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                                                                   EXHIBIT 10.34

DATED                                                                       2001







                            (1) THE BOOTS COMPANY PLC



                                       AND



                       (2) BIOPROGRESS TECHNOLOGY LIMITED




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                          PRODUCT DEVELOPMENT AGREEMENT



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                                LEGAL DEPARTMENT
                              THE BOOTS COMPANY PLC
                                   NOTTINGHAM
                                     NG2 3AA


                              TEL : (0115) 959 3432
                              FAX : (0115) 959 3314




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                                      INDEX

<TABLE>
<CAPTION>
CLAUSES                                                                                         PAGE NO
-------                                                                                         -------
<S>                                                                                                <C>
1.    Definitions and Interpretation.................................................................1
2.    Continuation of the Initial Development Programme..............................................3
3.    The Commercial Development Programme...........................................................4
4.    Supply of Plant................................................................................5
5.    Supply of Film.................................................................................9
6.    Payment........................................................................................9
7.    Intellectual Property Rights..................................................................10
8.    After Completion or Termination of the Commercial Development Programme.......................12
9.    Exclusivity...................................................................................14
10.   Fields........................................................................................14
11.   Confidentiality...............................................................................14
12.   Force Majeure.................................................................................15
13.   Termination...................................................................................15
14.   Assignment....................................................................................16
15.   Change of Control.............................................................................16
16.   Relationship..................................................................................17
17.   Waiver........................................................................................17
18.   Notices.......................................................................................17
19.   Entire Agreement and Amendments...............................................................18
20.   Applicable Law and Service of Process.........................................................18
21.   Invalidity and Severability...................................................................18
22.   Announcements.................................................................................19

</TABLE>

SCHEDULE

The Commercial Development Programme


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THIS AGREEMENT is made the 26 day of November 2001

BETWEEN:-

(1)      THE BOOTS COMPANY PLC registered in England number 27657, whose
         registered office is at Nottingham NG2 3AA ("Boots") of the one part;
         and

(2)      BIOPROGRESS TECHNOLOGY LIMITED registered in England number 3289265,
         whose registered office is at Unit 1, Norwood Road, March,
         Cambridgeshire PE15 8QD ("Bioprogress") of the other part.

WHEREAS:-

     A.  By an agreement (the "Initial Agreement") dated 17th October 2000 and
         made between Boots of the one part and Bioprogress of the other part,
         Boots and Bioprogress agreed to collaborate in a development programme

     B.  The Initial Agreement contains provisions requiring Boots to give
         notice to Bioprogress if, following the completion of the Initial
         Development Programme, it wishes to enter into a further programme for
         the development on a commercial scale of a product or products
         developed pursuant to the Initial Development Programme and, upon such
         notice being given, requiring the parties to negotiate and use
         reasonable endeavours to agree the terms of such further programme.

     C.  Boots having served such notice upon Bioprogress, the parties have
         agreed that the said further programme shall be conducted on the terms
         and conditions hereinafter contained.


NOW IT IS HEREBY AGREED as follows:-

1.       DEFINITIONS AND INTERPRETATION

1.1      In this Agreement, unless the context otherwise requires, the following
         expressions shall have the following meanings:-

         "Acceptance Criteria"                   means the tests which the Plant
                                                 is required to pass, and the
                                                 criteria and standards which
                                                 the Plant is required to meet,
                                                 as devised and agreed by the
                                                 parties hereto pursuant to the
                                                 Commercial Development
                                                 Programme;



                                       1
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         "Affiliate"                             means, in relation to any
                                                 company, any legal entity
                                                 controlling, controlled by or
                                                 under common control with the
                                                 company in question. "Control"
                                                 for these purposes means direct
                                                 or indirect possession of the
                                                 power to direct or cause the
                                                 direction of the management or
                                                 policies of such company or
                                                 entity, whether pursuant to the
                                                 ownership of voting securities,
                                                 by contract or otherwise;

         "Boots Plant"                           means that part of the Plant
                                                 to be developed by Bioprogress
                                                 for the development and
                                                 manufacture of the Products
                                                 pursuant to the Commercial
                                                 Development Programme;

         "Core Plant"                            means that part of the Plant
                                                 which excludes the Boots Plant;

         "Initial Agreement"                     means the agreement referred to
                                                 in Recital A hereto;

         "Initial Development Programme"         means the development programme
                                                 referred to in Recital A
                                                 hereto;

         "Inventions"                            means all or any (as the
                                                 context so permits) inventions,
                                                 improvements, discoveries,
                                                 methods or other valuable
                                                 developments, whether patented
                                                 or otherwise;

         "Patents"                               means all patents and patent
                                                 applications, together with any
                                                 patents granted pursuant to
                                                 such applications (whether or
                                                 not the existence or details of
                                                 same shall have been disclosed
                                                 by Bioprogress to Boots)
                                                 granted to (in the case of
                                                 patents) or made by (in the
                                                 case of patent applications)
                                                 Bioprogress or any of its
                                                 Affiliates, or to which
                                                 Bioprogress or any of its
                                                 Affiliates may be beneficially
                                                 entitled, in Territory or any
                                                 part thereof as at the date of
                                                 this Agreement, and in any way
                                                 relating to the Plant or



                                       2
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                                                 the Plant Technology, or to any
                                                 part of either;

         "Plant Technology"                      means all technology, know how
                                                 and technical information,
                                                 whether protected by
                                                 intellectual property rights
                                                 (including but not limited to
                                                 the Patents) or otherwise,
                                                 owned or controlled by
                                                 Bioprogress and necessary for
                                                 the proper operation,
                                                 maintenance, servicing, repair,
                                                 testing and commissioning of
                                                 the Plant;



         "Registration"                          means the grant to Boots or its
                                                 nominee by any competent
                                                 medicines registration
                                                 authority in any country within
                                                 the Territory of a licence to
                                                 manufacture, market, advertise
                                                 for sale, promote, sell, or
                                                 distribute the Products, or to
                                                 have any of the same done by a
                                                 third party, in or from that
                                                 country;

         "Territory"                             means each and every country
                                                 within the world; and

         "Warranty Period"                       means the period of twelve
                                                 months commencing on the first
                                                 date on which the Plant has met
                                                 all the Acceptance Criteria;

1.2      In this Agreement, words denoting the singular include the plural and
         vice versa, and a reference to any gender includes a reference to all
         other genders.

