<PAGE>

                                                                    EXHIBIT 10.1

      Confidential Treatment Requested.  *** indicates material has been omitted
      pursuant to a Confidential Treatment Request filed with the Securities and
      Exchange Commission. A complete copy of this agreement has been filed
      separately with the Securities and Exchange Commission.

                          EXCLUSIVE LICENSE AGREEMENT

  Re: Baylor OTA # 04-107 Entitled "Serum Proteomic Methods and Biomarkers for
      Diagnosis of Neurodegenerative Disease and Differential Diagnosis of
      Alzheimer's, Parkinson's Lou Gehrig's (ALS) Diseases, and other Motor
      Neuron and Neurological Disorders"

      This Exclusive License Agreement (hereinafter called "Agreement"), to be
effective as of the 28th day of June, 2004 (hereinafter called "Agreement
Date"), is by and between Baylor College of Medicine (hereinafter called
"BAYLOR"), a Texas nonprofit corporation having its principal place of business
at One Baylor Plaza, Houston, Texas 77030, and Power3 Medical Products, Inc., a
corporation organized under the laws of New York and having a principal place of
business at 3400 Research Forest Drive, Suite B2-3, The Woodlands, Texas 77381,
and its Affiliates (hereinafter, collectively referred to as "LICENSEE").

      WITNESSETH:

      WHEREAS, BAYLOR and LICENSEE each own an undivided interest in and to the
Patent Rights as defined below; and

      WHEREAS, BAYLOR is willing to grant a royalty bearing, worldwide,
exclusive license to the Patent Rights to LICENSEE on the terms set forth
herein; and

      WHEREAS, LICENSEE desires to obtain said exclusive license under the
Patent Rights.

      NOW, THEREFORE, for and in consideration of the premises and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parties hereto expressly agree as follows:

1.    DEFINITIONS AS USED HEREIN

      1.1 The term "Affiliates" shall mean any corporation, partnership, joint
venture or other entity of which the common stock or other equity ownership
thereof is twenty five percent (25%) or more owned by LICENSEE.

      1.2 The term "Confidential Information" shall mean all information
relating to the business of a Party that is not available to the general public,
including but not limited to its technical and business information, products,
assets, inventions, know-how, research programs, biological materials, software,
trade secrets, designs, personnel, financial condition, business plans or
prospects, protocols, clinical parameters or markers and other information
associated with this Agreement, whether or not patentable or copyrightable,
delivered or communicated to the other Party.

      Confidential Information includes not only written information, but
information transferred orally, visually, electronically or by any other means,
that is designated as being confidential. Confidential Information also includes
any copies, notes or summaries prepared from the Confidential Information
provided by either Party.

      1.3 The term "Field" shall mean all fields.

                                      -1-
<PAGE>

                                                                    EXHIBIT 10.1

      1.4 The term "Inventors" shall mean Stanley Appel, Ericka Simpson and
Albert Yen, employees of BAYLOR, and Ira Goldknopf and Essam Sheta, employees of
LICENSEE.

      1.5 The term "Legal Costs" shall mean all legal fees and expenses, filing
or maintenance fees, assessments and all other costs and expenses related to
prosecuting, obtaining and maintaining patent protection on the Patent Rights in
the United States and foreign countries.

      1.6 The term "Licensed Product(s)" shall mean any product, process or
service that incorporates, utilizes or is made with the use of the Patent
Rights.

      1.7 The term "Net Sales" shall mean the gross amount of monies or cash
equivalent or other consideration which is paid by unrelated third parties to
LICENSEE or sublicensees for the Licensed Products by sale or other mode of
transfer, less all trade, quantity and cash discounts actually allowed, credits,
and allowances actually granted on account of rejections, returns or billing
errors, duties, transportation and insurance, taxes and other governmental
charges actually paid. The term "Net Sales" in the case of non-cash sales, shall
mean the fair market value of all equivalent or other consideration received by
LICENSEE for the Licensed Products.

      1.8 The term "Party" shall mean either LICENSEE or BAYLOR, and "Parties"
shall mean LICENSEE and BAYLOR.

      1.9 The term "Patent Rights" shall mean United States Patent Application
Serial No. TBA, entitled "Biomarkers for Neurodegenerative Disease," filed TBA,
which was developed by the Inventors, the inventions described and claimed
therein, and all other pending United States patent applications or parts
thereof and any United States patent which issues from any such pending
applications and any and all divisions, reissues, re-examinations, renewals,
continuations, continuations-in-part to the extent the claims are directed to
subject matter specifically described in the aforementioned patent application
and are dominated by the claims of the existing Patent Rights, and extensions
thereof, and all other counterpart, pending or issued patents in all other
countries.

      1.10 The term "Sublicensing Revenue" shall mean all (i) cash, (ii)
sublicensing fees and (iii) all other payments and the cash equivalent thereof,
which are paid to LICENSEE by the sublicensees of its rights hereunder, other
than research and development money paid to LICENSEE to conduct research.

2.    GRANT OF LICENSE

      2.1 Subject to the reservations of rights set forth in Paragraph 2.2,
BAYLOR hereby grants to LICENSEE an exclusive, worldwide, sublicensable license
under the Patent Rights to make, have made, use, market, sell, offer to sell,
lease and import Licensed Products in the Field.

