Document:

EXHIBIT 10.26

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

                    BIOPROGRESS TECHNOLOGY INTERNATIONAL INC

                                       and

                         PETER BLACK HEALTHCARE LIMITED

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

                              AGREEMENT FOR SUPPLY
                              OF PROTOTYPE MACHINE
                  --------------------------------------------

                                 Rustons & Lloyd
                                 136 High Street
                                    Newmarket
                                     Suffolk
                                     CB8 8NN

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DATE:                                               2000

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

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 and the Company
has agreed to provide certain services to the Purchaser.

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)  `Commercial Use' means delivery of the Products manufactured using goods
     supplied under the Film Supply Agreement, for profit after the Upgrade
     Acceptance Date (which for the avoidance of doubt will exclude the sale or
     manufacture of samples of the Products whether or not such samples are sold
     for profit)

(c)  `the Confidential Items' means those parts of the Machine and Upgrade and
     which are listed in Schedule 4

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

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

(f)  `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

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

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

(i)  `the Initial Specification' means the specification of the Machine set 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 William Nadin Way,
     Swadlincote, South Derbyshire DE11 0BB

(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 $1,000,000

(q)  `the Purchaser's Authorised Representative' means the Purchaser's
     Divisional Operations Manager from time to time (being Bruce George
     Leworthy at the date of this Agreement)

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

(s)  `the Upgrade' means the version of the Machine which complies with the
     Upgrade Specification to be created by the Company as a result of the
     provision of the Services

(t)  "the Upgrade Acceptance Criteria" means compliance with the Upgrade
     Specification and the provisions of clause 8.2

(u)  `the Upgrade Acceptance Date' the date upon which the Upgrade is accepted
     by the Purchaser in accordance with clause 6

(v)  `the Upgrade Specification' means the specification set out or referred to
     in Schedule 3

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

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     3.1.2 the provision of the Services; and

     3.1.3 the licence fee of US$500,000 in respect of the Machine and the
           Upgrade 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
     instalments (the instalments referred to at clauses 3.3(c) and 3.3(d)
     being, for the avoidance of doubt, the Licence Fee):

     (a) US $250,000    -    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 $250,000    -     No later than seven days after the Machine
                              Acceptance Date

     (c) US $250,000    -     No later than seven days after the Upgrade
                              Acceptance Date

     (d) US $250,000    -     No later than seven days after the date on which
                              Commercial Use first occurs.

3.4  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  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 4 per cent per annum above the base rate
     from time to time of Barclays Bank plc from the due date therefor 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 14 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.

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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:

     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 14 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 14 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    The Services
     ------------

6.1  The Company shall commence and thereafter expeditiously continue the
     provision of the Services as soon as reasonably practicable after the
     Machine Acceptance Date.

6.2  The Company will perform the Services:

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     6.1.1 with all due skill and care and to the highest professional
           standards;

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

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

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

6.4  Within 14 days of the service of the notice referred to in clause 6.3 the
     parties will inspect and test the Upgrade in the presence of the
     Purchaser's Authorised Representative to establish whether the Upgrade
     meets the Upgrade Acceptance Criteria.

6.5  Within 14 days of the inspection pursuant to clause 6.4 a joint written
     report will be prepared recording the detailed results of the inspection
     and testing referred to in clause 6.4 and commenting on whether the Upgrade
     Acceptance Criteria have been satisfied.

6.6  If the report is agreed and demonstrates that the Upgrade 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
     Upgrade shall be deemed to be accepted on the date of such notice.

6.7  If the report records that the Upgrade 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 procedures set out in clauses 6.3 to 6.6 shall be
     repeated as soon as possible until successful compliance with the Upgrade
     Acceptance Criteria is achieved.

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

7    Title to and risk in the Machine
     --------------------------------

7.1  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').

7.2  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 therefor shall be a fiduciary one.

7.3  If either:

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

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     7.3.2 prior to the Payment Date the Purchaser convenes a meeting of its
           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.

8.2  Subject to the limitations upon its liability in clause 9 below the Company
     warrants to the Purchaser that the Upgrade will for a period of 12 months
     from the Upgrade Acceptance Date:

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

     8.2.2 conform in all respects with the Upgrade Specification;

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

     8.2.4 comply with all statutory and EC requirements and regulations
           relating to the Upgrade.

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.

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
           authorising 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 Upgrade 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 or Upgrade 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 one (1) year 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.

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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
     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)500,000.

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.