1.3      References in this Agreement to Clauses and to the Schedule are to
         Clauses of and the Schedule to this Agreement.

1.4      The Schedule forms an integral part of this Agreement.

1.5      The headings to the Clauses are for identification purposes only and do
         not affect their interpretation.

2.       CONTINUATION OF THE INITIAL DEVELOPMENT PROGRAMME

2.1      Boots and Bioprogress hereby acknowledge that t the duration of the
         Initial Development Programme was extended until and including 31st
         October 2001, subject to the provisions of Clause 2.2.


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2.2      Boots shall, in consideration of all work performed by Bioprogress
         pursuant to or in contemplation of the Initial Development Programme
         during the extended period thereof referred to in Clause 2.1, reimburse
         Bioprogress in respect of the purchase price to Bioprogress of all
         materials, equipment or services which Boots expressly requests
         Bioprogress to obtain for the purpose of carrying out such work, in
         accordance with the following provisions:-

         2.2.1    Bioprogress shall, upon receipt of each such express request
                  from Boots, provide Boots with written details of the cost of
                  purchase of the said materials, equipment or services, and
                  shall purchase the same following, but under no circumstances
                  prior to, receipt of express instructions from Boots to
                  purchase the materials, equipment or services in question;

         2.2.2    Bioprogress shall make payment for all materials equipment and
                  services purchased and shall submit to Boots a copy of a
                  receipted invoice in respect of all such materials, equipment
                  or services for which reimbursement is claimed pursuant to
                  this Clause 2.2;

         2.2.3    Boots shall reimburse Bioprogress in respect of all sums due
                  to it at or before the end of the month following the month in
                  which the relevant copy receipted invoice is received by
                  Boots;

2.3      Except as provided in Clause 2.2, Bioprogress shall not be entitled to
         any form of payment or other consideration in respect of any work
         performed by it and to which this Clause 2 applies, or the provision by
         it of any materials equipment or services required for the purpose of
         performing such work.

2.4      The provisions of the Initial Agreement shall , remain in full force
         and effect, however in the event of any conflict between the provisions
         of this Agreement and those of the Initial Agreement, then, to the
         extent that the provisions in question relate to the Initial
         Development Programme, or to any matter relating thereto or arising as
         a consequence of the execution or completion thereof other than
         anything which is the subject matter of this Agreement, the former
         shall prevail.

3.       THE COMMERCIAL DEVELOPMENT PROGRAMME

3.1      Bioprogress shall perform its obligations under the Commercial
         Development Programme in accordance with the terms thereof.

3.2      Boots shall manage the conduct of the Commercial Development Programme,
         including but not limited to the performance by Bioprogress of its
         obligations thereunder, in accordance with the provisions thereof.

3.3      Boots shall be entitled, by giving notice to that effect to
         Bioprogress, to terminate the Commercial Development Programme at any
         time. In the event of termination of the Commercial Development
         Programme by Boots pursuant to this Clause 3.3, the provisions of
         Clause 8.3 shall apply.

3.4      Without limiting any of the specific obligations on the part of
         Bioprogress contained within the Commercial Development Programme or
         elsewhere in this Agreement, Bioprogress shall at all times during the
         currency of the Commercial Development Programme provide, at its own
         expense, such co-


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         operation and assistance as Boots may reasonably require in order to
         perform Boots' own functions in relation to the Commercial Development
         Programme. Boots will notify Bioprogress of the precise nature and
         extent of the co-operation and assistance which it requires on an
         ongoing basis once those requirements have been determined. Upon
         receipt of such notification, Bioprogress shall promptly confirm to
         Boots whether or not it is able to provide the co-operation or
         assistance requested by Boots. If it is able to provide the same, the
         parties shall negotiate in good faith and use reasonable endeavours to
         agree the precise nature and extent of the co-operation or assistance
         to be provided, and if appropriate the time and venue at which it will
         be provided. If Bioprogress is unable to provide all or any part of the
         co-operation or assistance requested, the parties shall negotiate in
         good faith and use reasonable endeavours to agree the provision by
         Bioprogress of co-operation or assistance in an alternative manner
         which in general terms meets the requirements of Boots and is
         reasonably acceptable to Boots, however Boots shall be entitled to
         determine at its discretion whether or not any alternative co-operation
         or assistance proposed by Bioprogress is so acceptable. If Bioprogress
         persistently fails to provide the co-operation or assistance reasonably
         requested by Boots, or if Bioprogress fails to provide such
         co-operation or assistance on any one or more occasions and the result
         of such failure is that the execution of the Commercial Development
         Programme is prevented or delayed to a material extent, then such
         failure shall be regarded as a material breach of this Agreement for
         the purposes of Clause 13.1.

4.       SUPPLY OF PLANT

4.1      Bioprogress will supply the Plant to Boots in accordance with the
         provisions of this Clause 4.

4.2      Bioprogress shall construct or procure the construction of the Plant by
         making to the specification for the Core Plant, the further
         modifications and enhancements embodied in the Boots Plant.