      2.2 The grant in Section 2.1 shall be further subject to, restricted by
and non-exclusive with respect to:

(i) the making or use of the Patent Rights by BAYLOR for non-commercial
research, patient care, teaching and other educationally related purposes;

(ii) the making or use of the Patent Rights by the BAYLOR Inventors for
non-commercial research purposes at academic or research institutions;

(iii) any non-exclusive license of the Patent Rights that BAYLOR grants to other
academic or research institutions for non-commercial research purposes; and

                                      -2-
<PAGE>

                                                                    EXHIBIT 10.1

(iv) any non exclusive license of the Patent Rights that BAYLOR is required by
law or regulation to grant to the United States of America or to a foreign state
pursuant to an existing or future treaty with the United States of America.

      2.3 Government Reservation. Rights under this Agreement are subject to
rights required to be granted to the Government of the United States of America
pursuant to 35 USC Section 200-212, including a nonexclusive, nontransferable,
irrevocable, paid-up license to practice or have practiced for or on behalf of
the United States the subject inventions throughout the world.

3.    MARKETING EFFORTS

      LICENSEE shall use reasonable efforts, as defined herein, to effect
assiduously the introduction of Licensed Products into the commercial market as
soon as practicable. Such efforts shall include, but not be limited to: (i)
diligence in the patent filings and prosecution as described in Section 8 and
(ii) working with Dr. Stan Appel to increase the clinical data and relevance of
the diagnostic processes.

4.    PAYMENTS

      4.1 As partial consideration for the rights conveyed by BAYLOR under this
Agreement, LICENSEE shall pay BAYLOR a license fee of *** upon execution of this
Agreement.

      4.2 In addition to the foregoing, LICENSEE shall pay BAYLOR a royalty of
***. Such royalties shall be payable as provided in Section 5.

      4.3 After the first commercial sale, if the royalties paid in any calendar
year do not reach the minimum amount of ***, LICENSEE shall pay an additional
amount with the payment due for the period ending December 31 of such year, so
that the total amount paid for such year shall reach such minimum amount.

      4.4 LICENSEE shall also pay BAYLOR the following milestone payment set
forth below:

(i) ***

LICENSEE shall notify BAYLOR in writing within thirty (30) days upon the
achievement of the milestone, such notice to be accompanied by payment of the
appropriate milestone payment. Milestones are to be paid regardless of whether
LICENSEE or LICENSEE's sublicensee attains such milestone.

      4.5 In addition to the foregoing fees and royalties, LICENSEE agrees to
pay to BAYLOR ***.

      4.6 LICENSEE will be responsible for all Legal Costs incurred after the
Agreement Date.

      4.7 Should LICENSEE fail to make any payment whatsoever due and payable to
BAYLOR hereunder, BAYLOR may, at its sole option, terminate this Agreement as
provided in Section 10.

                                      -3-
<PAGE>

                                                                    EXHIBIT 10.1

5.    REPORTING

      5.1 No later than sixty (60) days after December 31 of each calendar year,
LICENSEE shall provide to BAYLOR a written annual Progress Report describing
progress on research and development, regulatory approvals, manufacturing,
sublicensing, marketing and sales during the most recent twelve (12) month
period ending December 31 and plans for the forthcoming year. If multiple
technologies are covered by the license granted hereunder, the Progress Report
shall provide the information set forth above for each technology. LICENSEE
shall also provide any reasonable additional data BAYLOR requires to evaluate
LICENSEE's performance.

      5.2 LICENSEE shall report to BAYLOR the date of first sale of Licensed
Products in each country within thirty (30) days of occurrence.

      5.3 LICENSEE shall submit to BAYLOR within thirty (30) days after March
31, June 30, September 30 and December 31, a Royalty Report setting forth for
such calendar quarter at least the following information:

(i) the number of Licensed Products sold by LICENSEE and sublicensees in each
country;

(ii) total billings for such Licensed Products;

(iii) deductions applicable to determine the Net Sales thereof;

(iv) the amount of Sublicensing Revenue received by LICENSEE;

(v) the amount of royalty due thereon, or, if no royalties are due to BAYLOR for
any reporting period, the statement that no royalties are due; and

(vi) the amount of other payments due BAYLOR, including but not limited to,
milestone payments and minimum royalty payments.

      Such report shall be certified as correct by an officer of LICENSEE and
shall include a detailed listing of all deductions from royalties and other
payments. After termination or expiration of this Agreement, a final payment
shall be made by LICENSEE covering the whole or partial calendar quarter.

      5.4 LICENSEE shall pay to BAYLOR with each such Royalty Report the amount
of royalties and other payments due with respect to such calendar quarter. If
multiple technologies are covered by the license granted hereunder, LICENSEE
shall specify which Patent Rights are utilized for each Licensed Product
included in the Royalty Report by citing the applicable OTA NUMBER listed on the
front page of the Agreement.

      5.5 All payments due hereunder shall be deemed received when funds are
credited to BAYLOR's bank account and shall be payable by check or wire transfer
in United States dollars. For sales of Licensed Products in currencies other
than the United States, LICENSEE shall use exchange rates published in The Wall
Street Journal on the last business day of the calendar quarter that such
payment is due. No transfer, exchange, collection or other charges, INCLUDING
ANY WIRE TRANSFER FEES, shall be deducted from such payments.

