EXHIBIT 10.40

DATED: July 10, 2001


                    BIOPROGRESS TECHNOLOGY INTERNATIONAL INC

                                       and

                                FARMASIERRA, S.A.


                   -------------------------------------------
                              AGREEMENT FOR SUPPLY
                     OF THE PROTOTYPE PHARMACEUTICAL MACHINE
                  --------------------------------------------
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DATE: July 10, 2001

PARTIES:

1 'The Company': BIOPROGRESS TECHNOLOGY INTERNATIONAL INC, a corporation
organised under the laws of the State of Nevada, United States of America, of
Unit 1, Norwood Road, March, Cambridgeshire, PE15 8QD, England, and

2 'The Purchaser': FARMASIERRA, S.A. a Spanish company whose registered office
is at Carretera de Irun, Km. 26,200 28700 San Sebastian de los Reyes Madrid,
Spain.

RECITAL:

This agreement sets out the terms under which the Company has agreed to sell and
the Purchaser to purchase the machine referred to in Schedule 1.

OPERATIVE PROVISIONS:

1 Definitions

In this agreement unless the context otherwise requires:

(a) 'an Affiliate' means in respect of either of the parties any company which
is a holding or subsidiary company or a subsidiary of a holding company, the
terms 'holding company' and 'subsidiary' having the meanings in section 736 of
the Companies Act 1985

(b) 'the Bio-equivalence/bio-availability studies and stability data' means data
compiled on the XGel film system and pharmaceutical products contained in it
which is required in order to enable the Medicines Regulatory Authorities to
approve XGel as a dosage form for prescription medicines.

(c) 'Commercial Use' means delivery of the Products manufactured using goods
supplied under the Film Supply Agreement, for profit

(d) 'the Confidential Items' means those parts of the Machine which are
listed in Schedule 4

(e) 'the Delivery Date' means the actual date of delivery of the Machine to
the Premises

(f) 'Documentation' means all instruction manuals, documents and drawings that
the Purchaser may require to safely own, operate and maintain the Machine

(g) 'Employees' means all of the personnel (including subcontractors or agents
and the personnel of any subcontractor or agent) used by the Company from time
to time in performing its obligations under this Agreement

(h) 'Expert' means a person to whom reference is made under clause 23.1

(i) 'the Film Supply Agreement' means the supply agreement entered into between
the Purchaser and the Company of even date herewith

(j) 'the Initial Specification' means the specification of the Machine set

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out in Schedule 1

(j) "the Licence" means the Licence Agreement entered into by the parties of
even date herewith

(k) 'the Machine' means the machine referred to in Schedule 1

(l) 'the Machine Acceptance Criteria' means compliance with the Initial
Specification and the provisions of clause 8.1

(m) 'the Machine Acceptance Date' means the date upon which the Machine is
accepted by the Purchaser in accordance with clause 5 below

(n) 'the Premises' means the Purchaser's premises at [CONFIDENTIALITY REQUESTED]
Madrid, Spain.

(o) 'the Product' means any product manufactured by the Purchaser pursuant to
the terms of the Licence

(p) 'the Purchase Price' means the sum of US $[CONFIDENTIALITY REQUESTED]

(q) 'the Purchaser's Authorised Representative' means the Purchaser's
President/CEO from time to time (being DR. Tomas Olleros Izard at the date
of this Agreement)

(r) 'the Regulatory Marketing Authorisation' means the necessary approvals from
the appropriate medicines control authorities for the XGel encapsulation process
to be specified as an encapsulation process for prescription medicine products.

(s) 'the Services' means the services referred to in Schedule 2

2     Machine and services

The Company agrees to sell the Machine and provide the Services to the
Purchaser, and the Purchaser agrees to buy the Machine from the Company all on
the terms and conditions of this agreement.