4.3      Bioprogress shall be responsible, whether acting on its own behalf or
         through sub-contractors, for the delivery, installation, commissioning
         and testing of the Plant, in accordance with the provisions of,
         including, without limitation, the timescales (as to which time shall
         be of the essence) agreed pursuant to, the Commercial Development
         Programme.

4.4      Bioprogress warrants to Boots as follows:

         4.4.1    That the Plant will meet the Acceptance Criteria within the
                  timescales stipulated therefor in the Commercial Development
                  Programme;

         4.4.2    That the Plant will conform continuously and without
                  interruption in all respects to the Performance Specification
                  during the Warranty Period; and

         4.4.3    That without prejudice to the obligations of Bioprogress under
                  Clauses 4.5, 4.6 and 4.7, the Plant will, from the end of the
                  Warranty Period until the expiry of the period of time for
                  which Boots shall require to use the same, give good, safe and
                  reliable performance in all material respects. It is
                  acknowledged by Boots that the


                                       5

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                  occurrence of minor defects in and to the Plant which are
                  capable of prompt and complete rectification shall not
                  constitute a breach of this Warranty.

         Bioprogress shall indemnify Boots and keep Boots fully indemnified
         against all claims, actions, demands, liability, damages, costs, losses
         and expenses suffered or incurred by Boots (including without
         limitation, any claims, actions or demands made or brought against
         Boots by, or any liability incurred in favour of, any third party) to
         the extent that the same arise as the result of any breach by
         Bioprogress of any of the warranties contained in this Clause 4.4,
         except to the extent that the same arise as the result of any wrongful
         act or omission on the part of Boots or its employees. Bioprogress
         shall maintain insurance against its liability under the foregoing
         indemnity with a reputable insurance company to a limit of cover not
         less than Pound Sterling 2 000 000 (Two million pounds) per individual
         event or occurrence and shall on request produce to Boots copies of the
         relevant policy or policies of insurance, together with receipts for
         the payment of premiums.

4.5      The following provisions shall apply to the servicing, repair and
         maintenance of the Plant at all times whilst it is under the possession
         or control of Boots:-

         4.5.1    Bioprogress shall perform, or procure the performance of, the
                  routine maintenance and servicing of the equipment in
                  accordance with such provisions as are agreed pursuant to the
                  Commercial Development Programme. Such work shall be performed
                  at no additional cost to Boots ( except to the extent
                  otherwise agreed ).

         4.5.2    Bioprogress shall be responsible for all non-routine
                  maintenance and servicing of the Plant to which the provisions
                  to be agreed pursuant to Clause 4.5.1 do not apply and the
                  repair of all defects in and damage to the Plant, the need for
                  which arises either during or as a result of the use of the
                  Plant by Boots during the Warranty Period. Such work shall,
                  unless otherwise agreed, be performed at no additional cost to
                  Boots ,. except to the extent that the need for such
                  maintenance, servicing, repair or rectification arises as the
                  result of any failure by Boots or any of its employees to
                  operate or use the Plant other than in accordance with the
                  provisions of the manual to which Clause 4.7 relates.

         4.5.3    Bioprogress shall carry out or procure the carrying out of all
                  maintenance, servicing, repair and rectification to the Plant
                  to which the provisions of neither Clauses 4.5.1 nor 4.5.2
                  apply and Boots shall make payment to Bioprogress for such
                  maintenance, servicing, repair and rectification at such rates
                  as are agreed between Boots and Bioprogress from time to time;
                  the initial rates for this purpose shall be subject to
                  agreement as part of the Commercial Development Programme, and
                  such rates shall remain in full force and effect for a period
                  of not less than one year commencing on the day following the
                  completion of the commissioning and testing of the Plant.

4.6      Bioprogress shall provide to Boots full and adequate training in the
         operation, and use of the Plant, including in the training of others to
         operate and use the Plant , the details of the nature of the said
         training and the times and venues at which is to be carried out to be
         agreed between Bioprogress and Boots



                                       6
<PAGE>


4.7      Bioprogress shall, no later than the date of delivery of the Plant,
         provide Boots with not less than two copies of a complete and
         up-to-date operating manual for the Plant, and shall in addition at all
         times during the working life of the Plant provide Boots promptly with
         such revisions, addenda and supplements to these as are necessary as a
         consequence of any modifications, amendments or enhancements made to
         the Plant after delivery, or of any incompleteness or inaccuracy
         discovered in the current version of the said manual.

4.8      Risk in the Plant shall vest in Boots upon delivery except in respect
         of any loss or damage thereto which is the result of any negligent act
         or omission on the part of Bioprogress, its employees, agents or
         representatives.

4.9      Title to the Core Plant shall remain vested in Bioprogress, subject
         always to the provisions of Clause 4.14.

4.10     Title to the Boots Plant shall vest in Boots upon the making by Boots
         to Bioprogress of the payment referred to in Clause 6.1.2. Upon the
         vesting of title to the Boots Plant in Boots, the licence granted by
         Bioprogress to Boots under Clause 4.11 shall, insofar as the same
         relates to the Boots Plant, be varied in the following manner:

         4.10.1   The said licence shall cease to be coterminous with this
                  Agreement and shall become perpetual;

         4.10.2   The rights granted to Boots shall be extended to include the
                  right to maintain, repair and modify the Boots Plant; and

         4.10.3   Boots shall have the right to grant sub-licences to third
                  parties to perform any of the acts which Boots is licensed to
                  perform pursuant to the terms of the said licence, but not
                  further or otherwise.

4.11     Bioprogress hereby grants to Boots an exclusive (subject to the
         provisions of Clause 4.14.3) and non-transferable (except to an
         Affiliate of Boots) licence, coterminous with this Agreement, to use
         the Plant Technology for the purpose of operating the Plant, and
         performing all its other obligations under this Agreement in relation
         to the Plant, in order to enable it to conduct the Commercial
         Development Programme and thereafter, subject to the provisions of
         Clause 8 to manufacture or have manufactured the Products in the Field
         for use or resale in the Territory.

