STATE OF NORTH CAROLINA)
                                 LEASE AGREEMENT
COUNTY OF FORSYTH      )

     THIS LEASE,  (the  "Lease")  made and entered into this, 14 day of January,
1999, by and between Visible Goth, LLC hereinafter  called "LANDLORD" and FRISBY
TECHNOLOGIES, INC., hereinafter referred to as "TENANT".

                                    RECITALS:

     IN  CONSIDERATION  of the mutual covenants  contained  herein,  the parties
agree as follows:

     1.  Description of Leased  Premises.  Landlord is the developer of a single
tenant  building  containing  approximately  20,000  SF (the  "Building")  to be
located on 8 acres at Centre  Park  Boulevard,  Winston-Salem,  Forsyth  County,
North Carolina,  27101 being more fully described on Exhibit "A" attached hereto
and hereby made a part hereof.

     The Premises shall consist of said Building (and other improvements) in the
approximate  amount of 20,000 SF,  being more fully  described  and shown on the
attached  floor plan as Exhibit "B". The Premises shall be for the exclusive use
of Tenant, its agents, servants, employees and invitees for showroom and related
uses.

     Landlord  represents  and  warrants  that it is the  contract  owner in fee
simple of the Premises and that there are no covenants,  restrictions  or zoning
or other  regulations which prevent or are violated by, this Lease or the use of
the Premises as contemplated herein.

     2. Term: The term of this Lease shall be for a period of Twenty (20) years,
beginning on date Landlord tenders  premises to Tenant (in turnkey  condition as
more specifically  described in the attached  specifications and floor plan) the
"Commencement  Date" and  continue  for Two Hundred and Forty (240)  consecutive
months through the "Termination Date". Landlord shall deliver Premises to Tenant
One Hundred  Fifty (150) days  following  Landlord  obtaining  building  permit.
Tenant shall have an  additional  thirty (30) days before  commencement  of rent
payment to prepare  Premises  for  occupancy.  Tenant  shall have an  additional
thirty (30) days before  commencement  of rent  payment to prepare  Premises for
occupancy.

     3. Base Rent:  Tenant  shall pay for rental for the  Premises in the amount
of:

Years     Annual Net Rent     Monthly Net Rent

1         $146,979.00         $12,248.25
2         $146,979.00         $12,248.25
3         $151,979.00         $12,664.92
4         $181,979.00         $15,164.92
5         $181,979.00         $15,164.92
6         $186,979.00         $15,581.58
7         $186,979.00         $15,581.58
8         $186,979.00         $15,581.58
9         $196,979.00         $16,414.92
10        $196,979.00         $16,414.92
11        $201,979.00         $16,831.58
12        $201,979.00         $16,831.58
13-20     $170,000.00         $14,166.67


     4. Tenant to Pay Pro-Rata Share of Operating Expenses:

(A) Tenant shall pay electricity to the demised premises.

(B) The Premises  contains  20,000 square feet of rentable area which  comprises
100 percent of the total Building rentable area.

(C) For purposes of this  section,  the term "Lease Year" shall mean a period of
twelve  (12)  months or less,  commencing  with the term  commencement  date and
ending on the following  December 31st;  each  successive  period of twelve (12)
months or less commencing with January 1,  immediately  preceding the expiration
of the term.

(D) Tenant  shall pay an amount equal to 100 percent of the  operating  expenses
for  those  services  of the  Building.  For  the  purpose  of  this  paragraph,
"Operating  Expenses"  shall  mean  (but  not to be  limited  to) the  following
incurred by the Landlord with respect to the Building of which the Premises form
a part: property taxes, casualty and liability insurance, water, sewer, building
maintenance  and  repairs to common  areas and tenant  premises,  pest  control,
security services, management fees (not to exceed 3% of base rent) and all other
expenses  paid  in  connection  with  the  operation  of the  Building  properly
chargeable  against  income.  These expenses will be itemized and billed monthly
with payment due with the following month's rent.  Failure to pay these expenses
on a timely basis will be considered a material  breach of this Lease  entitling
Landlord to exercise any rights or remedies  contained herein or provided by law
or other authority.

(E) Any  refunds  or credits  that are  received  by  Landlord  with  respect to
operating  expenses  billed to tenants  shall be credited to each such  tenant's
account  in the  billing  cycle  following  the  receipt  of refund or credit by
Landlord.

(F) Tenant may inspect  and or audit  Landlord's  books and records  relating to
operating  expenses  for  the  Building.   Tenant  may  conduct  any  reasonable
examination  of the books and records at the  Landlord's  place of business with
provided  written  notice is sent to Landlord  not less than 4 days prior to any
inspection.

     5.  Occupancy and  Acceptance of Premises:  Landlord  shall deliver  actual
possession of the Premises to Tenant on the Commencement Date. Tenant may accept
early occupancy,  provided  however,  in such event Tenant shall pay to Landlord
base initial  rental  calculated on a daily basis  assuming a 365 day year,  for
each day Tenant shall occupy the Premises  prior to the  Commencement  Date.  If
permission is given to Tenant to occupy the Demised  Premises  prior to the date
of  commencement  of the term hereof such occupancy  shall be subject to all the
provisions of this Lease except those relating to the term of this Lease.

     In the  event  the  Premises  are not  completed  and  ready  for  Tenant's
occupancy by the Commencement  Date as set forth above, the parties hereto shall
execute an  Amendment  modifying  this Lease to confirm the actual  commencement
date and  termination  date of the Lease Term. In the event the Premises are not
ready by the Commencement  Date,  Landlord will continue to provide office space
at the current  location under the same terms and  conditions  then in existence
and,  in  addition,  Landlord  shall give Tenant a credit of  $1,000.00  per day
against future rental due under this lease until Premises are delivered.

     6. Late Payment of Rent: All monthly installments of rent herein stipulated
are due in advance,  without  prior offset of  deduction,  on the first (1st) of
each month during the term hereof. All rents not received by the Landlord by the
tenth  (10th) day of each month  during  the term  hereof  shall be past due and
Tenant shall be charged a late fee equal to 5% of the total monthly  amount due.
Landlord shall invoice Tenant for any such past due rent charges.

     7. Use: The Premises  shall be used and occupied only for Office,  Research
and  Development,  Prototype  Assembly  and Storage use and shall not be used or
occupied for any other purpose  without the prior  written  consent of Landlord.
These uses are permitted pursuant to the Conditions,  Covenants and Restrictions
applicable to tenants in the Centre 311 Business Park. Tenant shall not conduct,
or allow to be  conducted,  on or within the Premises any business or permit any
act which in any way  increases  the cost of fire  insurance  on the Building or
constitutes  a nuisance or is contrary to or in violation of the laws,  statutes
or ordinances of local, state or federal  governments having  jurisdiction.  Any
violation of this provision by Tenant shall be a material  breach of this lease,
entitling  Landlord  to  exercise  any rights or  remedies  contained  herein or
provided by law or other authority.