3     Purchase price

3.1 The Purchase Price shall include:

      3.1.1 the cost of delivery of the Machine to the Premises and installation
      of it, and

      3.1.2 the provision of the Services; and

      3.1.3 the licence fee of US$[CONFIDENTIALITY REQUESTED] in respect of the
      Machine payable by the Purchaser to the Company pursuant to clause 5.3.2
      of the Licence ("the Licence Fee").

3.2 The Purchase Price shall not include value added tax which shall be payable
by the Purchaser in the manner and at the rate from time to time prescribed by
law.

3.3 The Purchaser shall pay the Purchase Price to the Company in the
following installments:
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(a) US $[CONFIDENTIALITY REQUESTED] - On the signing of this agreement, by
telegraphic transfer to the Company's bank at account number 50122742 at
Barclays Bank plc, Barclays Business Centre, Chesterton Branch, 28 Chesterton
Road, Cambridge, CB4 3AZ (sort code 20-17-35)

(b) US $[CONFIDENTIALITY REQUESTED] - No later than [CONFIDENTIALITY REQUESTED]
days after the Machine Acceptance Date

(c) US $[CONFIDENTIALITY REQUESTED] - No later than [CONFIDENTIALITY REQUESTED]
days after the completion of Bio-equivalence/Bio-availability studies and
product stability data necessary for the preparation of the registration
dossier.

(d) US $[CONFIDENTIALITY REQUESTED] - No later than [CONFIDENTIALITY REQUESTED]
days after the receipt of Regulatory Marketing Authorization.

(e) US $[CONFIDENTIALITY REQUESTED] - No later than [CONFIDENTIALITY REQUESTED]
days after the date on which Commercial use first occurs.

      3.4.1 The Purchaser agrees to keep the Company regularly and promptly
      informed of its efforts to exploit the Product, and in particular (but
      without limitation) to notify the Company immediately when Commercial Use
      first occurs.

      3.5.1 The Company reserves the right to charge the Purchaser interest in
      respect of the late payment of any sum due under this agreement (as well
      after as before judgment) at the rate of [CONFIDENTIALITY REQUESTED] per
      cent per annum above the base rate from time to time of Barclays Bank plc
      from the due date herefor until payment.

4     Delivery

4.1 The Company shall deliver the Machine to the Premises as soon as reasonably
practicable after the signing of this agreement, but shall not be liable for any
delay in delivery however caused.

4.2 The Company shall give the Purchaser not less than [CONFIDENTIALITY
REQUESTED] days' notice of the Delivery Date and details of the labour and
equipment, which will be required from the Purchaser pursuant to clause 4.3.

4.3 At delivery the Purchaser shall make available to the Company free of charge
such labour and equipment as the Company shall reasonably require to perform its
duties hereunder.

4.4 Upon completion of delivery the Company shall remove all packing cases and
other containers in which the Machine was delivered.

5     Installation and acceptance

5.1 The Company shall commence and thereafter expeditiously continue
installation of the Machine at the Premises as soon as reasonably practicable
after the Delivery Date.

5.2 The Company will carry out the installation of the Machine:
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      5.2.1 with all due skill and care and to the highest professional
      standards;

      5.2.2 using suitable and trained employees with appropriate experience and
      qualifications; and

      5.2.3 in compliance with all relevant standards, codes of practice
      statutory requirements and regulations.

5.3 The Company will advise the Purchaser in writing when it considers the state
of the Machine to be such that it meets the Machine Acceptance Criteria.

5.4 Within [CONFIDENTIALITY REQUESTED] days of the service of the notice
referred to in clause 5.3 the parties will inspect and test the Machine in the
presence of the Purchaser's Authorised Representative to establish whether the
Machine meets the Machine Acceptance Criteria.

5.5 Within [CONFIDENTIALITY REQUESTED] days of the inspection pursuant to clause
5.4 a joint written report will be prepared recording the detailed results of
the inspection and testing referred to in clause 5.4 and commenting on whether
the Machine Acceptance Criteria have been achieved.

