Document:

EXHIBIT 10.28

DATED                                                              JULY 24, 2000
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                    BIOPROGRESS TECHNOLOGY INTERNATIONAL INC

                                       and

                         PETER BLACK HEALTHCARE LIMITED

                       ----------------------------------

                            PATENT LICENCE AGREEMENT

                       ----------------------------------

                                 Rustons & Lloyd
                                 136 High Street
                                    Newmarket
                                     Suffolk
                                     CB8 8NN

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DATE:                                                                       2000

PARTIES:

1    `The Licensor': 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 Licensee': PETER BLACK HEALTHCARE LIMITED, an English company
     registered under number 931141, whose registered office is at Keighley,
     West Yorkshire, BD21 3BB, England.

RECITALS:

(A)  The Licensor has developed and is the beneficial owner of the rights of
     confidence in and has possession of a substantial body of valuable
     Technical Information (as defined below) relating to the manufacture,
     assembly, and commercial operation of the Products (as defined below) and
     is the beneficial owner of the Patents (as defined below).

(B)  The Licensee wishes to receive and the Licensor is willing to grant a
     licence on the terms and conditions hereinafter set forth to use such
     information and to work under the said Patents in order to manufacture,
     use, sell or otherwise deal in the Products.

OPERATIVE PROVISIONS:

1    Definitions
     -----------

In this Agreement the following terms shall have the following meanings unless
the context otherwise requires:

(a)  `Affiliate' - any holding company or subsidiary, or any other subsidiary of
     a holding company, of the party in question, the expressions `holding
     company' and `subsidiary' having the meanings in s.736 of the Companies Act
     1985

(b)  `Anniversary Date' - in respect of each Machine means the date referred to
     in clause 5.2.3 or 5.3.1 (as appropriate)

(c)  `Confidential Items' those parts of the Machine and items of tooling for
     the Machine which are listed in Schedule 4

(d)  `Confidential Information' - all information which is commercially
     sensitive or of a secret nature (including the Technical Information) or
     information which is marked confidential or which is orally stated to be
     confidential relating to any and all aspects of either party

(e)  `Copyright' - all copyright and rights in the nature of copyright to which
     either party may now be or may subsequently become entitled in or in
     respect of all drawings and other documents, recordings in any form and all
     other materials bearing or embodying any part of the Technical Information
     including without limitation any such materials consisting of or containing
     software or databases

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(f)  `Effective Date' - the date of this Agreement

(g)  `Exclusive Territory' - the United Kingdom and the Republic of Ireland

(h)  `Expert' - means a person to whom a reference is made under clause 17

(i)  `Film Supplier' - means the party referred to as "the Company" in the Film
     Supply Agreement or any other party to whom the rights and obligations of
     "the Company" under the Film Supply Agreement may have been validly
     assigned under that agreement

(j)  `Film Supply Agreement' - means the agreement referred to as such in the
     Prototype Agreement (as defined in clause 5.3)

(k)  `Improvements' - all improvements, modifications or adaptations to the
     Products or the process for manufacturing the Products which may be made or
     acquired by either party during the term of this Agreement

(l)  `Non-Exclusive Territory' - Switzerland and the countries of the European
     Union at the date hereof (other than the United Kingdom and the Republic of
     Ireland)

(m)  `Machines' - the Company's Swallow form fill and seal encapsulation machine
     designed to operate with the XGel materials using vacuum forming rollers
     with radiant pre-heat field by the action of heated plattens.

(n)  `Patents' -

     (i)   the patent applications short particulars of which are set out in
           Schedule 1 hereto;

     (ii)  all patent applications that may hereafter be filed in the Territory
           by or on behalf of the Licensor which either are based on or claim
           priority from any of the foregoing patent applications, or which
           relate in any other way to the Products or the Technical Information,
           or which are in respect of any Improvements to which the Licensor is
           exclusively entitled and which the Licensor is due to disclose to the
           Licensee under clause 4.1 below;

     (iii) all patents which may be granted pursuant to any of the foregoing
           patent applications

(o)  `Products' - any construction using in part or in whole the XGel Materials
     and forming an ingestible containment device for non-aqueous liquids,
     solids, minerals, pastes or powders to be sold as vitamins, minerals,
     supplements, herbs or medicinal products (but excluding;

     (i)   prescription products;

     (ii)  non-prescription medicinal products which either are incapable of
           manufacture on a Machine or do not use the XGel Materials; or

     (iii) docosahexaenoic acid supplements)

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(p)  `Solicitors' - Messrs Rustons & Lloyd of 136 High Street, Newmarket,
     Suffolk CB8 8NN

(q)  `Technical Information' - all identifiable know-how, experience, data and
     all other technical or commercial information relating to the Products or
     the manufacture of the Products using the Machines and/or the XGel
     Materials whether in human or machine readable form and whether stored
     electronically or otherwise and which might reasonably be of commercial
     interest to either party in the design manufacture or supply of the
     Products

(r)  `Territory' - the Exclusive Territory and Non-Exclusive Territory

(s)  `XGel Materials' - any materials the manufacture or preparation of which
     uses in whole or in part any of the Patents or the Technical Information or
     Copyright the specification of which is designed for oral use by customers
     and where the active contents are to be released after the end product has
     been swallowed

(t)  `Xgel Technical Information' - means all of the Technical Information which
     relates to the Xgel Materials

(u)  `XGel Trade Mark' -the trade mark "XGel" owned by the Licensor.

2    Technical information
--------------------------

2.1  Promptly after the signing of this Agreement by both parties the Licensor
     will supply the Licensee with all Technical Information in its possession
     that has not previously been disclosed that is reasonably necessary or
     desirable to enable the Licensee to manufacture on a commercial scale and
     sell the Products.

2.2  The Licensee undertakes that for so long as any part of the Technical
     Information remains subject to the obligations of confidence of clause 8
     hereof it will not use the same for any purpose except as expressly
     permitted in this Agreement.

3    Grant of rights
     ---------------

3.1  The Licensor hereby grants to the Licensee an exclusive licence under the
     Patents, the Technical Information and Copyright:

     3.1.1 to manufacture Products in the Exclusive Territory; and

     3.1.2 to use sell or otherwise deal in Products manufactured under the
           licence in clauses 3.1.1 and 3.2.1 in the Exclusive Territory.

3.2  The Licensor hereby grants to the Licensee a non-exclusive licence (subject
     to clause 3.3) under the Patents, Technical Information and Copyright:

     3.2.1 to manufacture Products in the Non-Exclusive Territory;

     3.2.2 to use sell or otherwise deal in Products manufactured under the
           licence in clauses 3.1.1 and 3.2.1 in the Non-Exclusive Territory;
           and

     3.2.3 to use sell or otherwise deal outside the Territory in Products
           manufactured under the licence in clauses 3.1.1 and 3.2.1 bearing a
           trade mark or trade name of the Licensee and the XGel trade mark only
           provided that the Licencee obtains the Licensor's prior written
           consent.

