EXHIBIT 10.2

                        CONFIDENTIAL TREATMENT REQUESTED

Confidential Portions of This Agreement Which Have Been Redacted Are Marked With
Brackets  ([***]).  The  Omitted  Material  Has Been Filed  Separately  With The
Securities And Exchange Commission.

                                SUPPLY AGREEMENT

     THIS  AGREEMENT  is  entered  into  as of the 3rd  day of  May,  2001  (the
"Commencement  Date"),  by  and  between  BANNER  PHARMACAPS  INC.,  a  Delaware
corporation,  having an office at 4125 Premier Drive, High Point, North Carolina
27265 ("Banner") and SANOFI-SYNTHELABO  INC., a Delaware corporation,  having an
office at 90 Park Avenue, New York, New York 10016 ("SaSy").

     SaSy desires that Banner manufacture,  imprint and bulk package the Product
(as  hereinafter  defined)  for  SaSy  utilizing  Banner's  patented  Soflet(TM)
technology in accordance with the provisions of this  Agreement.  Banner has the
capacity and is willing to manufacture, imprint and bulk package the Product for
SaSy in accordance with the provisions of this Agreement.

     In consideration of the premises and of the mutual promises hereinafter set
forth, the parties agree as follows:

1.   Definitions

     The  terms  defined  in this  Section  1 shall,  for all  purposes  of this
Agreement, have the meanings specified in this Section 1 (applicable in both the
singular and plural forms).

     1.1 "Act" shall mean the United  States  Food,  Drug and  Cosmetic  Act, as
amended from time to time.

     1.2  "Cores"  shall mean the active  ingredient(s)  listed in Appendix A in
solid  caplet or tablet  dosage form  provided by SaSy to Banner for purposes of
gelatin enrobing by Banner.




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     1.3 "cGMPs"  shall mean  current  Good  Manufacturing  Practices as further
defined  in  regulations  promulgated  by the FDA  under  the Act or in  related
guidance documents.

     1.4 "FDA" shall mean the United States Food and Drug Administration and any
of its successor agencies or departments.

     1.5 "In bulk" shall mean quantities of Product  packaged in non-retail size
containers,   such  Product  intended  for  repackaging  and/or  re-labeling  in
accordance with the Act.

     1.6 "Product" shall mean a Core (as defined in Section 1.2 above) which has
been gelatin enrobed by Banner under this Agreement.

     1.7 "Specifications"  shall mean any and all specifications  agreed upon by
the parties from time to time for the composition and manufacture of the Product
including the  imprinting  and packaging  thereof.  All  Specifications  and any
subsequent changes thereto shall be in writing, dated and signed by the parties,
and identified as "Appendix A."

2.   Purchase/Supply of Product

     2.1 Banner Commitment. Banner agrees to manufacture,  imprint and supply to
SaSy in bulk (as defined in 1.5 above) the Product,  and any additional products
agreed  to by the  parties  in  writing,  pursuant  to  SaSy's  purchase  orders
submitted  in  accordance  with the  terms  and  conditions  of this  Agreement.
Banner's  duties shall  include  manufacturing,  gelatin  enrobing,  imprinting,
testing,  bulk packaging,  applying lot numbers,  labeling,  and shipment of the
Product.

     2.2 SaSy  Commitment.  SaSy  agrees to  purchase  from Banner all of SaSy's
requirements  of the  Product  for  distribution  and sale in the United  States
during the term of this Agreement.

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     2.3  Exclusivity.  During  the  term  of  this  Agreement,  subject  to the
conditions set forth below,  Banner agrees not to manufacture (either for itself
or a third party) a prescription  prenatal  vitamin product in [***] for sale or
distribution  within the United States.  Further,  subject to the conditions set
forth below, Banner agrees not to develop (either for itself or a third party) a
prescription  prenatal vitamin product in [***],  which product would be sold or
distributed within the United States during the term of this Agreement. Banner's
exclusivity  commitment shall be subject to the following  conditions:

     (a) SaSy  purchases  at least [***] units of Product in calendar  year 2002
and in each  subsequent  calendar year during the term of this Agreement and any
term extensions.

     (b)  SaSy's  PreNate(TM)Brand,  at all  times  remains  in the [***] in the
prenatal  prescription  vitamin  category based on full calendar year sales,  as
determined by market research data agreed to by the parties.

3.   Terms of Purchase

     3.1 Pricing.  Pricing for the Prenate(TM)brand product for the year 2001 is
$ [***] per 1,000  units.  The base price  ("Base  Price") for  purchases of the
Prenate(TM) brand product during subsequent calendar years shall be as follows:

     [***] per 1,000 units

     [***] per 1,000 units

     [***] per 1,000 units

Beginning  with calendar year 2002,  sales of the  Prenate(TM)  brand product to
SaSy will be invoiced and paid at $[***] per 1,000 units,  subject to adjustment
pursuant  to  Section  3.2(a).  If during any such  calendar  year SaSy does not
realize at least $[***] in gross factory

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sales (by Sanofi) of the  Product,  then the Product  price for all sales during
such year shall be adjusted retroactively to the applicable Base Price set forth
above,  based upon the actual unit sales volume during such calendar year.  SaSy
shall pay Banner (1) the difference  between the  applicable  Base Price and the
$[***] invoiced price,  multiplied by (2) the actual number of units sold during
such year, within 30 days following  Banner's invoice.  Pricing for any Products
other than the  Prenate(TM)  brand  Product shall be subject to agreement by the
parties.

     3.2 Price Adjustments; Payment Terms.

     (a) Banner shall have the right to adjust its prices annually on sixty (60)
days' written  notice to SaSy to reflect any total net increases in its per unit
cost of labor plus  overhead  (i.e.,  if there is a decrease in overhead  and an
increase in labor,  the price  adjustment  shall reflect the net change).  Price
increases for labor and overhead costs will not exceed the rate of change in the
"Employment  Cost Index for total  compensation  for private  industry workers -
Manufacturing  Nondurables"  from June 2001 to the calendar month  preceding the
effective date of the increase,  as established by the U.S. Department of Labor.