      5.6 Late payments shall be subject to a charge of one and one-half percent
(1.5%) per month, the interest being compounded annually, or two hundred fifty
dollars ($250.00), whichever is greater. LICENSEE shall calculate the correct
late payment charge, and shall add it to each such late payment.

                                      -4-
<PAGE>

                                                                    EXHIBIT 10.1

Said late payment charge and the payment and acceptance thereof shall not negate
or waive the right of BAYLOR to seek any other remedy, legal or equitable, to
which it may be entitled because of the delinquency of any payment.

      5.7 If payments are sent by check, they shall be sent to the address
listed in Paragraph 14.1. If payments are sent by wire transfer, they shall be
sent using the wiring instructions sent by BAYLOR.

      5.8 In the event of acquisition, merger, change of corporate name, or
change of make-up, organization, or identity, LICENSEE shall notify BAYLOR in
writing within thirty (30) days of such event.

      5.9 If LICENSEE or sublicensee (or optionee) does not qualify as a "small
entity" as provided by the United States Patent and Trademark Office, LICENSEE
must notify BAYLOR immediately.

6.    RECORDS AND INSPECTION

      LICENSEE shall maintain or cause to be maintained a true and correct set
of records pertaining to the Net Sales of Licensed Products by LICENSEE under
this Agreement. During the term of this Agreement and for a period of two (2)
years thereafter, LICENSEE agrees to permit an accountant selected and paid by
BAYLOR and reasonably acceptable to LICENSEE to have access during ordinary
business hours to such records as are maintained by LICENSEE as may be
necessary, in the opinion of such accountant, to determine the correctness of
any report and/or payment made under this Agreement. In the event that the audit
reveals an underpayment of royalty by more than five percent (5%), the cost of
the audit shall be paid by LICENSEE. If the underpayment is less than five
percent (5%) but more than two percent (2%), LICENSEE and BAYLOR shall each pay
fifty percent (50%) of the cost of the independent audit. Such accountant shall
maintain in confidence, and shall not disclose to BAYLOR, any information
concerning LICENSEE or its operations or properties other than information
directly relating to the correctness of such reports and payments. BAYLOR will
be entitled to no more than one examination per year without LICENSEE's written
consent.

7.    SUBLICENSES

      All sublicensee granted by LICENSEE of its rights hereunder shall be
subject to the terms of this Agreement. LICENSEE shall be responsible for its
sublicensees and shall not grant any rights which are inconsistent with the
rights granted to and obligations of LICENSEE hereunder. Any act or omission of
a sublicensee which would be a breach of this Agreement if performed by LICENSEE
shall be deemed to be a breach by LICENSEE of this Agreement. Each sublicense
agreement granted by LICENSEE shall include an audit right by BAYLOR of the same
scope as provided in Section 6 hereof with respect to LICENSEE. No such
sublicense agreement shall contain any provision which would cause it to extend
beyond the term of this Agreement. LICENSEE shall give BAYLOR prompt
notification of the identity and address of each sublicensee with whom it
concludes a sublicense agreement and shall supply BAYLOR with a copy of each
such sublicense agreement.

8.    PATENTS AND INFRINGEMENT

      8.1 From the Agreement Date and for the term of this Agreement, LICENSEE
shall have primary responsibility using patent counsel of its choice reasonably
acceptable to BAYLOR for filing, prosecuting and maintaining all patent
applications and patents included in the Patent Rights licensed hereunder,
except that BAYLOR may assume responsibility at its sole expense for pursuing
any protection which LICENSEE declines to prosecute pursuant to Paragraph 8.2 of
this Agreement.

                                      -5-
<PAGE>

                                                                    EXHIBIT 10.1

      8.2 During the term of this Agreement, if LICENSEE decides not to file any
or all United States and foreign applications or to continue prosecution of a
patent application to issuance or maintain any United States or foreign patent
application or patent, LICENSEE shall timely notify BAYLOR in writing in order
that BAYLOR may file the United States and foreign applications and continue the
prosecution or maintenance of such patent applications at its own expense. If
LICENSEE fails to notify BAYLOR in sufficient time for BAYLOR to assume the
cost, LICENSEE shall be considered in default of this Agreement.

      8.3 During the term of this Agreement, LICENSEE agrees to prosecute with
good faith and due diligence all such patent applications and to take all
actions reasonably necessary to maintain and enforce the patents and proprietary
rights in and to the Patent Rights.

      8.4 During the term of this Agreement LICENSEE shall instruct counsel for
LICENSEE to keep BAYLOR reasonably informed, at LICENSEE's expense, of
prosecutions pursuant to this Section 8 including submitting to BAYLOR copies of
all official actions and responses thereto.

      8.5 BAYLOR agrees to cooperate with LICENSEE to whatever extent is
necessary to procure patent protection of any rights, including fully agreeing
to execute any and all documents to give LICENSEE the full benefit of the
licenses granted herein.