4.12     In consideration of the supply to Boots of the Plant, and the
         performance by Bioprogress of its obligations in relation to the Plant,
         pursuant to this Clause 4, and of the licence granted by Bioprogress to
         Boots pursuant to Clause 4.8, Boots shall pay to Bioprogress the sums
         more particularly specified in Clause 6, in accordance with the
         provisions thereof.

4.13     In the event of the termination by Boots of the Commercial Development
         Programme or if, following the completion of the Commercial Development
         Programme, Boots does not give notice to Bioprogress, pursuant to the
         provisions of Clause 8.1, that it wishes to proceed with the commercial
         exploitation of the Products, the Core Plant shall be returned to
         Bioprogress in accordance with the following provisions:-



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         4.13.1   Bioprogress shall be responsible for the decommissioning and
                  removal, at its own expense, from Boots' premises of the Core
                  Plant;

         4.13.2   upon the receipt by Bioprogress of notice of termination from
                  Boots pursuant to Clause 3.2 or if Boots gives notice or is
                  deemed to have given notice pursuant to Clause 8.1 that it
                  does not wish to proceed with the commercial exploitation of
                  the Products , Boots and Bioprogress shall negotiate in good
                  faith and use reasonable endeavours to agree a timed programme
                  for the decommissioning and removal of the Core Plant;

         4.13.3   notwithstanding the provisions of Clause 4.10.2, Bioprogress
                  shall complete the decommissioning and removal of the Core
                  Plant from Boots' premises within three (3) calendar months of
                  the notice from Boots referred to in Clause 4.13.2. If
                  Bioprogress has not completed the decommissioning and the
                  removal of the Core Plant from Boots' premises by the end of
                  that period, then Boots shall be entitled to complete or have
                  completed the decommissioning and removal of the Core Plant,
                  and Bioprogress shall be liable for the reasonable costs
                  incurred by Boots in so doing, unless the failure of
                  Bioprogress to complete the said decommissioning and removal
                  is the result of the failure by Boots to negotiate in good
                  faith the details of the timed programme for the same pursuant
                  to Clause 4.13.2, in which event such removal and
                  decommissioning shall be at the expense of Boots, and Boots
                  must complete the same within a period of two (2) calendar
                  months from the end of the period of three (3) calendar months
                  referred to above;

         4.13.4   The Boots Plant shall (subject to Clause 4.10) remain the
                  property of Boots, and shall not be removed from Boots'
                  premises pursuant to this Clause 4.13 unless title thereto
                  shall not have vested in Boots pursuant to Clause 4.10;

         4.13.5   Bioprogress shall be responsible for making good any damage
                  caused to Boots premises' or any other property owned or
                  controlled by Boots, to the extent that the same arises as a
                  result of the decommissioning and removal of the Plant from
                  Boots' premises, but except to the extent that such damage
                  arises as a result of any wrongful act or omission on the part
                  of Boots, its employees, agents or representatives.

4.14     If, following the completion of the Commercial Development Programme,
         Boots wishes to proceed with the commercial exploitation of the
         Products, Boots shall purchase the Core Plant from Bioprogress in
         accordance with the following provisions:-

         4.14.1   the payment terms relating to the said purchase are set out in
                  Clause 6;

         4.14.2   upon payment of the consideration for the purchase of the Core
                  Plant more particularly specified in Clause 6.2, title to the
                  Core Plant will immediately vest in Boots;


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         4.14.3   the licence granted by Bioprogress to Boots pursuant to Clause
                  4.11 shall, with effect from the date on which title to the
                  Core Plant vests in Boots be varied in the following manner:-

                  4.14.3.1  the said licence shall cease to be coterminous with
                            this Agreement and shall become perpetual;

                  4.14.3.2  the rights granted to Boots under the said licence
                            shall be extended to include the right to maintain,
                            repair and modify the Core Plant;

                  4.14.3.3  Boots shall have the right to grant sub-licences to
                            third parties to perform any of the acts which Boots
                            is licensed to perform pursuant to the terms of the
                            said licence, but not further or otherwise.

5.       SUPPLY OF FILM

5.1      Bioprogress will supply to Boots:-.

6.       PAYMENT

6.1      Without prejudice to any right of termination contained within this
         Agreement, Boots shall make the following initial payments to
         Bioprogress:

6.2

6.3      In consideration of the licence granted by Bioprogress to Boots
         pursuant to Clause 4.11, Boots shall pay to Bioprogress, with effect
         from the date of the grant to Boots of the first Registration of the
         Products, a licence fee in respect of each unit of plant, calculated as
         follows:--

         6.3.1

6.4



6.5

In respect of all payments due from Boots to Bioprogress pursuant to Clauses
6.1, 6.2, 6.3 and 6.4, Bioprogress shall submit one valid VAT invoice to Boots
in respect of each payment to be made. Each such invoice shall be deemed to have
been received by Boots, notwithstanding the provisions of Clause 19, on the date
upon which the payment to which the invoice in question relates is due, having
regard to the foregoing provisions of this Clause 6 or, if later, upon the
deemed date of receipt


                                       9
<PAGE>


by Boots of the said invoice, determined in accordance with the provisions of
Clause 19.


6.6      Boots shall pay to Bioprogress the sum due to Bioprogress in respect of
         each valid VAT invoice submitted to Boots in accordance with the
         provisions of this Clause 6 at or before the end of the month following
         the month in which the invoice is received or is deemed to have been
         received pursuant to the provisions of Clause 6.5

6.8      All payments referred to in this Clause 6 are exclusive of VAT at the
         rate prevailing at the time of the taxable supply in question.