     (b) Banner  shall  adjust its prices  annually to reflect any  increases or
decreases in its cost of raw materials,  including gelatin.  In each case Banner
shall submit to SaSy the new  purchasing  standard  pricing for raw materials at
least sixty (60) days before the effective  date of the price  change.  Banner's
submission shall include appropriate  documentation to support the change in raw
materials  pricing.

     (c) The parties agree that any price  adjustments under Sections 3.2(a) and
3.2(b) shall be effective on January 1 of each  calendar year during the term of
this Agreement.



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     (d) The Product prices do not include any taxes, including, but not limited
to, sales,  use and excise taxes or customs  duties,  all of which shall be paid
when due by SaSy.  SaSy  shall  provide  for all  applicable  jurisdictions  any
necessary  tax  exemption or other  certifications  for any Products that Banner
agrees  to drop  ship on  behalf  of SaSy.

     (e)  Payments to Banner by SaSy for Product  purchases  shall be net thirty
(30) days.  Payment shall be in U.S.  dollars.  Banner's invoice shall be issued
upon the date of shipment of Products to SaSy or SaSy's designee.

     3.3 Forecasts.  On or before the last day of each calendar month during the
term of this  Agreement,  SaSy shall furnish  Banner with a written  forecast of
SaSy's  requirements  of the  Product  for  each of the next  succeeding  twelve
months.  The first three (3) months of each  forecast  shall be a firm  purchase
commitment  (the "Committed  Purchase"),  and only month three can vary from the
prior monthly  forecast.  The first and second months of each 12 month  forecast
shall be the same as the  second  and third  months of the  prior  twelve  month
forecast (i.e., rolling 12 month forecast).

     3.4  Purchase  Orders.  Within  two (2)  weeks  of the  submission  of each
forecast, SaSy shall provide Banner with a binding firm order ("Purchase Order")
for the  Committed  Purchase  which  specifies  the specific  Product,  expected
delivery date to SaSy, the quantities of each Product  ordered and the requested
place, time and manner of delivery  (including any carrier designated for use by
SaSy).  All  purchases  shall be pursuant to Banner's  standard form of purchase
order  acknowledgement.  In the event of a conflict between such  acknowledgment
form and this  Agreement,  this Agreement  shall  control.  Within five (5) days
after receipt of a Purchase Order, Banner shall notify SaSy of its acceptance of
such  Purchase  Order.  If such Purchase  Order exceeds the standard  order size
(i.e., 10 lots, 1.234 mm tablets, theoretical batch size), Banner shall indicate
what portion of the amounts  covered by the Purchase  Order Banner is willing to


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accept as a binding  order.  Such  confirmation  shall also confirm the delivery
date. If a specific raw material  ingredient is delayed due to an event of force
majeure or fails to meet  specifications,  then for all purposes of this Section
3.4, Banner's  shipment  timetable shall be extended by the period of such delay
or in the case of unacceptable material, to allow Banner adequate time to obtain
suitable replacement material, provided such time or period shall not exceed the
3 month force  majeure  period set forth in Section 9 below.  Banner  recognizes
that  the  secure  sourcing  of  raw  materials  is  an  integral  part  of  its
manufacturing  responsibilities,  and will inform  SaSy in a timely  manner with
respect to any problems  related to such  sourcing.

     3.5 Shipment.  Banner shall ship each order F.O.B.  Banner's  manufacturing
facility. Freight and insurance shall be for the account of SaSy, and SaSy shall
bear the risk of loss, delay or damage in transit from and after delivery to the
designated carrier.  Banner shall package the Product for shipment in accordance
with its customary  practices,  unless otherwise agreed in writing by Banner, in
which event any extra cost incurred by Banner on account of changes requested by
SaSy shall be  reimbursed  by SaSy.  Banner shall include the following for each
shipment of the Product: (a) the purchase order number; (b) the lot and/or batch
numbers;  (c) the quantity of the Product;  and (d) a certificate of analysis in
Banner's customary form.

     3.6 Royalties.

     3.6.1 For Calendar Year 2002 and  subsequent  years during the term of this
Agreement, including any extensions, SaSy shall pay to Banner annually a royalty

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equal to [***]% of SaSy's "Gross Sales" (as defined below) if SaSy's Gross Sales
for such year exceed a threshold of $[***].  The royalty shall be payable on all
Gross  Sales for the year if the $[***]  threshold  is reached.  SaSy's  payment
shall be made within thirty (30) days after the end of each calendar year.  Each
payment  shall be based upon a report  (prepared by SaSy and submitted to Banner
within 45 days of the end of the  calendar  year)  showing  Gross Sales for such
calendar  year for the  Product,  with  sufficient  detail to  permit  Banner to
confirm such report.  For purposes  hereof,  "Gross  Sales" means  factory gross
sales of the Product  before any  deductions  are made for  discounts,  returns,
rebates, and allowances by SaSy in accordance with its customary trade practices
and as determined in accordance with generally accepted  accounting  principles,
consistently  applied.  SaSy shall keep accurate books and records in accordance
with generally accepted accounting  principles showing all information  required
to  calculate  the amounts  payable  under this  Section  3.6.1.  Such books and
records  will be  preserved  for at least  three (3) years  from the date of the
payment  to which they  relate.