                                       8

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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 and
     will on or prior to the Upgrade Acceptance Date provide complete and
     accurate Documentation for the Upgrade 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 or the Upgrade at any
     future date.

10.3 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
     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.

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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
     and/or the Upgrade until the first anniversary of the Upgrade 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 Upgrade
     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
----------------

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.

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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 employees
     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.

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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.

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.

                                       12

<PAGE>

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 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.

                                       13

<PAGE>

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.

                                        14

<PAGE>

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

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

The Machine is the Company's Swallow form fill and seal encapsulation machine
conforming to the following specification:-

Cavity arrangement  -        Nested

Cavities per drum   -        624
(10 minim oval)

Vacuum Drum Width   -        300mm

Film Spec           -        300mm/50mtr

Minimum output      -        29,193 capsules per hour

Drum Rotation Speed -        0.3cm/sec

Air Pressure        -        100psi

Air Volume          -        min 0.6 cubic metres/minute

Power               -        3 phase 60 Amp supply

Footprint           -        4.4 mtrs by 1.1 mtrs

Height              -        1.95 mtrs

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

                           The Services (Clause 1(r))
                           --------------------------

The services to be provided by the Company are the carrying out of such work as
may be necessary and the modification of the Machine so that it is upgraded to
meet the Upgrade Specification.

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

                     The Upgrade Specification (Clause 1(v))
                     ---------------------------------------

The upgraded specification which the Machine is to meet following the provision
of the Services is such specification as the parties may agree from time to time
being at least the following:-

                                       15

<PAGE>

Cavity arrangement  -        Nested

Cavities per drum   -        850
(10 minim oval)

Vacuum Drum Width   -        600mm

Film Spec           -        600mm/50mtr

Minimum output      -        79,532 capsules per hour

Drum Rotation Speed -        0.3cm/sec

Air Pressure        -        100psi

Air Volume          -        min 0.6 cubic metres/minute

Power               -        3 phase 60 Amp supply

Footprint           -        4.4 mtrs by 1.1 mtrs

Height              -        1.95 mtrs

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

                      The Confidential Items (Clause 1(c))
                      ------------------------------------

Filling Wedge
Sealing and cutting plates

SIGNED

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

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

                                       16EXHIBIT 10.27

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

                    BIOPROGRESS TECHNOLOGY INTERNATIONAL INC

                                       and

                         PETER BLACK HEALTHCARE LIMITED

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

                            MACHINE SUPPLY AGREEMENT
                  --------------------------------------------

                                 Rustons & Lloyd
                                 136 High Street
                                    Newmarket
                                     Suffolk
                                     CB8 8NN

<PAGE>

DATE:                                                                       2000

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

RECITAL:

The purpose of this agreement is to record the terms under which the Company has
agreed to sell and the Purchaser to purchase certain equipment.

OPERATIVE PROVISIONS:

1    Interpretation
     --------------

1.1  In this Agreement, unless the context otherwise requires:

     (a)  `Acceptance Criteria' means compliance with the Specification and
          clause 7.1

     (b)  `Acceptance Date' means in respect of each Machine the date upon which
          such Machine is accepted by the Purchaser in accordance with clause 4

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

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

     (e)  `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

     (f)  `an Expert' means a person to whom a reference is made under clause
          10.1

     (g)  `Force Majeure' means, in relation to either party, any circumstances
          beyond the reasonable control of that party (including, without
          limitation, any strike, lock-out or other industrial action)

     (h)  `the Machine' means the machine described in Schedule 1 and `Machines'
          shall be construed accordingly

     (i)  `the Patent Licence' means a patent licence agreement between the
          parties of even date with this agreement relating to patent
          application numbers 9606371.4, PCT/GB97/00838, GB9824658.0, GB
          9925166.2, PCT/GB/03649, GB 9916033.5 and GB 0003424.9

                                       1

<PAGE>

     (j)  `Premises' means any of the Purchaser's premises to which a Machine is
          to be delivered or is situated

     (k)  `Purchaser's Authorised Representative' means the Purchaser's
          Divisional Operations Manager from time to time (being Bruce George
          Leworthy at the date of this Agreement)

     (l)  `the Specification' means the specification set out in Schedule 2 as
          upgraded from time to time by the Company at its discretion or any
          other specification agreed in writing between the Company and the
          Purchaser from time to time

1.2  Any reference in this Agreement to `writing', or cognate expressions,
     includes a reference to any communication effected by telex, cable,
     facsimile transmission or any comparable means.