     8. Quiet  Enjoyment:  The Landlord  covenants that Tenant,  upon paying the
Landlord the rental  stipulated  herein together with all other charges reserved
herein,  and  performing the covenants,  promises and agreements  herein,  shall
peaceably  and  quietly  have,  hold and  enjoy  the  Premises  and all  rights,
easements,  appurtenances  and  privileges  belonging or  appertaining  thereto,
during the full term hereby granted and any extensions or renewals thereof.

     9. Common Areas:  As used in this Lease,  Common Areas shall mean all areas
of the  entire  building  which are  available  for the common use of Tenant and
which  are not held  for the  exclusive  use of the  Tenant  or  other  Tenants,
including  but not  limited to  corridors,  restrooms,  stairs,  elevators,  the
parking areas and entrances and exits thereto,  driveways and truck serviceways,
sidewalks,  landscaped  areas,  access  roads  and other  areas  and  facilities
provided for the common or joint use and benefit of  occupants of the  building,
their employees, agents, customers and invitees.

     Tenant agrees to abide by and conform to Building Rules and Regulations and
shall be  responsible  for the compliance  with same by its  employees,  agents,
customers  and  invitees.  The failure of Landlord to enforce any such Rules and
Regulations  shall not be deemed to be a waiver.  Pursuant to Paragraph 4 Tenant
is obligated to pay Landlord it's proportionate share of any such costs.

     10.  Assignment and  Subletting:  Tenant  covenants and agrees that neither
this Lease nor the term hereby granted, nor any part thereof,  will be assigned,
mortgaged,  pledged, encumbered or otherwise transferred, by operation of law or
otherwise, and that the Premises will not be sublet or advertised for subletting
or  occupied,  by anyone  other than  Tenant,  or for any purpose  other than as
hereinabove set forth, without the prior written consent of Landlord,  not to be
unreasonably withheld.

     11.  Landlord's  Repairs:  The  Landlord  shall  maintain  and keep in good
condition and repair the roof,  supporting  walls,  sewage  sanitary  system and
shall effect  repairs  necessary.  The Landlord  shall also  maintain and repair
plumbing,  mechanical,  heating  and air  conditioning  and  electrical  systems
installed by Landlord,  floor and wallcoverings,  light fixtures,  window frames
and glass,  window blinds,  doors,  door locks,  and security  systems,  if any.
Pursuant to Paragraph 4 Tenant is obligated to pay Landlord  it's  proportionate
share of any such costs. However, the Landlord shall not be responsible for such
maintenance  and  repairs in the event the same are  required as a result of the
negligence  or willful act of the Tenant or its clients,  customers,  licensees,
assignees,  agents,  employees or invitees and further,  in any such event,  the
cost  of  such   maintenance   and  repairs  so  required   shall  be  the  sole
responsibility of the Tenant.

     12. Tenant's  Repairs/Alterations:  The Tenant shall submit to the Landlord
for Landlord's  prior written approval all of the plans and  specifications  for
any structural alterations, additions or improvements in and to the Premises All
such  alterations,  additions or  improvements  shall be made in accordance with
applicable city, county, state and federal laws and ordinances, and building and
zoning rules and regulations. Tenant shall be liable for all damages or injuries
which may result to any person or  property by reason of or  resulting  from any
alterations, additions or improvements made by it to the Premises and shall hold
the Landlord harmless with respect thereto.  All additions and improvements made
by the  Tenant  shall  become  a part  of  the  Premises  and  shall,  upon  the
termination or expiration of this Lease, belong to the Landlord.

     At  Landlord's  option,  Landlord may require that Tenant remove any or all
alterations or improvements at Tenant's expense upon termination of the Lease.

     13.  Subordination  and Attornment:  Tenant agrees that this Lease shall be
subject and  subordinate  to any  mortgages  or deeds of trust now or  hereafter
placed upon the  Premises and to all  modifications  thereto.  Subordination  is
conditioned upon non  disturbance.  Tenant agrees at any time to execute any and
all  documents  necessary to  effectuate  this  subordination.  Tenant agrees to
attorn to the mortgagee, trustee, or beneficiary under any such mortgage or deed
of trust or the purchaser at a sale pursuant to the foreclosure  thereof. In the
event of the sale,  assignment,  or transfer by Landlord of its  interest in the
Premises to a successor in interest who expressly  assumes the obligation of the
Landlord hereunder,  the Landlord shall thereupon be released or discharged from
all of its covenants and obligations  hereunder,  except such obligations  shall
have accrued prior to any such sale, assignment,  or transfer; and Tenant agrees
to look solely to any successor in interest of the landlord for  performance  of
any such obligations.

     14.  Change in Ownership of Premises:  If the  ownership of the Premises or
the name or address of the party  entitled to receive  rent  hereunder  shall be
changed,  the  Tenant  shall,  until  receipt of proper  notice of such  change,
continue to pay the rent and other charges herein reserved accrued and to accrue
hereunder  to the party to whom and in the  manner  in which the last  preceding
installment of rent or other charge has paid,  and each such payment  shall,  to
the extent thereof, exonerate and discharge the Tenant.

     15. Condemnation:  If the whole of the Building or such substantial portion
thereof as will make  Premises  unusable  for the  purposes  referred  to herein
shall, be condemned by any legally  constituted  authority for any public use or
purpose,  then in either of said events the term hereby granted shall cease from
the time when  possession  thereof  is taken by the  condemning  authority,  and
rental shall be accounted for as between Landlord and Tenant as of that date. In
the event the portion  condemned is such that the remaining  portion can,  after
restoration and repair, be made useable for Tenant's  purposes,  then this Lease
shall not terminate;  however, the rent shall be reduced equitably to the amount
of the Premises taken. In such an event, Landlord shall make such repairs as may
be  necessary  as  soon  as  the  same  can  be  reasonably  accomplished.  Such
termination,  however,  shall be  without  prejudice  to the  rights  of  either
Landlord  or Tenant,  or both,  to  recover  compensation  and damage  caused by
condemnation  from condemnor.  It is further  understood and agreed that neither
the Tenant nor Landlord  shall have any rights in any award made to the other by
any condemnation authority.

     16.  Right of Landlord  to Enter:  The Tenant  agrees that upon  reasonable
notice the  Landlord  or its agents may at all  reasonable  times enter upon the
Premises for the purpose of inspection or repair of the Building or the Building
systems and such other purposes as Landlord may deem necessary or proper for the
reasonable protection of Landlord's interest in the Premises,  the same shall be
done without interference with Tenant's use of the Premises and shall be subject
to Tenant's reasonable requirements concerning security and access. In addition,
the Landlord may enter the Premises  upon  reasonable  notice at all  reasonable
times to exhibit the Premises to  prospective  purchasers.  During the three (3)
months immediately  preceding the final expiration of the term created hereunder
or any renewal  thereof,  the Landlord may exhibit the Premises upon  reasonable
notice to  prospective  Tenants  and/or affix a notice that the Premises are for
rent;  such notice shall not be greater  than four (4) square feet in area,  and
shall be affixed to a suitable part thereof,  exclusive of doors and windows and
so as to not obstruct the Tenant's  signs.  For the purposes of this  paragraph,
the term  "Reasonable  Notice"  shall be  defined  as a time of not less than 24
hours unless otherwise mutually agreed upon.

     17.  Taxes:  Landlord  agrees to pay,  before they become  delinquent,  all
taxes,  assessments and governmental  charges of any kind and nature  whatsoever
(hereinafter  collectively  referred to as "Taxes")  lawfully levied or assessed
against the Building and the grounds, parking areas, driveways and alleys around
the  Building,  except  any taxes  attributable  to the  operation  of  Tenant's
business or Tenant's  property.  Pursuant to  Paragraph 4 Tenant is obligated to
pay Landlord it's proportionate share of any such costs.

     If at any time  during  the  term of this  Lease,  the  present  method  of
taxation shall be changed so that in lieu of the whole or any part of any taxes,
assessments or governmental  charges levied,  assessed or imposed on real estate
and the  improvements  thereof,  there  shall be levied,  assessed or imposed on
Landlord a capital  levy or other tax directly on the rents  received  therefrom
and/or a franchise  tax,  assessment,  levy or charge  measured by or based,  in
whole or in part,  upon such rents for the  present or any  future  building  or
buildings on the Premises, then all such taxes, assessments,  levies or charges,
or the part thereof so measured or based,  shall be deemed to be included within
the term "taxes" for the purposes hereof.

     18. Fire and Extended Coverage Insurance:  Landlord agrees to keep in force
policies of fire and extended coverage insurance which shall insure the Building
against such perils or loss as Landlord may deem appropriate including vandalism
and malicious mischief,  in an amount equal to one hundred percent (100%) of the
replacement cost of the Building and the improvements installed by the Landlord.
Pursuant to Paragraph 4 Tenant is obligated to pay Landlord  it's  proportionate
share of any such costs.

     Tenant agrees to maintain and keep in force,  at its expense and throughout
the  term  hereof,  insurance  against  fire and  such  other  risks as are from
time-to-time  included  in standard  extended  coverage  endorsements  including
vandalism  and  malicious  mischief,  insuring  Tenant's  stock-in-trade,  trade
fixtures,  furniture,  furnishings,  floor and wall coverings, special equipment
and all other  items of  personal  property  of Tenant  located on or within the
Premises  and all  such  other  improvements  as are made by the  Tenant  to the
Premises.

     Landlord and Tenant  hereby  mutually  release and discharge the other from
loss  or  damage  to the  described  Premises  or the  contents,  including  any
improvements  and betterments  located in or on the described  Premises,  to the
extent  such  loss or damage  is  insured  by the  described  fire and  extended
coverage insurance.

     Both  Landlord  and Tenant  agree to  furnish  the other a  certificate  of
insurance  evidencing  the required  fire and extended  coverage  insurance  and
giving  the  certificate  holder  thirty  (30) days  notice of intent to cancel,
non-renew or amend such insurance.

     If Tenant elects to satisfy this condition by self  insuring,  it may do so
provided  it  provides   Landlord  and  Landlord's   insurance  agent  with  (1)
documentation  establishing  values of Tenant installed  fixtures,  furnishings,
equipment,  inventory and process  equipment or other  material used in Tenant's
operation;  (2) provide Landlord with financial statements and other information
evidencing  Tenant's  financial ability to maintain the Premises and contents as
self  insured  and (3) that  Landlord's  attorney  shall  prepare  an  agreement
regarding  subrogation  of claims in the event of a  casualty  loss of  Tenant's
fixtures, furnishings and/or inventory.

     19.  Damage and  Destruction:  In the event the Premises are damaged by any
peril covered by standard policies of fire and extended coverage insurance to an
extent which is less than fifty percent (50%) of the cost of  replacement of the
Premises, the damage to that portion of the Premises which Landlord is obligated
to insure pursuant to the immediately preceding paragraph hereof, shall promptly
be repaired by landlord, at Landlord's expense but in no event shall Landlord be
required  to  repair  or  replace  Tenant's   stock-in-trade,   trade  fixtures,
furniture,  furnishings, special equipment and personal property which Tenant is
required to insure pursuant to the immediately  preceding  paragraph  hereof. In
the event of such damage and (a)  Landlord is not required to repair as provided
herein,  or (b) the Premises are damaged to the extent of fifty percent (50%) or
more of the cost of replacement of the Premises,  or (c) the Building is damaged
to the extent of fifty percent (50%) or more of the cost of replacement,  or (d)
such damage is  twenty-five  percent (25%) or more of the cost of replacement of
the  Premises  and the same occurs  during the last year of initial  term or any
extensions or renewal terms of this Lease, then, in any such event (s), Landlord
may elect  either to repair or rebuild the Premises or the Building of which the
Premises are a part, as the case may be, or to terminate  this Lease upon giving
notice of such election, in writing, to Tenant within thirty (30) days after the
happening of the event causing such damage.

     If  such  damage,   repairing  or  rebuilding  shall  render  the  Premises
untenantable,  in whole or in part,  a  proportionate  abatement of the rent and
additional  rent  stipulated  herein  shall be allowed from the date such damage
occurred  until the date  Landlord  completes  the repairs or  rebuilding,  said
proportion  shall be  computed  on the  basis of the  relation  which  the gross
leasable area of the space  rendered  untenantable  bears to the gross  leasable
area of the  Premises.  If Landlord is required or elects to repair the Premises
as provided herein,  Tenant shall repair or replace its floor and wall coverings
pursuant to the terms hereof,  in a manner and to at least a condition  equal to
that prior to such damage or  destruction;  in addition,  Tenant shall repair or
replace its  stock-in-trade,  trade fixtures,  furniture,  furnishings,  special
equipment in a manner and to a condition  Tenant deems  appropriate and adequate
for the conduct of its business  within the  Premises.  In  addition,  Tenant is
hereby given the sole option to terminate  this Lease in the event  repairing or
rebuilding to be effected by Landlord and required hereunder cannot be completed
within  ninety  (90)  days from the date of the  occurrence  of the  damage  and
destruction.

     20.  Liability of Landlord:  Tenant waives all claims against  Landlord for
damages to goods or for  injuries to persons on or about the  Premises or common
areas from any  causes  arising  at any time  other  than  damages  or  injuries
directly  resulting  from  Landlord's  negligence.  The  Tenant  will  indemnify
Landlord on account of any damage or injury to any  persons,  or to the goods of
any person,  arising from the use of the Premises by the Tenant, or arising from
the failure of Tenant to keep the Premises in good condition as provided herein.
The Landlord  shall  indemnify  Tenant on account of any damage or injury to any
persons, or to goods of any person,  arising from the use of the Premises by the
Landlord.  Landlord  shall not be liable to the Tenant for any damage by or from
any act of negligence of any other  occupancy of the same  Building.  The Tenant
agrees to pay for all damages to the Building, as well as all damage or injuries
suffered by Tenant or occupants thereof caused by Tenant's negligence.

     Landlord is specifically  not responsible  under any  circumstance  for any
damage to any computer, computer component, or computer peripheral,  hardware or
software damaged by any interruption,  usage or variation for whatever reason in
the  electrical  distribution  system in the  building,  unless  resulting  from
Landlord's negligence.

     21. Liability  Insurance:  In addition to the policies of fire and extended
coverage  insurance to be kept and maintained by Landlord and Tenant pursuant to
paragraph  18  hereinabove,  Landlord  and Tenant  shall each obtain and keep in
force  during the term hereof and any  extension or renewal  terms,  policies of
commercial  general  liability  providing  bodily  injury  and  property  damage
liability  with  combined  single  limits of not less than One  Million  Dollars
($1,000,000.00).  The Tenant shall, in addition, name the Landlord as additional
insured under such liability policy. Pursuant to Paragraph 4 Tenant is obligated
to pay Landlord it's proportionate share of any such costs.

     Both  Landlord  and Tenant  agree to  furnish  the other a  certificate  of
insurance  evidencing the required liability coverage and giving the certificate
holder  thirty  (30) days  notice of intent to cancel,  non-renew  or amend such
insurance.

     22.  Parking:  Landlord shall make  available to Tenant,  seventy five (75)
parking spaces for visitors and employees which will be provided on the lot upon
which the Building is constructed.

     23. Signs: Landlord agrees that Tenant shall install its Tenant signage and
logo in a manner  consistent  with the sign  ordinance of City of Winston  Salem
Forsyth County Unified Development Ordinance.

     24.  Utilities:  Tenant  shall  pay for water and  sewer  used  within  the
Premises.  Tenant shall pay its separately  metered  charges for electricity and
gas used within the Premises.

     25. Janitorial  Services:  Tenant shall provide janitorial  services to the
interior of its Premises.

     26.  Extermination:  The Landlord shall provide pest control service within
the  Premises  and  Tenant  shall  pay the cost for this  service.  Pursuant  to
Paragraph 4 Tenant is obligated to pay Landlord it's proportionate  share of any
such costs.

     27. Plate Glass  Breakage:  Landlord  shall be  responsible  for repair and
replacement in the event of plate glass damage or breakage,  except in the event
of  negligence  of Tenant.  Pursuant to  Paragraph 4 Tenant is  obligated to pay
Landlord  it's  proportionate  share of any such  costs  unless  such  damage or
breakages is due to negligence of Landlord.

     28. Garbage Removal:  Landlord will be responsible for providing a dumpster
for  garbage  and arrange for its  systematic  pickup.  Pursuant to  Paragraph 4
Tenant is obligated to pay Landlord it's proportionate share of any such costs.

     29. Fire  Extinguishers:  In the event a fire  extinguisher  is provided by
Landlord on the Premises,  Landlord  shall be  responsible  for the  maintenance
thereof.  Pursuant  to  Paragraph 4 Tenant is  obligated  to pay  Landlord  it's
proportionate share of any such costs.

     30.  Storing of Flammable  Materials:  The Tenant  agrees that it shall not
store nor shall it use any  dangerous  and/or  flammable  material(s)  within or
around  Premises in a manner which violates any law or which may cause the costs
incurred by Landlord with respect to taxes and insurance  regarding the Premises
to increase in which case Tenant shall bear the cost of any such increase.

     31.  Replacement of Light Bulbs: The Landlord shall replace all light bulbs
within  Premises.  Tenant  shall pay the cost of said  replacement.  Pursuant to
Paragraph 4 Tenant is obligated to pay Landlord it's proportionate  share of any
such costs.

     32.  Removal of Tenant's  Fixtures:  The Tenant shall have the privilege at
any time,  on or before  vacating  the  Premises,  of removing any or all of its
personal property,  equipment and fixtures,  and Tenant shall repair any damages
caused by the removal  thereof  and shall  leave the  Premises in good and clean
condition and repair.

     33. Default by Tenant: In the event Tenant shall fail to pay monthly rental
by the tenth (10th) day of the month for three consecutive  months or four times
during a twelve month  period;  or if Tenant is  adjudicated  a bankrupt;  or if
Tenant  files a petition on  bankruptcy  under any section or  provision  of the
bankruptcy  law; or if an  involuntary  petition in  bankruptcy is filed against
Tenant,  and same is not withdrawn or dismissed  within sixty (60) days from the
filing thereof;  or if a receiver or trustee is appointed for Tenant's  property
and the order  appointing  such receiver or trustee  remains in force for thirty
(30)  days  after  the  entry  of such  order;  or if,  whether  voluntarily  or
involuntarily, Tenant takes advantage of any debtor relief proceedings under any
present or future law,  whereby the rent or any part  thereof is, or is proposed
to be, reduced or payment thereof deferred; or if Tenant makes an assignment for
the  benefit of  creditors;  or if  Tenant's  effects  should be levied  upon or
attached under process against Tenant,  not satisfied or dissolved within thirty
(30) days after written  notice from  Landlord to tenant to obtain  satisfaction
thereof;  or if Tenant shall vacate or abandon the Premises;  or if Tenant shall
fail to perform or observe any other  covenant,  agreement,  or  condition to be
performed  or kept by the Tenant under the terms and  provisions  of this Lease,
and such failure in any one such event shall continue for thirty (30) days after
written notice thereof has been given by Landlord to Tenant;  then in any one of
such events,  Landlord shall have the right, at the option of the Landlord, then
or at any time  thereafter  while such default or defaults  shall  continue,  to
elect  either:  (1) to cure such  defaults  at the expense of Tenant and without
prejudice to any other remedies which Landlord might otherwise have, any payment
made or expenses incurred by Landlord incurring such default shall bear interest
thereon at eighteen  percent  (18%) per annum,  or at such maximum legal rate as
permitted by North  Carolina  law,  whichever  shall be lower,  to be and become
additional  rent to be paid by Tenant with the next  installment or rent falling
due thereafter; or (2) to re-enter the Premises and dispossess Tenant and anyone
claiming under Tenant, by summary proceedings  pursuant to the laws of the State
of North Carolina, and remove their effects, and take complete possession of the
Premises and either (i) declare this Lease forfeited and the term ended, or (ii)
elect to continue this Lease in full force and effect, but with the right at any
time  thereafter to declare this Lease  forfeited  and the term ended;  or (iii)
exercise  any other  remedies  or  maintain  any action  permitted  to  Landlord
pursuant  to the laws of the State of North  Carolina,  or any other  applicable
laws. In such re-entry the Landlord may,  under process of law, have all persons
and  Tenant's  personal  property  removed  from  the  Premises.  Tenant  hereby
covenants  in such event of default  for  itself  and all others  occupying  the
Premises under Tenant,  to peacefully yield up and surrender the Premises to the
Landlord.  Should Landlord justifiably declare this Lease forfeited and the term
ended  subject to due process,  the  Landlord  shall be entitled to recover from
Tenant  the  rental  and all  other  sums due and owing by Tenant to the date of
termination,  plus the costs of curing all of Tenant's  defaults  existing at or
prior to the date of termination,  plus the deficiency, if any, between Tenant's
rental  hereunder  and the rental  obtained by Landlord on another Lease for the
balance  of the term  remaining  under  this Lease  should  Landlord,  following
default as aforesaid, elect to continue this Lease in full force. Landlord shall
use its best  efforts  to rent the  Premises  by private  negotiations,  with or
without  advertising  and on the best terms  available  for the remainder of the
term  hereof,  or for such  longer or  shorter  period as  Landlord  shall  deem
advisable.  Tenant  shall  remain  liable for all rentals and other  charges and
costs  imposed  on  Tenant  herein,  in the  amounts,  at the times and upon the
conditions as herein provided,  but Landlord shall credit against such liability
of the Tenant all amounts  received by Landlord from such reletting  after first
reimbursing  itself  for all costs  incurred  in curing  Tenant's  defaults  and
re-entering, preparing and refinishing the Premises for reletting, and reletting
the Premises,  and for the payment of any  procurement fee or commission paid to
obtain  another  Tenant,  and for all attorney fees and legal costs  incurred by
landlord.

     34. Re-Entry by Landlord:  No re-entry by Landlord or any action brought by
Landlord to oust Tenant from the Premises  shall operate to terminate this Lease
unless  Landlord shall give written  notice of  termination to Tenant,  in which
event Tenant's liability shall be as above provided.  No right or remedy granted
to Landlord herein is intended to be exclusive of any other right or remedy, and
cumulative  and in  addition to any other  right or remedy  hereunder  or now or
hereafter  existing in law or equity or by statute.  In the event of termination
of this Lease,  Tenant  waives any and all rights to redeem the Premises  either
given by any stature now in effect or hereafter enacted.

     35.  Waiver of Rights:  No waiver by  Landlord  or Tenant of any  provision
hereof  shall be deemed to be a waiver of any other  provision  hereof or of any
subsequent  breach  by Tenant  of the same or any  other  provision.  Landlord's
consent to or approval of any act shall not be deemed to render  unnecessary the
obtaining of Landlord's  consent to or approval of any subsequent act by Tenant.
The  acceptance  of rent  hereunder  by  Landlord  shall  not be a waiver of any
preceding  breach by Tenant of any provision hereof other than failure of Tenant
to pay the  particular  rent so accepted  regardless of Landlord's  knowledge of
said preceding breach at the time of acceptance of such rent.

     36. Notices.  All notices and demands of any kind which Landlord and Tenant
may be  required to give or serve upon the other party may be given and shall be
deemed to have been  given by  depositing  one copy of it in the  United  States
Mail,  postage paid,  certified  mail,  return receipt  requested,  addressed as
follows:


                  LANDLORD:         Visible Goth, LLC
                                    c/o JDL Castle Corporation
                                    P.O. Box 1395
                                    Winston-Salem, NC  27102

                  TENANT:           Frisby Technologies, Inc.
                                    Attn.:  Greg Frisby
                                    77 East Main Street Suite 2000
                                    Bay Shore  NY 11706


     Either  party may in  addition  deliver  written  notice by hand  delivery.
Further,  the  parties  hereto  may  give or  receive  notice  by or from  their
respective  attorneys and may, by like notice,  designate a new address to which
subsequent notice shall be directed.

     37. Compliance with Laws: Tenant shall promptly execute and comply with all
laws,  ordinances,  rules  regulations  and  requirements of any or all federal,
state and municipal authorities having jurisdiction over the manner in which the
Tenant's  business is  conducted,  but only  insofar as these laws,  ordinances,
rules and regulations and  requirements  are violated by the conduct of Tenant's
business.

     38.  Surrender:  Upon the  termination  of this Lease or any  extensions or
renewals  hereof,  the Tenant  shall  surrender  the  Premises in good and clean
condition and repair as when  received,  excepting only normal wear and tear and
damage  by fire and other  casualty  damage  covered  by  insurance  and paid to
Landlord.  Tenant  shall not remain in the  Premises  without  the  benefit of a
written Lease or Renewal  Agreement  executed by the parties hereto prior to the
expiration  of the then  existing  term.  No other  holding over of the Premises
shall be allowed on any basis whatsoever, except as otherwise herein provided.

     39.  Holdover:  In the event  Tenant  remains in  possession  of the leased
Premises  after the  expiration of the term of this Lease,  without having first
extended this Lease by written agreement with Landlord, and without either party
realizing  the term of this Lease has  expired,  such  holding over shall not be
construed as a renewal or  extension  of this Lease.  Such holding over shall be
deemed  to have  created  and be  construed  as  tenancy  from  month to  month,
terminable  on 30 days  notice in writing  from either  party to the other.  The
monthly  rental to be paid shall be the same monthly  rental  payable during the
last  month of the term of the Lease.  All other  terms and  conditions  of this
Lease shall continue to be applicable for both Landlord and Tenant.

     If Tenant fails to surrender  the Premises to Landlord on expiration of the
term as required by this paragraph, Tenant shall hold Landlord harmless from all
damages  resulting  from Tenant's  failure to surrender the Premises,  including
without limitation, claims made by the succeeding Tenant resulting from Tenant's
failure to surrender the Premises.

     40. Liens:  Unless an unsafe  condition  exists which Landlord is unable or
refuses to repair or  replace  in a timely  manner,  if Tenant  shall  cause any
material to be furnished  to the  Premises or labor to be  performed  thereon or
therein, Landlord shall not under any circumstances be liable for the payment of
any expenses  incurred or for the value of any work done or material  furnished.
All such work shall be at Tenant's expense and Tenant shall be solely and wholly
responsible to all contractors,  laborers, and material men furnishing labor and
material to the  Premises.  Nothing  herein  shall  authorize  the Tenant or any
person  dealing  through,  with or under  Tenant to charge the  Premises  or any
interest  of the  Landlord  therein or this Lease with any  mechanic's  liens or
other lien or  encumbrance  whatever.  On the  contrary,  (and notices is hereby
given) the right and power to charge any lien or encumbrance of any kind against
the Landlord or its estate is hereby expressly denied.

     41. Benefits,  Burdens and Entire  Agreement:  This Lease is binding on and
benefits the parties hereto and their respective heirs,  legal  representatives,
successors,  nominees  and  assigns.  Liabilities  hereunder  shall be joint and
several  upon  all who  sign  this  agreement.  Throughout  this  agreement  the
masculine  gender  shall be deemed to include the  feminine,  the  feminine  the
masculine, the singular the plural and the plural the singular.

     This Lease  contains the entire  agreement  between the parties hereto with
respect  to the  Premises  leased  hereunder;  further  this  Lease  may  not be
modified,  altered or amended,  except by an instrument in writing,  executed by
the parties hereto or their respective heirs, legal representatives, successors,
nominees  or  assigns  and  which  instrument  shall be  attached  hereto  as an
amendment to this Lease and shall thereby become a part hereof.

     42.  Attorney's  Fees:  If either the Landlord or Tenant files an action to
enforce any agreement  contained in this Lease, or for breach of any covenant or
condition,  the prevailing party in any such action,  shall be reimbursed by the
other party for reasonable attorneys' fees in the action.

     43.  Governing Law: This Lease shall be governed by and construed under the
laws of the State of North Carolina.

     44. Estoppel  Certificates:  Tenant may be required,  from time to time, to
execute  and  deliver  to  Landlord  a  similar   certificate   for  purpose  of
refinancing,  syndication,  sale of property,  etc. In such event,  Tenant shall
have ten (10) days from its receipt thereof from Landlord to execute and deliver
such fully executed  certificate to Landlord.  Tenant's  failure to execute said
certificate shall constitute a default hereunder.

     45. Non Compete Clause:  Landlord shall not lease any space in the Building
which houses Frisby Technologies, Inc. to any competitor engaged in the research
and/or manufacture of thermal management products.

     46.  Termination  of  Lease  Agreement:  Tenant  shall  have  the  right to
terminate  this Lease at the end of the twelfth (12th) year upon notice given to
Landlord at the end of the  eleventh  (11th)  Lease year.  Tenant will remain in
possession of this space during the twelfth (12th) Lease year following notice.

     47. Frisby  Technologies,  Inc. Option to Renew:  Provided Tenant is not in
default  hereunder,  the term of this Lease may be extended at the option of the
Tenant  for  periods of time not less than five (5) years nor  greater  than ten
(10) years per option  period.  Each such option  shall be  exercised by written
notice  to  Landlord  on or before  the end of  next-to-last  Lease  year of the
initial term or renewal term then in effect. The rental payments for each option
period shall be subject to negotiations immediately following Landlord's receipt
of renewal request notice.


                           (SIGNATURE PAGE TO FOLLOW)



<PAGE>


IN TESTIMONY  WHEREOF,  this lease has been executed by the parties  hereto,  in
duplicate originals, as of the date first above written.


Frisby Technologies, Inc., TENANT

BY: /s/ Gregory S. Frisby(SEAL)
    ---------------------------
       Greg Frisby, President


ATTEST:/s/ Douglas McCrosson
       ---------------------
         Secretary


NEW YORK
COUNTY OF SUFFOLK

     I, Andrew B. Siben,  Notary Public for said County and State,  certify that
personally came before me this day and acknowledged that he/she is the Secretary
of Frisby Technologies,  Inc. the foregoing instrument was signed in its name by
its Chairman sealed with its corporate seal, and attested by as its Secretary.

Witness my hand and official seal, this the 12th day of January, 1999.


(Official Seal)                     Notary Public

My commission expires December 31, 1999.               /s/Andrew B. Siben
                                                       ------------------



--------------------------------------------------------------------------------


Visible Goth, LLC., LANDLORD


/s/ W. David Shannon
------------------------------------------
W. David Shannon                    (SEAL)
Managing Member


STATE OF NORTH CAROLINA
COUNTY OF FORSYTH


     I, Mary Ann  Crump,  a Notary  Public in and for the  aforesaid  County and
State do hereby certify that W. David Shannon personally appeared before me this
date and  acknowledged  the due  execution of the foregoing  instrument  for the
purpose therein expressed.

WITNESS my hand and Notarial Seal, this the 15th day of January, 1999.


My Commission Expires: November 9, 2001

<PAGE>

                                   EXHIBIT "A"

                                    (Survey)


This exhibit is appended to the Lease Agreement for reference  purposes and will
be substituted  for an Exhibit "A" which shall show the  construction  site plan
and legal description for the leased premises.



<PAGE>


                                   EXHIBIT "B"

                    WORK LETTER AGREEMENT AND SPECIFICATIONS
                    FRISBY TECHNOLOGIES, INC. LEASE PREMISES
                           FRISBY TECHNOLOGIES CENTER

BUILDING EXTERIOR

          Structure

          The building is steel with brick masonry cladding.

          Glass

          Windows areas will consist of an aluminum framing system  pre-finished
          with a color  selected to compliment  the building  facade as shown on
          the attached  elevation.  Glass will consist of double pane  insulated
          units to enhance  mechanical  performance  and compliment the building
          exterior.

          Landscape/Hardscape/Courtyard/Patio

          The site shall contain  amenities  including  hardscaping of sidewalks
          and appropriate  landscape.  Landscaping shall compliment the building
          and its  surroundings  and will be at a  minimum  consistent  with the
          appearance of other buildings in the Park.

CEILINGS AND INTERIOR FINISHES

Ceilings  must be at least  nine feet (9') in  offices  clear  from floor to the
lowest  obstruction.  With the  exception  of areas shown on finished  schedule,
ceilings will receive acoustical treatment. Protrusions of fixtures into traffic
ways shall be avoided.  Ceiling will be 15' in sections 1a, 8, 9, 17, 19, 20 and
25. Ceiling will be 10' in Section 13a, 14a & 15. Ceiling will be 18' in Section
16.  Ceilings must be a flat plane in each room and suspended  with  fluorescent
recessed fixtures and finished as follows.

          Restrooms: Acoustical tile or lay in panels with textured or patterned
          surface.

          Offices and Conference  Rooms:  Acoustical  tile or lay in panels with
          textured or patterned.

          Breakroom Areas: Acoustical tile will be provided.

CORRIDORS/OPEN OFFICES

         Wall Coverings

         Prior to  occupancy,  all wall space will be covered as provided for in
         the attached finish schedule.

          Doors: Exterior

          Exterior doors must be 8 ft high heavy duty, full flush,  hollow steel
          construction,  insulated  tempered  glass.  Exterior  doors  shall  be
          weather-tight, equipped with automatic door closures and open outward.
          Hinges, pivots, and pins shall be installed in a manner which prevents
          removal when the door is closed and locked.

          Doors: Interior

          Doors will have heavy duty  hardware  with  hardware  stops.  Building
          standard doors shall be 8 ft high solid core wood with lever hardware.
          Passage  locks will be  provided.  Doors to private  offices  shall be
          master keyed.  Hardware for doors in the means of egress shall conform
          to NFPA Standard No. 101.