     3.6.2 Upon ten (10) days written notice from Banner,  SaSy shall permit one
or more certified public  accountants  mutually agreeable to Banner and SaSy, to
inspect during normal business hours SaSy's books and records which specifically
pertain to the computation of Gross Sales and royalty revenues. Such accountants
will keep confidential all information  received from SaSy, except that they may
disclose to Banner their findings  regarding the  computation of Gross Sales and
royalty  revenues so that Banner may verify any amounts  payable  under  Section
3.6.1.  If any such  inspection of SaSy's records  indicates an  underpayment to
Banner of five percent (5%) or more for any annual period, SaSy will



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reimburse Banner the discrepancy together with the actual and reasonable costs
of such inspection. Otherwise, such inspection will be at Banner's sole expense.

4.   Ingredients.

     4.1  Delivery  of Cores.  SaSy shall  coordinate  the  delivery of Cores to
Banner in  quantities  as agreed by the parties  (via  confirmation  of purchase
order) and as are necessary to enable Banner to  manufacture  and gelatin enrobe
the Core as provided  herein.  SaSy will use  reasonable  commercial  efforts to
supply the Cores at least three (3) weeks  before  commencement  of  manufacture
with  freight  prepaid to  Banner's  High Point,  North  Carolina  facility,  as
reasonably  directed  by Banner.  If a specific  shipment of Cores is delayed or
fails to meet the Core  Specifications (as defined in Section 4.2), then for all
purposes of this Section 4.1, Banner's  shipment  timetable shall be extended by
an appropriate  period to account for such delay or in the case of  unacceptable
Cores, by an appropriate  period for SaSy to supply suitable  replacement Cores.
Title to the Cores  shall  remain with SaSy at all times.  Banner  shall have no
payment obligation for the Cores; provided,  however, that in the event of loss,
damage or shortage of Cores after receipt by Banner, Banner shall be responsible
for the Cores  required to be  replaced  at a unit price of $[***] per  thousand
Cores.

     4.2 Core Specifications. The Cores SaSy supplies to Banner shall conform to
specifications   (including   size)   agreed  to  by  the  parties   (the  "Core
Specifications")  and  delivery  of the Cores to  Banner  shall  signify  SaSy's
approval of such Cores for use in  manufacturing  the  Product.  SaSy shall also
furnish  Banner  specifications  for  storage  conditions  for the Cores  (e.g.,
packaging,  temperature,  percentage of relative  humidity,  etc.) to ensure the
Cores  remain  stable  and  capable of  processing  and  Banner  shall  store in
accordance therewith. SaSy shall

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be responsible,  at its expense, for return or disposal of any Cores that do not
meet the Core  Specifications,  and shall  indemnify and hold  harmless  Banner,
subject to Sections 11.1,  11.3 and 11.5, for any losses or liabilities  arising
from use of Cores that do not meet the Core Specifications  previously agreed to
by the parties. Banner shall assume responsibility and risk for the safekeeping,
storage and handling of Cores delivered by SaSy to Banner hereunder.

     4.3 Yields.  (a) At the  completion  of the first  twenty  (20)  full-scale
production  batches (except the first  validation lot, which has been previously
allocated  between the parties for process  optimization),  SaSy and Banner will
mutually agree on a "standard yield".  This determination will be made by a team
of both  parties'  technical  personnel.  This yield will serve as the  standard
reference for full year calculation. At the end of each calendar year during the
term, if the actual annual yield is lower than the standard  yield,  then Banner
shall  promptly  investigate  the reasons for the loss and provide SaSy with the
results of the investigation.  If the investigation determines the Core loss was
due to  non-conformance  with Banner  Manufacturing  Requirements (as defined in
Section 5.1) or Banner's production  processes,  then Banner will reimburse SaSy
for the variance, at a unit price of $[***] per thousand Cores. Retained samples
and additional  stability requests will not be taken into account in calculating
manufacturing  loss. For purposes of determining  the actual yield,  any broken,
damaged or unusable Cores detected  before or during the enrobing  process shall
be excluded in  determining  the quantity of Cores  supplied by SaSy.  If due to
manufacturing  errors  by Banner  or  non-conformance  of  Product  with  Banner
Manufacturing  Requirements,  an entire  batch of Product  or Cores is  rendered
unusable, then Banner shall reimburse SaSy for the entire batch of Cores, at the


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unit price set forth above,  and in the case of Product  previously  paid for by
SaSy,  at the  actual  cost of such  unusable  Product.

     (b) If after Banner's  investigation  as described in Section 4.3(a) above,
Banner and SaSy do not agree on the loss or the reasons thereof, the matter will
be submitted to an  independent  laboratory  acceptable  to both parties for its
review and  determination.  The parties will agree on the methods and procedures
for testing. The determination of such independent laboratory will be binding on
both parties. The cost of the independent laboratory shall be borne by the party
who was in error.

     4.4 Supply of Inactive Ingredients.  Banner shall supply inactive and other
ingredients and materials as required for enrobing,  manufacturing,  imprinting,
testing and shipping the Product.  Banner's  receipt,  processing,  handling and
storage of all raw materials  required hereunder shall be conducted under proper
and  sanitary  conditions  in  accordance  with  cGMPs.  In the  manufacture  of
Products,  Banner  will not use any  materials  that  fail to meet  the  current
National  Formulary,  the  current  U.S.  Pharmacopoeia  standards  (where  such
standards are established and are applicable), and/or any requirements specified
by Customer and agreed to by Banner for such materials.  Banner must inform SaSy
in a timely manner of any changes  which may impact the  validation or stability
of the Products.

5. Performance Standards

     5.1  Specifications  and  Characteristics  Banner shall  manufacture,  bulk
package,  test and ship the Products in accordance  with (i) the  Specifications
and (ii) all applicable laws and regulations,  including but not limited to, the
Act  and  the  regulations   promulgated   thereunder   (such  as  current  Good
Manufacturing  Practices ("GMPs")),  as amended and in effect from time to time.