1.3  The headings in this Agreement are for convenience only and shall not
     affect its interpretation.

2    Sale of Machines
     ----------------

2.1  During the continuance of this Agreement the Company shall sell and the
     Purchaser shall purchase such quantities of Machines as may be ordered by
     the Purchaser from time to time under clause 2.3, subject to the terms and
     conditions of this Agreement.

2.2  During the continuance of this Agreement the Purchaser shall purchase all
     of its requirements for Machines from the Company and accordingly, except
     as otherwise provided in this Agreement, the Purchaser shall not purchase
     Machines from any other person.

2.3  Orders for Machines shall be given by the Purchaser to the Company in
     writing or, if given orally, shall be confirmed by the Purchaser in writing
     not more than 3 days after the order is given by the Purchaser.

2.4  Whilst the Company agrees to take all such steps as may reasonably be
     required to fulfil its obligations under this Agreement in the normal
     course, the Company shall not be obliged to give the Purchaser any priority
     over any other customer of the Company with regard to the supply or
     delivery of the Machines.

3    Specification of the Machine
     ----------------------------

3.1  All Machines sold by the Company to the Purchaser pursuant to this
     Agreement shall conform to the Specification.

3.2  The Company shall consult with the Purchaser from time to time during the
     continuance of this Agreement in order to ensure that the Specification of
     the Machines to be sold by the Company to the Purchaser is acceptable to
     both parties, but the Company shall not be obliged to agree to any change
     to the Specification requested by the Purchaser (except, for the avoidance
     of doubt, any change to the Specification required to ensure that the
     Machines comply with clause 7.1.4 to which the Company will be obliged to
     agree).

                                       2

<PAGE>

4    Manufacture, delivery and installation of Machines
     --------------------------------------------------

4.1  The Company shall deliver each of the Purchaser's orders for the Machine on
     any date confirmed by the Company upon receipt of the order as the delivery
     date but time of delivery shall not be of the essence.

4.2  The Company shall deliver the Machine to the Premises and shall commence
     and thereafter expeditiously continue installation of the Machine as soon
     as reasonably practicable after such delivery.

4.3  The Company will carry out the installation of each Machine:

     4.3.1 with all due skill and care and to the highest professional
           standards;

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

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

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

4.5  Within 14 days of the service of the notice referred to in clause 4.4 the
     parties will inspect and test each Machine in the presence of the
     Purchaser's Authorised Representative to establish whether the Machine
     meets the Acceptance Criteria.

4.6  Within 14 days of the inspection pursuant to clause 4.5 a joint written
     report will be prepared recording the detailed results of the inspection
     and testing referred to in clause 4.5 and commenting on whether the Machine
     Acceptance Criteria have been met.

4.7  If the report is agreed and demonstrates that the 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.

4.8  If the report records that the 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 procedures set out in clauses 4.4 to 4.7 shall be repeated
     as soon as possible until successful compliance with the Acceptance
     Criteria is achieved.

4.9  If there is any difference of opinion between the parties as to whether the
     inspection tests and other procedures carried out demonstrate that the
     Acceptance Criteria have been achieved the matter shall, at the request of
     either the Company or the Purchaser, be determined by an Expert.

4.10 Risk in and responsibility for each Machine shall pass to the Purchaser on
     the Acceptance Date for each Machine.

4.11 The Purchaser shall allow the Company including the Employees such
     reasonable access to the Premises at reasonable times as it shall from time
     to time require to perform its obligations under this agreement.

                                       3

<PAGE>

4.12 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).

4.13 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.

4.14 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.

4.15 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 opinion is
     unsuitable or inappropriate.

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

5    Price of the Machines
     ---------------------

5.1  Subject to clause 5.3, the price for each Machine purchased by the
     Purchaser from the Company hereunder shall be calculated by reference to
     the number of Machines forming the subject of each order placed by the
     Purchaser, in accordance with the table set out in Schedule 3.

5.2  The purchase price for each Machine purchased by the Purchaser from the
     Company hereunder shall be paid:-

     (a)  as to 50% on the placing of the order for the Machine in question in
          accordance with clause 2.3, and

     (b)  as to 50% no later than seven days after the Acceptance Date.