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3.3  Notwithstanding that the rights granted by clauses 3.2.1 and 3.2.2 are
     non-exclusive the Licensor agrees not to grant any licence to any person
     under the Patents or to use the Technical Information or Copyright to
     manufacture, sell or otherwise deal in the Products except in accordance
     with the following sub-clauses of this clause 3.3:-

     3.3.1 If the Licensor becomes aware of any third party in the Non-Exclusive
           Territory who wishes either

          (a)  to be granted a licence to manufacture Products for sale or other
               distribution in the Non-Exclusive Territory, or

          (b)  to appoint a contract manufacturer of Products for sale or other
               distribution in the Non-Exclusive Territory

               the Licensor will notify the Licensee in writing and refer such
               third party to the Licensee and use all reasonable endeavours to
               procure that such third party appoints the Licensee as its
               contract manufacturer of the Products in the Non-Exclusive
               Territory.

     3.3.2 If for any reason either

          (a)  such third party as is referred to in clause 3.3.1 indicates to
               the Licensor that it is unwilling to appoint the Licensee as its
               contract manufacturer of Products for sale or other distribution
               in the Non-Exclusive Territory (the Licensor having used all
               reasonable endeavours to procure such appointment in accordance
               with clause 3.3.1 and at least 45 days having passed from the
               date of notification of the Licensee pursuant to clause 3.3.1),
               or

          (b)  the Licensee is unwilling or unable to act for such third party
               as a contract manufacturer of Products for sale or other
               distribution in the Non-Exclusive Territory on the terms required
               by the third party

           then the Licensor may grant to the third party the right to
           manufacture Products in the Non-Exclusive Territory and to sell or
           otherwise distribute the Products in the Non-Exclusive Territory
           under such third party's own brand name (but not otherwise) and for
           the avoidance of doubt such licence will not allow such third party
           to sublicence any sub-contractor to manufacture the Products.

     3.3.3 The Licensee shall be deemed to be unwilling or unable to act for
           such third party as described in clause 3.3.2(b) if either

          (a)  the Licensee expressly notifies the Licensor that it is so
               unwilling or unable, or

          (b)  no agreement has been entered into between the Licensee and the
               said third party for the Licensee to act for the third party as a
               contract manufacturer of Products for sale or other distribution
               in the Territory within 90 days (or such longer period as the
               Licensor may agree in writing) of the date of notification under
               clause 3.3.1.

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3.4  In the event that any new country joins the European Union after the date
     hereof ("New Country") then, except where the Licensor has already granted
     an exclusive licence to a person under the Patents or to use the Technical
     Information or Copyright to manufacture, sell or otherwise deal in the
     Products in that New Country prior to the date on which the New Country
     entered the European Union, the Licensor will negotiate in good faith with
     the Licensee to include the New Country in the Non-Exclusive Territory
     under this Agreement. If at any time after the New Country joins the
     European Union and prior to the New Country becoming part of the
     Non-Exclusive Territory the Licensor wishes to grant any licence under the
     Patents or to use the Technical Information to any third party in respect
     of that New Country it shall notify the Licensee in writing and shall
     thereafter negotiate in good faith and use all reasonable endeavours to
     reach agreement with the Licensee to include the New Country in the
     Non-Exclusive Territory under this Agreement, If, having complied with all
     the above provisions of this clause 3 above, the Licensor and Licensee have
     been unable to agree terms for the inclusion of the New Country in the
     Non-Exclusive Territory under this Agreement by the date 90 days after the
     notification to the Licensee above, the Licensor may grant such a licence
     to such third party.

3.5  The parties hereto agree to execute a formal licence agreement
     substantially as set out in Schedule 2 hereto for the purposes of
     registering any patent licence granted pursuant to clause 3.2 above.

3.6  The Licensee shall be entitled to sub-license any Affiliate of the Licensee
     for so long as it is such an Affiliate under the rights granted or to be
     granted under clauses 3.1 and 3.2 hereof provided that

     3.6.1 the sub-licence shall be in writing and shall contain obligations on
           the sub-licensee at least as onerous as those set out herein; and

     3.6.2 the Licensee shall remain responsible for all acts and omissions of
           such sub-licensees as though they were by the Licensee; and

     3.6.3 the Licensee shall forthwith notify the Licensor in writing of any
           sub-licence granted pursuant to this clause and shall at the same
           time provide the Licensor with a copy of such sub-licence.

3.7  For the avoidance of doubt, it is hereby declared that the Licensee shall
     have no right hereunder to manufacture use or sell the Products otherwise
     than as expressly licensed to the Licensee hereby, and without prejudice to
     the foregoing, the Licensee accepts that (subject to clause 3.2.3), the
     Licensee will not at any time sell Products into any country which is
     outside the Territory.

3.8  The Licensor will not for the term of this Agreement manufacture, supply or
     otherwise deal in any of the Products and (except in accordance with clause
     3.3) shall not license any third parties to do the same within any part of
     the Territory

3.9  For the avoidance of doubt, and subject to clause 3.10 nothing in this
     Agreement shall be construed or implied as a licence or grant of rights by
     the Licensor to the Licensee under the Patents or in respect of the
     Technical Information or Copyrights other than for the construction,
     manufacture, promotion, sale and distribution of the Products.

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3.10 The Licensor hereby grants the Licensee the right to manufacture or have
     manufactured all such parts and tooling (other than the Confidential Items)
     as may be necessary to repair and maintain the Machines or produce the
     Products and the Licensor hereby grants to the Licensee a non-exclusive
     licence (together with the right to sub-licence) under the Patents,
     Technical Information and Copyright as may be necessary for this purpose,
     including the right to sub-licence such third party as the Licensee may
     require to enable such third party to design and manufacture such parts and
     tooling.

3.11 Within 14 days of the date of execution of this Agreement the Licensor will
     deposit with the Solicitors at their offices at 136 High Street, Newmarket,
     Suffolk CB8 8NN or such other address as they shall from time to time in
     writing indicate to the Licensor and the Licensee one copy of the XGel
     Technical Information.

3.12 Within 14 days of the date of any modification enhancement revision or
     update to the XGel Technical Information the Licensor will deposit with the
     Solicitors a revised copy of the whole (or the relevant part) of the XGel
     Technical Information incorporating such modification, enhancement,
     revision or update (as the case may be).

3.13 The Licensor will procure that the Solicitors provide an undertaking to the
     Licensor and the Licensee on the date hereof in the form attached at
     Schedule 5.

