral, etc. Debtors further covenant with the Secured Party as follows:

9.1 the Collateral, to the extent not in the possession of the Secured Party (as defined in the First Lien Security Agreement) or not delivered to the Secured Party and except as contemplated in Section 9.8 hereof, will be kept at 429 Memory Lane, Marshall, Texas 75672, and no Debtor will remove the Collateral (other than any Inventory sold in the ordinary course of business) from such locations, without the prior written consent of Secured Party (which consent shall be given in Secured Party’s sole discretion);

9.2 except for the security interest herein granted and liens disclosed on Schedule I , Debtors shall be the owners of or have other rights in the Collateral free from any right or claim of any other person, lien, security interest or other encumbrance, and Debtors shall defend the same against all claims and demands of all persons at any time claiming the same or any interests therein adverse to the Secured Party;

9.3 Debtors shall not pledge, mortgage or create, or suffer to exist any right of any person in or claim by any person to the Collateral, or any security interest, lien or encumbrance in the Collateral in favor of any person, other than the Secured Party except for liens disclosed on Schedule I ;

9.4 Debtors will keep the Collateral in good order and repair and will not use the same in violation of law or any policy of insurance thereon;

9.5 Debtors will permit the Secured Party, or its designee, to inspect the Collateral at any reasonable time, wherever located;

9.6 Debtors will pay promptly when due all taxes, assessments, governmental charges, and levies upon the Collateral or incurred in connection with the use or operation of such Collateral or incurred in connection with this Agreement;

9.7 Debtors will continue to operate, their business in compliance with all applicable provision of the federal Fair Labor Standards Act, as amended, and with all applicable provisions of federal, state, and local statutes and ordinances dealing with the control, shipment, storage or disposal of hazardous material or substances; and

9.8 Debtors will not sell or otherwise dispose of, or offer to sell or otherwise dispose of, the Collateral or any interest therein except for sales of inventory in the ordinary course of business.

10. Insurance and Risk of Loss .

10.1 Debtors will insure the Collateral in accordance with Secured Party’s reasonable requirements regarding choice of carrier, risks insured against, and amount of coverage. Policies must be written in favor of Debtors, be endorsed to name Secured Party as an additional insured or as otherwise directed in writing by Secured Party, and provide that Secured Party will receive at least ten (10) days’ notice before cancellation or change in coverage. Debtors must provide copies of the policies or certificates, and any renewals, to Secured Party.

10.2 Debtors assume all risk of loss to the Collateral.

10.3 Debtors appoint Secured Party as attorney-in-fact to collect any returned unearned premiums and proceeds of any insurance on the Collateral and to endorse and deliver to Secured Party any payment from such insurance made payable to Debtors. Debtors’ appointment of Secured Party as Debtors’ agent is coupled with an interest.

10.4 In the event of failure by the Debtors to provide and maintain insurance as herein provided, the Secured Party may, at its option, provide such insurance and charge the amount thereof to the Debtors. The Debtors shall furnish the Secured Party with certificates of insurance and policies evidencing compliance with the foregoing insurance provision.

11. Collateral Protection Expenses; Preservation of Collateral .

11.1 Expenses Incurred by Secured Party . In the Secured Party’s discretion, if the Debtors fail to do so, the Secured Party may discharge taxes and other encumbrances at any time levied or placed on any of the Collateral, maintain any of the Collateral, make repairs thereto and pay any necessary filing fees or insurance premiums. The Debtors agree to reimburse the Secured Party on demand for all expenditures so made. These expenses will bear interest from the date of advance at the rate of 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. The Secured Party shall have no obligation to the Debtors to make any such expenditures, nor shall the making thereof be construed as the waiver or cure of any Event of Default.

11.2 Secured Party’s Obligations and Duties . Anything herein to the contrary notwithstanding, the Debtors shall remain obligated and liable under each contract or agreement comprised in the Collateral to be observed or performed by the Debtors thereunder. The Secured Party shall not have any obligation or liability under any such contract or agreement by reason of or arising out of this Agreement or the receipt by the Secured Party of any payment relating to any of the Collateral, nor shall the Secured Party be obligated in any manner to perform any of the obligations of the Debtors under or pursuant to any such contract or agreement, to make inquiry as to the nature or sufficiency of any payment received by the Secured Party in respect of the Collateral or as to the sufficiency of any performance by any party under any such contract or agreement, to present or file any claim, to take any action to enforce any performance or to collect the payment of any amounts which may have been assigned to the Secured Party or to which the Secured Party may be entitled at any time or times. The Secured Party shall use reasonable care with respect to the Collateral in its possession or under its control. The Secured Party shall not have any other duty as to any Collateral in its possession or control or in the possession or control of any agent or nominee of the Secured Party, or any income thereon or as to the preservation of rights against prior parties or any other rights pertaining thereto.

12. An Event of Default . An “Event of Default” shall be deemed to have occurred hereunder if:

12.1 Debtors fail to timely pay the Obligations or Debtors fail to perform any obligation or covenant in this Agreement or the Loan Documents as or when due to be paid or performed;

12.2 any warranty, covenant or representation in the Security Agreement or the Intellectual Property Security Agreement between Debtors, on the one hand, and Secured Party, on the other, in this Agreement is materially false when made;

12.3 an Event of Default has occurred under the Loan Agreement; or

12.4 any Collateral is impaired by loss, theft, damage, levy and execution, issuance of an official writ or order of seizure, or destruction, unless it is promptly replaced with Collateral of like kind and quality or restored to its former condition.

13. Remedies .

13.1 If an Event of Default exists, Secured Party may: