Document:

<PAGE>
                                                                    Exhibit 10.4

               ASSIGNMENT AND ASSUMPTION OF INTELLECTUAL PROPERTY
               --------------------------------------------------

     This Assignment and Assumption of Intellectual Property Agreement
("Agreement") is made and entered into as of August 29, 2005 (the "Execution
Date") by and between Delk Holdings, Inc., a Texas corporation ("Assignor"), and
Advanced Materials Group, Inc., a Nevada corporation ("Assignee").

     WHEREAS, Assignor is the owner, licensee, or otherwise has an interest in,
the intellectual property assets and intellectual property rights relating
thereto, described on Schedule A attached hereto (collectively, the "IP
Assets");

     WHEREAS, Assignor is desirous of assigning and transferring its rights to
the IP Assets to Assignee, and Assignee is desirous of acquiring such rights of
Assignor in, to and under said IP Assets; and

     WHEREAS, Assignor is a party to that certain Separation and Release
Agreement by and between the Assignor, Robert Delk, Delk Partners, Ltd, the
Assignee, and certain directors, officers, and stockholders of the Assignee (the
"Release Agreement").

     NOW, THEREFORE, the parties agree as follows:

     1. For good and valuable consideration, receipt of which is hereby
acknowledged, Assignor hereby sells, assigns and transfers to Assignee on and as
of the date on which the Release Agreement becomes effective under the terms
thereof (the "Effective Date") its entire right, title and interest in and to
the IP Assets, the same to be held and enjoyed by Assignee for its own use and
enjoyment, to the end of the term or terms for which said intellectual property
rights are or may be granted, renewed or reissued, as fully and entirely as the
same would have been held and enjoyed by Assignor, if this assignment had not
been made.

     2. Assignee hereby aggress to assume all of the duties and obligations of
Assignor related to the IP Assets, to discharge such duties and obligations from
the Effective Date forward, including, without limitation, those duties and
obligations, (which include any and all accrued and unpaid minimum royalty
payments, whether or not due on or before the Effective Date) under the
agreements set forth on Schedule B (the "IP Agreements").

     3. Assignee further agrees to indemnify and hold Assignor harmless from and
against any claims arising out of Assignor's violation of or failure to assume
and discharge its duties and obligations with respect to the IP Assets and the
IP Agreements, as provided for in paragraph 2 above.

     4. ASSIGNOR MAKES NO WARRANTY OR GUARANTEE THAT THE IP ASSETS ARE NOT NOW
INVOLVED OR WILL NOT IN THE FUTURE BE INVOLVED IN ANY INTERFERENCE, REISSUE,
REEXAMINATION OR OPPOSITION PROCEEDING; DOES NOT NOW INTERFERE OR WILL NOT IN
THE FUTURE INTERFERE WITH A PATENT OR PATENT APPLICATION OF ANY THIRD PARTY; OR
IS NOT NOW, OR WILL NOT IN THE FUTURE BE, INFRINGED, CHALLENGED OR THREATENED.
ASSIGNOR HEREBY DISCLAIMS ALL WARRANTIES, EXPRESS OR IMPLIED, INCLUDING
WARRANTIES OR CONDITIONS OF MERCHANTABILITY, SATISFACTORY QUALITY, AND FITNESS
FOR A PARTICULAR PURPOSE, OR IMPLIED WARRANTIES ARISING FROM COURSE OF
PERFORMANCE, COURSE OF DEALING OR USAGE OF TRADE.

     5. ASSIGNEE AGREES TO ACCEPT THIS ASSIGNMENT "AS IS" WITH ALL FAULTS,
EXCEPTIONS AND RISKS ASSOCIATED THEREWITH.

     6. Assignor assigns no rights to Assignee other than those transferred
hereunder, and Assignor retains any and all right, title and interest to any
patents, copyrights or intellectual property of any kind not expressly conveyed
herein.

     7. This Agreement shall be construed in accordance with and governed by the
laws of the State of Texas, without regard to the principles of conflicts of
laws.

                            [SIGNATURE PAGE FOLLOWS]

<PAGE>

     IN WITNESS WHEREOF, the parties have executed this Agreement as of the
Execution Date.

ASSIGNOR:                                   ASSIGNEE

DELK HOLDINGS, INC.                         ADVANCED MATERIALS GROUP, INC.

By: /s Robert Delk                          By: /s William G. Mortensen
    -------------------------------             ------------------------------
Name: Robert Delk                           Name: William G. Mortensen
Title: President                            Title: President

                                            By: /s Michael L. Bowen
                                                ------------------------------
                                            Name: Michael L. Bowen
                                            Title: Executive Vice President

<PAGE>

                                   SCHEDULE A
                                   ----------

                                  THE IP ASSETS

Description of Product                  Federal/State IP Registration Info.
----------------------                  -----------------------------------

UnderBare Adhesive Panty                1) US Patent Application 10/267,325,
                                        filed 10-8-02 by Inventor Connors, and
                                        licensed to Delk Holdings, Inc.
                                        2) US Patent No. 6,681,407, issued
                                        January 27, 2004 to Inventor Martz and
                                        Licensed to PCI originally, then to Delk
                                        Holdings, Inc. on February 4, 2005.
                                        3) Sales and Manufacturing Agreement
                                        between PCI and Delk Holdings, Inc.
                                        establishing a joint venture between the
                                        two Inventors.

Ice Pack (SINGLE USE ICE PACK)          US Provisional Patent Application Serial
                                        No. 60/602,591 filed August 18, 2004 by
                                        Inventor Bowen. Owned by Delk Holdings.

Tube Holder (ADHESIVE)                  US Provisional Patent Application Serial
                                        No. 60/602,403 Filed August 18, 2004 by
                                        Inventor Bowen. Owned by Delk Holdings.

Tube Holder (VELCRO)                    US Patent Application Serial No.
                                        10/701,589 Filed November 5, 2003 by
                                        Inventor Bowen, from a Provisional
                                        patent application filed in 2002. Owned
                                        by Delk Holdings.

Suction Mat                             US Patent Application 60/603,740 filed
                                        08-23-2004 by Inventor Bowen.

Tool Holder                             US Patent Application Serial No.
                                        60/623,924, filed November 1, 2004, by
                                        Inventor Bowen

Bohmfalk Surgical Mask                  Patent Numbers 5,694,972 and 6,237,596*

Yavitz "Breate Right" Surgical Mask     Patent Number 5,803,075*

Yavitz "Dot Your Eyes" Contact
Applicator                              Patent Numbers 5,538,301 and 5,732,990*

Yavitz Surgeon's Cuff                   Patent Number 5,572,743*

*The Company acknowledges that the license agreements between these patent
holders and Delk Holdings has lapsed as of the Execution Date, and therefore
Delk Holdings has no interests or rights in these patents and products
notwithstanding their inclusion on this exhibit.

<PAGE>

                                   SCHEDULE B
                                   ----------

                                  IP AGREEMENTS<PAGE>
                                                                    Exhibit 10.5

                        SEPARATION AND RELEASE AGREEMENT

     This Separation and Release Agreement (the "Agreement") is made and entered
into on August 29, 2005 (the "Execution Date") to be effective on the seventh
day following the Execution Date (the "Effective Date") by and between ROBERT
DELK ("Delk"), DELK HOLDINGS, INC., a Texas corporation ("Delk Holdings"), DELK
PARTNERS, LTD, a Texas limited partnership ("Delk Partners"), ADVANCED MATERIALS
GROUP, INC. (the "Company"), and for the limited purposes set forth in Section 7
and 9 of this Agreement, those officers, directors and stockholders of the
Company who have executed this Agreement (the "Company Affiliated Signatories").

     A.   Delk has been employed by the Company in the position of President and
          Chief Executive Officer (the "Delk Employment"), pursuant to an
          Employment Agreement as of August 1, 2003 (the "Employment
          Agreement"), a copy of which is attached hereto as Exhibit A,

     B.   The Company owes Delk $47,269.86 in unpaid compensation due and owing
          through July 31, 2005 (the "Delk Unpaid Wages").

     C.   Delk has been serving as a Director of the Company since January 2003.

     D.   Delk Partners holds a significant amount of the Company's common
          stock.

     E.   Delk loaned the Company $150,000 pursuant to a promissory note dated
          April 22, 2004 (the "Delk Note"), a copy of which is attached hereto
          as Exhibit B and incorporated herein by reference.

     F.   The amount of principal and accrued but unpaid interest on the Delk
          Note as of the Execution Date is $112,000 (the "Delk Unpaid Principal
          and Interest"); and

     G.   Delk Holdings has executed an Assignment and Assumption of
          Intellectual Property as of the date hereof to be effective on the
          Effective Date in favor of the Company, a copy of which is attached
          hereto as Exhibit C (the "IP Assignment Agreement") whereby certain
          intellectual property assets (the "(IP Assets") are being conveyed to
          the Company.

     H.   The Company owes Delk $84,114 which represents legal fees, third party
          royalties and other expenses for patent prosecution and related
          matters which Delk incurred in respect of the IP Assets which are
          being assigned to the Company by Delk Holdings pursuant to the IP
          Assignment Agreement (the "Delk IP Advances");

     I.   Delk tendered, and the Company has accepted, his resignation as a
          Director effective June 24, 2005, and the Company has agreed to accept
          his resignation as President and Chief Executive Officer effective as
          of the Effective Date.

     J.   Delk, Delk Holdings and Delk Partners, on one hand, and the Company
          and the Company Affiliated Signatories, on the other hand, desire to
          settle fully, finally and amicably all issues between them, pursuant
          to the terms and conditions set forth below.

     NOW THEREFORE, in exchange for the terms, promises and obligations of the
parties hereto made in this Agreement:

     1. EFFECTIVE DATE. This Agreement shall become effective as of the
Effective Date.

     2. TERMINATION OF EMPLOYMENT AGREEMENT. Delk and the Company agree to
terminate and cancel the Employment Agreement in its entirety, such Employment
Agreement to be null and void and of no future force and effect, with no
provision therein to survive this termination and cancellation regardless of any
provision in the Employment Agreement to the contrary, and to the extent an
amendment of the Employment Agreement is required in order to give effect to
this Section 2, then the parties hereby agree that the Employment Agreement is
so amended.

<PAGE>

     3. COMPANY PAYMENTS DUE DELK. The Company remits the amount of $248,383.86
to Delk contemporaneously with the execution of this Agreement (the "Delk
Payment"), which represents the following aggregated amounts:

          (a) The Delk Unpaid Wages;

          (b) The Delk IP Advances;

          (c) The Delk Unpaid Principal and Interest; and

          (d) $5,000 in legal fees incurred by Delk and Delk Holdings in
     furtherance of negotiating and consummating this Agreement and the IP
     Assignment Agreement.

     Delk and Delk Holdings acknowledge and agree that, with the Company's
     remittance of the Delk Payment, the Company has paid Delk and Delk Holdings
     all wages due and owing to either Delk or Delk Holdings as of the Effective
     Date, and that neither Delk nor Delk Holdings shall have any entitlement or
     claim to any further compensation or benefits from the Company, including,
     without limitation, salary, bonuses, incentive compensation, stock, stock
     options, accrued vacation payments, severance, unvested pension benefits,
     employer-paid health benefits, fringe benefits, expense reimbursements, or
     any other employment benefits.

     4. RESTRICTED ACTIVITIES.

          (a) None of Delk, Delk Holdings, nor Delk Partners shall, for a period
     of one (1) year from the Effective Date (the "Restricted Period"), directly
     or indirectly, either as an employee, employer, consultant, agent,
     principal, partner, stockholder, corporate officer, board member, director,
     or in any other individual or representative capacity, engage or attempt to
     engage in any activity which is competitive with either (i) the specific
     products sold by the Company to its customers as of the Effective Date and
     set forth in Exhibit D (a "Company Product") or (ii) the IP Assets conveyed
     to the Company in the IP Assignment Agreement. The foregoing restrictions
     shall not prevent any of Delk, Delk Holdings, or Delk Partners from owning
     stock in the Company or from owing five percent (5%) or less of the equity
     securities of any public company other than the Company.