          Partitions

          Partitions  and  dividers  will be  provided  as shown on floor  plans
          attached.

          Partitions: Permanent

          Permanent  partitions  will  be  provided  as  necessary  to  surround
          corridors,  toilet rooms and janitor  closets and will extend from the
          structural slab to the structural ceilings above.

          Partitions: Subdividing

          Office  subdividing  partitions will extend from the finished floor to
          the finished ceiling.

FLOOR COVERING AND PERIMETERS

Floor  covering  may be either  resilient  flooring,  carpet or wood as shown on
finished schedule.

          Office  Areas/Carpet:  Prior to occupancy carpet will cover all office
          areas as shown on the attached Finished Schedule.

          Breakroom/Wet Lab/Lounge/QA:  Resilient flooring will be used in these
          areas.

          Executive  Restrooms:  Three (3) executive restrooms will be provided.
          Restrooms shall have ceramic tile.

          Toilet Service Areas:  Ceramic tile or VCT shall be used in all toilet
          areas.

          Carpet - Physical Requirements:

          Carpet pile construction:  Level loop,  textured loop, level cut pile,
          or level cut/uncut pile

          Pile weight: Twenty-eight (28) ounces per square yard

          Secondary Back: Synthetic fiber or jute for glue-down installation.

          Static  Buildup:  3.5 KV maximum with built-in  static  dissipation is
          recommended: "Static-Controlled" is acceptable.

          Carpet -  Installation:  Carpet must be installed in  accordance  with
          manufacturing instructions to lay smoothly and evenly.

DRINKING FOUNTAINS

The Lessor shall provide 2 or more drinking fountains.

RESTROOMS on each floor.  Each toilet room shall have  sufficient  water closets
enclosed with stall  partitions and doors,  urinals (in Men's Room), and hot and
cold water. Two shower stalls shall be provided in each restroom.  Water closets
and  urinals  shall not be visible  when the  exterior  door is open.  Each main
toilet room shall contain:

Equipment:

     A lavatory for each water closet.

     A single full width mirror spanning the entire distance from sink to sink

     3GCFI plugs along the sink bank in each restroom

     A continuous  shelf located  approximately  18 inches above sink height for
     placement of toiletries.

     A toilet paper dispenser in each water closet stall

     A dual access partition mounted dual roll toilet paper dispenser  stainless
     steel for each water stall

     A coat hook on inside face of door to each water closet stall

     One (1) paper towel dispenser, and waste receptacle at each end of both the
     Woman's and Men's lavatories

     One surface mounted horizontal liquid soap dispenser for each lavatory

     One  recessed  dual  napkin/tampon  dispenser  and disposal in each Women's
     lavatory

     A recessed toilet seat covers dispenser in each water stall

     Full  continuous  vanities  with cabinets will be provided in each restroom
     spanning the entire distance from sink to sink. (Material and colors TBD.)

     Fixtures including ceramic tile.


EXECUTIVE RESTROOMS

         Landlord shall provide three (3) executive  restrooms.  Restrooms shall
         have superior finishes including ceramic tile floor, vinyl covered wall
         covering,  incandescent can lights,  commode, sink, vanity and restroom
         fixtures.

HEATING AND AIR CONDITIONING

A  new  heating  and  air  conditioning  system  shall  be  installed  sized  to
accommodate load required and ducted to provide  distribution in accordance with
the floor plan attached.

     Zone  Control:  Individual  air control will be provided for 12 zones.  All
     areas  will be  equipped  with  override  controls  for  extended  hours of
     operation.

VENTILATION

Outside air shall be provided to all office  space for a minimum of fifteen (15)
cubic  feet  per  minute  (CFM)  for each  person  or 0.2 CFM per  square  foot,
whichever is greater.  Economizer cycle free cooling,  using outside air, may be
used for cooling.

ELECTRICAL:  GENERAL

The Lessor shall be responsible  for meeting the applicable  requirements of the
National  Electric Code,  the National  Electric  Safety Code,  Standards of the
National Electric Manufacturers'  Association,  Insulated Power Cable Engineers'
Association, the American Institute of Electrical Engineers, and local codes and
ordinances.  Main service facilities will be enclosed.  Distribution panels must
be circuit breaker type with twenty percent (20%) spare power load and circuits.

LIGHTING: INTERIOR

Low brightness,  parabolic type 2' x 4' fluorescent  fixtures using no more than
2.0   watts   per   square   foot   shall  be   provided   and   shown  on  Plan
Notes/Specifications to be provided.

Ballasts are to be rapid - start, thermally protected,  voltage regulating type,
UL listed and ETL approved.

CEO Office, CFO Office and Executive Station,  Board Room, Reception and Display
in each area recessed incandescent lights as appropriate.

CEO and executive area closet, a light will be provided inside.

Storage,  open  lab  and  warehouse  area  shall  be lit  with  surface  mounted
fluorescent fixtures. Open lab will have a higher level of lighting.

Building entrances and parking areas will be lighted.


JANITORIAL SERVICES

Will be located by the loading dock and contain a plumbing and a wash-sink.

NETWORK ROOM

Shall be located by the Mechanical room and have air conditioning piped directly
in.

PORTABLE FIRE EXTINGUISHERS

Portable type fire  extinguishers  meeting  requirements of NFPA Standard No. 10
shall be provided.  Inspection (quick check) and maintenance (thorough check) of
these extinguishers shall be done in accordance with NFPA Standard No. 10.

EXIT AND EMERGENCY LIGHTING

Emergency  lighting  must  provide  at least  0.5 foot  candle  of  illumination
throughout the exit path,  including exit access routes, or other routes such as
passageways to the outside of the building.

FIRE SYSTEM

Shall include sprinklers and smoke detectors were applicable.

LAN/WAN TELEPHONE DATA, ETC.

The Lessor will provide the required conduit.

ELECTRICAL

Engineering/Marketing:  Each station has three duplex receptacles (one dedicated
and two shared)  either wall fed or power pole.  Landlord  will provide 3 linear
feet of overhead and base cabinets with sink.

Administrative: Each station had three duplex receptacles (one dedicated and two
shared).  Four stations can be fed from each doghouse or power pole  connection.
Four (4)  doghouse  connector  feeds  are  required.  The A coffee  machine  and
refrigerator  will be placed in this area.  The  Lessor  will  provide  matching
built-ins for floor and overhead  cabinets  approximately  six (6) feet long and
three (3) feet deep and will  consist  of a wet-sink  with hot and cold  running
water.  The unit will be installed in the file,  fax repro room  adjacent to the
Administration area. It will also have running hot and cold water.

Reception:  Reception  and desk will be installed  by Tenant  between two single
door  entries  from  reception  to lease  space.  It will  require  38 inches of
clearance  from the sheet rock wall to the corner  containing  the lateral file.
The  feeds  will  be  installed  by  routing  or  using  flat  wire.  Additional
requirements for seating area will be required.

