Document:

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                                                                   EXHIBIT 10.22

                               INDUS INTERNATIONAL

                     RICHARD H. BEATTY EMPLOYMENT AGREEMENT

         This Agreement is entered into as of October 1, 2001 (the "Effective
Date"), by and between Indus International, Inc. (the "Company"), and Richard H.
Beatty (the "Executive").

         1.       Duties and Scope of Employment.

                  (a)      Positions and Duties. As of the Effective Date,
Executive will serve as Executive Vice President and Chief Operating Officer of
the Company reporting to the Chief Executive Officer. Executive will render such
business and professional services in the performance of his duties, consistent
with Executive's position within the Company, as shall reasonably be assigned to
him by the Company's Board of Directors (the "Board").

                  (b)      Obligations. During the Employment Term, Executive
will perform his duties faithfully and to the best of his ability and will
devote his business efforts and time to the Company at the Company's San
Francisco, California offices. Executive understands and agrees that frequent
travel may be necessary in carrying out his duties hereunder including, without
limitation, frequent travel to the Company's global offices as well as client
sites. During the Employment Term, Executive agrees not to actively engage in
any other employment, occupation or consulting activity with or without any
direct or indirect remuneration without the prior approval of the Board;
provided, however, that Executive may serve in any capacity with any civic,
educational or charitable organization, or as a member of corporate Boards of
Directors or committees thereof, without the approval of the Board, so long as
such activities do not materially interfere with his duties and obligations
under this Agreement.

         2.       Employment Term. Executive's employment with the Company
pursuant to this Agreement (the "Employment Term") shall commence on the
Effective Date and shall continue, unless otherwise terminated earlier as
provided in Section 6 hereof, until December 31, 2003 (the "Original Term");
provided that the Employment Term shall be extended by the Company, in its sole
discretion, for an additional twelve (12) month period (the "Additional Term")
if, at least ninety (90) days prior to the end of the Original Term, the Company
has notified the Executive in writing that the Employment Term shall be
extended. If the Company does not notify Executive in writing that the
Employment Term shall be extended at the end of the Original Term, then at such
time, Executive shall become an "at-will" employee of the Company and the
employment relationship may be terminated at any time, upon written notice to
the other party, with or without good cause or for any or no cause, at the
option either of the Company or Executive.

         3.       Compensation.

                  (a)      Base Salary. During the Employment Term, the Company
will pay Executive as compensation for his services a base salary at the
annualized rate of three hundred and fifty thousand dollars $350,000 (the "Base
Salary"). The Base Salary will be paid periodically in
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accordance with the Company's normal payroll practices and be subject to
applicable tax withholding.

                  (b)      Annual Bonus. In addition to the Base Salary,
Executive may receive a performance bonus during each year of employment with
the Company under this Agreement equal to an amount, to be determined by the
Board or the Company's Compensation Committee, of up to one hundred percent
(100%) of Base Salary; provided, however, that, subject to Section 9, the
payment of any such bonus shall be subject to Executive's continued employment
with the Company through the end of the applicable Company fiscal year. Such
performance bonus, if any, shall be determined by the Compensation Committee of
the Board based upon its evaluation of performance relative to the business plan
and other pertinent considerations.

                  (c)      Stock Option. The Company has previously granted
Executive a stock option, which is, to the extent possible under the $100,000
rule of Section 422(d) of the Internal Revenue Code of 1986, as amended (the
"Code") intended to be an "incentive stock option" (as defined in Section 422 of
the Code), to purchase 150,000 shares of the Company's Common Stock at an
exercise price of $7.625 (the "Option"). Subject to the accelerated vesting
provisions set forth herein, the Option will vest as to 25% of the shares
subject to the Option on the date of grant, and as to 25% of the shares subject
to the Option each year thereafter, so that the Option will be fully vested and
exercisable three (3) years from the date of grant, subject to Executive's
continued service to the Company on the relevant vesting dates. The Option is
subject to the terms, definitions and provisions of the Company's Stock Plan
(the "Option Plan") and the stock option agreement by and between Executive and
the Company (the "Option Agreement"), both of which documents are incorporated
herein by reference.

     4.           Employee Benefits; Indemnification. During the Employment
Term, Executive will be entitled to participate in the employee benefit plans
currently or hereafter maintained by the Company of general applicability to
other senior executives of the Company, including, without limitation, the
Company's group medical, dental, vision, disability, life insurance, and
flexible-spending account plans. The Company reserves the right to cancel or
change the benefit plans and programs it offers to its employees (including
Executive) at any time. Upon the Effective Date, Executive shall be offered an
indemnification agreement comparable in form and substance to indemnification
agreements previously entered into by and between the Company and its executive
officers.

     5.           Vacation. Executive will be entitled to paid vacation of four
(4) weeks per year in accordance with the Company's vacation policy, with the
timing and duration of specific vacations mutually and reasonably agreed to by
the parties hereto.

     6.           Expenses. The Company will reimburse Executive for reasonable
travel, entertainment or other expenses incurred by Executive in the furtherance
of or in connection with the performance of Executive's duties hereunder,
including, but not limited to, first class airfare and transportation expenses
between work locations and Executive's domicile in the Los Angeles area. Such
expenses shall be reimbursed in accordance with the Company's expense
reimbursement policy as in effect from time to time.

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         7.       Housing Expense Reimbursement. The Company will reimburse
Executive for up to $30,000 each calendar year for housing expenses related to
maintaining an apartment in San Francisco, California. Such expenses shall be
reimbursed in accordance with the Company's expense reimbursement policy as in
effect from time.

         8.       [Reserved]

         9.       Severance.

                  (a)      Termination without Cause; Termination for Good
Reason. If Executive's employment with the Company is terminated at any time
during the Employment Term (i) by the Company without "Cause" (as defined
herein) or (ii) by the Executive for "Good Reason" (as defined herein), and
Executive signs and does not revoke a standard release of claims with the
Company substantially in the form to be attached hereto as Exhibit A, then,
subject to Section 13, Executive shall be entitled to receive as severance (i)
an amount equal to Executive's then-current Base Salary (less applicable
withholding taxes), payable over a period of twelve (12) months from the date of
such termination in accordance with the Company's normal payroll policies, and
(ii) a bonus payment equal to the maximum bonus payment provided by this
Agreement (equal to one hundred percent (100%) Executive's then-current Base
Salary), payable in a lump sum within 30 days of such termination, and (iii) the
Company will pay for full COBRA benefits for Executive for the earlier of
eighteen (18) months or until Executive receives health, medical and/or dental
benefits, respectively, from a new employer, and (iv) the Option and any new
stock options granted during the term of this Agreement (collectively, the
"Options"), to the extent vested on the date of termination, may be exercised
until fifteen (15) months after the date of termination in order to minimize the
volatility of the Company's stock.

                  (b)      Voluntary Termination; Termination for Cause. If
Executive's employment with the Company is terminated by Executive without Good
Reason or by the Company for Cause, then (i) all vesting of the Options will
terminate immediately and all payments of compensation by the Company to
Executive hereunder will terminate immediately (except as to amounts already
earned), and (ii) Executive will only be eligible for severance benefits in
accordance with the Company's established policies as then in effect, if
applicable. If Executive's employment with the Company is terminated by
Executive without Good Reason, the Options, to the extent vested on the date of
termination, may be exercised until six (6) months after the date of termination
in order to minimize the volatility of the Company's stock.

                  (c)      Death or Disability. If Executive's employment with
the Company is terminated due to Executive's death or Disability (as defined
herein), and Executive or Executive's beneficiary (wife, Beverly Jean Beatty) or
guardian signs and does not revoke a standard release of claims with the Company
substantially in the form to be attached hereto as Exhibit A, then, subject to
Section 13, Executive or Executive's beneficiary shall be entitled to receive as
severance (i) an amount equal to Executive's then-current Base Salary (less
applicable withholding taxes), payable over a period of twelve (12) months from
the date of such termination in accordance with the Company's normal payroll
policies, and (ii) a bonus payment equal to the maximum bonus payment provided
by this Agreement (equal to one hundred percent (100%) of Executive's
then-current Base Salary), payable in a lump sum within 30 days of such
termination, and (iii) with respect to a termination for Disability, the Company
will pay for full COBRA benefits for Executive for the

                                      -3-
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earlier of twelve (12) months or until Executive receives health, medical and/or
dental benefits, respectively, from a new employer, and (iv) the Options, to the
extent vested on the date of termination, may be exercised until fifteen (15)
months after the date of termination in order to minimize the volatility of the
Company's stock.

         10.      Change of Control Benefits. In the event of a "Change of
Control" (as defined below) that occurs prior to the Executive's termination of
employment, then on a "Trigger Date," which is the earlier of (A) the date six
(6) months after the date of the Change of Control or (B) upon the termination
of Executive's employment without Cause or for Good Reason pursuant to Section
9(a), Executive's then-outstanding Options shall immediately vest and become
exercisable, and may be exercised until fifteen (15) months after the Trigger
Date in order to minimize the volatility of the Company's stock. In all other
respects the Options shall continue to be bound by and subject to the terms of
their respective agreements.

         In the event that, following a Change of Control, (i) Executive's
employment is terminated without Cause or for Good Reason pursuant to Section
9(a) or (ii) Executive terminates his employment with the Company with or
without Good Reason at any time after six (6) months following a Change in
Control, and Executive signs and does not revoke a standard release of claims
with the Company substantially in the form to be attached hereto as Exhibit A,
then, subject to Section 13, Executive will receive the severance benefits set
forth in Section 9(a); provided, however, that the severance payments described
in Section 9(a)(i) and (ii) shall be paid in a lump sum within 15 days following
Executive's termination.

         11.      Definitions.

                  (a)      Cause. For purposes of this Agreement, "Cause" is
defined as (i) an act of dishonesty made by Executive in connection with
Executive's responsibilities as an employee, (ii) Executive's conviction of, or
plea of nolo contendere to, a felony, (iii) Executive's gross misconduct, or
(iv) Executive's continued substantial violations of his employment duties after
Executive has received a written demand for performance from the Company which
specifically sets forth the factual basis for the Company's belief that
Executive has not substantially performed his duties.

                  (b)      Change of Control. For purposes of this Agreement,
"Change of Control" of the Company is defined as: (i) any "person" (as such term
is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended) (and provided "person" for purposes of this definition shall not
include any funds managed by E.M. Warburg Pincus & Co. or Warburg Pincus LLC or
their affiliates) is or becomes the "beneficial owner" (as defined in Rule
13d-3 under said Act), directly or indirectly, of securities of the Company
representing 50% or more of the total voting power represented by the Company's
then outstanding voting securities; or (ii) a change in the composition of the
Board occurring within a two-year period, as a result of which fewer than a
majority of the directors are Incumbent Directors. "Incumbent Directors" will
mean directors who either (A) are directors of the Company as of the date
hereof, or (B) are elected, or nominated for election, to the Board with the
affirmative votes of at least a majority of the Incumbent Directors at the time
of such election or nomination (but will not include an individual whose
election or nomination is in connection with an actual or threatened proxy
contest relating to the election of directors to the Company); or (iii) the date
of the consummation of a merger or consolidation of the

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Company with any other corporation that has been approved by the stockholders of
the Company, other than a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity or such entity's parent) more
than fifty percent (50%) of the total voting power represented by the voting
securities of the Company or such surviving entity or such entity's parent
outstanding immediately after such merger or consolidation, or the stockholders
of the Company approve a plan of complete liquidation of the Company; or (iv)
the date of the consummation of the sale or disposition by the Company of all or
substantially all the Company's assets.

                  (c)      Disability. "Disability" shall mean that the
Executive has been unable to perform his Company duties as the result of his
incapacity due to physical or mental illness, and such inability, at least
twenty-six (26) weeks after its commencement, is determined to be total and
permanent by a physician selected by the Company or its insurers and acceptable
to the Executive or the Executive's legal representative (such Agreement as to
acceptability not to be unreasonably withheld). Termination resulting from
Disability may only be effected after at least 30 days' written notice by the
Company of its intention to terminate the Executive's employment. In the event
that the Executive resumes the performance of substantially all of his duties
hereunder before the termination of his employment becomes effective, the notice
of intent to terminate shall automatically be deemed to have been revoked.

                  (d)      Good Reason. "Good Reason" means without the
Executive's express written consent (i) a significant reduction of the
Executive's duties, position, responsibilities, line of reporting, or the
removal of such Executive from such position and responsibilities, unless the
Executive is provided with a comparable position (i.e., a position of equal or
greater organizational level, duties, authority, compensation and status); (ii)
a substantial reduction, without good business reasons, of the facilities and
perquisites (including office space and location) available to the Executive
immediately prior to such reduction; (iii) a reduction by the Company in the
base compensation or discretionary bonus opportunity of the Executive as in
effect immediately prior to such reduction; (iv) a material reduction by the
Company in the kind or level of benefits to which the Executive was entitled
immediately prior to such reduction with the result that such Executive's
overall benefits package is significantly reduced; or (v) the relocation of the
Executive to a facility or a location more than fifty (50) miles from such
Executive's then present location.

         12.      Confidential Information. Executive agrees to enter into the
Company's standard Confidential Information and Invention Assignment Agreement
(the "Confidential Information Agreement") upon commencing employment hereunder.

                                      -5-
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         13.      Conditional Nature of Severance Payments.

                  (a)      Noncompete. Executive acknowledges that the nature of
the Company's business is such that if Executive were to become employed by, or
substantially involved in, the business of a competitor of the Company during
the twelve (12) months following the termination of Executive's employment with
the Company, it would be very difficult for the Executive not to rely on or use
the Company's trade secrets and confidential information. Thus, to avoid the
inevitable disclosure of the Company's trade secrets and confidential
information, Executive agrees and acknowledges that Executive's right to receive
the severance payments set forth in Section 9 (to the extent Executive is
otherwise entitled to such payments) shall be conditioned upon the Executive not
directly or indirectly engaging in (whether as an employee, consultant, agent,
proprietor, principal, partner, stockholder, corporate officer, director or
otherwise), nor having any ownership interested in or participating in the
financing, operation, management or control of, any person, firm, corporation or
business that competes with Company or is a customer of the Company. Executive
may own minor investments less than 2% of outstanding stock of a publicly traded
company. Upon any breach of this section, all severance payments pursuant to
this Agreement shall immediately cease and any payments already made shall be
repaid by Executive to the Company.

                  (b)      Non-Solicitation. Until the date one (1) year after
the termination of Executive's employment with the Company for any reason,
Executive agrees and acknowledges that Executive's right to receive the
severance payments set forth in Section 9 (to the extent Executive is otherwise
entitled to such payments) shall be conditioned upon Executive not either
directly or indirectly soliciting, inducing, attempting to hire, recruiting,
encouraging, taking away, hiring any employee of the Company or causing an
employee to leave his or her employment either for Executive or for any other
entity or person and upon breach of this section, any payments already made
shall be repaid by Executive to the Company.

                  (c)      Understanding of Covenants. The Executive represents
that he (i) is familiar with the foregoing covenants not to compete and not to
solicit, and (ii) is fully aware of his obligations hereunder, including,
without limitation, the reasonableness of the length of time, scope and
geographic coverage of these covenants.

         14.      Limitation on Payments. In the event that the severance and
other benefits provided for in this Agreement or otherwise payable to the
Executive (i) constitute "parachute payments" within the meaning of Section 280G
of the Internal Revenue Code of 1986, as amended (the "Code") and (ii) but for
this Section 14, would be subject to the excise tax imposed by Section 4999 of
the Code, then the Employee's severance benefits under Section 4(a)(i) shall be
either:

                  (a) delivered in full, or

                  (b) delivered as to such lesser extent which would result in
no portion of such severance benefits being subject to excise tax under Section
4999 of the Code,

         whichever of the foregoing amounts, taking into account the applicable
federal, state and local income taxes and the excise tax imposed by Section
4999, results in the receipt by the Employee on an after-tax basis, of the
greatest amount of severance benefits, notwithstanding that all or some portion
of such severance benefits may be taxable under Section 4999 of the Code. Unless

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the Company and the Executive otherwise agree in writing, any determination
required under this Section 14 shall be made in writing by the Company's
independent public accountants immediately prior to a Change of Control (the
"Accountants"), whose determination shall be conclusive and binding upon the
Employee and the Company for all purposes. For purposes of making the
calculations required by this Section 14, the Accountants may make reasonable
assumptions and approximations concerning applicable taxes and may rely on
reasonable, good faith interpretations concerning the application of Sections
280G and 4999 of the Code. The Company and the Executive shall furnish to the
Accountants such information and documents as the Accountants may reasonably
request in order to make a determination under this Section. The Company shall
bear all costs the Accountants may reasonably incur in connection with any
calculations contemplated by this Section 14.

         15.      Assignment. This Agreement will be binding upon and inure to
the benefit of (a) the heirs, executors and legal representatives of Executive
upon Executive's death and (b) any successor of the Company. Any such successor
of the Company will be deemed substituted for the Company under the terms of
this Agreement for all purposes. For this purpose, "successor" means any person,
firm, corporation or other business entity which at any time, whether by
purchase, merger or otherwise, directly or indirectly acquires all or
substantially all of the assets or business of the Company. None of the rights
of Executive to receive any form of compensation payable pursuant to this
Agreement may be assigned or transferred except by will or the laws of descent
and distribution. Any other attempted assignment, transfer, conveyance or other
disposition of Executive's right to compensation or other benefits will be null
and void.

         16.      Notices. All notices, requests, demands and other
communications called for hereunder shall be in writing and shall be deemed
given (i) on the date of delivery if delivered personally, (ii) one (1) day
after being sent by a well established commercial overnight service, or (iii)
four (4) days after being mailed by registered or certified mail, return receipt
requested, prepaid and addressed to the parties or their successors at the
following addresses, or at such other addresses as the parties may later
designate in writing:

                  If to the Company:
                  Copies to each of the Chief Financial Officer and General
                  Counsel at the Company's principal executive office

                  If to Executive:

                  at the last residential address known by the Company.

         17.      Severability. In the event that any provision hereof becomes
or is declared by a court of competent jurisdiction to be illegal, unenforceable
or void, this Agreement will continue in full force and effect without said
provision.

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         18.      Arbitration.

                  (a)      Executive agrees that any dispute or controversy
arising out of, relating to, or in connection with this Agreement, or the
interpretation, validity, construction, performance, breach, or termination
thereof, shall be settled by binding arbitration to be held in Cherokee County,
Georgia in accordance with the National Rules for the Resolution of Employment
Disputes then in effect of the American Arbitration Association (the "Rules").
The arbitrator may grant injunctions or other relief in such dispute or
controversy. The decision of the arbitrator will be final, conclusive and
binding on the parties to the arbitration. Judgment may be entered on the
arbitrator's decision in any court having jurisdiction.

                  (b)      The arbitrator(s) will apply Georgia law to the
merits of any dispute or claim, without reference to rules of conflicts of law.
The arbitration proceedings will be governed by federal arbitration law and by
the Rules, without reference to state arbitration law. The Executive hereby
consents to the personal jurisdiction of the state and federal courts located in
Georgia for any action or proceeding arising from or relating to this Agreement
or relating to any arbitration in which the parties are participants.

                  (c)      EXECUTIVE HAS READ AND UNDERSTANDS THIS SECTION,
WHICH DISCUSSES ARBITRATION. EXECUTIVE UNDERSTANDS THAT BY SIGNING THIS
AGREEMENT, EXECUTIVE AGREES TO SUBMIT ANY CLAIMS ARISING OUT OF, RELATING TO, OR
IN CONNECTION WITH THIS AGREEMENT, OR THE INTERPRETATION, VALIDITY,
CONSTRUCTION, PERFORMANCE, BREACH OR TERMINATION THEREOF TO BINDING ARBITRATION,
AND THAT THIS ARBITRATION CLAUSE CONSTITUTES A WAIVER OF EXECUTIVE'S RIGHT TO A
JURY TRIAL AND RELATES TO THE RESOLUTION OF ALL DISPUTES RELATING TO ALL ASPECTS
OF THE EMPLOYER/EMPLOYEE RELATIONSHIP, INCLUDING BUT NOT LIMITED TO,
DISCRIMINATION CLAIMS.

         All parties must initial here for Section 18 to be effective:

            RHB
         ---------
            TRM
         ---------

         19.      Integration. This Agreement, together with the Option Plan,
Option Agreement and the Confidential Information Agreement represents the
entire agreement and understanding between the parties as to the subject matter
herein and supersedes all prior or contemporaneous agreements whether written or
oral. No waiver, alteration, or modification of any of the provisions of this
Agreement will be binding unless in writing and signed by duly authorized
representatives of the parties hereto.

         20.      Tax Withholding. All payments made pursuant to this Agreement
will be subject to withholding of applicable taxes.

         21.      Governing Law. This Agreement will be governed by the laws of
the State of Georgia (with the exception of its conflict of laws provisions).

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         22.      Acknowledgment. Executive acknowledges that he has had the
opportunity to discuss this matter with and obtain advice from his private
attorney, has had sufficient time to, and has carefully read and fully
understands all the provisions of this Agreement, and is knowingly and
voluntarily entering into this Agreement. Company agrees to reimburse Executive
for attorney fees related to review of this Agreement.

                         [signatures on following page]

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         IN WITNESS WHEREOF, each of the parties has executed this Agreement, in
the case of the Company by their duly authorized officers, as of the day and
year first above written.

         INDUS INTERNATIONAL

         By:  /s/ Thomas R. Madison               Date:   2/4/02
             ---------------------------                -----------------------

         Title:  Chairman
                ------------------------

         EXECUTIVE

          /s/ Richard H. Beatty                   Date:   2/1/02
         -------------------------------                -----------------------
         Richard H. Beatty

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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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                                       2

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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                                       3

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.

<PAGE>
                                       4

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.

<PAGE>
                                       5

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

<PAGE>
                                       6

         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.

<PAGE>
                                       7

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.

<PAGE>
                                       8

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.

<PAGE>
                                       9

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.

<PAGE>
                                       10

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

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