5.6 If the report is agreed and demonstrates that the Machine Acceptance
Criteria have been met to the satisfaction of the Purchaser's Authorised
Representative he will issue a written notice certifying this fact and the
Machine shall be deemed to be accepted on the date of such notice.

5.7 If the report records that the Machine Acceptance Criteria have not been met
the Company shall as soon as possible prepare (and copy to the Purchaser) and
implement a remedy programme to correct the matters that led to such failure and
the procedure set out in clauses 5.3 to 5.6 above shall be repeated as soon as
possible until successful compliance with the Machine Acceptance Criteria is
achieved.

5.8 If there is any dispute as to whether the inspection, tests and other
procedures carried out demonstrate that the Machine Acceptance Criteria have
been achieved the matter shall be referred for determination to an Expert.

6     Title to and risk in the Machine

6.1 Title to the Machine shall not pass to the Purchaser until the date that the
Purchase Price and value added tax thereon have been paid in full to the Company
('the Payment Date').

6.2 Until the Payment Date the Purchaser shall not be entitled to sell transfer
lease charge assign by way of security or otherwise deal in or encumber the
Machine and the relationship between the Company and the Purchaser in respect of
the Machine including any proceeds of sale or other consideration therefore
shall be a fiduciary one.

6.3 If either:

      6.3.1 the Purchaser fails to effect payment in full of all sums due
      hereunder by the due date, or

      6.3.2 prior to the Payment Date the Purchaser convenes a meeting of its

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      creditors or a proposal is made for a voluntary arrangement within Part I
      of the Insolvency Act 1986 or a proposal for any other composition scheme
      or arrangement with (or assignment for the benefit of) the Purchaser's
      creditors or if the Purchaser is unable to pay its debts within the
      meaning of section 123 of the Insolvency Act 1986 or if a trustee receiver
      administrative receiver or similar officer is appointed in respect of all
      or any part of the business or assets of the Purchaser or if a meeting is
      convened for the purpose of considering a resolution or other steps are
      taken for the winding up of the Purchaser or for the making of an
      administration order (otherwise than for the purpose of an amalgamation or
      reconstruction)then the Company (without prejudice to any other legal
      remedies it may have) shall at any time thereafter be entitled to enter on
      the Premises (without notice to the Purchaser) and remove the Machine.

7.4 If in breach of clause 7.2 above the Purchaser sells the Machine prior to
the Payment Date then any proceeds of sale in respect thereof and all rights
arising under or in respect of said sale shall be held (in the case of the
proceeds of sale in a separate account) by the Purchaser as trustee for the
Company.

7.5 Risk in the Machine shall pass to the Purchaser upon the Machine Acceptance
Date. Risk in any parts comprising the Upgrade shall pass to the Purchaser on
the Upgrade Acceptance Date.

7.6 With effect from the Machine Acceptance Date up to and including the Payment
Date the Purchaser shall insure the Machine for its full replacement value with
the Royal and Sun Alliance or such other insurance company as the Company shall
approve (such approval not to be unreasonably withheld) and shall provide a copy
of the insurance certificate to the Company promptly on request.

8     Warranty in respect of the Machine

8.1 Subject to the limitations upon its liability set out in clause 9 below the
Company warrants to the Purchaser that the Machine will for the period from the
Machine Acceptance Date to the Upgrade Acceptance Date:

      8.1.1 be free from defects in or arising from design materials workmanship
      delivery or installation;

      8.1.2 conform in all respects with the Initial Specification;

      8.1.3 be of satisfactory quality within the meaning of the Sale of
      Goods Act 1979 (as amended) and fit for its purpose; and

      8.1.4 comply with all statutory and EC requirements and regulations
      relating to the Machine.

8.3 Subject to the limitations upon its liability in clause 9 below the Company
warrants to the Purchaser that the Company will:

      8.3.1 carry out the installation of the Machine and perform the Services
      with all due skill, care and diligence;

      8.3.2 comply with all applicable legislation, statutory provisions and
      regulations in performing its obligations under this Agreement.
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8.4 The Purchaser shall give notice to the Company as soon as it is reasonably
able upon becoming aware of a breach of warranty.