          (b) During the Restricted Period, none of Delk, Delk Holdings, nor
     Delk Partners shall directly or indirectly through another person or entity
     (i) assist, induce or attempt to induce any employee of the Company to
     leave the employ of the Company, or in any way interfere with the
     relationship between the Company and any employee thereof, (ii) hire
     directly or through another person, any person who was an employee of the
     Company as of the Effective Date, or (iii) assist, induce or attempt to
     induce any independent contractor, vendor or supplier of the Company to
     discontinue its relationship or violate any agreement with the Company.

          (c) During the Restricted Period, none of Delk, Delk Holdings, nor
     Delk Partners shall disclose or use any Company Confidential Information
     that they became aware of during the term and within the scope of the Delk
     Employment except to the extent such Company Confidential Information was
     known to Delk, Delk Holdings, or Delk Partners prior to the beginning of
     the Delk Employment or becomes generally known to and available for use by
     the public other than as a result of the acts or omissions of Delk, Delk
     Holdings, or Delk Partners in violation of this Agreement. Each of Delk,
     Delk Holdings, and Delk Partners shall take all reasonable steps to
     safeguard Company Confidential Information in their possession and to
     protect it against disclosure, misuse, espionage, loss and theft during the
     Restricted Period. As used in this Agreement, the term "Company
     Confidential Information" means trade secrets and other similar proprietary
     information designated and safeguarded as confidential by the Company and
     which is not generally known to the public and which is directly related to
     either (i) a Company Product or (ii) the IP Assets conveyed to the Company
     in the IP Assignment Agreement; provided, however, that "Company
     Confidential Information" shall expressly not include any information that
     is required by law or court order to be disclosed.

                                      -2-

<PAGE>

     5. RETENTION OF WARRANT. As partial consideration for the Delk Note, Delk
received a Warrant to purchase up to 100,000 shares of the Company's Common
Stock for $0.363 per share (the "Warrant"), a copy of which is attached hereto
as Exhibit E and incorporated herein by reference. The Company acknowledges that
Delk shall be entitled to keep the Warrant, and may exercise it in accordance
with its terms.

     6. STOCK OPTIONS. Pursuant to the Company's 2003 Stock Plan (the "Plan"),
Delk received options to purchase up to 1,770,000 shares of the Company's Common
Stock at varying exercise prices (the "Options"). The Company acknowledges that
Delk shall be entitled to keep the Options, and may exercise them in accordance
with the terms of the grant certificates related thereto and the terms of the
Plan. Delk acknowledges that, pursuant to the terms of the grant certificates
and the Plan, the Options expire, if not exercised, 90 days after the date of
his resignation as a Service Provider (as that term in defined in the Plan) to
the Company.

     7. RELEASE BY DELK, DELK HOLDINGS AND DELK PARTNERS. Each of Delk, Delk
Holdings, and Delk Partners (collectively, the "Delk Releasing Parties"),
individually and collectively, and whether in the capacity of director,
stockholder, partner, trustee, employee, agent or affiliate, hereby fully and
without limitation release, covenant not to sue, and forever discharge the
Company and the Company Affiliated Signatories (the "Company Releasees"), from
any and all rights, claims, cross-claims, counter-claims, demands, liabilities,
actions and causes of action whether in law or in equity, suits, damages,
losses, workers' compensation claims, attorneys' fees, costs, and expenses, of
whatever nature whatsoever, known or unknown, fixed or contingent, suspected or
unsuspected (collectively, the "Delk Claims"), that the Delk Releasing Parties
now have, or may ever have, against any of the Company Releasees for any acts or
omissions by the Company Releasees occurring on or prior to the Effective Date
of this Agreement; provided, however, that nothing herein shall release any
Company Releasee from any obligation which it may have under this Agreement or
from any rights expressly retained pursuant to this Agreement and/or the IP
Assignment Agreement, and provided further than nothing herein shall prevent the
Delk Releasing Parties from asserting any claim or demand in connection with the
Company's directors and officers insurance policies or otherwise being entitled
to the full benefits of any such policies to the same extent as if this
Agreement had not been entered into.