6.9      Notwithstanding that all payments in this Clause 6 are expressed in US
         Dollars, Boots may at its discretion make any payments which it
         required to make under this Clause 6 in Sterling. For this purpose the
         amounts payable as expressed in US Dollars shall be converted to
         Sterling by dividing the same by the US Dollar to Pound Sterling
         Exchange Cross Rate published in the Financial Times on the day on
         which the relevant sum is authorised for payment by Boots.

6.10     Bioprogress agrees to comply with the Income Tax (Sub-contractors in
         the Construction Industry) Regulations 1193 S.I. No 743, as amended by
         the Income Tax (Sub-contractors in the Construction Industry
         (Amendments)) Regulations 1998 S.I. No 2622, or any amendment or
         remarking thereof, and in accordance with the said Regulations to
         provide Boots with evidence that it holds a valid tax exemption
         certificate or a registration card. Alternatively, Bioprogress may at
         its option provide to Boots written confirmation from its Tax Office
         that the Regulations do not apply to this Agreement.

7.       INTELLECTUAL PROPERTY RIGHTS

7.1      Bioprogress hereby warrants to Boots as follows:-

         7.1.1    that all intellectual property (whether patented or
                  otherwise), know-how, technical information and all other
                  rights, knowledge and information of a similar nature
                  disclosed or to be disclosed by Bioprogress to Boots in order
                  to enable Boots to carry out the Commercial Development
                  Programme, or used by Bioprogress in the course of providing
                  co-operation and assistance to Boots in connection with the
                  carrying out of the Commercial Development Programme, or used
                  or intended to be used by Boots or any third


                                       10
<PAGE>


                  party in the manufacture of any Product at any time hereafter
                  (whether during the Commercial Development Programme or
                  pursuant to any commercial exploitation of the Product) and
                  relating to the film material used to form the capsule, and
                  the processes used to form and seal the capsules used in the
                  encapsulation of the capsule film are, or shall be, as between
                  Bioprogress and Boots, vested in Bioprogress or its Affiliates
                  absolutely and without encumbrance;

         7.1.2    that the Plant Technology is or shall be vested in Bioprogress
                  or its Affiliates absolutely and without encumbrance; and

         7.1.3    that Bioprogress has the full and unfettered right and power
                  to enter into this Agreement including, without limitation,
                  the right and power to enter into all its obligations
                  hereunder and to grant to Boots the rights purported to be
                  granted hereunder.

7.2      The warranties given by Bioprogress in Clause 7.1 will apply in full to
         any Invention which hereafter vests in Bioprogress pursuant to Clauses
         7.4 or 7.6.

7.3      Subject to Clauses 7.4 and 7.6, all Inventions relating to the Product
         (including, without limitation, all materials and formulations used in
         and necessary for the manufacture thereof, and all processes necessary
         to make or otherwise relating to such materials and formulations) made
         during or as a consequence of the execution of the Commercial
         Development Programme (whether or not the same shall be completed) or
         of the commercial exploitation of the Products, if applicable, shall be
         the property of Boots.

7.4      All Inventions relating to the Plant or otherwise falling within the
         definition of Plant Technology as set out in Clause 1 made by either
         Bioprogress or Boots during or as a consequence of the execution of the
         Commercial Development Programme (whether or not the same shall be
         completed) or other commercial exploitation of the Products, shall be
         the property of Bioprogress. However, the licence granted by
         Bioprogress to Boots pursuant to Clause 4.11 shall extend to any
         Invention to which this Clause 7.4 relates immediately upon the
         creation thereof.

7.5      If Bioprogress, whether solely or jointly with Boots, makes any
         Invention to which Clause 7.3 relates, Bioprogress agrees to assign to
         Boots the entire right, title and interest anywhere in the world to
         Boots, without any additional payment by Boots to Bioprogress other
         than the charges expressed to be payable by Boots to Bioprogress under
         this Agreement. Bioprogress shall, at the request and expense of Boots,
         do all such things and execute all such documents as Boots shall
         reasonably require in order validly to vest such right, title and
         interest in Boots and shall co-operate fully in the prosecution by
         Boots of any such right, title or interest.

7.6      All Inventions relating to the film material used to form the capsules
         forming part of the Products, and the processes used to form and seal
         the said capsules used in the encapsulation process of the capsule fill
         shall be the property of Bioprogress or its Affiliates.

7.7      Subject to the provisions of Clause 7.8, if Boots, whether solely or
         jointly with Bioprogress, makes any Invention to which Clause 7.6
         relates either during or as a consequence of the execution of the
         Commercial Development


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<PAGE>


         Programme, or any part thereof, or of the commercial exploitation of
         the Products, Boots agrees to assign to Bioprogress, or to such of its
         Affiliates as Bioprogress may specify, the entire right, title and
         interest therein anywhere in the world. Boots shall, at the request and
         expense of Bioprogress, do all such things and execute all such
         documents as Boots shall reasonably require in order validly to vest
         such right, title and interest in Bioprogress or the relevant Affiliate
         (as the case may be) and shall co-operate fully in the prosecution by
         Bioprogress or such Affiliate (as the case may be) of any such right,
         title or interest.