5.3  Subject to clause 5.4 the Company reserves the right, by giving notice to
     the Purchaser at any time, to increase the price of Machines to reflect any
     increase in the cost to the Company which is due to any factor beyond its
     control (such as, without limitation, currency regulation, alteration of
     duties, significant increase in the costs of labour, materials or other
     costs of manufacture but excluding foreign exchange fluctuation), any
     change in delivery dates, or specifications which is requested by the
     Purchaser, or any delay caused by any instructions of the Purchaser or
     failure of the Purchaser to give the Company adequate information or
     instructions (provided that the Purchaser has been given reasonable notice
     of the information and instructions which the Company requires) PROVIDED
     THAT:-

                                       4

<PAGE>

     (i)  subject to clause 5.9 the first such notice of increase shall not take
          effect before the first anniversary of the date of this agreement and
          subsequent notices shall not take effect more frequently than at 12
          month intervals; and

     (ii) in determining the total amount of any increase the Company will, if
          appropriate, make due allowance for any items in respect of which the
          costs have decreased in the period since either the date of this
          agreement (in the case of the first increase) or the date the previous
          increase took effect (in any other case).

5.4  The Price of each Machine will be the price applying at the time the order
     for such Machine is placed by the Purchaser notwithstanding that the
     Company may have increased the price of Machines prior to the date on which
     payment becomes due in respect of such Machine.

5.5  The Purchaser shall obtain the Confidential Items only from the Company but
     shall be free to obtain other spare parts and/or tooling for the Machine
     from any supplier. The Company undertakes to maintain such stock of
     Confidential Items as may be necessary to enable it to supply such items to
     the Purchaser within 24 hours of receipt of any order therefor from the
     Purchaser.

5.6  The prices for any spare or replacement Machine parts or tooling purchased
     by the Purchaser from the Company shall be the Company's standard prices
     for such parts applicable on 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 (who purchase the same quantity
     or fewer spare parts and tooling as the Purchaser) for the same spare parts
     and/or tooling.

5.7  Unless otherwise expressly agreed in writing all prices referred to in this
     agreement or elsewhere shall be exclusive of:-

     (a)  any costs of packaging, carriage and insurance of the Machines,

     (b)  any applicable value added tax or other sales tax or duty, which shall
          be added to the sum in question.

5.8  If the Purchaser fails to pay on the due date any amount which is payable
     to the Company under this Agreement then, without prejudice to clause
     12.2:-

     (a)  that amount shall bear interest from the due date until payment is
          made in full, both before and after any judgment, at 4 per cent per
          annum over Barclays Bank plc base rate from time to time; and

     (b)  the Company shall be entitled to suspend deliveries of Machines until
          the outstanding amount has been received by the Company from the
          Purchaser.

5.9  The restrictions on the frequency of price increases contained in clause
     5.3(i) shall not apply in circumstances where the reason for the increased
     cost incurred by the Company is that changes in the Specification have
     required increased quantities of materials or different specifications or
     grades of materials to be used in the manufacture of the Machines (provided
     that, for the avoidance of doubt, this shall only apply to the extent that
     such increased cost is due to such changes and shall not entitle the
     Company to increase the price at that time to reflect any other increases
     in cost).

                                       5

<PAGE>

6.   Title to Machines and documentation
     -----------------------------------

6.1  Title to any Machine shall not pass to the Purchaser until the date that
     the Purchase Price for the Machine in question and value added tax thereon
     (if applicable) and any applicable packaging, carriage and insurance
     charges 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 in question and the relationship between the Company and the
     Purchaser in respect of such Machine including any proceeds of sale or
     other consideration therefor 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
           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 Purchaser's
     premises or any other premises where the Machine in question is located
     (without notice to the Purchaser) and remove the Machine in question.

6.4  If in breach of clause 6.2 above the Purchaser sells any 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.

6.5  With effect from the date of delivery up to and including the Payment Date
     the Purchaser shall insure the Machine in question 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 upon request.

                                       6

<PAGE>

7    Warranty in respect of Machines
     -------------------------------

7.1  Subject to the limitations upon its liability set out in clause 8 below the
     Company warrants to the Purchaser that each Machine will for a period of
     twelve months from the Acceptance Date in respect of each Machine:

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

     7.1.2 conform in all respects with the Specification;

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

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

7.2  Subject to the limitations upon its liability in clause 8 below the Company
     warrants to the Purchaser that the Company will:

     7.2.1 carry out the installation of the Machines with all due skill, care
           and diligence; and

     7.2.2 comply with all applicable legislation, statutory provisions and
           regulations in performing its obligations under the Agreement.

7.3  The Purchaser shall give notice to the Company as soon as it is reasonably
     able upon becoming aware of a breach of warranty.