     8. OLDER WORKER'S BENEFIT PROTECTION ACT. This Agreement is subject to the
terms of the Older Workers Benefit Protection Act of 1990 (the "OWBPA"). The
OWBPA provides that an individual cannot waive a right or claim under the Age
Discrimination in Employment Act ("ADEA") unless the waiver is knowing and
voluntary. Pursuant to the terms of the OWBPA, Delk acknowledges and agrees that
he has executed this Agreement voluntarily, and with full knowledge of its
consequences. In addition, Delk hereby acknowledges and agrees that: (a) this
Agreement has been written in a manner that is calculated to be understood, and
is understood, by Delk; (b) the release provisions of this Agreement apply to
rights and claims that Delk may have under the ADEA, including the right to file
a lawsuit against the Company for age discrimination; (c) the release provisions
of this Agreement do not apply to any rights or claims that Delk may have under
the ADEA that arise after the date Delk executes this Agreement; (d) Delk has
been advised in writing to consult with an attorney prior to executing this
Agreement; (e) Delk shall have a period of 21 days in which to consider the
terms of this Agreement prior to its execution; and (g) Delk shall have a period
of seven days after execution of this Agreement in which to revoke this
Agreement. Delk further understands that this Agreement shall not become
effective until expiration of this seven-day period.

     9. RELEASE BY THE COMPANY AND THE COMPANY AFFILIATED SIGNATORIES. The
Company and the Company Affiliated Signatories (collectively, the "Company
Releasing Parties"), each individually and collectively, and whether in the
capacity of director, stockholder, partner, trustee, employee, agent or
affiliate, hereby fully and without limitation release, covenant not to sue, and
forever discharge each of Delk, Delk Holdings, and Delk Partners (the "Delk
Releasees"), from any and all rights, claims, cross-claims, counter-claims,
demands, liabilities, actions and causes of action whether in law or in equity,
suits, damages, losses, workers' compensation claims, attorneys' fees, costs,
and expenses, of whatever nature whatsoever, known or unknown, fixed or
contingent, suspected or unsuspected (collectively, the "Company Claims"), that
the Company Releasing Parties now have, or may ever have, against any of the
Delk Releasees for any acts or omissions by the Delk Releasees occurring on or
prior to the Effective Date of this Agreement; provided, however, that nothing
herein shall release any Delk Releasee from any obligation which it may have
under this Agreement and/or the IP Assignment Agreement.

     10. LEGAL FEES. If any legal action, arbitration or other proceeding is
brought for the enforcement of this Agreement, or because of any alleged
dispute, breach, or default in connection with this Agreement, the successful or
prevailing party shall be entitled to recover reasonable attorneys' fees and
other costs.

                                      -3-

<PAGE>

     11. INTEGRATED AGREEMENT. This Agreement and the agreements incorporated
herein by reference constitute a single, integrated written contract expressing
the entire agreement of the parties. There is no other agreement, written or
oral, express or implied, between the parties with respect to the subject matter
hereof, except this Agreement. This Agreement may not be orally modified, and
may be modified only in a written instrument signed by the parties. The parties
acknowledge that no representations, statements or promises made by the other
party, or by their respective agents or attorneys, have been relied on in
entering into this Agreement. Each party understands that the facts with respect
to which this Agreement is entered into may be materially different from those
the parties now believe to be true. Each party accepts and assumes this risk and
agrees that this Agreement and the releases in it shall remain in full force and
effect, and legally binding, notwithstanding the discovery or existence of any
additional or different facts, or any claims with respect to those facts.

