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                                                                        Exh 10.4

                                    AGREEMENT

       This Agreement is made and entered into this 9th day of May , 2001,

                                 by and between

                FREUDENBERG Vliesstoffe KG, a limited partnership
                      duly organized and existing under the
                      laws of Germany, having its principal
                    office at Hohnerweg 2-4, 69465 Weinheim,
                    Federal Republic of Germany (hereinafter
                         referred to as ,,FREUDENBERG")

                                       and

           Frisby Technologies Inc., a corporation duly organized and
                existing under the laws of Delaware, having its
                principal office at 3195 Centre Park Boulevard,
                  Winston-Salem, North Carolina 27107, U.S.A.
                     (hereinafter referred to as,,FRISBY").


                                   WITNESSETH

WHEREAS, Frisby produces and sells under the trademarks ComforTemp(R) and
Thermasorb(R) Microencapsulated and Bulk Phase Change Material (hereinafter
referred to as MicroPCM),

WHEREAS, Frisby and Freudenberg have entered into a cooperation in relation to
the development and application of MicroPCM for use in apparel, accessories,
footwear and sporting goods applications, medical, packaging, constructions and
building products, transportations markets and applications worldwide,

WHEREAS, Frisby and Freudenberg have jointly developed a technical Invention of
producing thermal controlled nonwovens using MicroPCM,


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WHEREAS, Both Parties acknowledge that this Invention has been equally based on
the contribution of both parties and would not have been possible without the
close cooperation between the parties,

WHEREAS, the inventors of the Invention, Duncan Russel (employee of Frisby),
Terry O'Regan and Dr. Peter Grynaeus (both employees of Freudenberg) have
jointly applied for UNITED STATES LETTERS PATENT, Reg.-No.09/699,744, with the
title ,,NONWOVEN THERMAL CONTROL MATERIAL",

WHEREAS, Both Parties acknowledge that the quality of MicroPCM needed for a
technically satisfactory exploitation of the Invention can only be reached
through a controlled production of MicroPCM by Frisby,

WHEREAS, Both Parties acknowledge that the production of thermal controlled
nonwovens using phase change materials in accordance with the Invention is
highly sophisticated and in the mutual interest of the parties and the END USERS
should be carried out solely by Freudenberg having the necessary expertise of
producing nonwovens,

WHEREAS, Both Parties acknowledge that significant investments are necessary on
the side of Freudenberg in order to produce a technically advanced product,

Now, therefore, in consideration of the mutual covenants hereinafter set forth,
the parties agree as follows;


1.       Definitions

For the purpose of this Agreement, the terms defined in this article shall have
the meaning specified below and shall be applicable to both the singular and the
plural forms.

1.1      ,,Invention" as used in this Agreement shall mean all inventions
         disclosed or claimed in the Application for United States Letters
         Patent, registration number 09/699, 744 with the title ,,Nonwoven
         Thermal Control Material".

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1.2      The ,,Patent" shall mean the ,,Application for United States Letters
         Patent", registration number 09/699, 744, with the title ,,Nonwoven
         Thermal Control Material" and all subsequent applications claiming only
         the Invention as defined under section 1.1 of this Agreement and all
         patents, if any, granted hereupon and thereupon.

1.3      ,,Protected Products" shall mean all thermal controlled nonwovens with
         MicroPCM which will by use of the Invention and/or in exploitation of
         the Patent be developed by either/or both parties and produced by
         Freudenberg according to the technical specifications determined by
         Frisby as accepted by Freudenberg.

1.4      ,,Competing Products" shall mean all thermal controlled nonwovens with
         MicroPCM which will by use of the Invention and/or in exploitation of
         the Patent be produced by Freudenberg according to its own technical
         specifications.

1.5      ,,Frisby's Trademarks" shall mean the trademarks ,,ComforTemp(R)",
         ,,Thermasorb(R)", the,,C-degree " symbol, the,,(0)" (degree) symbol
         and,,The Ultimate Degree of Comfort".

1.6      ,,Freudenberg's Trademarks" shall mean the trademarks which will be
         introduced and/or registered in connection with Freudenberg's Products.

1.7      ,,Territory" shall mean the entire world.

1.8      ,,Affiliate" shall mean, with respect to any PARTY hereto, any other
         person or entity directly or indirectly controlling, controlled by, or
         under common control with such PARTY. For the purposes of this
         definition, ,,control", when used with respect to any person or entity,
         means the possession, directly or indirectly, of the power to direct or
         cause the direction of a management and policies of such person or
         entity, whether through the ownership of voting securities, by contract
         or otherwise; and the terms ,,controlling" and ,,controlled" have
         meanings correlative to the foregoing.

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2.       Interest in the Patent, Subsequent Patent Applications and Costs

2.1      Each party guarantees (i) that the inventors of the Invention employed
         by a PARTY have, to the extent legally possible, assigned all of their
         interests in the Invention and the Patent to the respective party, and
         (ii) that they have and will satisfy claims of their respective
         inventors connected therewith.