      8.6 During the term of this Agreement, each Party shall promptly inform
the other of any suspected infringement of any claims in the Patent Rights or
the misuse, misappropriation, theft or breach of confidence of other proprietary
rights in the Patent Rights by a third party, and with respect to such
activities as are suspected. Any action or proceeding against such third party
shall be instituted as following:

(i) BAYLOR and LICENSEE may agree to jointly institute an action for
infringement, misuse, misappropriation, theft or breach of confidence of the
proprietary rights against such third party. Such joint action shall be brought
in the names of both BAYLOR and LICENSEE. If BAYLOR or LICENSEE decide to
jointly prosecute an action or proceeding after it has been instituted by one
Party, the action shall be continued in the name or names they both agree is
expedient for efficient prosecution of such action. LICENSEE and BAYLOR shall
agree to the manner in which they shall exercise control over any joint action
or proceeding, providing however that if they cannot agree BAYLOR shall have the
right to unilaterally decide on control. In such joint action or proceeding, the
out-of-pocket costs shall be borne equally, and any recovery or settlement shall
be shared equally.

(ii) If LICENSEE does not agree to participate in a joint action or proceeding
then BAYLOR shall have the right, but not the obligation, to institute an action
for infringement, misuse, misappropriation, theft or breach of confidence of the
proprietary rights against such third party. If BAYLOR elects to institute
action, it does so at its own cost. If BAYLOR fails to bring such an action or
proceeding within a period of three (3) months after receiving notice or
otherwise having knowledge of such infringement, then LICENSEE shall have the
right, but not the obligation, to prosecute the same at its own expense. Should
either BAYLOR or LICENSEE commence suit under the provisions of this Paragraph
8.6 and thereafter elect to abandon the same, it shall give timely notice to the
other Party who may, if it so desires, continue prosecution of such action or
proceeding. All recoveries, whether by judgment, award, decree or settlement,
from infringement or misuse of Patent Rights shall be apportioned as follows:
(a) the Party bringing the action or proceeding shall first recover an amount
equal the costs and expenses incurred by such Party directly related to the
prosecution of such action or proceeding, (b) the Party cooperating in such
action or proceeding shall then recover costs and expenses incurred by such
Party directly related to its cooperation in the prosecution of such action or
proceeding and (c) the remainder shall be divided equally between LICENSEE and
BAYLOR.

                                      -6-
<PAGE>

                                                                    EXHIBIT 10.1

      8.7 Neither BAYLOR nor LICENSEE shall settle any action covered by
Paragraph 8.6 without first obtaining the consent of the other Party, which
consent will not be unreasonably withheld.

      8.8 BAYLOR shall not be liable for any losses incurred as the result of an
action for infringement brought against LICENSEE as the result of LICENSEE's
exercise of any right granted under this Agreement. The decision to defend or
not defend shall be in LICENSEE's sole discretion.

9.    TERM AND EXPIRATION

      Unless sooner terminated as otherwise provided in Section 10, the license
to employ Patent Rights granted herein as part of Section 2 shall expire on a
country-by-country basis, on the later of (i) the date of expiration of the last
of the Patent Rights to expire or (ii) in the event no patents included within
the Patent Rights issue in such country, the first date following the tenth
(10th) anniversary of the first commercial sale of Licensed Products by LICENSEE
in such country. After such expiration, LICENSEE shall have a perpetual,
paid-in-full (i.e., royalty free) license in such country.

10.   TERMINATION

      10.1 In the event of default or failure by LICENSEE to perform any of the
terms, covenants or provisions of this Agreement, LICENSEE shall have thirty
(30) days after the giving of written notice of such default by BAYLOR to
correct such default. If such default is not corrected within the said thirty
(30) day period, BAYLOR shall have the right, at its option, to cancel and
terminate this Agreement. The failure of BAYLOR to exercise such right of
termination, for non-payment of royalties/fees or otherwise, shall not be deemed
to be a waiver of any right BAYLOR might have, nor shall such failure preclude
BAYLOR from exercising or enforcing said right upon any subsequent failure by
LICENSEE.

      10.2 BAYLOR shall have the right, at its option, to cancel and terminate
this Agreement in the event that LICENSEE shall (i) become involved in
insolvency, dissolution, bankruptcy or receivership proceedings affecting the
operation of its business or (ii) make an assignment of all or substantially all
of its assets for the benefit of creditors, or in the event that (iii) a
receiver or trustee is appointed for LICENSEE and LICENSEE shall, after the
expiration of thirty (30) days following any of the events enumerated above,
have been unable to secure a dismissal, stay or other suspension of such
proceedings.

      10.3 LICENSEE shall have the right in its sole discretion to terminate
this Agreement upon sixty (60) days' written notice to BAYLOR.

      10.4 In the event of termination of this Agreement, all rights in the
Patent Rights conveyed by BAYLOR to LICENSEE shall automatically revert to
BAYLOR, and BAYLOR shall be free to license such rights to third parties.

      10.5 LICENSEE shall provide, in all sublicenses granted by it under this
Agreement, that LICENSEE's interest in such sublicenses shall, at BAYLOR's
option, terminate or be assigned to BAYLOR upon termination of this Agreement.

      10.6 In the event this Agreement is terminated pursuant to this Section
10, or expires as provided for in Section 9, BAYLOR is under no obligation to
refund any payments made by LICENSEE to BAYLOR, as set forth in Section 4, prior
to the effective date of such termination or expiration.