     12. SEVERABILITY. The parties to this Agreement agree, covenant and
represent that each and every provision of this Agreement shall be deemed to be
contractual, and that they shall not be treated as mere recitals at any time or
for any purpose. Therefore, the parties further agree, covenant and represent
that each and every provision of this Agreement shall be considered severable.
If a court of competent jurisdiction finds any provision to be invalid or
unenforceable for any reason, that provision, or part thereof, shall remain in
force and effect to the extent allowed by law, and all of the remaining
provisions of this Agreement shall remain in full force and effect and
enforceable.

     13. CAPTIONS. The captions and section numbers in this Agreement are
inserted for the reader's convenience, and in no way define, limit, construe, or
describe the scope or intent of the provisions of this Agreement.

     14. COUNTERPARTS. This Agreement may be executed in counterparts, and when
each party has signed and delivered at least one such counterpart, each
counterpart shall be deemed an original, and, when taken together with other
signed counterparts, shall constitute one agreement, which shall be binding upon
and effective as to all parties.

     15. APPLICABLE LAW. This Agreement shall be construed in accordance with
and governed by the laws of the State of Texas, without regard to the principles
of conflicts of laws.

     DELK HAS READ THE FOREGOING AGREEMENT AND ACCEPTS AND AGREES TO THE
     PROVISIONS IT CONTAINS. DELK HEREBY EXECUTES THIS AGREEMENT, KNOWINGLY
     AND VOLUNTARILY, AND WITH FULL UNDERSTANDING OF ITS CONSEQUENCES. DELK
     FURTHER ACKNOWLEDGES AND UNDERSTANDS THAT HE HAS BEEN GIVEN 21 DAYS IN
     WHICH TO CONSIDER THE TERMS OF THIS AGREEMENT, AND THAT HE HAS
     VOLUNTARILY CHOSEN TO EXECUTE THIS AGREEMENT ON THE DATE INDICATED
     BELOW.

                            [SIGNATURE PAGE FOLLOWS]

                                      -4-

<PAGE>

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
dates indicated below.

Dated: August 29, 2005               /s Robert Delk
                                     -------------------------------------------
                                     ROBERT DELK

                                     DELK HOLDINGS, INC.

Dated: August 29, 2005               By: /s Robert Delk
                                         ---------------------------------------
                                         Robert Delk, President

                                     DELK PARTNERS, Ltd.

Dated: August 29, 2005               By: /s Robert Delk
                                         ---------------------------------------
                                         Robert Delk, a General Partner

Dated: August 29, 2005               ADVANCED MATERIALS GROUP, INC.

                                     By: /s Timothy R. Busch
                                        ----------------------------------------
                                         Timothy R. Busch, Chairman of the Board

FOR THE LIMITED PURPOSE OF
SECTIONS 7 AND 9 ONLY:               THE COMPANY AFFILIATED SIGNATORIES
--------------------------

Dated: August 29, 2005               /s  Timothy R. Busch
                                     -------------------------------------------
                                     Timothy R. Busch

Dated: August 29, 2005               /s  Michael L. Bowen
                                     -------------------------------------------
                                     Michael Bowen

Dated: August 29, 2005               /s  William Mortensen
                                     -------------------------------------------
                                     William Mortensen

Dated: August 29, 2005               /s  Maurice DeWald
                                     -------------------------------------------
                                     Maurice DeWald

Dated: August 29, 2005               /s Price Paschall
                                     -------------------------------------------
                                     Price Paschall

                                      -5-

<PAGE>

                                    EXHIBIT A

                            DELK EMPLOYMENT AGREEMENT
                            -------------------------

<PAGE>

                                    EXHIBIT B

                                    DELK NOTE
                                    ---------

<PAGE>

                                    EXHIBIT C

                             IP ASSIGNMENT AGREEMENT
                             -----------------------

<PAGE>

                                    EXHIBIT D

                                COMPANY PRODUCTS
                                ----------------

<PAGE>

                                    EXHIBIT E

                                  DELK WARRANT
                                  ------------

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