3.14 A "Relevant Event" shall have occurred for the purpose of this clause 3 if:

     3.14.1 the Licensor 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 Licensor or the Film Supplier 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 of similar
            officer is appointed in respect of all or any part of the business
            or assets of the Licensor or the Film Supplier 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
            Licensor or the Film Supplier or for the making of an administration
            order (otherwise than for the purpose of an amalgamation or
            reconstruction); or

     3.14.2 any of the events referred to in clause 3.14.1 occurs to the Film
            Supplier (in circumstances where the Film Supplier and Licensor are
            different legal persons) and the Licensor fails to make arrangements
            which ensure that the Licensee receives an uninterrupted supply of
            the Goods (as defined in the Film Supply Agreement) pursuant to the
            terms of the Film Supply Agreement; or

     3.14.3 the Licensor shall be in material breach of its obligations to
            deposit revised copies of the Technical Information pursuant to
            clause 3.12 above; or

     3.14.4 the Film Supplier is in material breach of its obligations under the
            Film Supply Agreement to supply the Goods (as defined in such
            Agreement) and fails to remedy such breach within 30 days of receipt
            of a notice from the Licensee pointing out the breach and calling
            for it to be remedied.

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<PAGE>

3.15 In order to obtain the release of the XGel Technical Information the
     Licensee shall forthwith upon becoming aware of a Relevant Event prepare
     and submit to the Solicitors a statutory declaration which shall:

     3.15.1 be sworn by a duly authorised officer of the Licensee;

     3.15.2 set out fully the facts and circumstances of the Relevant Event; and

     3.14.1 have attached thereto all relevant supporting documentation in the
            Licensee's possession.

3.16 In the case of a Relevant Event falling under clause 3.14.1 above the
     Solicitor is hereby authorised to release the XGel Technical Information to
     the Licensee upon receipt of a statutory declaration in the form specified
     in clause 3.15 above.

3.17 In the case of a Relevant Event falling under any of clauses 3.14.2 or
     3.14.3 or 3.14.4 above the Solicitor shall submit a copy of the Licensee's
     statutory declaration to the Licensor forthwith upon receiving the same. If
     the Licensor does not either:

     3.17.1 remedy, or procure that the Film Supplier remedies the breach or
            failure giving rise to the Relevant Event; or

     3.17.2 by written notice (setting out all relevant facts and circumstances
            and having attached thereto all relevant documentation in the
            Licensor's possession) deny its occurrence

     within thirty days of receipt by the Licensor of the Licensee's copy
     statutory declaration then the Solicitors are hereby authorised upon expiry
     of the said thirty days (and subject to the said statutory declaration
     complying with the provisions of clause 3.15 above) to release the XGel
     Technical Information to the Licensee.

3.18 If the Licensor denies the occurrence of a Relevant Event by written notice
     pursuant to clause 3.17.2 above:

     3.18.1 the Solicitors shall not release the XGel Technical Information;

     3.18.2 the Solicitors shall forthwith submit a copy of the Licensor's
            written notice to the Licensee;

     3.18.3 each of the Licensor and the Licensee hereby agrees to use its best
            endeavours to reach agreement upon whether or not a Relevant Event
            within the terms of any of clauses 3.14.2 or 3.14.3 or 3.14.4 above
            has taken place within fourteen days of the date of receipt by the
            Licensee of the Licensor's notice referred to in clause 3.17.2 above
            in default of which the matter shall be referred for determination
            by the Expert; and

     3.18.4 if it is agreed by the parties pursuant to clause 3.18.3 above or
            decided by the Expert that a Relevant Event has occurred within the
            terms of clauses 3.14.2 or 3.14.3 or 3.14.4 above then the Solicitor
            is hereby authorised to release the XGel Technical Information to
            the Licensee.

3.19 Upon receipt of the XGel Technical Information the Licensee shall be
     entitled to use and/or develop the XGel Technical Information and to grant
     sub-licences under all or any part of the XGel Technical Information to the
     extent necessary to enable the Licensee to have the XGel Materials
     manufactured on its behalf for use only in the Products pursuant to the
     terms of this Agreement.

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3.20 The Licensor represents and warrants to the Licensee that subject to the
     time limit for depositing revisions to the XGel Technical Information set
     out in clause 3.12 above the XGel Technical Information deposited with the
     Solicitors shall at all times be complete accurate and up-to-date.

3.21 Any charge made by the Solicitors in respect of the storage of the XGel
     Technical Information will be met by the Licensor.

4    Improvements
-----------------

4.1  Each party shall forthwith disclose to the other in confidence and in such
     detail as that other may reasonably require all Improvements that it may
     develop or acquire during the term of this Agreement except in so far as
     such disclosure would disclose information derived from and subject to
     confidentiality obligations in favour of a third party.

4.2  Improvements that the Licensor is due to disclose to the Licensee under
     clause 4.1 above shall be deemed to be part of the Technical Information
     for the purposes of the rights granted to the Licensee under clause 3
     hereof.

4.3  The Licensor shall have a non-exclusive irrevocable world-wide royalty-free
     licence without limit of time with the right to assign and to grant
     sub-licences thereunder to use all Improvements the Licensee is due to
     disclose to the Licensor under clause 4.1 hereof and to use and exploit all
     intellectual property rights in respect thereof owned by the Licensee or
     any assign or successor in title of the Licensee.

4.4  Save as otherwise provided herein, Improvements arising from work carried
     out by the Licensor alone shall remain the exclusive property of the
     Licensor and Improvements arising from work carried out by the Licensee
     alone shall remain the exclusive property of the Licensee.

4.5  Subject to clause 9.7 below, Improvements arising from work carried out
     jointly shall belong to the parties equally unless they shall otherwise
     agree. Each party shall have the irrevocable right to use such joint
     Improvements independently of the other and to the extent necessary for
     such use each shall grant to the other a royalty free worldwide irrevocable
     perpetual non-exclusive licence under all jointly held intellectual
     property rights relating thereto including the right to assign and to grant
     sub-licences thereunder. Each party undertakes that on request it will
     confirm to any prospective licensee of the other the right of that other to
     grant such a licence pursuant to this clause.

5    Licence fees and payment
     ------------------------

5.1  The provisions of this clause 5 apply unless otherwise agreed in writing
     between the parties.

5.2  In consideration for the rights granted to the Licensee under clause 3, and
     subject to the provisions of clauses 5.3 to 5.6 (inclusive), the Licensee
     shall pay a licence fee to the Licensor for each Machine purchased by the
     Licensee. Such fee shall be calculated in accordance with the table set out
     in Schedule 3 by reference to the total number of Machines already

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<PAGE>

     purchased or ordered by the Licensee (including those forming the subject
     of the current order and all previous orders) on the date the order in
     question is placed. For the purposes of applying the said table the
     following provisions shall apply in respect of each individual Machine
     purchased by the Licensee other than the prototype Machine referred to in
     clause 5.3:-

     5.2.1 the first year for licence fee purposes shall begin on the date the
           order for the Machine in question is placed by the Licensee.
           Subsequent years shall begin on each subsequent anniversary thereof;

     5.2.2 the licence fee for the first year shall be paid as to 50% on the
           date the order for the Machine in question is placed by the Licensee,
           and as to the balance when the said Machine is accepted by the
           Purchaser; and

     5.2.3 licence fees for subsequent years shall be paid in full in respect of
           each Machine no later than the anniversary of the date of acceptance
           by the Purchaser of the said Machine (being known as "the Anniversary
           Date" in respect of each such Machine).