2.2      Representing both FREUDENBERG and FRISBY, or representing the joint
         inventors as provided for by the applicable law from time to time
         Freudenberg Forschungsdienste KG - Patente und Marken -, 69465
         Weinheim, Federal Republic of Germany, shall be responsible for all
         subsequent applications for the Patent, provided, however, that FRISBY
         is kept timely informed, FRISBY can suggest claims to pursue, and
         FRISBY will be given the right to act in any instance, should
         FREUDENBERG elect not to do so. In either case, FREUDENBERG and FRISBY
         agree to equally split all expenses (within 30 days of written notice
         by FREUDENBERG or FRISBY, as the case may be) related to these
         responsibilities.

2.3      In case the cooperation between the PARTIES under this Agreement
         should, during its term, lead to protectable inventions other than the
         Invention as defined under Section 1.1 of this Agreement, the PARTY
         being, in terms of the Employee Invention Act, employer of the
         respective inventor shall own such invention, and shall be entitled to
         apply for the corresponding industrial and/or intellectual property
         right in its own name and at its own expense.

         Inventions made jointly by inventors of both PARTIES shall be jointly
         owned by both PARTIES and applications for industrial and/or
         intellectual property rights shall be filed by both PARTIES together,
         the application proceedings shall be conducted according to the
         provisions of Section 2.2 of this Agreement mutatis mutandis. The
         industrial and/or intellectual property rights resulting therefrom
         shall be administered jointly and be exploited as agreed upon terms and
         conditions on a case by case basis. The PARTIES agree that they will
         make their best efforts in such negotiations to include such industrial
         and/or intellectual property rights into this Agreement. Section 3.3 of
         this Agreement also applies to such industrial and/or intellectual
         property rights.

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3.       Assignment of rights

3.1      No party is entitled to assign its interest in the Patent to a third
         party without the other party's prior written consent.

3.2      The aforesaid notwithstanding either party may assign its interest in
         the Patent without the consent of the other PArty to any of its
         Affiliates. Such assignment does not in any way affect the
         corresponding party's obligation to abide by the terms of this
         Agreement.

3.3      Each party may at any time waive, in whole or in part, its interest in
         the Invention or the Patent. In case a party hereto intends to do so,
         it shall inform the other party without delay and assign to the other
         party, upon such other party's request, its interest in the Invention
         or the Patent, as the case may be. The costs relating to the Patent
         (including subsequent applications) shall be borne by the assignee as
         of the moment of assignment.


4.       Subject matter of the contract

4.1      The parties agree that Freudenberg has, to the extent legally possible,
         the exclusive right to manufacture the Protected Products and the
         Competing Products during the term of the Patent. Frisby is not
         entitled to produce Protected Products within the Territory.

4.2      This Agreement shall apply to the Territory.

5.       Purchase obligation

5.1      For the production of the Protected Products and the Competing Products
         Freudenberg, during the term of the Patent shall purchase MicroPCM
         exclusively

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         from Frisby according to the terms and conditions of a supply contract
         to be agreed upon between THE PARTIES separately.

5.2      Section 5.1 shall not apply if, to the extent and as long as Frisby is
         not able to comply, for whatever reason, with the quantities, the
         quality and/or the prices of delivery schedules requested by
         FREUDENBERG or agreed upon between the parties.

5.3      Frisby is entitled to supply MicroPCM to third parties. FRISBY shall at
         any and all times satisfy FREUDENBERG's demand for MicroPCM for the
         production of Competing Products with priority over FREUDENBERG's
         demand for MicroPCM for the production of Protected Products.


6.       Production of Protected Products

6.1      Frisby undertakes to have produced the Protected Products exclusively
         by Freudenberg during the term of the Patent according to the terms and
         conditions of the product specifications determined by FRISBY and
         accepted by Freudenberg.

6.2      Section 6.1 shall not apply if, to the extent and as long as
         Freudenberg is not able to comply, for whatever reason, with the
         quantities, the quality and/or the prices of delivery schedules
         requested by Frisby or agreed upon between the parties.

6.3      Freudenberg is entitled to produce Competing Products provided that it
         shall at any and all times except as provided for in section 5.3
         satisfy with priority FRISBY'S demand for Protected Products.
         Freudenberg has the right to use the Patent and the know-how and the
         confidential technical information transferred to it by FRISBY, if any,
         under this Agreement and/or under the Secrecy Agreement executed by the
         parties in March 1./3., 2000 for the production or the marketing of
         Competing Products.

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6.4      Freudenberg is entitled to have Protected Products manufactured also by
         Affiliates and - with the prior consent of FRISBY - also by other third
         parties.


7.       Quality Control


7.1      Freudenberg shall produce the Protected Products compliant to the
         technical specifications determined by Frisby and accepted by
         FREUDENBERG pursuant to section 6.1 of this Agreement. Frisby has the
         right to supervise the agreed-upon quality and to reject Protected
         Products which do not comply with the technical specifications.