                                      -7-
<PAGE>

                                                                    EXHIBIT 10.1

      10.7 No termination of this Agreement shall constitute a termination or a
waiver of any rights of either Party against the other Party accruing at or
prior to the time of such termination. The obligations of Sections 6, 7, 13, 15
and 16 shall survive termination of this Agreement.

11.   ASSIGNABILITY

      LICENSEE may assign this Agreement as part of:

(i) A sale or other transfer of LICENSEE's entire business; or

(ii) A sale or other transfer of that part of LICENSEE's business to which the
license granted hereby relates;

and upon payment by LICENSEE to BAYLOR of an assignment fee of ***. LICENSEE
shall give BAYLOR thirty (30) days prior written notice of such assignment,
including the new contact information of assignee. BAYLOR, however, shall not be
deemed to have approved such assignment and transfer unless and until such
assignee has agreed in writing to BAYLOR to be bound by all the terms and
provisions of this Agreement and BAYLOR has received the assignment fee as
specified above, in which event LICENSEE shall be released of liability
hereunder. Upon such assignment of this Agreement by such assignee, the term "
LICENSEE" as used herein shall include such assignee.

12.   GOVERNMENTAL COMPLIANCE

      12.1 LICENSEE shall at all times during the term of this Agreement and for
so long as it shall use the Patent Rights, or sell Licensed Products, comply and
cause its sublicensees to comply with all laws that may control the import,
export, manufacture, use, sale, marketing, distribution and other commercial
exploitation of the Patent Rights, Licensed Products or any other activity
undertaken pursuant to this Agreement.

      12.2 LICENSEE agrees that Licensed Products leased or sold in the United
States shall be manufactured substantially in the United States.

13.   ARBITRATION

      13.1 Amicable Resolution. The Parties shall attempt to settle any
controversy between them amicably. To this end, a senior executive from each
Party shall consult and negotiate to reach a solution. The Parties agree that
the period of amicable resolution shall toll any otherwise applicable statute of
limitations. However, nothing in this clause shall preclude any Party from
commencing mediation if said negotiations do not result in a signed written
settlement agreement within thirty (30) days after written notice that these
amicable resolution negotiations have commenced.

      13.2 Mediation. If a controversy arises out of or relates to this
agreement, or the breach thereof, and if the controversy cannot be settled
through amicable resolution, the Parties agree to try in good faith to settle
the controversy by mediation before resorting to final and binding arbitration.
The Party seeking mediation shall propose five mediators, each of whom shall be
a lawyer licensed to practice by the state of Texas, having practiced actively
in the field of commercial law for at least fifteen (15) years, to the other
Party who shall select the mediator from the list. The Parties shall split the
cost of the mediator equally. The Parties agree that the period of mediation
shall toll any otherwise applicable statute of limitations. However, nothing in
this clause shall preclude any Party from commencing arbitration if said
negotiations do not result in a signed written settlement agreement within sixty
(60) days after written notice that amicable resolution negotiations have
commenced.

                                      -8-
<PAGE>

                                                                    EXHIBIT 10.1

      13.3 Arbitration. Any dispute, controversy, or claim arising out of or
relating to this Agreement, or the breach, termination or invalidity thereof,
including claims for tortious interference or other tortious or statutory claims
arising before, during or after termination, providing only that such claim
touches upon matters covered by this Agreement shall be finally settled by
arbitration administered by the American Arbitration Association pursuant to the
Commercial Arbitration Rules in force at the time of the commencement of the
arbitration, except as modified by the specific provisions of this Agreement. It
is the specific intent of the Parties that this arbitration provision is
intended to be the broadest form allowed by law.

      13.4 Parties to Arbitration. This agreement to arbitrate is intended to be
binding upon the signatories hereto, their principals, successors, assigns,
subsidiaries and affiliates. This agreement to arbitrate is also intended to
include any disputes, controversy or claims against any Party's employees,
agents, representatives, or outside legal counsel arising out of or relating to
matters covered by this Agreement or any agreement in which this Agreement is
incorporated.

      13.5 Consolidation Permitted. The Parties expressly agree that any court
with jurisdiction may order the consolidation of any arbitrable controversy
under this Agreement with any related arbitrable controversy not arising under
this Agreement, as the court may deem necessary in the interests of justice or
efficiency or on such other grounds as the court may deem appropriate.

      13.6 Entry of Judgment. The Parties agree that a final judgment on the
arbitration award may be entered by any court having jurisdiction thereof.

      13.7 Appointing Arbitrators. The American Arbitration Association shall
appoint the arbitrator(s) from its Large, Complex Claims Panel. If such
appointment cannot be made from the Large, Complex Claims Panel, then from its
Commercial Panel. The Parties hereby agree to and acquiesce in any appointment
of an arbitrator or arbitrators that may be made by such appointing authority.

      13.8 Qualifications of the Arbitrator(s). The arbitrator(s) must be a
lawyer, having practiced actively in the field of commercial law for at least
fifteen (15) years.

      13.9 Governing Substantive Law. The arbitrator(s) shall determine the
rights and obligations of the Parties according to the substantive laws of the
State of Texas (excluding conflicts of law principles) as though acting as a
court of the State of Texas.

      13.10 Governing Arbitration Law. The law applicable to the validity of the
arbitration clause, the conduct of the arbitration, including any resort to a
court for provisional remedies, the enforcement of any award and any other
question of arbitration law or procedure shall be the Federal Arbitration Act.