5.3  The parties acknowledge that by an agreement of even date with this
     agreement ("the Prototype Agreement") the Licensor has agreed to sell and
     the Licensee to purchase a prototype Machine and the Licensee has agreed to
     carry out certain services in respect of the said prototype Machine. In
     respect of that prototype Machine only, the following licence fee
     arrangements shall apply instead of those set out in clause 5.2:-

     5.3.1 the first year for licence fee purposes shall begin on the date on
           which the Licensee delivers Products pursuant to its first order from
           a third party for any quantity of the Product for Commercial Use as
           defined in the Prototype Agreement. Subsequent years shall begin on
           each subsequent anniversary thereof (being known as "the Anniversary
           Date" for such Machine). The Licensee agrees to notify the Licensor
           immediately it receives its first such order;

     5.3.2 the Licence fee for the first year shall be $500,000 and has been
           included within the sums payable by the Licensee to the Licensor
           pursuant to the terms of clause 3 of the Prototype Agreement, and no
           further licence fee shall be payable in respect of the said first
           year; and

     5.3.3 licence fees for subsequent years shall be paid in full no later than
           the Anniversary Date in the year in question.

5.4  For the avoidance of doubt, for the purposes of applying the table set out
     in Schedule 3 the prototype Machine referred to in clause 5.3 shall be
     regarded as the first Machine purchased by the Licensor.

5.5  The Licencee may at any time give not less than three months notice to the
     Licensor (such notice to expire on the relevant Anniversary Date) that a
     Machine is no longer required and/or used by the Licensee and with effect
     from the relevant Anniversary Date, no licence fee shall be payable in
     respect of such Machine. The Licensor will use all reasonable endeavours
     during the period of notice to assist the Licensee to find a purchaser for
     and to sell such Machine.

5.6  All sums due under this Agreement

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<PAGE>

     5.6.1 are exclusive of any value added tax which, if applicable, shall be
           payable in addition subject to the provision by the Licensor of an
           appropriate value added tax invoice,

     5.6.2 shall be made in US dollars to the credit of such bank account as the
           Licensor may specify in writing at any time, and

     5.6.3 shall be made in full without deduction of taxes charges and other
           duties that may be imposed except in so far as any such deduction may
           be credited in full by the Licensor against the Licensor's own tax
           liabilities. The parties agree to co-operate in all respects
           necessary to take advantage of such double taxation agreements as may
           be available.

5.7  If any sum due hereunder is not paid on the due date then, without
     prejudice to any other remedies the Licensor may have in that event, the
     Licensee shall pay interest on the overdue amount at the rate of 4% above
     the base rate from time to time of Barclays Bank plc from the date payment
     was due until the date it is made.

6    Performance
     -----------

6.1  During the continuance of this Agreement the Licensee shall

     6.1.1 use all reasonable endeavours to promote the distribution and sale of
           Products in the Territory as widely as its resources reasonably
           permit and will make available all necessary selling and
           manufacturing facilities to meet all reasonable demands for Products
           throughout the Territory. The Licensee shall seek to maximise such
           demand, consistent only with the Licensee obtaining a reasonable rate
           of return on its assets employed in making and selling Products,

     6.1.2 ensure that all Products supplied by the Licensee meet all such
           reasonable specifications as the Licensor may from time to time
           reasonably apply thereto and satisfy in performance quality
           construction and use the reasonable requirements of the Licensor and
           shall upon reasonable notice from the Licensor give the Licensor or
           its authorised representative free access at any reasonable time to
           the premises of the Licensee for the purpose of ensuring that the
           Licensee is observing these obligations (provided that the Licensor
           shall not alter the specification more than once in any twelve month
           period except where such change is required by law),

     6.1.3 sell Products to any suitable buyer independently of any other
           products of the Licensee if so required,

     6.1.4 ensure that all literature relating to Products prepared by the
           Licensee and packaging of the Products manufactured or sold by the
           Licencee bears an acknowledgement in English (or such other language
           as may be the prime language on the literature or packaging in
           question) which reads "This Product is manufactured using the XGel
           (TM) film system under licence from BioProgress Technology
           International Inc" (or such other wording as the parties may from
           time to time agree in writing) in typeface of a reasonably legible
           size, and

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<PAGE>

     6.1.5 not act as agent of the Licensor and specifically not give any
           indication that it is acting otherwise than as principal and in
           advertising or selling Products not make any representation or give
           any warranty on behalf of the Licensor.

6.2  The Licensee shall at its own expense register or procure the registration
     of any licence agreement executed under clause 3.5 hereof within 28 days of
     the Effective Date and shall notify the Licensor in writing of the recordal
     of such registration at the appropriate patent office.

6.3  During the term of this Agreement, the Licensor shall:-

     6.3.1 co-operate with the Licensee, at the Licensee's request, in
           developing technical or other data, including data substantiating
           labelling or advertising claims for the XGel Materials;

     6.3.2 co-operate with the Licensee, at the Licensee's request and expense,
           if any, in obtaining all necessary foreign governmental approvals
           within the Territory, including safety approvals, for the sale or use
           of the Products in the Territory;

     6.3.3 generally, do all things that in the opinion of the Licensee are
           reasonably and commercially necessary to assist the Licensee in the
           performance of its obligations hereunder; and

     6.3.4 use all reasonable endeavours promptly to correct any errors in the
           Technical Information, Copyright or Patents subsequently discovered
           by the Licensor, or by the Licensee which the Licensee notifies in
           writing to the Licensor.

7    Representations and warranties
-----------------------------------

7.1  The Licensor represents and warrants to the Licensee as follows:-

     7.1.1 It has the full power and the authority to enter into this Agreement
           and to fully perform its obligations hereunder.

     7.1.2 Neither the execution and the delivery of this Agreement nor the
           performance or compliance by the Licensor with any of its obligations
           hereunder will conflict with or result in the breach of the terms of,
           or constitute a default under, the Articles of Incorporation or
           Bylaws of the Licensor or any material agreement to which the
           Licensor is a party or by which it is bound.

     7.1.3 It has good right to the legal and beneficial ownership of the
           Machine, the XGel Materials, Technical Information, Copyright and the
           Patents ("Licensed Technology").

     7.1.4 The Licensed Technology does not, to the best of its knowledge and
           belief having made all reasonable enquiries, infringe any existing
           patent, published application for a patent, copyright, design right
           or other intellectual property right whatsoever in the Territory.

     7.1.5 The Licensor is not aware, to the best of its knowledge and belief
           having made reasonable enquiries, of any reason why the patent
           applications within the Patents should not be granted in full as
           patents in the territories in which applications have been filed in
           the form it is in at today's date.

                                       11

<PAGE>

     7.1.6 The Licensor is the sole applicant of the patent applications within
           the Patents and the patent applications are subsisting.

     7.1.7 All Technical Information and information relating to the Patents has
           been (or will pursuant to clause 2.1 be) disclosed and is accurate.

7.2  The Licensee represents and warrants to the Licensor as follows:-

     7.2.1 It has the full power and the authority to enter into this Agreement
           and to fully perform its obligations hereunder.