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Banner's  responsibilities  and obligations  described in the foregoing sentence
are hereinafter referred to as the "Banner Manufacturing  Requirements".  Banner
shall perform such quality control and quality  assurance testing as is required
to  ensure  that  the  Products  comply  with  all of the  Banner  Manufacturing
Requirements, except as otherwise set forth in the Specifications, the Technical
Agreement, or any of the appendices hereto. Banner shall not make any changes to
the Specifications without the prior written consent of SaSy.

     5.2 Certificate of Analysis. Concurrent with shipment, Banner shall deliver
to SaSy a Certificate of Analysis,  in Banner's  customary form attached  hereto
for each lot of Product  sold to SaSy,  confirming  that the  Product  meets the
Banner  Manufacturing  Requirements.

     5.3 Product Acceptance.

          (a)  Within  thirty  (30)  days of  receipt  of  Product,  SaSy or its
designee  shall conduct an analysis of samples of Products  delivered by Banner.
Should  the  result of any  analysis  of such  samples  deviate  from the Banner
Manufacturing Requirements, SaSy shall notify Banner in writing by facsimile and
immediately  thereafter  provide Banner with samples of the Product tested.  If,
following a review of the test results and after  conducting its own test of the
samples,  Banner  agrees  that  such  samples  do  not  conform  to  the  Banner
Manufacturing  Requirements,  Banner shall provide SaSy,  free of any additional
charge, with new deliveries of the same quantity of the Products and pay for the
cost of any related shipping,  removal or destruction.  At Banner's cost, Banner
may promptly  reinspect the nonconforming  Product to determine whether it meets
the Banner  Manufacturing  Requirements.  In either event, SaSy shall return, at
Banner's  expense,  the particular lot or shipment of the Product which does not
comply  with the Banner  Manufacturing  Requirements  if  requested  to do so by
Banner.  If SaSy  fails to notify  Banner of a batch  that  fails to  conform to
Banner Manufacturing Requirements by the thirty-fifth (35th) day following




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receipt of the Product, then SaSy shall be deemed to have accepted such batch.

     (b) If Banner and SaSy do not agree on whether the Product  conforms to the
Banner  Manufacturing   Requirements,   the  matter  will  be  submitted  to  an
independent  testing  laboratory  acceptable  to both parties for its review and
determination.  The parties will agree on the analytical  methods and procedures
for testing and an inter-laboratory methods transfer process will be implemented
at  the  laboratory  to  ensure  acceptable  data.  The  determination  of  such
independent  laboratory  will  be  binding  on  both  parties.  The  cost of the
independent laboratory shall be borne by the party whose testing results were in
error.  If the product is determined not to conform to the Banner  Manufacturing
Requirements,  then Banner  shall,  subject to  Sections  11.2 and 11.5 have the
obligations  with  respect to the  non-conforming  Product  set forth in Section
5.3(a) above;  provided,  however, that Banner shall be responsible for the cost
of any lost or damaged Core (at $[***] per 1,000 Cores) that may be necessary in
order to replace any  non-conforming  Products.  Notwithstanding  the foregoing,
Banner shall have no liability  with respect to  non-conforming  Products to the
extent  that  such   Products  do  not  conform  to  the  Banner   Manufacturing
Requirements  because of a defect in the Core or any other ingredients  supplied
by SaSy under this  Agreement.  If the Product is  determined  to conform to the
Banner  Manufacturing  Requirements,  then  SaSy  shall  accept  and pay for the
Product in accordance  with the terms  hereof.

     (c) Subject to Sections 11.2 and 11.5, Banner's obligations in this Section
5.3 shall  constitute  SaSy's sole remedy for  delivery of Product that does not
conform to Banner Manufacturing  Requirements.


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     6. Product Complaints

     6.1 Field.  Should either party  experience any quality  problem  involving
field  correction of any specific lot(s) of Product  supplied to SaSy by Banner,
such party will notify the other in writing by facsimile within twenty-four (24)
hours.  Banner will test  retained  samples of lots in  question  and report its
findings  within ten (10) working days.  SaSy retains the right to correct field
problems as it deems appropriate, with or without the concurrence of Banner. All
information   about  Product   complaints  shall  be  considered   "Confidential
Information"  under the terms of this Agreement.

     6.2 Regulatory.  Either party shall  immediately  notify the other party in
writing  should it become  aware of any defect or  condition  that  renders  any
lot(s)  of  Product  supplied  by  Banner  to SaSy in  violation  of the  Banner
Manufacturing  Requirements or the Act, or of a similar law of any  jurisdiction
where the  Product is sold.  Banner  shall share with SaSy (and SaSy shall share
with  Banner  only to the extent  related to  Banner's  activities)  all data on
confirmed  lot  specific  Product  complaints  including,  but not  limited  to,
complaints or information regarding performance and/or allegations or reports of
any negative  effect from the use or misuse of such  affected lot of Products as
soon as such data is  available.  Banner  will  provide  reasonable  and  timely
assistance  to SaSy in  resolving  customer  complaints.  SaSy  shall  have sole
responsibility  and  authority to interact  directly  with its  customers in the
resolution of such complaints.

     6.3 Adverse Reports. Banner will report to SaSy all data and/or information
pertaining  to  adverse  reports on any lot of  Product  supplied  by Banner for
distribution  by SaSy which would have an adverse  impact on  performance of the
Products.



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     6.4 Notices.  Field  notifications with respect to the Products,  or any of
them shall be the responsibility of SaSy. All costs associated with such actions
shall be the  responsibility  of the party whose fault or omission  necessitated
such action.  Should there be a difference  of opinion  between  Banner and SaSy
regarding  a field  notification,  SaSy will  exercise  the right to notify  its
customers  without  delay.

7.  Term and  Termination

     7.1 Term; Renewal.  This Agreement shall continue in effect for a period of
five (5) years  following  the date  hereof  and shall  automatically  renew for
successive renewal terms of two (2) years each unless either party gives written
notice  of  non-renewal  at least  twelve  (12)  months  prior to the end of the
initial  five-year term or any successive  two-year  renewal term, in which case
this  Agreement  shall  automatically  expire  at the  end  of  such  term.

