License Agreement

Stanelco PLC
23 October 2003

STANELCO PLC

Stanelco signs binding Heads of Terms with IsraCaps Ltd for the licensing of
Stanelco's established patented Radio Frequency capsule making technology in the
State of Israel

Stanelco, the RF (radio frequency) applications group, is pleased to announce
that it has signed binding Heads of Terms with IsraCaps Ltd, an Israeli
registered company to exploit Stanelco's RF capsule making technology in Israel.

The new technology replaces gelatine with starch-based materials, which show
substantial cost savings over current gelatine capsule technology.

The licence, to be granted under these binding Heads of Terms allows for the
manufacture of Prescription and OTC Pharmaceuticals capsules, together with
Health & Nutritional, Cosmetics and Detergent sachets along with other
applications in the Israeli market.

An immediate payment of £100,000 was received on the signing of the Heads of
Terms. A sum of £350,000 is payable upon delivery of the first RF capsule
machine together with subsequent payments of £250,000 per annum on the next
three anniversaries of the commissioning of the first machine. Royalties will be
payable at a rate of 6% of net invoiced sales.

Contacts:
Barrie Hozier
Stanelco Plc
Tel [phone]

Jonathon Bill / Caroline Study
Bell-Pottinger  Financial
Tel [phone]


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