7.2      Frisby will carry out technical tests for this purpose and at its costs


8.       Confidentiality


8.1      The parties agree to keep confidential all documents and information
         which have been submitted to them by the other party in execution of
         this Agreement and not to provide it to third parties other than its
         Affiliates both during this Agreement and after its expiration,
         provided that such Affiliates abide by the confidentiality obligations
         of this Agreement as if they were parties thereto

8.2      The Secrecy Agreement executed by the parties dated March 1./3., 2000
         remains in full force and effect under this Agreement.

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9.       Duration and Termination of the Agreement

9.1      This Agreement shall remain in full force and effect until refusal,
         withdrawal, expiration, avoidance, lapse, abandonment or revocation of
         the Patent.

9.2      Each party has the right to terminate this Agreement with a three
         months written notice at any time for good cause in case that the other
         party breaches its obligations under sections 4.1, 5.1, 6.1 and/or 8.1
         this Agreement and does not cure such breach within a reasonable period
         of time, however not longer than 30 days from the non-breaching party's
         written request to do so.

9.3      Each party is furthermore entitled to terminate this Agreement giving
         at least six months written notice with effect as of the end of the
         corresponding calender year, however not earlier than with effect as of
         December 31, 2005.

9.4      In the case that either PARTY and all of its Affiliates should at any
         time decide not to proceed with the business of producing and/or
         selling thermal controlled nonwovens with MicroPCM and with any other
         business in the context of which the Patent is directly or indirectly
         beeing used or exploited, such PARTY shall assign to the other PARTY
         its interest in the Patent according to the procedure provided for in
         section 3.3 of this Agreement.


10.      Use of Trademarks

10.1     Frisby will market Protected Products either by itself or by its
         Affiliates solely under trademarks owned by Frisby or said Affilates.
         Frisby agrees not to challenge or oppose either by itself or by an
         Affiliate in any way the use and registration of Freudenberg's
         Trademarks used on/or in connection with Competing Products by
         Freudenberg or its Affiliates. Frisby further agrees that it will
         neither by itself nor by an Affiliate use similar marks on/or in
         connection with Competing Products.

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10.2     Freudenberg will market Competing Products either by itself or by its
         Affiliates solely under its trademarks. Freudenberg agrees not to
         challenge or oppose either by itself or by an Affiliate in any way the
         use and registration of Frisby's Trademarks on/or in connection with
         Protected Products by Frisby or its Affiliates. Freudenberg further
         agrees that it will neither by itself nor by an Affiliate use similar
         marks on/or in connection with Protected Products.


11.      Communication

11.1     the parties agree that they will use with regard to the
         consumer-markets in which they market the Protected Products and
         Competing Products respectively their best efforts to prevent a
         confusion between FRISBY'S Trademarks and FREUDENBERG'S Trademarks used
         in connection with the corresponding activities. the parties further
         understand that in marketing the Protected Products and the Competing
         Products respectively they will not make neither directly nor
         indirectly any reference to the other PARTY'S trademarks.

11.2     Section 11.1 notwithstanding, FRISBY can at the industry level with
         respect to the sale of Protected Products refer for promotion purposes
         to FREUDENBERG`s trademarks, e.g. in press releases, public relation,
         stockholder newsletter, product announcements and other publications.
         With regard to the sale of Protected Products and Competing Products
         respectively FREUDENBERG is entitled to make reference, e.g. in the
         above mentioned publications to the trademark ,,Thermasorb(R)" if
         FREUDENBERG believes that such reference helps to promote the sale of
         such products.


12.      This Agreement shall be governed by and construed, interpreted and
         enforced in accordance with the laws of the State of North Carolina
         without reference to the conflict of laws principles thereof. Any
         disputes arising out of this Agreement shall be adjudicated in a court
         of competent jurisdiction in North Carolina and nowhere else. Each
         party hereby irrevocably submits to the jurisdiction of such court for
         the purposes of any suit or other proceeding arising out of this
         Agreement.

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13.      This Agreement contains the entire Agreement and understanding between
         the parties hereto with respect to the subject matter hereof and no
         modifications may be made to this Agreement except by a writing signed
         by all of the parties hereto.

Wherefore, the parties have caused this Agreement to be duly executed and to
become effective as of the date of the year first above written.


Frisby technologies inc.                  Freudenberg Vliesstoffe KG

By:  /s/ Duncan R. Russell                By:   /s/ Hermann Eidel
     ---------------------                      -----------------
         Duncan R. Russell                       Hermann Eidel
Title:  President & COO                   Title:  Managing Director & Chairman

Date:  May 9, 2001                        Date:   May 15, 2001

Frisby technologies inc.                  Freudenberg Vliesstoffe KG
By:  /s/ Gregory S. Frisby                By:    /s/ Friedhelm Brandau
     ---------------------                       ---------------------
        Gregory S. Frisby                         Friedhelm Brandau
Title:  Chairman & CEO                    Title:  General Manager

Date:   May 9, 2001                       Date:   May 15, 2001