     7.2 Termination.  Either party shall have the right to terminate this
Agreement at any time by notice in writing to the other:

          (a) If  the  other  party  commits  a  material  breach  of any of its
obligations herein and fails (i) where a remedy is reasonably  possible,  within
sixty (60) days after notice from the non-breaching party to remedy that breach.

          (b) If the other party (i) applies for or consents to the  appointment
of a receiver, trustee or liquidator of it or of its properties and assets, (ii)
admits in writing its  inability to pay its debts as they mature,  (iii) makes a
general assignment for the benefit of creditors,  (iv) is adjudicated a bankrupt
or insolvent,  (v) files a voluntary  petition under the Federal Bankruptcy Code
or takes  advantage of any  insolvency,  readjustment  of debt,  dissolution  or
liquidation law or statute or files an answer admitting the material allegations
of a petition filed against it at any proceeding under any such law, or (vi) has
entered against it an order, judgment or decree issued by any court of competent



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jurisdiction  approving  a  petition  seeking  reorganization  of it  or of  its
properties and assets or appointing a receiver, trustee or liquidator of it.

          (c) If the other  party is  prevented  by reason of any  circumstances
referred  to  in  Section  9 of  this  Agreement  from  performing  any  of  its
obligations  hereunder  for a  continuous  period of three (3) months.

     7.3 Post Termination Obligation.  Upon termination of this Agreement,  SaSy
shall  purchase  from Banner all  Products for which SaSy has  outstanding  firm
orders with Banner, and shall reimburse Banner for the actual costs of packaging
components  used  to  make  the  Products  that  Banner  cannot  use  after  the
termination  date.  Banner  shall  return  to SaSy  at  SaSy's  expense  (unless
termination is by SaSy pursuant to Section 7.2(a) and then at Banner's  expense)
all Cores supplied by SaSy remaining in Banner's  possession that are not needed
to complete SaSy's outstanding firm orders to the extent such components were to
be used for Product for which SaSy had submitted a purchase  order.

8.  Technical  Agreement.  Banner  and  SaSy  agree to  enter  into a  Technical
Agreement for the  manufacture of the Product which will specify  certain of the
parties' responsibilities for certain of the parties' manufacturing, compliance,
and regulatory  matters,  in  substantially  the form attached as Appendix B.

9. Force  Majeure.  Neither Banner nor SaSy shall be considered in default or be
liable to the other party for any delay in performance or for non-performance of
the  terms of this  Agreement  caused by  circumstances  beyond  the  reasonable
control of such party,  including  but not  limited to, acts of God,  explosion,
fire, flood, earthquake or tremor, war, whether declared or not, accident, labor
strike or labor  disturbances,  sabotage,  order or decrees of any court, or raw
material  shortages,  unavailability,  or delay in delivery. A party claiming a


                                       15
<PAGE>


right to be excused from performance under this Section shall immediately notify
the other  party in writing of the extent of its  inability  to  perform,  which
notice shall specify the occurrence beyond its reasonable  control that prevents
such  performance.  Such other  party  shall have the right to make  alternative
arrangements  during the period of the force majeure and, after 3 months,  shall
have the right to terminate this Agreement.

10.  Confidential Information.

     10.1  Non-Disclosure.  During the term of this  Agreement  and for a period
ending the later of (i) ten (10) years  following  the date  hereof or (ii) five
(5) years following expiration or termination of this Agreement, SaSy and Banner
shall keep,  and shall cause its  respective  affiliates,  officers,  directors,
employees and agents to keep,  confidential  all information  proprietary to the
other  party that has been  acquired  by it  through  its  participation  in the
negotiation  and  performance  of  this  Agreement,  and  each  shall  use  such
information  solely  for  purposes  of  performing  its  obligations  hereunder,
provided that the foregoing  restriction shall not apply to information that (a)
is or hereafter becomes  generally  available to the public other than by reason
of any default  with respect to  confidentiality  under this  Agreement,  (b) is
hereafter  disclosed to such party by a third party who is not in default of any
confidentiality  obligation  to the  other  party  (and such  disclosure  can be
properly  demonstrated  by  the  receiving  party),  (c)  was  previously  or is
hereafter  developed  by or  on  behalf  of  such  party,  without  reliance  on
confidential  information of the other party acquired prior to or after the date
hereof (and such can be properly  demonstrated by the receiving  party),  (d) is
required to be disclosed in compliance  with  applicable  laws or regulations or
order by a court or other  governmental  or  regulatory  agency  or body  having
competent  jurisdiction,  provided that  reasonable  measures  shall be taken to
assure confidential treatment of such information, (e) is provided by such party
under appropriate  terms and conditions,  including  confidentiality  provisions


                                       16
<PAGE>

equivalent  to  those  in this  Agreement,  to  third  parties  for  consulting,
accounting,  legal and similar  purposes,  (f) such party  considers  reasonably
necessary to disclose in connection with any action,  suit or proceeding  before
any court or any governmental or other regulatory agency or body or any arbitral
panel,  or any  audit or  investigation  brought  by any  governmental  or other
regulatory  agency or body, or the assertion of any claim against any insurer or
other third party. Each of SaSy and Banner recognizes that any violation of this
confidentiality  provision may cause the other  irreparable harm and agrees that
the other party shall be  entitled,  in addition to any other right or remedy it
may have, at law or in equity, to an injunction  without the posting of any bond
or other  security,  enjoining the  disclosing  party,  its affiliates and their
respective  officers,  directors,  employees  and agents from any  violation  or
potential  violation of this Section 10.1.  The terms of this Section 10.1 shall
survive any  termination or expiration of this  Agreement.