     7.2.2 Neither the execution and the delivery of this Agreement nor the
           performance or the compliance by the Licensee with any of its
           obligations hereunder will conflict with or result in the breach of
           the terms of, or constitute a default under, the Articles of
           Incorporation or Bylaws of the Licensee or any material agreement to
           which the Licensee is a party or by which it is bound.

8    Confidentiality
     ---------------

8.1  Each party agrees to maintain secret and confidential all Confidential
     Information obtained from the other both pursuant to this Agreement and
     prior to and in contemplation of it and all other information that it may
     acquire from the other in the course of this Agreement, to use the same
     exclusively for the purposes of this Agreement, and to disclose the same
     only to those of its employees and sub-licensees pursuant to this Agreement
     (if any) to whom and to the extent that such disclosure is reasonably
     necessary for the purposes of this Agreement.

8.2  The foregoing obligations of clause 8.1 above shall not apply to
     Confidential Information or other information which

     8.1.1 prior to receipt thereof from one party was in the possession of the
           recipient party and at its free disposal,

     8.1.2 is subsequently disclosed to the recipient party without any
           obligations of confidence by a third party who has not derived it
           directly or indirectly from the disclosing party,

     8.1.3 is or becomes generally available to the public in the Territory
           through no act or default of the recipient party or its agents or
           employees, or

     8.1.4 is required by a binding court order or otherwise by law to be
           disclosed.

8.2  Notwithstanding the foregoing provisions the parties and any sub-licensees
     pursuant to this Agreement shall be entitled to disclose Confidential
     Information of the other to actual or potential customers for Products in
     so far as such disclosure is reasonably necessary to promote the sale or
     use of Products.

8.4  Each party shall procure that all its employees and sub-licensees pursuant
     to this Agreement (if any) who have access to any information of the other
     to which the obligations of clause 8.1 apply shall be made aware of and
     subject to these obligations and shall further procure that so far as is
     reasonably practicable all of such employees and sub-licensees shall enter
     into written undertakings in favour of the other party to this end in a
     form previously approved by the Licensor.

                                       12

<PAGE>

9    Patents and other intellectual property
     ---------------------------------------

9.1  If the Licensee becomes aware of any infringement of the Patents or
     Copyright or misuse of the Technical Information it shall promptly notify
     the Licensor and provide all details within its knowledge. The Licensee
     shall also provide the Licensor with all assistance reasonably requested by
     the Licensor and at the Licensor's cost for the purposes of any
     infringement action the Licensor may bring.

9.2  The Licensor shall use all reasonable endeavours to take any action
     regarding any infringements, at its own cost save that the Licensor shall
     not be obliged to instigate legal proceedings unless a patent or other
     suitable intellectual property counsel of at least 10 years' calling (to be
     appointed in default of agreement between the parties at the request of
     either of them by the President for the time being of the Law Society) has
     advised in writing that the Licensor has a good arguable case against the
     infringer.

9.3  If the Licensor fails within a reasonable period of time in the
     circumstances to take such steps as may reasonably be considered necessary
     or appropriate by the Licensee in respect of any infringement of the
     Patents or Copyright or mis-use of the Technical Information, the Licensee
     shall have the right and is hereby authorised by the Licensor to take those
     steps independently. In so doing the Licensee shall not be taken as acting
     as the agent or in any way on behalf of the Licensor but the Licensor shall
     give all reasonable assistance, including lending its name as a party to
     any proceedings, at the Licensee's expense to facilitate any proceedings by
     the Licensee. The Licensee shall bear all costs but shall be entitled to
     retain for its own absolute benefit any damages, costs or other expenses
     awarded or recovered in any such proceedings.

9.4  Nothing in this Agreement shall confer on the Licensee any right or licence
     to use any of the Licensor's (or any of its Affiliate's) trade marks,
     service marks, logos or trade names other than the trade mark "X-Gel" which
     the Licensee may use on the packaging of the Products and on marketing and
     other promotional materials relating to the Products subject to the consent
     of the Licensor, not to be unreasonably withheld or delayed.

9.5  If at any time during this Agreement the Licensee directly or indirectly
     opposes or assists any third party to oppose the grant of letters patent on
     any patent application within the Patents, or disputes or directly or
     indirectly assists any third party to dispute the validity of any patent
     within the Patents or any of the claims thereof, the secret or substantial
     nature of the Technical Information of the Licensor, or whether the Patents
     are necessary within the meaning of E.C. Regulation No 240/96, the Licensor
     shall be entitled at any time thereafter to determine all or any of the
     licences granted hereunder forthwith by notice thereof to the Licensee.

9.6  Where one party hereto has developed or acquired an Improvement to which
     clause 4.1 above applies it shall not publish the same or do anything that
     might prejudice the validity of any patent that might subsequently be
     granted on it until the other party has had at least 15 working days from
     disclosure in writing of all information relating to it to consider whether
     patent or other protection should be applied for. The first party will on
     request notify the other whether it intends to seek any relevant
     protection. If it does not wish to do so and if the other party within the
     15 working day period notifies the first party that it would like to seek

                                       13

<PAGE>

     patent or other protection, and if it is agreed between the parties that
     the other party may do so, then this obligation shall continue for such
     time as may be reasonably required to prepare and file an application for
     patent or other protection.

9.7  Either party to this Agreement may at any time in respect of an Improvement
     elect not to pursue further an application for patent protection either
     jointly or on its own behalf or to maintain any such patent protection as
     it may have obtained and the party so electing shall notify the other party
     and shall if so requested assign all rights it may have therein for nominal
     consideration to that other party provided that the party electing not to
     pursue the application or the resulting patent shall be entitled to a full
     non-exclusive royalty free worldwide perpetual and irrevocable licence
     under all relevant rights with the right to assign and to sub-license.

9.8  Subject to the foregoing each party shall be free to apply for patent
     protection for any invention not made in whole or in part by an employee of
     the other provided however that the specification in support thereof does
     not disclose any Technical Information or other information which is
     confidential to the other.

9.9  Subject to the provisions of clause 9.7 hereof the Licensor and the
     Licensee shall share equally the costs of filing and prosecuting any future
     joint patent applications to grant and of maintaining such granted patents
     in the Territory.

10   Records and reports
     -------------------

10.1 The Licensee agrees to keep true and accurate records and books of account
     containing its operations hereunder, which records and books of account
     shall upon reasonable notice of the Licensor be open at all reasonable
     times during business hours for inspection by the Licensor or its duly
     authorised agent.

10.2 The Licensor agrees to maintain confidential all financial information
     received with respect to the Licensee's operations pursuant to clause 10.1.

11   Indemnification
     ---------------

11.1 The Licensee hereby indemnifies and holds the Licensor, its officers,
     directors, employees and agents harmless from and against any and all
     judgement decrees, losses, expenses, damages, claims, costs (including,
     without limitation, attorney's fees and expenses and court costs), or any
     liabilities whatsoever resulting from or arising out of or in connection
     with any one or more of the Licensee's covenants, agreements,
     representations or warranties set forth in this Agreement or related to the
     use of the Technical Information, Patents, Copyright and Products other
     than in accordance with this Agreement.