      13.11 Governing Convention. The Parties elect to have the New York
Convention on the Recognition and Enforcement of Foreign Arbitral Awards of June
10, 1958 (instead of the Inter-American New York Convention on International
Commercial Arbitration of August 15, 1990) govern any and all disputes that may
be the subject of arbitration pursuant to this Agreement.

      13.12 Preliminary Issues of Law. The arbitrator(s) shall hear and
determine any preliminary issue of law asserted by a Party to be dispositive of
any claim, in whole or part, in the manner of a court hearing a motion to
dismiss for failure to state a claim or for summary judgment, pursuant to such
terms and procedures as the arbitrator(s) deems appropriate.

      13.13 Confidentiality. The Parties and the arbitrator(s) shall treat all
aspects of the arbitration proceedings, including without limitation discovery,
testimony and other evidence, briefs and the award,

                                      -9-
<PAGE>

                                                                    EXHIBIT 10.1

as strictly confidential. Further, except as may be required by law, neither
Party nor the arbitrator(s) may disclose the existence, content, or results of
any arbitration hereunder without the prior written consent of both Parties.

      13.14 Place of Arbitration. The seat of arbitration shall be Houston,
Texas, USA.

      13.15 Language. The arbitration shall be conducted in the English
language. All submissions shall be made in English or with an English
translation. Witnesses may provide testimony in a language other than English,
provided that a simultaneous English translation is provided. Each Party shall
bear its own translation costs.

      13.16 Punitive Damages Prohibited. The Parties hereby waive any claim to
any damages in the nature of punitive, exemplary, or statutory damages in excess
of compensatory damages, or any form of damages in excess of compensatory
damages, and the arbitrator(s) is/are specially divested of any power to award
any damages in the nature of punitive, exemplary, or statutory damages in excess
of compensatory damages, or any form of damages in excess of compensatory
damages.

      13.17 Costs. The Party prevailing on substantially all of its claims shall
be entitled to recover its costs, including attorneys' fees, for the arbitration
proceedings, as well as for any ancillary proceeding, including a proceeding to
compel or enjoin arbitration, to request interim measures or to confirm or set
aside an award.

      13.18 Survival. The provisions of this Section 13 shall survive expiration
or termination of this Agreement.

14.   ADDRESSES

      14.1 All payments shall be made payable to "Baylor College of Medicine"
and shall be sent to the address below, and shall reference OTA # 04-107.

      BAYLOR Tax ID #: 74-1613878
      Director, Baylor Licensing Group
      Baylor College of Medicine
      One Baylor Plaza, BCM210-600D
      Houston, TX 77030

      14.2 All notices, reports or other communication pursuant to this
Agreement shall be sent to such Party via (i) United States Postal Service
postage prepaid, (ii) overnight courier, or (iii) facsimile transmission,
addressed to it at its address set forth below or as it shall designate by
written notice given to the other Party. Notice shall be sufficiently made, or
given and received (a) on the date of mailing or (b) when a facsimile printer
reflects transmission.

                                      -10-
<PAGE>

                                                                    EXHIBIT 10.1

      In the case of BAYLOR:
      Patrick Turley
      Associate General Counsel
      Baylor College of Medicine
      One Baylor Plaza, BCM210-600D
      Houston, TX 77030

      Facsimile No. 713-798-1252

      In the case of LICENSEE:
      Power3 Medical Products, Inc.
      3400 Research Forest Drive, Suite B2-3
      The Woodlands, TX 77381

      Facsimile No. 281-395-0881

      14.3 Each such report, notice or other communication shall reference OTA #
04-107.

15.   INDEMNITY, INSURANCE & WARRANTIES

      15.1 INDEMNITY. EACH PARTY SHALL NOTIFY THE OTHER OF ANY CLAIM, LAWSUIT OR
OTHER PROCEEDING RELATED TO THE PATENT RIGHTS. LICENSEE AGREES THAT IT WILL
DEFEND, INDEMNIFY AND HOLD HARMLESS BAYLOR, ITS FACULTY MEMBERS, SCIENTISTS,
RESEARCHERS, EMPLOYEES, OFFICERS, TRUSTEES AND AGENTS AND EACH OF THEM (THE
"INDEMNIFIED PARTIES"), FROM AND AGAINST ANY AND ALL CLAIMS, CAUSES OF ACTION,
LAWSUITS OR OTHER PROCEEDINGS (THE "BAYLOR CLAIMS") FILED OR OTHERWISE
INSTITUTED AGAINST ANY OF THE INDEMNIFIED PARTIES RELATED DIRECTLY OR INDIRECTLY
TO OR ARISING OUT OF THE DESIGN, PROCESS, MANUFACTURE OR USE BY ANY PERSON OR
PARTY OF THE PATENT RIGHTS, LICENSED PRODUCTS OR ANY OTHER EMBODIMENT OF THE
PATENT RIGHTS EVEN THOUGH SUCH BAYLOR CLAIMS AND THE COSTS (INCLUDING, BUT NOT
LIMITED TO, THE PAYMENT OF ALL REASONABLE ATTORNEYS' FEES AND COSTS OF
LITIGATION OR OTHER DEFENSE) RELATED THERETO RESULT IN WHOLE OR IN PART FROM THE
NEGLIGENCE OF ANY OF THE INDEMNIFIED PARTIES OR ARE BASED UPON DOCTRINES OF
STRICT LIABILITY OR PRODUCT LIABILITY; PROVIDED, HOWEVER, THAT SUCH INDEMNITY
SHALL NOT APPLY TO ANY BAYLOR CLAIMS ARISING FROM THE GROSS NEGLIGENCE OR
INTENTIONAL MISCONDUCT OF ANY INDEMNIFIED PARTY. LICENSEE WILL ALSO ASSUME
RESPONSIBILITY FOR ALL COSTS AND EXPENSES RELATED TO SUCH BAYLOR CLAIMS FOR
WHICH IT IS OBLIGATED TO INDEMNIFY THE INDEMNIFIED PARTIES PURSUANT TO THIS
PARAGRAPH 15.1, INCLUDING, BUT NOT LIMITED TO, THE PAYMENT OF ALL REASONABLE
ATTORNEYS' FEES AND COSTS OF LITIGATION OR OTHER DEFENSE.