7.8      In the event that Bioprogress or (if applicable) its Affiliates decide
         not to file any patent applications relating to any Invention to which
         Clause 7.6 relates or fail to do so within six (6) months of the
         completion or effective termination of the Commercial Development
         Programme (or, if later, from the date on which such Invention is made,
         of which Bioprogress shall immediately give notice to Boots) Boots may,
         at its discretion, file patent applications relating to such Inventions
         in any country or countries in the world in which patent applications
         relating to the said Inventions have not previously been filed by
         Bioprogress or (if applicable) its Affiliates. Bioprogress shall, if
         required by Boots (whether for the purpose of filing patent
         applications in respect of the same or otherwise) promptly assign or
         procure the assignment to Boots of the entire right, title and interest
         throughout the world in such Inventions without any payment other than
         those expressed to be payable under this Agreement. Upon the assignment
         to Boots of such right, title and interest, Boots shall grant to
         Bioprogress an irrevocable, royalty-free, non-exclusive licence, with
         the power to grant sub-licences, to use such Inventions and any patent
         or patent applications applicable thereto for any purpose not directly
         or indirectly competitive with the development, manufacture, sale,
         distribution or marketing of the Products (and, for the avoidance of
         doubt, it is hereby declared that any such purpose shall not be
         regarded as not being so competitive purely on the basis that it is
         intended to be carried on in any country in the world in which the
         Products are not currently being developed, manufactured, sold,
         distributed or marketed, whether by Boots or any third party). At the
         request and expense of Boots, Bioprogress shall do, or procure the
         doing of, all such things and execute or procure the execution of all
         such documents as Boots shall reasonably require in order validly to
         vest such right, title and interest in Boots, and shall co-operate
         fully and procure that its Affiliates co-operate fully in the
         prosecution by Boots of any such right, title or interest.

7.9      For the avoidance of doubt, all references to the right, title and
         interest in an Invention shall include, without limitation, the right
         to grant licences of the same anywhere in the world.

8.       AFTER COMPLETION OR TERMINATION OF THE COMMERCIAL DEVELOPMENT PROGRAMME

8.1      Boots shall, within three (3) months of the completion of the
         Commercial Development Programme, give notice to Bioprogress confirming
         whether or not it wishes to proceed with the commercial exploitation of
         the Products. If Boots fails to give such notice, it shall be deemed to
         have given notice to Biopogress that it does not wish so to proceed.

8.2      If Boots gives notice to Bioprogress pursuant to Clause 8.1 that it
         does not wish to proceed with the commercial exploitation of the
         Products or if Boots


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<PAGE>


         terminates the Commercial Development Programme pursuant to Clause 3.3
         (except where the reason for such termination is that Boots and
         Bioprogress have failed to reach agreement on any matter which is
         required to be agreed pursuant to or during the conduct of the
         Commercial Development Programme, including without limitation any
         matter to which Clause 6.2 relates), the following provisions shall
         apply:-

         8.2.1    all Inventions which may have been vested in Boots pursuant to
                  Clause 7, together with all patents and patent applications
                  relating thereto, shall immediately re-vest in Bioprogress or
                  such of its Affiliates as Bioprogress shall nominate, who
                  shall, subject to the provisions of Clause 8.3, have the full
                  and unencumbered right to exploit such Inventions, patents and
                  patent applications for any purpose throughout the Territory;
                  and

         8.2.2    Boots shall, at the request and expense of Bioprogress,
                  promptly do all such things and execute all such documents as
                  Bioprogress shall reasonably require in order validly to vest
                  in it such Inventions, patents and patent applications.

8.3      If either Boots gives notice to Bioprogress that it does not wish to
         proceed with the commercial exploitation of the Products, or Boots
         gives notice of termination of the Commercial Development Programme
         pursuant to Clause 3.3, and if in either case the reason for the giving
         of such notice is that Boots considers that exploitation of the
         Products on a commercial basis or the development of the Products on a
         commercial basis (as the case may be) is not achievable on technical,
         regulatory or commercial grounds, and Bioprogress at any time following
         the giving of such notice develops or discovers or becomes aware of the
         existence of and has the opportunity to acquire or exploit a process or
         method which it reasonably believes to be capable of allowing the
         development and subsequent exploitation on a commercial basis of the
         Products, and Boots was unaware of the existence of such process or
         method at the time when it gave such notice to Bioprogress, the
         following provisions shall apply:-

         8.3.1    Bioprogress shall forthwith give notice to Boots of the fact
                  that it has developed, discovered or become aware of the
                  existence of, the said process or method;

         8.3.2    Boots shall, within three (3) calendar months of receipt of
                  such notice, give notice to Bioprogress confirming whether or
                  not it has any interest in resuming the Commercial Development
                  Programme or pursuing the commercial exploitation of the
                  Products. If Boots fails to give such notice within the said
                  period, it shall be deemed to have given notice to the effect
                  that it has no such interest;

         8.3.3    If Boots gives notice to Bioprogress pursuant to Clause 8.3.2
                  that it has such interest, Boots and Bioprogress shall
                  forthwith negotiate in good faith, and use reasonable
                  endeavours to agree, comprehensive and mutually acceptable
                  terms and conditions enabling Boots to exploit such method or
                  process including, without limitation, the terms (if
                  applicable) upon which Bioprogress shall acquire title to, or
                  the right to use, all or part of any such method or process
                  from any third party the terms of any further commercial
                  development or exploitation of the Products, the ownership of
                  all intellectual property



                                       13
<PAGE>

                  in, and other rights relating to, such method or process, and
                  the timescales for such development or exploitation.

         8.3.4    If, notwithstanding the compliance by both parties with their
                  obligations as set out in Clause 8.3.3, the parties have not
                  within six (6) months of the commencement of the said
                  negotiations entered into a binding written agreement having
                  sufficient technical, commercial and legal efficacy to render
                  such development or exploitation reasonably capable of being
                  successfully prosecuted, either party may terminate the said
                  negotiations with immediate effect giving notice to that
                  effect to the other party;

         8.3.5    until Boots has given, or is deemed to have given, notice to
                  Bioprogress pursuant to Clause 8.3.2 that it has no such
                  interest, or until the termination of negotiations in
                  accordance with Clause 8.3.3, the provisions of Clause 9 shall
                  apply.