     10.2  Limitations  on Use. SaSy and Banner agree that they will not use the
confidential information of the other party for any purpose, other than carrying
out their respective obligations set forth in this Agreement,  including without
limitation,  publication of any kind,  without the prior written consent of such
other party.

11.  Indemnities and Insurance

     11.1 Limitation of Liability.  Subject to Sections 11.2 and 11.5,  Banner's
liability for shipment of Product which fails to conform to Banner Manufacturing
Requirements  shall be limited to the remedies set forth in Section 5.3. Neither
Banner  nor SaSy  shall be  liable  for any  incidental,  indirect,  special  or
consequential  damages,  or for lost  profits,  savings or  revenues of any kind
resulting  from the  failure of any  Products  to meet the Banner  Manufacturing
Requirements, the Core Specifications or for any other breach of this Agreement.


                                       17
<PAGE>

Banner and SaSy (with respect to Cores) expressly  disclaim any implied warranty
of fitness for a particular purpose.

     11.2.  By Banner.  Banner shall  indemnify  and hold SaSy and its officers,
directors,  shareholders,  agents and  employees  harmless  against  any and all
liability,  damage,  loss, cost or expense  resulting from any third party claim
made or suit  brought  against SaSy or such persons to the extent such claim (i)
is caused by Banner's  negligence or willful  misconduct,  (ii) is caused by the
failure of the  Products  to conform to the Banner  Manufacturing  Requirements,
(iii) is  caused by  Banner's  material  breach  of any terms of this  Agreement
(including  representations and warranties),  or (iv) arises out of a claim of a
violation of any  intellectual  property  rights,  including  but not limited to
trademark,  copyright  and/or  trade  dress,  infringement  of any patent or the
unauthorized use of a trade secret resulting from the material (excluding Cores)
or production process used by Banner in manufacturing  Product.  Upon the filing
of any such claim or suit, SaSy shall  immediately  notify Banner  thereof,  and
shall permit  Banner at its cost to handle and control such claim or suit.  SaSy
shall have the right to  participate in the defense of such claim or suit at its
own  expense.

     11.3.  By SaSy.  SaSy shall  indemnify  and hold  Banner and its  officers,
directors,  shareholders,  agents and  employees  harmless  against  any and all
liability,  damage,  loss, cost or expense  resulting from any third party claim
made or suit brought against Banner or such persons to the extent such claim (i)
is caused by SaSy's negligence or willful  misconduct,  (ii) is caused by SaSy's
material breach of any terms of this Agreement  (including  representations  and
warranties)  or arises  out of a  violation  by SaSy of any  applicable  laws or
regulations,  (iii) is caused by the Cores or any inherent Product properties or
defects,  but  excluding  defects  introduced  into the  Product  by  Banner  in
violation of Banner's  warranties or  obligations  hereunder,  (iv) is otherwise
caused  by or  arises  out of the  marketing,  distribution,  sale or use of the


                                       18
<PAGE>

Product by SaSy or any third  party or (v) arises out of a claim of a  violation
of any intellectual  property rights,  including but not limited to,  trademark,
copyright,  and/or trade dress,  infringement of any patent, or the unauthorized
use of a trade secret  resulting from the  manufacture of the Products by Banner
based on information or technology  furnished to Banner by SaSy. Upon the filing
of any such claim or suit,  Banner  shall  immediately  notify SaSy  thereof and
shall permit SaSy at its cost to handle and control  such claim or suit.  Banner
shall have the right to  participate in the defense of such claim or suit at its
own  expense.

     11.4 Claims. No claim shall be made or be enforceable  against either party
under this Section 11 unless  written  notice  thereof with full  particulars is
received by the indemnifying party within sixty (60) days after the existence or
cause of the claim is found.

     11.5 Recalls.  The parties recognize that it is possible for recalls of the
Products to be necessary  due to the action or inaction of one of the parties or
otherwise.  The parties agree that SaSy shall have sole responsibility to effect
any  recall.  Banner  shall  only be  responsible  for costs of a recall and all
reasonable expenses associated  therewith to the extent it is demonstrated to be
caused  solely  by a  breach  of  Banner's  obligations  under  this  Agreement,
including non-conformance to Banner Manufacturing  Requirements.  In such event,
Banner  shall use its  commercially  reasonable  best  efforts  to  replace  the
recalled  products within 60 days of notice of recall.  In the event of any such
recall,  regardless of the party whose action or inaction caused same, the party
discovering  such action or inaction shall promptly notify the other party,  and
the parties  shall  cooperate  fully in the  handling  and  disposition  of such
recall.  The parties  agree that  Banner  shall have no  responsibility  for any
recall  resulting from the Cores except to the extent any defect in the Cores is
caused  by  Banner,  or from  plans and  specifications  for  products  or other
materials provided by SaSy to Banner.



                                       19
<PAGE>

     11.6 Dispute Resolution.

     11.6.1 SaSy and Banner agree to use all best efforts to resolve any and all
disputes arising out of or relating to this Agreement. If after thirty (30) days
following  receipt of notice by one party from the other of a dispute under this
Agreement, the parties are unable to resolve the dispute, then the parties shall
each  appoint  a person of the rank of at least  Vice  President  to  personally
review  the facts of the  dispute  and seek to  resolve  the  matter by means of
direct  discussions  between the  appointed  representatives.  If the  appointed
representatives  cannot  reach  agreement  within  thirty (30) days of notice of
appointment  of such  representatives,  then the matter may be fully and finally
resolved in binding  arbitration if mutually  agreed to by both SaSy and Banner.