8.5 The Company shall as soon as it is reasonably able investigate any alleged
breach of warranty and shall remedy the same free of charge by either:

      8.5.1 carrying out such repairs modifications or alterations to the
      Machine or Upgrade as it shall in its absolute discretion think fit (or
      authorizing the Purchaser to carry out such repairs, modifications or
      alterations at the Company's cost) or (at its discretion)

      8.5.2 replacing the Machine or any part of it.

8.6 Any parts of the Machine or Upgrade replaced by the Company pursuant to
clause 8.5.2 above ('Replaced Parts') shall upon replacement become the property
of the Company and the Purchaser warrants that its title to such Replaced Parts
shall be free and unencumbered or that it shall have all necessary consents and
authorities to part with possession of the Replaced Parts.

8.7 Any new parts of the Machine used by the Company to replace Replaced Parts
will be guaranteed on the terms set out in clauses 8.1 and 8.2 for the unexpired
portion of such warranty.

8.8 Subject to the foregoing and with the exception of the condition and
warranties implied by section 12 of the Sale of Goods Act 1979 all conditions
warranties terms and undertakings express or implied statutory or otherwise in
respect of the Machine and the provision of the Services are hereby excluded.

8.9 During the term of this Agreement and for [CONFIDENTIALITY REQUESTED]
thereafter, the Company shall maintain product liability insurance on the
Machine with minimum limits of the sterling equivalent of $1,000,000 (ONE
MILLION DOLLARS) per occurrence and $10,000,000 (TEN MILLION DOLLARS) in the
aggregate with an insurance company registered in the United Kingdom and being a
member of the British Insurers Association. The Company shall provide the
Purchaser with a copy of the certificate of such insurance and evidence of the
payment of premiums therefor promptly upon request.

8.10 For the avoidance of doubt all deductibles under insurance policies
maintained by the Company will be the sole and exclusive responsibility of the
Company and clause 8.9 will not be deemed to limit in any way the Company's
liability under this Agreement.

9     Limitation of liability

9.1 The following provisions set out the Company's entire liability (including
any liability for the acts and omissions of its employees agents and
sub-contractors) to the Purchaser in respect of:

      9.1.1 any breach of its contractual obligations arising under this
      agreement, and

      9.1.2 any representation statement or tortious act or omission including
      negligence arising under or in connection with this agreement AND THE
      PURCHASER'S ATTENTION IS IN PARTICULAR DRAWN TO THE PROVISIONS OF

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      THIS CLAUSE 9.

9.2 Any act or omission on the part of the Company or its employees agents or
sub-contractors falling within clause 9.1 above shall for the purposes of this
clause 9 be known as an 'Event of Default'.

9.3 The Company's liability to the Purchaser for:

      9.3.1 death or injury resulting from its own or its employees' agents' or
      subcontractors' negligence, and

      9.3.2 all damage suffered by the Purchaser as a result of the implied
      statutory undertakings as to title quiet possession and freedom from
      encumbrances shall not be limited.

9.4 Subject to the provisions of clause 9.3 above the Company's entire liability
in respect of each Event of Default shall be limited to damages of an amount
equal to (pound)[CONFIDENTIALITY REQUESTED].

9.5 If a number of Events of Default give rise substantially to the same loss
then they shall be regarded as giving rise to only one claim under this
agreement.

9.6 Except in the case of an Event of Default arising under clause 9.3 above the
Company shall have no liability to the Purchaser in respect of any Event of
Default unless the Purchaser shall have served notice of the same upon the
Company within 12 months of the date it became aware of the circumstances giving
rise to the Event of Default.

9.7 Nothing in this clause 9 shall confer any right or remedy upon the Purchaser
to which it would not otherwise be legally entitled.

10    Documentation

10.1 The Company will on or prior to the Machine Acceptance Date provide
complete and accurate Documentation for the Machine to the Purchaser.