7.4  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:

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

     7.4.2 replacing the Machine or any part of it.

7.5  Any defective Machine or component parts replaced by the Company pursuant
     to clause 7.4.2 above (`Replaced Equipment') shall upon replacement become
     the property of the Company and the Purchaser warrants that its title to
     such Replaced Equipment shall be free and unencumbered or that it shall
     have all necessary consents and authorities to part with possession of the
     Replaced Equipment.

7.6  Any new parts of a Machine used by the Company to replace Replaced
     Equipment will be guaranteed on the terms set out in clause 7.1 for the
     unexpired portion of such warranty.

7.7  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 any Machines purchased hereunder are hereby
     excluded.

                                       7

<PAGE>

7.8  During the term of this Agreement and for one (1) year 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
     aggregatewith 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.

7.9  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 7.8 will not be deemed to limit in any way the
     Company's liability under this Agreement.

8    Limitation of liability
----------------------------

8.1  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:

     8.1.1 any breach of its contractual obligations arising under this
           agreement; and

     8.1.2 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
     THIS CLAUSE 8.

8.2  Any act or omission on the part of the Company or its employees agents or
     sub-contractors falling within clause 8.1 above shall for the purposes of
     this clause 8 be known as an `Event of Default'.

8.3  The Company's liability to the Purchaser for:

     8.3.1 death or injury resulting from its own or its employees' agents' or
           subcontractors' negligence; and

     8.3.2 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.

8.4  Subject to the provisions of clause 8.3 above the Company's entire
     liability in respect of each Event of Default shall be limited to damages
     of an amount equal to (pound)500,000.

8.5  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.

8.6  Except in the case of an Event of Default arising under clause 8.3 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.

                                       8

<PAGE>

8.7  Nothing in this clause 8 shall confer any right or remedy upon the
     Purchaser to which it would not otherwise be legally entitled.

9    Documentation
------------------

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

9.2  The Documentation provided by the Company to the Purchaser hereunder is the
     copyright of the Company and contains confidential information of the
     Company.

9.3  The Purchaser shall take all such steps as shall be necessary 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 any Machines at any
     future date.

9.4  The Purchaser undertakes to the Company to make its employees agents and
     sub-contractors aware of the provisions of this clause 9 and to use all
     reasonable endeavours to ensure compliance by its said employees agents and
     sub-contractors with the obligations set out in clause 9.3 above.

10   Expert determination
-------------------------

10.1 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.

10.2 Any person to whom a reference is made under clause 10.1 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.

10.3 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.

10.4 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.

                                       9

<PAGE>

11   Force majeure
------------------

11.1 If either party is affected by Force Majeure it shall promptly notify the
     other party of the nature and extent of the circumstances in question.

11.2 Notwithstanding any other provision of this Agreement, neither party shall
     be deemed to be in breach of this Agreement, or otherwise be liable to the
     other, for any delay in performance or the non-performance of any of its
     obligations under this Agreement, to the extent that the delay or
     non-performance is due to any Force Majeure of which it has notified the
     other party, and the time for performance of that obligation shall be
     extended accordingly.

11.3 If at any time the Company claims Force Majeure in respect of its
     obligations under this Agreement with regard to the supply of the Machines,
     the Purchaser shall be entitled to obtain from any other person such
     quantity of the Machines as the Company is unable to supply.

12   Duration and termination
-----------------------------

12.1 This Agreement shall come into force on the date at the top of page 1 above
     and, subject to the following provisions of this clause, shall continue in
     force for as long as the Patent Licence continues in force.

12.2 Either party shall be entitled forthwith to terminate this Agreement by
     written notice to the other if:

     12.2.1 that other party commits any continuing or material breach of any of
            the provisions of this Agreement and, in the case of such a breach
            which is capable of remedy, fails to remedy the same within 30 days
            after receipt of a written notice giving full particulars of the
            breach and requiring it to be remedied;

     12.2.2 an encumbrancer takes possession or a receiver is appointed over any
            of the property or assets of that other party;

     12.2.3 that other party makes any voluntary arrangement with its creditors
            or becomes subject to an administration order;

     12.2.4 that other party goes into liquidation (except for the purposes of
            an amalgamation, reconstruction or other reorganisation and in such
            manner that the company resulting from the reorganisation
            effectively agrees to be bound by or to assume the obligations
            imposed on that other party under this Agreement); or

     12.2.5 that other party ceases, or threatens to cease, to carry on
            business.