                                      -11-
<PAGE>

                                                                    EXHIBIT 10.1

      15.2 Insurance.

(i) LICENSEE shall, for so long as LICENSEE manufactures, uses or sells any
Licensed Product(s) for research applications, maintain in full force and effect
policies of (a) worker's compensation insurance within statutory limits, (b)
employers' liability insurance with limits of not less than one million dollars
($1,000,000) per occurrence and (c) general liability insurance with limits of
not less than two million dollars ($2,000,000) per occurrence with an annual
aggregate of two million dollars ($2,000,000).

(ii) During any period in which LICENSEE manufactures, uses or sells any
Licensed Product(s) for clinical applications, LICENSEE shall immediately notify
BAYLOR in writing, and LICENSEE shall maintain in full force and effect policies
of (i) worker's compensation insurance within statutory limits, (b) employers'
liability insurance with limits of not less than one million dollars
($1,000,000) per occurrence, (c) general liability insurance (with Broad Form
General Liability endorsement) with limits of not less than five million dollars
($5,000,000) per occurrence with an annual aggregate of ten million dollars
($10,000,000) and (d) products liability insurance, with limits of not less than
ten million dollars ($10,000,000) per occurrence with an annual aggregate of
twenty million dollars ($20,000000).

(iii) During any period in which LICENSEE manufactures or uses any Licensed
Product(s) in clinical trials, LICENSEE shall immediately notify BAYLOR in
writing, and LICENSEE shall maintain in full force and effect a clinical trial
insurance policy with limits of not less than five million dollars ($5,000,000)
per occurrence with an annual aggregate of ten million dollars ($10,000,000).

(iv) Such coverage(s) shall be purchased from a carrier or carriers having an A.
M. Best rating of at least A- (A minus) and shall name BAYLOR as an additional
insured. LICENSEE shall provide to BAYLOR copies of certificates of insurance
within thirty (30) days after execution of this Agreement. Upon request by
BAYLOR, LICENSEE shall provide to BAYLOR copies of said policies of insurance.
It is the intention of the Parties hereto that LICENSEE shall, throughout the
term of this Agreement, continuously and without interruption, maintain in force
the required insurance coverages set forth in this Paragraph 15.2. Failure of
LICENSEE to comply with this requirement shall constitute a default of LICENSEE
allowing BAYLOR, at its option, to immediately terminate this Agreement.

(v) BAYLOR reserves the right to request additional policies of insurance where
appropriate and reasonable in light of LICENSEE's business operations and
availability of coverage.

      15.3 DISCLAIMER OF WARRANTY. BAYLOR AND LICENSEE MAKE NO WARRANTIES OR
REPRESENTATIONS, EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, WARRANTIES
OF FITNESS OR MERCHANTABILITY, REGARDING OR WITH RESPECT TO THE PATENT RIGHTS OR
LICENSED PRODUCTS AND BAYLOR AND LICENSEE MAKE NO WARRANTIES OR REPRESENTATIONS,
EXPRESS OR IMPLIED, OF THE PATENTABILITY OF THE PATENT RIGHTS OR LICENSED
PRODUCTS OR OF THE ENFORCEABILITY OF ANY PATENTS ISSUING THEREUPON, IF ANY, OR
THAT THE PATENT RIGHTS OR LICENSED PRODUCTS ARE OR SHALL BE FREE FROM
INFRINGEMENT OF ANY PATENT OR OTHER RIGHTS OF THIRD PARTIES. NOTHING IN THIS
AGREEMENT SHALL BE CONSTRUED AS CONFERRING BY IMPLICATION, ESTOPPEL OR OTHERWISE
ANY LICENSE OR RIGHTS UNDER ANY PATENTS OF BAYLOR OTHER THAN THE PATENT RIGHTS,
REGARDLESS OF WHETHER SUCH PATENTS ARE DOMINANT OR SUBORDINATE TO THE PATENT
RIGHTS.

                                      -12-
<PAGE>

                                                                    EXHIBIT 10.1

16.   ADDITIONAL PROVISIONS

      16.1 Use of BAYLOR Name. LICENSEE agrees that it shall not use in any way
the name of "Baylor College of Medicine" or any logotypes or symbols associated
with BAYLOR or the names of any of the scientists or other researchers at BAYLOR
without the prior written consent of BAYLOR.