10.2 The Documentation is the copyright of the Company and contains
confidential information of the Company.

10.3 The Purchaser shall take all reasonable steps to protect the Company's
copyright and confidential information in such Documentation and without
prejudice to the generality of the foregoing shall not copy or reproduce the
same nor distribute sell or disclose the contents of the same to any third party
without the prior consent of the Company (such consent not to be unreasonably
withheld or delayed). For the avoidance of doubt nothing in this clause shall
prevent the Purchaser from handing over the Documentation to any third party to
whom it may sell the Machine at any future date.

10.4 The Purchaser undertakes to the Company to make its employees agents and
sub-contractors aware of the provisions of this clause 10 and to use all
reasonable endeavours to ensure compliance by its said employees agents and
sub-contractors with the obligations set out in clause 10.2 above.

11    Access to the Premises

11.1 The Purchaser shall allow the Company including the Employees such

<PAGE>

reasonable access to the Premises at reasonable times as it shall from time to
time require to perform its obligations under this agreement.

11.2 The Company shall procure that all Employees who may have access to the
Premises in connection with this agreement are fully aware of and fully comply
with the Purchaser's health and safety, fire and other rules applying to the
Premises (from time to time).

11.3 Whilst on the Premises the Company shall, and will ensure that the
Employees shall, comply with the Health and Safety at Work Act 1974 and all
other applicable health and safety regulations.

11.4 The Company shall take out and maintain at its own expense a policy or
policies of insurance with reputable insurers in respect of employer's liability
to the Employees and damage caused to the Premises by the Employees' negligence.

11.5 The Company shall be responsible for the behaviour of the Employees whilst
on the Premises, whether or not any act or omission by them falls within the
scope of their employment or authority. In particular the Company shall comply
with the Purchaser's regulations as to the behaviour of persons whilst on its
sites. The Company shall promptly exclude from the Premises any of the Employees
whose behaviour in the Purchaser's reasonable opinion is unsuitable or
inappropriate.

11.6 The Company will carry out its obligations under this agreement in such a
manner so as not to cause any damage to the Premises or, so far as reasonably
practicable, to interfere with the orderly carrying out of the Purchaser's
business at the Premises.

12.   Spare Parts and Tooling

12.1 The Company undertakes to keep available and to supply to the Purchaser
such spare parts and tooling as the Purchaser shall require for the Machine
until the first anniversary of the Acceptance Date and the Purchaser agrees to
purchase its requirements (if any) for such spare parts and tooling from the
Company during such period.

12.2 The prices for any spare parts and/or tooling purchased by the Purchaser
from the Company (at any time during the term of this Agreement) shall be the
Company's standard prices for such parts applicable at the date of order
provided that such spare parts and tooling will be supplied to the Purchaser at
a cost no greater than the Company charges to third parties for the same spare
parts and/or tooling.

12.3 For the avoidance of doubt, after the first anniversary of the Acceptance
Date, except in the case of the Confidential Items, the Purchaser shall be free
to obtain spare parts and/or tooling for the Machine and/or Upgrade from any
supplier. The Purchaser shall continue to obtain the Confidential Items only
from the Company, and the Company undertakes to maintain such stock of
Confidential Items as may be necessary to enable it to supply such items to the
Purchaser no later than the second Business Day after receipt of any order
therefor from the Purchaser. For the purposes of this clause 12.3 Business Day
has the same meaning as in clause 17.3.

13    Termination
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13.1 This agreement may be terminated:

      13.1.1 forthwith by either party if the other commits any material breach
      of any term of this agreement and which (in the case of a breach capable
      of being remedied) shall not have been remedied within 30 days of a
      written request to remedy the same, and

      13.1.2 forthwith by either party if the other shall convene a meeting of
      its creditors or if a proposal shall be made for a voluntary arrangement
      within Part I of the Insolvency Act 1986 or a proposal for any other
      composition scheme or arrangement with (or assignment for the benefit of)
      its creditors or if the other shall be unable to pay its debts within the
      meaning of section 123 of the Insolvency Act 1986 or if a trustee receiver
      administrative receiver or similar officer is appointed in respect of all
      or any part of the business or assets of the other party or if a petition
      is presented or a meeting is convened for the purpose of considering a
      resolution or other steps are taken for the winding up of the other party
      or for the making of an administration order (otherwise than for the
      purpose of an amalgamation or reconstruction).