11.2 The Licensor hereby indemnifies and holds the Licensee, its officers,
     directors, employees and agents harmless from and against any and all
     judgement decrees, losses, expenses, damages, claims, costs (including,
     without limitation, attorney's fees and expenses and court costs), or any
     liabilities whatsoever resulting from or arising out of or in connection
     with any one or more of the Licensor's covenants, agreements,
     representations or warranties set forth in this Agreement or related to the
     Licensee's use of the Technical Information, Copyright, Patents and
     manufacture and sale of the Products in accordance with the terms of this
     Agreement.

                                       14

<PAGE>

11.3 Notwithstanding any other provision of this Agreement neither party shall
     be liable to the other for any Consequential Loss arising under this
     Agreement. "Consequential Loss" means pure economic loss, loss of profit,
     loss of business and like loss.

11.4 This Clause 11 shall survive termination of this Agreement.

12   Term and termination
-------------------------

12.1 Subject as hereinafter provided this Agreement shall commence on the
     Effective Date and shall continue in force in each country of the Territory
     until expiry of the last to expire of the Patents in such country or, if
     longer, until the expiry of a period of ten (10) years from the earliest
     date when the Products have been first put on the market in any part of the
     European Union by the Licensee or any other licensee of the Licensor
     provided that the Technical Information remains secret and substantial
     within the meaning of E.C. Regulation 240/96 unless earlier terminated in
     accordance with the following provisions of this clause.

12.2 If at any time any of the Patents is held by a court or other tribunal of
     competent jurisdiction to be wholly or partly invalid or unenforceable in
     any part of the Territory the parties will negotiate together in good faith
     with a view to agreeing a suitable adjustment in the licence fees payable
     hereunder to take account of that fact. In the absence of agreement about a
     new licence fee within three months of the court or tribunal decision in
     question the Licensee may, by serving not less than three months' notice on
     the Licensor, terminate this agreement, but without prejudice to the
     accrued rights of either party. If notice to terminate is served by the
     Licensee pursuant to this clause 12.2 the Licensor will use all reasonable
     endeavours during the period of the notice to assist the Licensee to find
     purchasers for and to sell any Machines previously purchased by the
     Licensee from the Licensor.

12.3 If either party is in breach of any obligation on it hereunder and, in the
     case of a breach capable of remedy, it shall not have been remedied by the
     defaulting party within 45 days of written notice specifying the breach and
     requiring its remedy, or if either party becomes insolvent, has a receiver
     appointed over the whole or any part of its assets, enters into any
     compound with creditors, or has an order made or resolution passed for it
     to be wound up (otherwise than in furtherance of a scheme for amalgamation
     or reconstruction), or if the ownership or control of either party shall
     pass into the hands of any legal person, which is a competitor of the other
     then the other party may forthwith terminate this Agreement by notice
     without prejudice to the accrued rights of either party. For the purposes
     of this clause 12.3 a person shall be deemed to be a competitor of a party
     to this Agreement if he competes commercially in any area of that party's
     business whether or not it is an area relating to the types of product
     forming the subject of this Agreement.

12.4 Termination of this Agreement for any reason shall not bring to an end

     12.4.1 the confidentiality obligations on the parties hereto,

     12.4.2 the Licensee's obligations to pay licence fees or other sums which
            have accrued are due or which will become due in respect of sales
            under clause 12.5,

     12.4.3 the obligations (if any) on the Licensee under clause 12.6, or

     12.4.4 the licences (if any) under clauses 4.3, 4.5 and 9.7.

                                       15

<PAGE>

12.5 On termination of this Agreement for any reason the Licensee shall continue
     to have the right for a period of six months from the date of termination
     to complete deliveries of Products under contracts in force at that date
     and to dispose of Products already manufactured.

12.6 On termination of this Agreement by the Licensor for any reason under
     clause 12.3 above the Licensee shall offer to the Licensor at cost all
     stocks of Products and promotional and other literature relating thereto in
     its possession or control and shall provide the Licensor with all
     reasonable facilities to inspect the same and shall deliver up to the
     Licensor all production manuals and all other documents or materials
     whether human or machine readable and whether stored electronically or
     otherwise (including copies thereof) in its possession or control
     containing Technical Information remaining subject to the confidentiality
     obligations of clause 8 hereof.

12.7 In the event of a breach by the Licensor which would entitle the Licensee
     to terminate this Agreement the Licensee may, at its option, elect not to
     terminate the Agreement and instead shall be entitled to suspend the
     payment of any licence fees due under this Agreement from the date of the
     said election until such time as the Licensor remedies the breach. Any
     dispute as to whether the Licensee is entitled to exercise this option
     shall be referred at the request of either party to the Expert.

13   Insurance
--------------

13.1 During the term of the Agreement, and for one (1) year thereafter, the
     Licensor shall maintain product liability insurance on the XGel Materials
     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 in the United Kingdom and being a
     member of the British Insurers Association . The Licensor shall provide the
     Licensee with a copy of the certificate of such insurance and evidence of
     the payment of premiums therefor promptly upon request.

13.2 During the term of the Agreement, and for one (1) year thereafter, the
     Licensee shall maintain product liability insurance on the XGel Materials
     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 in the United Kingdom and being a
     member of the British Insurers Association. The Licensee shall provide the
     Licensor with a copy of the certificate of such insurance and evidence of
     the payment of premiums therefor promptly upon request.

14.  Force majeure
------------------

14.1 If either party to this Agreement is prevented or delayed in the
     performance of any of its obligations under this Agreement by force
     majeure, and if such party gives written notice thereof to the other party
     specifying the matters constituting force majeure, together with such
     evidence as it reasonably can give and specifying the period for which it
     is estimated that such prevention or delay will continue then the party in
     question shall be excused the performance or the punctual performance as
     the case may be as from the date of such notice for so long as such cause
     of prevention or delay shall continue.

                                       16

<PAGE>

14.2 For the purpose of this Agreement `force majeure' shall be deemed to be any
     cause affecting the performance of this Agreement arising from or
     attributable to acts, events, omissions or accidents beyond the reasonable
     control of the party to perform and without prejudice to the generality
     thereof shall include the following:-

     14.2.1 strikes, lock-outs or other industrial action

     14.2.2 civil commotion, riot, invasion, war threat or preparation for war

     14.2.3 fire, explosion, storm, flood, earthquake, subsidence, epidemic or
            other natural physical disaster

     14.2.4 impossibility of the use of railways, shipping, aircraft, motor
            transport or other means of public or private transport

     14.2.5 political interference with the normal operations of any party.

15   General
     -------

15.1 This Agreement shall be binding upon and enure to the benefit of the
     parties hereto and their respective legal successors but shall not
     otherwise be assignable by either party without the prior written consent
     of the other, which consent shall not be unreasonably withheld, except that
     the Licensor may assign any of its rights and obligations to an Affiliate.