     11.6.2  Arbitration  shall be conducted in accordance  with the  commercial
arbitration rules then in effect of the American Arbitration  Association (AAA).
Arbitration  shall take place in New York,  New York and shall be  conducted  by
three (3)  arbitrators,  one of whom shall be selected  by each  party,  and the
third  arbitrator by the two (2)  arbitrators  so selected,  all within the time
limits  established by the then existing rules of the AAA. To the maximum extent
permitted by applicable law, the decision of the arbitrators  shall be final and
without appeal,  and may be enforced in any court having  jurisdiction over SaSy
or Banner,  as the case may be or their  current  assets.  Upon the request of a
party,  the arbitration  award shall specify the factual and legal basis for the
award. To the extent permitted by applicable law, the  arbitrator(s)  shall have
the  power  to award  recovery  of all  costs  and  fees  (including  reasonable
attorneys' fees,  administrative  fees, and arbitrators' fees) to the prevailing
party. The  arbitrator(s)  may not award punitive  damages.  All other expenses,
including without  limitation,  legal fees shall be borne by the party incurring
such  expenses,  except  that the  parties  shall  divide  equally  the fees and
expenses of the  arbitrators  unless  otherwise  determined by the  arbitrators.



                                       20
<PAGE>

     11.6.3  Notwithstanding  the  foregoing,  if either SaSy or Banner does not
agree to binding  arbitration,  then either party may seek  injunctive  or other
relief from a court of law.

     11.7  Insurance.  Each  party  shall  obtain,  at  its  expense,  insurance
coverage,  including  Product  Liability  Insurance,  on Products with liability
limitations of five million dollars  ($5,000,000) per occurrence and ten million
dollars ($10,000,000) in the aggregate. Each party shall name the other party as
additional  insured on all such policies.  Such  insurance  company shall have a
rating of at least A- (minus) from A.M.  Best.

     11.8  Third  Party  Rights.   Banner   represents  and  warrants  that  the
manufacture of the Product or any component  thereof will not as a result of the
acts or omissions of Banner or Banner's agents,  representatives  or independent
contractors infringe any rights of third parties; provided, that Banner makes no
representations or warranties regarding the Cores.

12. Miscellaneous

     12.1 Title; Trademarks. Title to all Banner know-how,  technology and other
Banner intellectual property relating to the Softlet(TM)  technology and gelatin
shell  formulations for enrobing the Cores will remain with Banner; and title to
all know-how,  technology and intellectual  property relating to the Cores shall
remain with SaSy. SaSy shall own the Product  manufactured by Banner pursuant to
this  Agreement.  Except as required by a  governmental  authority or applicable
laws or  regulations,  SaSy  agrees  that it will not use the Banner name and/or
Banner's trademark in any advertising, promotions, marketing, and/or labeling of
the Products,  without the prior written consent of Banner.  SaSy shall have the
right to use Banner's trademark  "Soflet(TM)" and related logo and reference the
applicable patents of Banner on SaSy's packaging, advertising, product brochures
and trade dress,  provided SaSy obtains  Banner's prior approval of the proposed
manner  of use of  such  trademark  and  logo  and  patent  references  on  such
packaging,    advertising,    product    brochures    and    trade    dress.



                                       21
<PAGE>

     12.2  Records/Inspection.

          (a)  SaSy  shall  have  the  right,  at  reasonable  intervals  and on
reasonable  (at least ten (10)  business  days) prior  notice and during  normal
business hours, to inspect  Banner's  manufacturing,  laboratory,  packaging and
warehousing  facilities used in the manufacture,  packaging,  storage,  testing,
shipping and  receiving of the Products or their  components.  The frequency and
extent of routine  inspections  shall be no more than once per calendar  year or
upon just  cause as  mutually  agreed by the  parties.

          (b) SaSy shall have the right,  upon prior reasonable notice to Banner
and during normal  business  hours,  to examine all batch  production  and QA/QC
records  related  to the  Products  kept by Banner and to  request  and  receive
reasonable samples of raw materials,  packaging materials and finished Products.

          (c) During the term of this  Agreement,  Banner shall promptly  notify
SaSy of any  inspections by the FDA, or any federal,  state or local  government
health  agency,  of the  facilities  where the  Products  are  manufactured  and
packaged and shall thereupon  furnish SaSy with copies of all government  health
agency reports and/or other documents  (including responses to the FDA) relating
to such inspections  where the inspections  involve or may involve the Products,
the components or active ingredients (Cores) of the Products, the manufacture of
the Products,  or the premises used to process and ship the Products;  provided,
that  Banner  shall not be required to furnish  SaSy any  materials  that Banner
considers to be  proprietary  or  confidential  to it. If such  inspections  are
scheduled or  conducted  with  advance  notice,  Banner shall so advise SaSy and
unless there is a legal prohibition against doing so, SaSy shall have the option
to be present  during the  inspections.  Banner shall provide SaSy copies of any
Banner  correspondence  relating to the  Products  submitted  to any  government
agency.


                                       22
<PAGE>

          (d)  During  the  term of this  Agreement,  each  party  shall  report
promptly to the other any significant  information it may receive concerning any
defects,  adverse reactions and unexpected side effects,  if reasonably believed
to be related to the Products.

          (e) Banner shall keep records of the manufacture, testing and shipping
of the  Products,  and retain  samples of such  Products in order to comply with
applicable  regulations as well as to assist with resolving  product  complaints
and other  similar  investigations.  Copies of such records and samples shall be
made  available  to SaSy upon its request and shall be retained by Banner and be
available to SaSy for a period of one (1) year after the expiration dates of the
bulk  packaged  batch,  or  longer  if  required  by law.

     12.3 Governing  Law;  Jurisdiction.  This  Agreement  shall be governed and
construed in all respects by and under the laws of New York.