13.2 Any termination of this agreement pursuant to this clause shall be without
prejudice to any other rights or remedies a party may be entitled to hereunder
or at law and shall not affect any accrued rights or liabilities of either party
nor the coming into or continuance in force of any provision hereof which is
expressly or by implication intended to come into or continue in force on or
after such termination.

14    Confidentiality

14.1 Subject to clause 14.2 each of the parties hereto undertakes to the other
to keep confidential all information (written or oral) concerning the business
and affairs of the other that it shall have obtained or received as a result of
the discussions leading up to or the entering into of this agreement and to use
the same only for the purposes of this Agreement.

14.2 Either party, may disclose information which would otherwise be
confidential if and to the extent it is:

      14.2.1 already in its possession other than as a result of a breach of
      this clause;

      14.2.3 in the public domain other than as a result of a breach of this
      clause;

      14.2.4 required by a binding court order or otherwise by law to be
      disclosed;

      14.2.5 required by any regulatory or governmental body to which either
      party is subject or submits wherever situated, including without
      limitation The Stock Exchange or The Panel on Takeovers and Mergers,
      whether or not the requirement for information has the force of law; or

      14.2.6 disclosed to the professional advisors, auditors and bankers of
      each party under terms of confidentiality.

14.3 Each of the parties undertakes to the other to take all reasonable steps to
ensure compliance with the provisions of clause 14.1 above by its

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employee's agents and sub-contractors.

15    Force majeure

15.1 Neither party hereto shall be liable for any breach of its obligations
hereunder resulting from causes beyond its reasonable control including but not
limited to fires strikes (of its own or other employees) insurrection or riots
embargoes container shortages wrecks or delays in transportation inability to
obtain supplies and raw materials requirements or regulations of any civil or
military authority (an 'Event of Force Majeure').

15.2 Each of the parties hereto agrees to give notice forthwith to the other
upon becoming aware of an Event of Force Majeure such notice to contain details
of the circumstances giving rise to the Event of Force Majeure.

15.3 If a default due to an Event of Force Majeure shall continue for more than
12 weeks then the party not in default shall be entitled to terminate this
agreement. Neither party shall have any liability to the other in respect of the
termination of this agreement as a result of an Event of Force Majeure.

16    Waiver

The waiver by either party of a breach or default of any of the provisions of
this agreement by the other party shall not be construed as a waiver of any
succeeding breach of the same or other provisions nor shall any delay or
omission on the part of either party to exercise or avail itself of any right
power or privilege that it has or may have hereunder operate as a waiver of any
breach or default by the other party.

17    Notices

17.1 Any notice required to be given hereunder by either party to the other
shall be in writing and may be given by hand or sent by first class pre-paid
post or facsimile transmission and shall be deemed to be duly served:

      17.1.1 if delivered by hand, when left at the proper address for
      service;

      17.1.2 is given or made by prepaid first class post, 48 hours after being
      posted (excluding Saturdays, Sundays and public holidays);

      17.1.3 if given or made by facsimile transmission at the time of
      transmission, provided that a confirming copy is sent by first class
      prepaid post to the other party within 24 hours after transmission
      provided that, where in the case of delivery by hand or transmission by
      facsimile, such delivery or transmission occurs either after 4.00 pm on a
      Business Day, or on a day other than a Business Day, service shall be
      deemed to occur at 9.00 am on the next following Business Day (such times
      being local time at the address of the recipient).