CEO  Administration:  Feed to be determined . Landlord will provide three linear
feet of overhead and base cabinets with sink.

Typical  Office Layout for VP's,  Directors and  Managers:  Typical  layout will
require two duplex receptacles  located on the same wall as the U shaped station
and additional duplex receptacles for credenza and chairs.

File Room, Fax, Repro, etc. Each will require duplex receptacles for fax, repro,
coffee machines, etc., in addition to normal requirements.

Break Room: Will require outlets for coffee  machine,  microwave,  refrigerator,
etc.  Landlord will provide six linear feet overhead and base cabinets with sink
in the breakroom.

Conference  Rooms:  Provide floor mounted  duplex  receptacles to allow power to
desk unit location to be confirmed via furniture layout. Board Room: Provide two
(2) doghouse  connectors  to provide  power to  conference  room via under table
connections.

CEO's Office:  Provide floor mounted  duplex  receptacles to allow power to desk
unit location to be confirmed via furniture layout and workstation to be located
behind the desk.

Dock Level  Freight:  Freight  will be brought  directly  from the dock into the
Warehouse through a roll up door.

Open Lab:  Provide  blocking and  installation  and  installation for basketball
hoop.

LAB REQUIREMENTS

Loading dock space to  accommodate  freight  trucks (53 foot  trailers plus cab)
with  floating  dock:  also,  loading ramp for other truck  deliveries (2 garage
doors total)

Required  Electrical:  600 A service;  adequate 110 V outlets for all areas; all
220 V  (single  phase,  20A  except  where  noted)  outlets  to  have  twistlock
receptacles; other special electrical requirements - see below.

Required  plumbing:  Hook  ups for 2 sinks  (hot  and  cold  water)  for wet lab
benchtop, placement depending on final benchtop layout; hook-ups for water (cold
only) in each hood;  hook ups for washing  machine and utility  sink (open lab).

Required  air: 2 hook ups for air in each hood,  air  stubbed out at least three
places  above lab benches top; air stubbed out at least three places in the open
lab, QA and warehouse.  Required safety: 2 eye wash stations, one shower, all to
be located in wet lab area near hoods;  fire  extinguishers and sprinkler system
per code.

Wet Lab Area:  Approximately  50 ft of wall space  will be needed  for  benchtop
furniture with two corners.  Electrical wire molding to be run 44 inches off the
floor (above the benchtop); this wire molding to carry (at least) three separate
110 circuits and one 220 circuit  (twistlock  receptacles for 220 V service) air
access; tiled floor with drains; separate AC zone

QA Area: 110 V in walls; air access; tiled floor with drains; separate AC zone

Open Lab Area: 110 V and 220 V in walls around  periphery;  exact number depends
on  area  and  wall  space.  High  ceiling  ideal  (greater  than  15  feet ) to
accommodate  racks to hold  products;  access;  separate AC zone;  special  100A
service to be located here (see below) to operate shop machinery.

SPECIAL REQUIREMENTS/EQUIPMENT: Provided by Tenant. Landlord to provide outlets.

         Environmental Chamber (Walk-In)

o        To be placed in open lab area
o        Overall dimensions: 196 inch width* 152 inch depth*106 inch height
o        Electrical: 460V, 3 phase 60 HZ 100 A service
o        Plumbing: .075 inch NPT (one inlet, one outlet) cooling water
o        Plumbing: .075 inch FPT  (one inlet, one outlet) humidity water
o        Drain: 1.00 inch PVC socket (minimum three outlets)
o        Vent connection: flanged fitting for dryer air

     Air Compressor; 240 V 3 phase, 30 A service; lines to open lab QA, wet lab,
and warehouse areas;  separate room or storage area to house unit (due to noise)
or locate outside.

     Lab Hood  Venting:  Circular  duct  needed  for two  fumehoods  to draw air
outside:  one eight inch duct (35 CFM  exhaust)  and one ten inch duct (1100 CFM
exhaust at 0.1 inches w.g. static pressure.

     Washing Machine and Dryer (excellent  residential quality grade):  standard
plumbing and electrical requirements.  Landlord will provide washing machine and
dryer.

     Provide 40 volt three phase 200 amp service panel in warehouse.

     Chiller.  240 V 3 phase, 100 A service needed to accommodate 15 ton chiller
in open lab (ideally located near penetrable outside wall).

     Exhaust Fan: Depending on building layout, one wall mounted exhaust fan may
be needed in open lab or special  ventilation  accommodation  should be made for
open area. Landlord will install.

     Provide 460 volt 3 phase 200 amp service panel in warehouse.

SECURITY SYSTEM

Landlord  shall provide a security  system that includes coded card entry at all
     external  and  internal  entrances  accessible  to the  public and which is
consistent
with the  requirements  contracted  for  during  June and July 1998  with  Radar
Security Alarm, Inc., Winston-Salem, NC.

ALLOWANCES
Sign:                      $  6,000.00
Lobby                      $ 15,000.00
CEO/Board Room             $ 10,000.00

The total of $31,000.00 to be used at Tenant's discretion.

<PAGE>


                                  EXHIBIT "C-2"

Marked  up copy of  Building  Floor  Plan  Schematic  marked  by  Tenant to show
proposed changes which will be incorporated into construction drawings.



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                            Frisby Technologies Inc.
                            Facility Finish Schedule


ID        ITEM                FLOOR               WALL CVR
--        ----                -----               --------
1a        CEO                 Oak                 V
1b        CEO Bath            CT                  V
1c        CEO Closet          Oak                 P
2         CFO                 Oak                 V
3         VP                  Carpet              P
4         Directors           Carpet              P
5         Managers            Carpet              P
6a        Engineering         Carpet              P
6b        Fileroom/Fax        VCT                 P
7a        Administrative      Carpet              P
7b        Fileroom/Fax        VCT                 P
8a        Executive Station   Oak                 P
9         Boardroom           Oak                 V
10        Breakroom           VCT                 P
11a       Conference Room     Carpet              V
           (Exec. Area)
11b       Conference Room     Carpet              V
           (Eng./Mktg Area)
12        Executive Baths     CT                  V
13a       Wet Lab             VCT                 P
13b       Lab Office (Wet)    VCT                 P
14a       Dry Lab             VCT                 P
14b       Lab Office (Dry)    VCT                 P
15        Small Open Lab      VCT                 P
16        Open Lab (Large)    Oak/VCT             P
17        Warehouse           Cement              P
18        Warehouse Office    VCT                 P
19        Reception           Oak                 V
20        Display             Oak                 V
21        Environmental       VCT                 P
           Chamber Area
22        General Washroom    CT                  P
           (M/F)
23        Janitorial          VCT                 P
24        Network Room        VCT                 P
25        Executive Reception Oak                 P
            Area
26        Short Hallway to    Oak                 P
            Restroom &
            Breakroom