15.2 This Agreement constitutes the entire agreement and understanding of the
     parties and supersedes all prior written or oral representations agreements
     or understandings between them relating to the subject matter of this
     Agreement other than any false misrepresentation made by a party to induce
     the other party to enter into this Agreement.

15.3 No variation or amendment of this Agreement shall bind either party unless
     made in writing and agreed to in writing by duly authorised officers of
     both parties.

15.4 If any provision of this Agreement is agreed by the parties to be illegal
     void or unenforceable under any law that is applicable hereto or if any
     court or other authority of competent jurisdiction in a final decision so
     determines this Agreement shall continue in force save that such provision
     shall be deemed to be excised herefrom with effect from the date of such
     agreement or decision or such earlier date as the parties may agree.

15.5 The headings in this Agreement are for convenience only and are not
     intended to have any legal effect.

15.6 A failure by either party hereto to exercise or enforce any rights
     conferred upon it by this Agreement shall not be deemed to be a waiver of
     any such rights or operate so as to bar the exercise or enforcement thereof
     at any subsequent time or times.

15.7 Nothing in this Agreement shall create or be deemed to create a
     partnership, franchise or joint venture or the relationship of employer and
     employee or principal and agent between the parties.

                                       17

<PAGE>

15.8 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.

16   Notices
     -------

16.1 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 prepaid
     post or facsimile transmission and shall be deemed to be duly served. and
     shall be served by sending the same by registered or recorded delivery post
     to the address of the other party as given herein or to such other address
     as that party may have previously notified to the party giving notice as
     its address for such service:

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

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

     16.1.3 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).

16.2 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 Licensee and the
     Chief Financial Officer in the case of the Licensor.

16.3 For the purposes of this clause 16 "Business Day" means any day other than
     Saturdays, Sundays and public or statutory holidays.

17.  Expert Determination
-------------------------

17.1 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 Proprietory Association of Great
     Britain.

17.2 Any person to whom a reference is made under clause 17.1 shall act as 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.

17.3 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.

                                       18

<PAGE>

17.4 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.

18   Governing law and disputes
-------------------------------

18.1 The construction validity and performance of this Agreement shall be
     governed in all respects by English Law.

18.2 All disputes arising in any way out of or affecting this Agreement shall be
     subject to the exclusive jurisdiction of the English courts to which the
     parties hereto agree to submit.

                                       19

<PAGE>

                                   SCHEDULE 1
                                   ----------

              The Patent applications referred to in clause 1(n)(i)
              -----------------------------------------------------

9606371.4
PCT/GB97/00838
GB 9824658.0
GB 9925166.2
PCT/GB/03649
GB 9916033.5
GB 0003424.9

                                       20

<PAGE>

                                   SCHEDULE 2
                                   ----------

               Formal Patent Licence for Registration (Clause 3.5)
               ---------------------------------------------------

Date:                               2000

Parties:

1    `The Licensor': [________] of [________].

2    `The Licensee': [________] of [________].

Recitals:

(A)  The Licensor is the registered proprietor of United Kingdom Patent No
     [________] for an invention entitled [________] (the `Patent').

(B)  By an Agreement dated the [________] day of [________] 20[__] (the
     `Agreement') it was agreed between the parties thereto for the
     consideration therein mentioned that the Licensor would grant to the
     Licensee [an exclusive] [a non-exclusive] licence under the said Patent as
     herein set forth.

(C)  Accordingly, the parties have now agreed to execute this Licence.

Operative provisions:

1.   Pursuant to the said Agreement the Licensor HEREBY GRANTS (and shall from
     the date of the publication of the application for the Patent be deemed to
     have granted) to the Licensee [exclusive] [a non-exclusive] authority and
     licence to manufacture use exercise and sell the said invention and to do
     all other things within the scope of protection of the Patent on the terms
     and conditions of the Agreement whilst the Patent shall remain in force
     unless this Licence shall be terminated prior thereto under provisions of
     the Agreement or unless the Agreement shall itself be terminated whereupon
     this Licence shall ipso facto terminate.

2.   This Licence is granted in pursuance of the said Agreement and not in
     substitution therefor whereby nothing herein contained shall in any way
     derogate from the said Agreement which shall remain in full force and
     effect.

IN WITNESS etc

                                       21

<PAGE>
<TABLE>
<CAPTION>

                                                SCHEDULE 3
                                                ----------

                                          Licence fees (Clause 5)
                                          -----------------------

Unless otherwise agreed in writing the following are the annual fees payable by
the Licensee to the Licensor in respect of each Machine purchased by the
Licensee:-

---------------- -------------- -------------- -------------- -------------- -------------- -------------
    MACHINES        YEAR 1         YEAR 2         YEAR 3         YEAR 4         YEAR 5          EACH
     OWNED                                                                                   FOLLOWING
                                                                                                YEAR
---------------- -------------- -------------- -------------- -------------- -------------- -------------
   <S>             <C>            <C>            <C>            <C>            <C>            <C>
    First 5        $500,000       $350,000       $250,000       $150,000       $100,000       $50,000
---------------- -------------- -------------- -------------- -------------- -------------- -------------
 Nos. 6 to 10      $400,000       $250,000       $150,000        $75,000        $62,500       $31,250
---------------- -------------- -------------- -------------- -------------- -------------- -------------
 Nos. 11 to 20     $300,000       $200,000       $100,000        $62,500        $50,000       $25,000
---------------- -------------- -------------- -------------- -------------- -------------- -------------
  No. 21 and       $250,000       $150,000        $75,000        $50,000        $37,500       $18,750
  thereafter
---------------- -------------- -------------- -------------- -------------- -------------- -------------

                                                    22
</TABLE>

<PAGE>

                                   SCHEDULE 4
                                   ----------

                               Confidential Items
                               ------------------

Filling wedge
Sealing and cutting plates

                                       23

<PAGE>

                                   SCHEDULE 5
                                   ----------

                To be typed on Rustons & Lloyd's Headed Notepaper
                -------------------------------------------------

To:        Bioprogress Technology International Inc
           Unit 1, Norwood Road, March, Cambridgeshire PE15 8QD

And to:    Peter Black Healthcare Limited
           Keighley, West Yorkshire BD21 3BB

Dear Sirs

We refer to the Patent Licence Agreement entered into between Bioprogress
Technology International Inc and Peter Black Healthcare Limited of even date
herewith a copy of which is attached, ("the Patent Licence"). Words and
expressions in this letter shall have the same meanings as in the Patent
Licence.

Under the terms of the Patent Licence the Licensor has agreed to deposit a copy
of the XGel Technical Information and any modifications, enhancements, revisions
and updates thereto from time to time with us at our offices at 136 High Street,
Newmarket.

We hereby irrevocably undertake to the Licensee and the Licensor:

1    to place the XGel Technical Information submitted to us from time to time
     in our strong room and keep it there until released according to paragraph
     4 below;

2    upon receipt of the XGel Technical Information from time to time to send
     written confirmation of receipt and storage respectively to the Licensor
     and the Licensee;

3    to notify the Licensee and Licensor of any change in the location of
     storage of the XGel Technical Information; and

4    to release the XGel Technical Information to the Licensee in accordance
     with clauses 3.13 to 3.18 of the Patent Licence.