9.       EXCLUSIVITY

         Bioprogress shall not, and shall procure that its Affiliates do not, at
         any time enter into any discussions, negotiations or agreements,
         whether binding or otherwise, with any third party, the purpose of
         which, in whole or in part, is the development, manufacture, supply,
         distribution marketing or promotion of any product which is the subject
         of the Commercial Development Programme, or of any product which is
         capable of being developed, sold, distributed, marketed or promoted in
         competition with any such product, except in the following
         circumstances:-

9.1      Boots has terminated the Commercial Development Programme, subject
         always to the provisions of Clause 8.3, or this Agreement,; or

9.2      Boots has given notice to Bioprogress that it does not wish to proceed
         with the commercial exploitation of the Products, subject always to the
         provisions of Clause 8.3, or

9.3      Where the provisions of Clause 8.3 apply, negotiations entered into
         pursuant to Clause 8.3.3 have been terminated pursuant to Clause 8.3.4.

10.      FIELDS

In the event that either:-

11.      CONFIDENTIALITY

11.1     Subject to the following provisions of this Clause 11, neither party
         shall (whether during the term of this Agreement or thereafter) without
         the prior written consent of the other disclose to any person, firm or
         company any information supplied by the other under or in contemplation
         of this Agreement, or use any such information except as contemplated
         or provided hereunder. Provided that nothing in this Clause 11 shall
         prevent Boots from disclosing any information to which this Clause 11
         applies to professional advisers, or to actual or potential suppliers
         of products or services whom Boots needs to consult in order to
         evaluate its interest in entering into or proceeding with the
         Commercial Development Programme, or in agreeing



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<PAGE>


         any terms with Bioprogress pursuant to Clauses 6.2, 8.3.3 or 10.2,
         subject always to the compliance by Boots with its obligations under
         Clause 11.12

11.2     Each party shall inform any of its employees to whom any of the said
         information is disclosed, and Boots shall in addition inform any third
         party to whom any of the said information is disclosed, pursuant to
         Clause 11.1 of the provisions of this Clause 11 and shall use
         reasonable endeavours to ensure that each such employee or third party
         (as the case may be) shall observe such provisions.

11.3     The obligations of each party under this Clause shall not apply, or
         shall cease to apply, to any information which:-

         11.3.1   is public knowledge at the time of this Agreement, or
                  subsequently becomes public knowledge through no act or
                  failure to act on the part of the recipient or its employees;
                  or

         11.3.2   is known to the recipient and at its free disposal at the time
                  of disclosure, or which is subsequently disclosed to the
                  recipient by a third party lawfully entitled to disclose the
                  same; or

         11.3.3   is required to be disclosed by law.

12.      FORCE MAJEURE

12.1     Neither party shall be under any liability whatsoever to the other for
         failure or delay in the performance of its obligations under the
         Agreement where such performance becomes impracticable by reason of
         Force Majeure.

12.2     The party whose performance is not so affected by reason of Force
         Majeure shall be entitled to terminate this Agreement with immediate
         effect by giving notice to the other party if the performance by the
         other party of its obligations under this Agreement becomes or remains
         impracticable by reason of Force Majeure for an aggregate period in
         excess of ninety (90) days.

12.3     In this Clause, the expression "Force Majeure" means any circumstances
         or matters which are beyond the reasonable control of the party
         affected.

13.      TERMINATION

13.1     Either party may terminate this Agreement with immediate effect at any
         time prior to notice being given or being deemed to have been given by
         Boots, pursuant to Clause 8.1, that it wishes to proceed with the
         commercial exploitation of the Products, by giving notice to the other
         party in any of the following events:-

         13.1.1   if the other party should be in material breach of any of the
                  provisions of this Agreement and such breach (if capable of
                  remedy) shall continue thirty (30) days after notice in
                  writing specifying the breach and requiring the same to be
                  remedied has been given; or

         13.1.2   if a resolution is passed or adopted for the winding-up of the
                  other party (otherwise than for the purposes of and followed
                  by an amalgamation or reconstruction previously approved in
                  writing), or if a petition is presented for the appointment of
                  an administrator or


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<PAGE>


                  liquidator (and is not discharged within 14 days), or if a
                  receiver or administrative receiver is appointed, or an
                  encumbrancer takes possession of the whole or any part of its
                  undertaking or assets, or if the other party becomes insolvent
                  , or if any analogous event shall occur in any territory to
                  whose jurisdiction the other party is subject; or

         13.1.3   if the other party makes or seeks to make any composition or
                  arrangement with its creditors, or proposes any voluntary
                  arrangement, or is unable to pay its debts as they fall due,
                  or if any distress or execution is levied on any of its assets
                  (and is not discharged within fourteen (14) days), or if any
                  judgment for a monetary sum be given against it and is not
                  paid within fourteen (14) days, or if any analogous event
                  shall occur in any territory to whose jurisdiction the other
                  party is subject; or

         13.1.4   if the other party ceases or, in the reasonable opinion of the
                  party giving notice of termination, is likely to cease, to
                  carry on the whole or any relevant part of its business or
                  trade.

13.2     Termination for whatever cause of this Agreement shall be without
         prejudice to the rights of either party arising hereunder or as a
         result of any default or breach of obligation hereunder which shall
         have accrued prior to the date of such termination.

13.3     Notwithstanding termination of this Agreement, the provisions of
         Clause 11 shall continue in full force and effect.

14.      ASSIGNMENT

14.1     Boots may assign any of its rights or obligations hereunder to any of
         its Affiliates.

14.2     This Agreement is personal to Bioprogress who shall not, without Boots'
         prior written consent, assign any of its rights or obligations
         hereunder and any purported or attempted assignment by Bioprogress or
         transfer by operation of law without such consent shall give Boots the
         right to terminate this Agreement with immediate effect by giving
         notice in writing to Bioprogress.