     12.4 Successors and Assigns. Neither party may assign this Agreement or any
rights hereunder in any manner,  whether by virtue of law or otherwise,  without
the  prior  written  consent  of the other  party  (which  consent  shall not be
unreasonably withheld or delayed),  except that Banner may assign part or all of
its  responsibilities  and  obligations  under  this  Agreement  to one or  more
wholly-owned subsidiaries of Banner provided the assigning party remains jointly
and severally liable for performance  hereunder.  Notwithstanding the foregoing,
either  party  may  assign  this  Agreement  and  its  rights,  subject  to  its
obligations, hereunder to any assignee in connection with the transfer of all or
substantially all of its business or assets relating to the Product or the Cores
subject to the prior  consent of the other  party,  which  consent  shall not be
unreasonably  withheld,  provided that either party may withhold  consent in its
sole discretion to a proposed assignment to an entity with which it competes. It
is  understood  that in no event shall Banner  transfer the  manufacture  of the
Product  hereunder  to any other  Banner  Facility  without the consent of SaSy,



                                       23
<PAGE>

which  consent  shall  not be  unreasonably  withheld.  Any  increased  shipping
expenses  resulting  from such  transfer  shall be borne by Banner.

     12.5 Banner  Representations.  Banner represents and warrants that:

          (i)  the manufacture of the Product or any component  thereof will not
               as a result  of the  acts or  omissions  of  Banner  or  Banner's
               agents,  representatives or independent  contractors infringe any
               rights,  including  patent rights of third  parties;  and (i) the
               trademark  "Soflet(TM)" is owned by or licensed to Banner and may
               be lawfully  used by SaSy within the United  States in the manner
               set forth in  Section  12.1

          (ii) the  Product  has  been  gelatin   enrobed   using  the  patented
               Soflet(TM)technology  described  in U.S.  Patents  5,146,730  and
               5,459,983 (the "Patents');

         (iii) there  is  no  pending  litigation  or,  to  Banner's  knowledge,
               threatened litigation involving the Patents; and

          (iv) the  Patents  are free  and  clear of any  lien,  encumbrance  or
               security interest.

     12.6  Entire  Agreement.  This  Agreement  and all  attachments,  including
Appendices and Exhibits, hereto which are referenced herein set forth the entire
agreement  between the parties  relating to the subject matter  contained herein
and may not be modified,  amended or  discharged  except as expressly  stated in
this  Agreement  or  by a  written  agreement  signed  by  the  parties  hereto.
Notwithstanding the foregoing, any confidentiality agreement previously executed
between the parties  shall remain in effect in accordance  with its terms.

                                       24
<PAGE>

     12.7  Severability.  The  provisions  of this  Agreement  shall  be  deemed
separate.  Therefore, if any part of this Agreement is rendered void, invalid or
unenforceable,  such rendering shall not affect the validity and  enforceability
of the  remainder  of this  Agreement  unless the part or parts  which are void,
invalid  or  unenforceable  shall  substantially  impair  the value of the whole
Agreement  to  either  party.

     12.8  Notices.  Unless  otherwise  stated  in this  Agreement,  any and all
communications  required as provided for in this  Agreement  shall be in writing
and sent by (i) Certified or Registered Mail,  postage  prepaid,  return receipt
requested,  (ii) facsimile  followed by a letter of  confirmation or (iii) by an
express  overnight  courier service (for example,  Federal Express or Airborne),
postage  prepaid,  return  receipt  requested  and addressed as set forth below.
Notices shall be deemed given three (3) days  following  mailing by Certified or
Registered  Mail,  and one (1) day  following  the  date  sent by  facsimile  or
overnight  courier.

Any  notice to be given to Banner  shall be  addressed  to:

                Banner  Pharmacaps,  Inc.
                4125 Premier Drive
                High Point,  North  Carolina  27265
                Attention: Vice President,
                           Pharmaceutical Sales and Marketing

With a copy to:

                Banner Pharmacaps, Inc.
                4125 Premier Drive
                High Point, North Carolina 27265
                Attention:  Senior Vice President,
                Legal and Public Affairs



                                       25
<PAGE>

Any notice to be given to SaSy-Synthelabo shall be addressed to:

                  Sanofi-Synthelabo Inc.
                  90 Park Avenue
                  New York, New York 10016
                  Attention: Gregory Irace
                  Vice President and Chief Financial Officer

With a copy to:
                  Sanofi-Synthelabo Inc.
                  90 Park Avenue
                  New York, New York 10016
                  Attention: John M. Spinnato
                  Senior Vice President and General Counsel

Either  party may give  written  notice of a change of  address,  and after such
notice has been received,  any notice thereafter shall be given to such party as
above provided at such changed  address.

     12.9. Headings. The headings used in this Agreement are for the convenience
of the parties only, and shall not be considered in interpreting or applying the
provisions of this Agreement.

     12.10  Counterparts.  This  Agreement  may be  executed  in any  number  of
counterparts,  each of which shall be deemed an original  and all of which taken
together shall be one and the same agreement.



                                       26
<PAGE>

     IN WITNESS  WHEREOF,  the parties  hereto have caused this  Agreement to be
duly executed as of the date and year first above written.

    BANNER PHARMACAPS INC.                         SANOFI-SYNTHELABO INC.
         ("Banner")                                      ("SaSy")

By: /s/ Roger Gordon                       By: /s/ Gregory Irace
    ------------------------------             --------------------------------
Name:  Roger Gordon                        Name:  Gregory Irace
    ------------------------------             --------------------------------
Title: President                           Title: V.P. & C.F.O.
    ------------------------------             --------------------------------
Date:  8-2-01                              Date:  8-2-01
    ------------------------------             --------------------------------

                                           By:  /s/ John M. Spinnato
                                               --------------------------------
                                           Name:  John M. Spinnato
                                               --------------------------------
                                           Title: Sr. V.P. and General Counsel
                                               --------------------------------
                                           Date:  8-2-01
                                               --------------------------------

                                       27
<PAGE>


                                   APPENDIX A
                             CORES / SPECIFICATIONS


                                       28
<PAGE>

                                   APPENDIX B
                              TECHNICAL AGREEMENT





                                       29


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