      16.2 Confidentiality.

      (i) Because BAYLOR and LICENSEE will be cooperating with each other, and
because each may reveal to the other certain Confidential Information, BAYLOR
and LICENSEE agree to hold any Confidential Information that is obtained in
connection with this Agreement as confidential.

      (ii) A Party receiving Confidential Information shall use its best efforts
to ensure that all Confidential Information of the disclosing Party is kept
confidential. Thus, for example, neither Party will disclose Confidential
Information to any third party without the express written consent of the
disclosing Party and no receiving Party will use such Confidential Information
except pursuant to this Agreement. A receiving Party also agrees to notify the
disclosing Party immediately upon discovery of any unauthorized use or
disclosure of Confidential Information and, in every reasonable way, to
cooperate and to assist the disclosing Party to regain possession of the
Confidential Information and to prevent its further unauthorized use.

      (iii) Each Party's confidentiality obligations and the limitations upon
the right to use the Confidential Information shall not apply to the extent that
the receiving Party can demonstrate that the same: (a) was already known by the
receiving Party prior to the disclosure by the disclosing Party; (b) becomes
patented, published or otherwise part of the public domain through no fault or
omission of the receiving Party; (c) is disclosed to the receiving Party by a
third party that has the right to make such disclosure; (d) is independently
developed by the receiving Party without any use of the Confidential Information
and otherwise in a manner not inconsistent with this Agreement; (e) is
authorized to be disclosed by the disclosing Party in writing; or (f) is
required to be disclosed by applicable law, rule or regulation, by order of
governmental or judicial authority; provided that the receiving Party shall use
reasonable efforts to obtain confidential treatment of such information and
notifies the disclosing Party prior to making such disclosure.

      16.3 BAYLOR's Disclaimers. Neither BAYLOR, nor any of its faculty members,
scientists, researchers, employees, officers, trustees or agents assume any
responsibility for the manufacture, product specifications, sale or use of the
Patent Rights or Licensed Products which are manufactured by or sold by
LICENSEE.

      16.4 Independent Contractors. The Parties hereby acknowledge and agree
that each is an independent contractor and that neither Party shall be
considered to be the agent, representative, master or servant of the other Party
for any purpose whatsoever, and that neither Party has any authority to enter
into a contract, to assume any obligation or to give warranties or
representations on behalf of the other Party. Nothing in this relationship shall
be construed to create a relationship of joint venture, partnership, fiduciary
or other similar relationship between the Parties.

      16.5 Non-Waiver. The Parties covenant and agree that if a Party fails or
neglects for any reason to take advantage of any of the terms provided for the
termination of this Agreement or if a Party, having the right to declare this
Agreement terminated, shall fail to do so, any such failure or neglect by such
Party shall not be a waiver or be deemed or be construed to be a waiver of any
cause for the termination of this Agreement subsequently arising, or as a waiver
of any of the terms, covenants or

                                      -13-
<PAGE>

                                                                    EXHIBIT 10.1

conditions of this Agreement or of the performance thereof. None of the terms,
covenants and conditions of this Agreement may be waived by a Party except by
its written consent.

      16.6 Reformation. The Parties hereby agree that neither Party intends to
violate any public policy, statutory or common law, rule, regulation, treaty or
decision of any government agency or executive body thereof of any country or
community or association of countries, and that if any word, sentence, paragraph
or clause or combination thereof of this Agreement is found, by a court or
executive body with judicial powers having jurisdiction over this Agreement or
any of the Parties hereto, in a final, unappealable order to be in violation of
any such provision in any country or community or association of countries, such
words, sentences, paragraphs or clauses or combination shall be inoperative in
such country or community or association of countries, and the remainder of this
Agreement shall remain binding upon the Parties hereto.

      16.7 Force Majeure. No liability hereunder shall result to a Party by
reason of delay in performance caused by force majeure, that is circumstances
beyond the reasonable control of the Party, including, without limitation, acts
of God, fire, flood, war, terrorism, civil unrest, labor unrest, or shortage of
or inability to obtain material or equipment.

      16.8 Entire Agreement. The terms and conditions herein constitute the
entire agreement between the Parties and shall supersede all previous
agreements, either oral or written, between the Parties hereto with respect to
the subject matter hereof. No agreement of understanding bearing on this
Agreement shall be binding upon either Party hereto unless it shall be in
writing and signed by the duly authorized officer or representative of each of
the Parties and shall expressly refer to this Agreement.

      IN WITNESS WHEREOF, the Parties hereto have executed and delivered this
Agreement in multiple originals by their duly authorized officers and
representatives on the respective dates shown below, but effective as of the
Agreement Date.

POWER3 MEDICAL PRODUCTS, INC.            BAYLOR COLLEGE OF MEDICINE

Name:   /s/ Steven B. Rash               Name:   /s/ W. Dalton Tomlin
        ------------------------------           -----------------------------
                                                 W. Dalton Tomlin

Title:  Chairman/CEO                     Title:  Senior Vice President &
                                                 General Counsel

Date:   6-28-04                          Date:   6/21/04

6/11/04 LICENSEE     OTA # 04-107

                                      -14-