14.3     This Agreement shall be binding on the permitted assignees and
         successors of the parties hereto.

15.      CHANGE OF CONTROL

15.1     Bioprogress shall inform Boots immediately in the event of there being
         any change in the control of Bioprogress, for which purpose the
         expression "control" shall have the same meaning as that contained in
         the definition of "Affiliate" in Clause 1.1.

15.2     If there is any such change in control (whether or not Boots has
         received notice thereof), Boots may terminate this Agreement with
         immediate effect by giving notice in writing to Bioprogress.



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<PAGE>


16.      RELATIONSHIP

         Each party shall be responsible for its own obligations arising under
         or consequent upon this Agreement and it is agreed that neither this
         Agreement nor the activities of the parties shall result in the
         creation of a partnership or other relationship whereby either party
         shall be held in any way responsible for the acts or omissions of the
         other.

17.      WAIVER

17.1     No relaxation, forbearance, delay or indulgence by either party in
         exercising its rights under this Agreement, or any granting of time by
         such party, shall prejudice or affect its rights hereunder.

17.2     No waiver of any default or breach under this Agreement, or failure to
         enforce any rights by either party, shall constitute a waiver of any
         subsequent or continuing default or breach.

17.3     No waiver shall be effective unless made in writing, agreed and signed
         on behalf of the party so granting the waiver.

18.      NOTICES

18.1     Any notice, request or other communication required to be given under
         this Agreement shall be made in the English language, in writing, and
         may be hand-delivered or sent by pre-paid first class post, or
         facsimile transmission, to the recipient at the address first set out
         in this Agreement (or such other address as either party may specify by
         prior written notice to the other for this purpose) and marked for the
         attention of the following respective recipients:-

         18.1.1   in the case of notice served upon Boots, to the Company
                  Secretary at the address of Boots as stated in the heading to
                  this Agreement, with a copy to the Managing Director, Boots
                  Healthcare International, at the same address; and

         18.1.2   in the case of a notice served on Bioprogress, to the Managing
                  Director, Bioprogress Technology Limited, at the address of
                  Bioprogress as stated in the heading to this Agreement.

18.2     Subject to Clause 18.3, notice shall be deemed to have been received:-

         18.2.1   if delivered by hand, on the date of delivery; or

         18.2.2   if sent by post, on the second Working Day after the date of
                  posting; or

         18.2.3   if sent by facsimile, on the date of transmission, provided
                  that the sender's apparatus has recorded the transmission as
                  having been successfully made.

18.3     Where, having regard to Clause 18.2, any notice would be deemed to have
         been given on a day which is not a Working Day, or if the actual time
         of delivery or transmission is after 1700 hours, that notice shall be
         deemed to have been served on the next following Working Day.



                                       17
<PAGE>

18.4     It shall be sufficient in proving service that the letter containing
         the notice was properly addressed and, as the case may be, delivered,
         put in the post or transmitted.

19.      ENTIRE AGREEMENT AND AMENDMENTS

19.1     This Agreement (together with any documents referred to herein)
         supersedes any preliminary or previous correspondence, negotiations,
         arrangements or agreements (except in the case of fraud) between, and
         represents the entire understanding of, the parties in relation to the
         matters specifically dealt with herein.

19.2     No amendment to or alteration of this Agreement shall be effective
         unless made in writing, agreed and signed by a duly authorised
         representative of each of the parties hereto.

20.      APPLICABLE LAW AND SERVICE OF PROCESS

20.1     The construction, interpretation, meaning, validity and performance of
         this Agreement shall be governed by the laws of England, which is
         agreed to be the proper law of this Agreement.

20.2     The addresses of the parties for service of any process or documents
         required to be served by reason of law (or any rule, code or regulation
         having the force of law) in the United Kingdom are as follows:-

         20.2.1   in the case of Boots, the address of Boots as set out in the
                  heading to this Agreement, marked for the attention of the
                  Company Secretary, with a copy to the Managing Director, Boots
                  Healthcare International; and

         20.2.2   in the case of Bioprogress, the address of Bioprogress as set
                  out in the heading to this Agreement, marked for the attention
                  of the Managing Director.

20.3     The parties hereto submit to the non-exclusive jurisdiction of the
         English Courts.

21.      INVALIDITY AND SEVERABILITY

21.1     If any provision of this Agreement shall be held unlawful, invalid or
         unenforceable in whole or in part by any court or competent authority,
         such provision shall be deemed severed and subject to Clause 21.2, the
         Agreement shall continue to be valid as to all other provisions, and
         the parties shall meet and negotiate in good faith a valid and
         enforceable replacement for the severed provision, which replacement
         shall be designed to achieve as nearly as possible the same commercial
         objective as the original.

21.2     In the event that, notwithstanding the performance of the parties of
         their obligations under Clause 21.1, the parties cannot agree upon a
         replacement provision within one (1) calendar month of the same being
         held unlawful, invalid or unenforceable, then either party may
         terminate this Agreement forthwith by notice in writing.



                                       18
<PAGE>


22.      ANNOUNCEMENTS

         Neither party shall, without the prior written consent of the other
         (such consent not be unreasonably withheld) make any announcement or
         public statement, or make any other form of public disclosure
         (including, without limitation, the issuing of any press release)
         relating to or concerning this Agreement or any part thereof, or any
         activity carried on pursuant thereto. Provided that nothing in this
         Clause 22 shall prevent either party from making any announcement
         required by the rules of any stock exchange to which the party making
         such announcement is subject, in which event the party required to make
         such announcement shall use reasonable endeavours to agree with the
         other party the text of such announcement prior to disclosure, and
         shall in any event inform the other party of the requirement to make
         such disclosure prior to the making of the same.

AS WITNESS the hands of the duly authorised representatives of the parties
hereto the day and year first before written




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