Yours faithfully

 ....................................
Rustons & Lloyd Solicitors

                                       24

<PAGE>

SIGNED

 ......................................................................
on behalf of BioProgress Technology International Inc

 ......................................................................
on behalf of Peter Black Healthcare Limited

                                       25EXHIBIT 10.29

DATED                                                              JULY 24, 2000
--------------------------------------------------------------------------------

                         BIOPROGRESS TECHNOLOGY LIMITED

                                       and

                         PETER BLACK HEALTHCARE LIMITED

--------------------------------------------------------------------------------

                                    GUARANTEE

--------------------------------------------------------------------------------

<PAGE>

THIS GUARANTEE is made on                                                   2000

BETWEEN

(1)  BIOPROGRESS TECHNOLOGY LIMITED (registered number 3289265) whose registered
     office is at Unit 1, Norwood Road, March, Cambridgeshire, PE15 8QD ("the
     Guarantor"); and

(2)  PETER BLACK HEALTHCARE LIMITED (registered number 931141) whose registered
     office is at Keighley, West Yorkshire BD21 3BB ("the Beneficiary").

1.   INTERPRETATION

     In this Deed:-

1.1  references to persons will be construed so as to include bodies corporate,
     unincorporated associations and partnerships;

1.2  the headings to the clauses of this Deed will not affect its construction.

2.   GUARANTEE

2.1  Subject to clause 2.3 below, in consideration of the Beneficiary entering
     into a Prototype Machine Supply Agreement, a Machine Supply Agreement, a
     Film Supply Agreement and a Patent Licence Agreement with 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, ("the Principal") dated 2000 ("the Agreements"),
     the Guarantor guarantees to the Beneficiary the due and punctual observance
     and performance by the Principal of its obligations under the Agreements
     and promises to pay to the Beneficiary all sums from time to time due and
     payable (but unpaid) by the Principal under or pursuant to the Agreements
     or on account of any breach thereof ("the Liabilities").

2.2  This guarantee is a guarantee of the whole of the indebtedness of the
     Principal to the Beneficiary in respect of the Liabilities, but subject to
     clause 2.3 below.

2.3  The Guarantor shall not be required to make any payment to the Beneficiary
     pursuant to clause 2.1 above unless one of the following conditions has
     been fulfilled:

     2.3.1 the Principal has confirmed to both the Beneficiary and the Guarantor
           in writing its agreement that the sum in question is due and payable;
           or

     2.3.2 an Expert (within the meaning of one of the Agreements) has been
           appointed pursuant thereto and has determined in writing that the sum
           in question is due and payable; or

     2.3.3 a court or tribunal of competent jurisdiction has determined in
           writing that the sum in question is due and payable and either there
           is no right of appeal against such decision or the time for lodging
           an appeal has expired with no appeal having been made, but if any of

<PAGE>

           the conditions in clauses 2.3.1, 2.3.2 or 2.3.3 has been fulfilled,
           payment of the sum in question shall be made by the Guarantor no
           later than the date falling 14 days after whichever is the later of:

     2.3.4 the date of the Beneficiary's demand for such payment; and

     2.3.5 the date of fulfilment of the condition in question.

3.   PRESERVATION OF RIGHTS

3.1  The obligations of the Guarantor herein contained shall be in addition to
     and independent of every other security which the Beneficiary may now or
     hereafter hold in relation to the Liabilities or any of them.

3.2  Neither the obligations of the Guarantor herein contained nor the rights,
     powers and remedies conferred in respect of the Guarantor upon the
     Beneficiary by law shall be discharged, impaired or otherwise affected by:-

     3.2.1 the winding-up, dissolution, administration or reorganisation of the
           Principal or any change in its status, function, control or
           ownership;

     3.2.2 any of the Liabilities or any of the obligations of the Principal
           under any other security relating to the Liabilities being or
           becoming illegal, invalid, unenforceable or ineffective in any
           respect;

     3.2.3 time or other indulgence being granted or agreed to be granted to the
           Principal in respect of the Liabilities or any of them or under any
           such other security;

     3.2.4 any other act, event or omission which, but for this clause 3.2,
           might operate to discharge, impair or otherwise affect any of the
           obligations of the Guarantor herein contained or any of the rights,
           powers or remedies conferred upon the Beneficiary by law.

4.   REPRESENTATIONS AND WARRANTIES

     The Guarantor represents and warrants that:-

4.1  it is duly incorporated as a registered company in England and Wales and
     has power to enter into and perform the Guarantee and has taken all
     necessary corporate action to authorise the execution, delivery and
     performance of this Guarantee;

4.2  the execution, delivery and performance of this Guarantee will not
     contravene any law or regulation to which the Guarantor is subject or any
     provision of the Guarantor's memorandum and articles of association and all
     governmental or other consents requisite for such execution, delivery and
     performance are in full force and effect.

5.   PAYMENTS

     All payments to be made by the Guarantor to the Beneficiary hereunder shall
     be made without set-off or counterclaim and without any deduction or
     withholding whatsoever. If the Guarantor is obliged by law to make any
     deduction or withholding from any such payment, the amount due from the

<PAGE>

     Guarantor in respect of such payment shall be increased to the extent
     necessary to ensure that, after the making of such deduction or
     withholding, the Beneficiary receives a net amount equal to the amount the
     Beneficiary would have received had no such deduction or withholding been
     required to be made.

6.   CONTINUING SECURITY

     The obligations of the Guarantor herein contained shall constitute and be
     continuing obligations notwithstanding any settlement of account or other
     matter or thing whatsoever, and in particular but without limitation, shall
     not be considered satisfied by any intermediate payment or satisfaction of
     all or any of the obligations of the Principal in relation to any of the
     Liabilities and shall continue in full force and effect until final payment
     in full of all amounts owing by the Principal thereunder and total
     satisfaction of all the Principal's actual and contingent obligations
     thereunder.

7.   NOTICES

     Any demand to be made by the Beneficiary hereunder may be made at the
     principal place of business of the Guarantor for the time being.

8.   GOVERNING LAW

     This Guarantee shall be governed by and construed in accordance with
     English law and the Guarantor hereby irrevocably submits to the
     jurisdiction of the English courts.

This Guarantee has been executed and delivered as a deed on the date stated at
the beginning of this Deed.

<PAGE>

EXECUTED and DELIVERED as a DEED                                            )
by BIOPROGRESS TECHNOLOGY LIMITED                                           )
acting by                                                                   )

                                            .................................
                                            Director

                                            .................................
                                            Director/Secretary

EXECUTED and DELIVERED as a DEED                                            )
by PETER BLACK HEALTHCARE LIMITED                                           )
acting by                                                                   )

                                            ..................................
                                            Director

                                            ..................................
                                            Director/Secretary

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