12.3 For the purpose of clause 12.2.1, a breach shall be considered capable of
     remedy if the party in breach can comply with the provision in question in
     all respects other than as to the time of performance (provided that time
     of performance is not of the essence).

12.4 Any waiver by either party of a breach of any provision of this Agreement
     shall not be considered as a waiver of any subsequent breach of the same or
     any other provision.

                                       10

<PAGE>

12.5 The rights to terminate this Agreement given by this clause shall not
     prejudice any other right or remedy of either party in respect of the
     breach concerned (if any) or any other breach.

12.6 Upon the termination of this Agreement for any reason, subject as otherwise
     provided in this Agreement and to any rights or obligations which have
     accrued prior to termination, neither party shall have any further
     obligation to the other under this Agreement.

13   Nature of agreement
------------------------

13.1 Either party shall be entitled to perform any of the obligations undertaken
     by it and to exercise any of the rights granted to it under this Agreement
     through any other company which at the relevant time is its holding company
     or subsidiary (as defined by section 736 of the Companies Act 1985, as
     amended) or the subsidiary of any such holding company, and any act or
     omission of any such company shall for the purposes of this Agreement be
     deemed to be the act or omission of such party to this Agreement.

13.2 Subject to the Purchaser's consent (which shall not be unreasonably
     withheld or delayed) the Company shall be entitled to carry out its
     obligations under this Agreement through any agents or sub-contractors
     appointed by it in its absolute discretion for that purpose.

13.3 Except as provided in clauses 13.1 and 13.2, this Agreement is personal to
     the parties, and neither of them may, without the written consent of the
     other, assign, mortgage, charge (otherwise than by floating charge) or
     dispose of any of its rights hereunder, or sub-contract or otherwise
     delegate any of its obligations under this Agreement.

13.4 Nothing in this Agreement shall create, or be deemed to create, a
     partnership between the parties.

13.5 This Agreement contains the entire agreement between the parties with
     respect to its subject matter, supersedes all previous agreements and
     understandings between the parties, and may not be modified except by an
     instrument in writing signed by the duly authorised representatives of the
     parties.

13.6 Each party acknowledges that, in entering into this Agreement, it does not
     do so on the basis of or rely on any representation, warranty or other
     provision except as expressly provided in this Agreement, and accordingly
     all conditions, warranties or other terms implied by statute or common law
     are hereby excluded to the fullest extent permitted by law provided that
     this shall not exclude any liability which either party would otherwise
     have to the other in respect of statements made fraudulently by that party
     prior to the date of this Agreement.

13.7 If any provision of this Agreement is held by any court or other competent
     authority to be void or unenforceable in whole or part, the other
     provisions of this Agreement and the remainder of the affected provisions
     shall continue to be valid.

13.8 This Agreement shall be governed by and construed in all respects in
     accordance with the laws of England, and the Purchaser agrees to submit to
     the exclusive jurisdiction of the English courts.

                                       11

<PAGE>

13.9 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.

14   Notices
------------

14.1 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:

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

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

     14.1.3 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).

14.2 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.

14.3 For the purposes of this clause 14 "Business Day" means any day other than
     Saturdays, Sundays and public or statutory holidays.

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

                           The Machine (Clause 1.1(h))
                           ---------------------------

The Machine is 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

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

                        The Specification (Clause 1.1(l))
                        ---------------------------------

Cavity arrangement         -        Nested

Cavities per drum          -        850
(10 minim oval)

                                       12

<PAGE>

Vacuum Drum Width          -        600mm

Film Spec                  -        600mm/50mtr

Minimum output             -        79,532 capsules per hour

Drum Rotation Speed        -        0.3cm/sec

Air Pressure               -        100psi

Air Volume                 -        min 0.6 cubic metres/minute

Power                      -        3 phase 60 Amp supply

Footprint                  -        4.4 mtrs by 1.1 mtrs

Height                     -        1.95 mtrs

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

                                Prices (Clause 5)

---------------------------------- ---------------------------------
Number of  Machines  forming  the  Price per machine
subject of the order in question
---------------------------------- ---------------------------------
1-5                                US$500,000
---------------------------------- ---------------------------------
6-10                               US$475,000
---------------------------------- ---------------------------------
11-20                              US$450,000
---------------------------------- ---------------------------------
21 or more                         US$425,000
---------------------------------- ---------------------------------

                                   SCHEDULE 4
                                   ----------
                               Confidential Items
                               ------------------

Filling Wedge
Sealing and cutting plates

SIGNED

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

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

                                       13

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