17.2 Any demand, notice or communication shall be made in writing or by
facsimile addressed to the recipient at its registered office or its address
stated in this agreement (or such other address or facsimile number as may be
notified in writing from time to time) and shall be marked for the attention of
the Company Secretary in the case of the Purchaser or the Chief Financial
Officer in the case of the Company.
<PAGE>

17.3 For the purposes of this clause 17 "Business Day" means any day other than
Saturdays, Sundays and public or statutory holidays.

18    Invalidity and severability

If any provision of this agreement shall be found by any court or administrative
body of competent jurisdiction to be invalid or unenforceable the invalidity or
unenforceability of such provision shall not affect the other provisions of this
agreement and all provisions not affected by such invalidity or unenforceability
shall remain in full force and effect. The parties hereby agree to attempt to
substitute for any invalid or unenforceable provision a valid or enforceable
provision, which achieves to the greatest extent possible the economic legal and
commercial objectives of the invalid or unenforceable provision.

19    Entire agreement

The Company shall not be liable to the Purchaser for loss arising from or in
connection with any representations agreements statements or undertakings made
prior to the date of execution of this agreement other than those
representations agreements statements and undertakings confirmed by a duly
authorised representative of the Company in writing or expressly incorporated or
referred to in this agreement provided that this shall not exclude any liability
which the Company would otherwise have to the Purchaser in respect of statements
made fraudulently by the Company prior to the date of this Agreement.

20    Successors

This agreement shall be binding upon and enure for the benefit of the successors
in title of the parties hereto.

21    Assignment

Neither party shall be entitled to assign this agreement nor all or any of their
rights and obligations hereunder without the prior written consent of the other.

22    VAT

Save in so far as otherwise expressly provided all amounts stated in this
agreement are expressed exclusive of value added tax and any value added tax
arising in respect of any supply made hereunder shall on the issue of a valid
tax invoice in respect of the same be paid to the party making such supply by
the party to whom it is made in addition to any other consideration payable
therefor.

23    Expert determination

23.1 Where under any provision of this Agreement any matter is to be determined
by an Expert, the matter shall be referred at the instance of either party to
such person as may be appointed by agreement between the parties or, in default
of agreement, nominated on the application of either party by the President for
the time being of the Institute of Mechanical Engineers.

23.2 Any person to whom a reference is made under clause 23.1 shall act as

<PAGE>

an expert and not as an arbitrator and shall be entitled to appoint such
technical expert or experts as he considers necessary to assist him in
determining the matter referred to him. The decision of the Expert (which shall
be given by him in writing stating his reasons therefor) shall be final and
binding on the parties.

23.3 Each party shall provide any Expert with such information as he may
reasonably require for the purposes of his determination; if either party claims
any such information to be confidential to it then, provided that in the opinion
of the Expert that party has properly claimed the same as confidential, the
Expert shall not disclose the same to the other party or to any third party.

23.4 The costs of any Expert (including the costs of any technical expert
appointed by him) shall be borne in such proportions as the Expert may determine
to be fair and reasonable in all the circumstances or, if no such determination
is made by the Expert, by the parties in equal proportions.

24    Headings

Headings to clauses in this agreement are for the purpose of information and
identification only and shall not be construed as forming part of this
agreement.

25    Law

This agreement shall be governed by and construed in accordance with English law
and the parties hereto agree to submit to the exclusive jurisdiction of the
English courts.

26    Third Party Contracts

The parties hereby agree that they do not intend that any third party, which may
benefit from this Agreement, shall have any rights of enforcement under the
terms of the Contract (Rights of Third Parties) Act 1999.

SCHEDULE 1

The Initial Specification and the Machine (Clauses 1(i) and 1(k)

SCHEDULE 2

SCHEDULE 3

SCHEDULE 4

The Confidential Items (Clause 1(c))


SIGNED
<PAGE>


Graham R.M. Hind
.................................................................
on behalf of BioProgress Technology International Inc


Tomas Olleros
..................................................................
on behalf of Farmasierra S.A.