Product License and Distribution Agreement

     This PRODUCT LICENSE AND DISTRIBUTION  AGREEMENT (the  "Agreement") is made
as of September 25, 1998 (the  "Effective  Date") by and between  Medical Foods,
Inc.,  a  Delaware  corporation,  having  principal  place of  business  at Five
Cambridge Center, Cambridge, MA 02142 ("Licensor"), and Biomune Systems, Inc., a
Nevada  corporation,  having  principal place of business at 2401 South Foothill
Drive,  Salt Lake  City,  Utah  84109("Licensee").  Licensor  and  Licensee  are
sometimes referred to heroin as a "Party" or the "Parties."

     WHEREAS,  Licensor has developed a medical food product,  known as NiteBite
(the Product, as further defined in Article I below) and is the owner of certain
Technology (as further defined in Article I below); relating to and contained in
the Product; and

     WHEREAS, Licensor wishes to have the Product marketed, sold and distributed
in the Territory (as defined in Article I below); and

     WHEREAS,  Licensor wishes to designate Licensee,  and Licensee wishes to be
designated, as Licensor's exclusive distributor of the Product in the Territory,
on the terms and conditions set forth for this Agreement; and

     WHEREAS, Licensor wishes to grant, and Licensee wishes to acquire, licenses
of the Technology for the purpose of manufacturing,  marketing, distributing and
selling the Product;

     NOW THEREFORE, in consideration of the foregoing premises and the covenants
set forth below, the Parties agree as follows:

                         1. DEFINITIONS

     1.1  "Affiliate"  shall  mean  any  corporation  or other  business  entity
directly or indirectly controlled by, controlling, or tinder common control with
Licensee  during the term of this Agreement.  For this purpose,  "control" means
direct or indirect beneficial ownership:

          (a)  of at least fifty percent (50%) of the voting stock; or

          (b) of at least  fifty  percent  (50%)  interest in the income of such
corporation or other business.

     1.2 "Commercial Sales" shall mean sales of Product by Licensee or its agent
to the public or to a third party that makes the Product  available for purchase
by members of the public in amounts within the relevant country which exceed the
Minimum Commercial Sales by Country set forth in Exhibit C.


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     1.3  "Confidential  Information"  shall mean any  information  or materials
received  by one  Party  from  the  other  Party.  In  particular,  Confidential
Information  may  include,  but is not  necessarily  limited  to,  trade  secret
components  of the  Technology,  research  projects,  work  in  process,  future
developments, scientific, engineering,  manufacturing, marketing, business plan,
financial or personnel  matter  relating to either Party,  its present or future
products, sales, supplies, customers,  employees, investors or business, whether
in oral,  written,  graphic or electronic  form,  to the extent  provided by one
Party to the other.  Notwithstanding  the  foregoing,  Confidential  Information
shall not include any information which:
     (a) is now, or hereafter  becomes,  through no act or failure to act on the
part of the receiving Party, generally known or available;

     (b)  is  known  by the  receiving  Party  at the  time  of  receiving  such
information as evidenced by its written records;

     (c) is hereafter  furnished to the receiving  Party by a third party,  as a
matter of right without restriction on disclosure; or

     (d) is the  subject of a written  permission  to  disclose  provided by the
disclosing Party.

     1.4 "Exclusive," with reference to the licenses granted to Licensee,  means
Licensor  will not make,  use,  distribute,  sell or  otherwise  dispose  of the
Product and has not granted and shall not grant further licenses with respect to
the Product or the  Technology  as applied to the Product in the  Territory,  so
long as this Agreement is in effect.

     1.5 "Licensed Trademarks" shall mean those trademarks listed on Exhibit A.

     1.6  "Licensee" is understood to include Biomune Systems, Inc. and any
and all of its Affiliates.

     1.7 "Combination  Product" is defined as a unit of sale containing  Product
along with an item or items other than the Product.

     1.8 "Net Sales" shall mean the gross revenues actually received by Licensee
the sale of Products to  independent  third  parties who are not  Affiliates  of
Licensee, less the following deductions.

          (1) Prompt payment or quantity discounts actually allowed and taken in
such amounts as are customary in the trade;

          (2) Taxes, tariffs and duties levied on shipments or sales of


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the Product or exportation of monies (other than taxes on the net income of
Licensee) actually paid or withheld;

          (3) Credit for returns.

          (4) In the event that the Product is sold in the form of a Combination
Product,  then Net Sales for such  Combination  Products  will be  calculated by
multiplying  the actual Net Sales of such  Combination  Products by the fraction
A/(A+B) where A is the invoice price of the Product if sold separately, and B is
the invoice price of the other product or products in the Combination Product if
sold separately.

     1.9 "Patent  Rights" refers to Licensor's  rights arising from  Provisional
U.S. Patent  Application  08/815,595  including any foreign patent  applications
corresponding thereto, any United States divisions, continuations,  reissues, or
reexaminations  thereof (the "Patent  Applications"),  and any United  States or
foreign  patent(s)  issued or  granted  therefrom  in and any  United  States or
foreign patents or patent applications claiming any elements of the Technology.

     1.10 "Product" shall mean the NiteBite  Timed-release Glucose Bar (TM), any
enhanced or modified  versions thereof that Licensor develops during the Term of
this Agreement,  and all oral delivery formats (e.g., nutrition bars, beverages,
etc.) which provide the benefits of the  timed-release  glucose  formulation  in
NiteBite for the  management  of blood  glucose in people with diabetes that are
developed,  manufactured,  used or  sold by  Licensee  during  the  Term of this
Agreement.

     1.11  Technology  means all  Patent  Rights,  know-how,  technology,  trade
secrets,  processes,  data,  material,  methods  or other  information,  whether
patentable or  unpatentable,  which Licensor owns,  controls or has a license to
(with a right to sublicense) and which is useful in the manufacture,  marketing,
sale, distribution or use of the Product in the Territory.

     1.12  "Term"  shall  have  the  meaning  set  forth in  Section  11 of this
Agreement.

     1.13 "Transition  Period" shall mean the thirty (30) day period  commencing
on the Effective Date.

     1.14  "Territory"  shall mean North America and those  countries  listed in
Exhibit B, "Tier One Countries" shall mean those countries designated as such on
Exhibit B, and "Tier Two  Countries"  shall mean those  countries  designated as
such on Exhibit B.



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                        2. LICENSE GRANT

     2.1 Product and Technology  Licenses.  Licensor  hereby grants and Licensee
hereby  accepts  an  Exclusive  right  and  license  to make,  have  made,  use,
distribute, license, sell, have sold or otherwise dispose of the Product, and to
use the Technology to undertake such  activities  with respect to the Product in
the Territory during the Term of the Agreement.

     2.2  Trademark Licenses

          (a) Licensor hereby grants to Licensee an Exclusive license to use the
Licensed  Trademarks in Part I of Exhibit A, in connection with the manufacture,
offer,  sale and  distribution  of the Product in the  Territory for the Term of
this Agreement.

          (b) Licensor hereby grants to Licensee a non-exclusive  license to use
the  Licensed  Trademarks  in  Part II of  Exhibit  A, in  connection  with  the
manufacture,  offer,  sale and  distribution of the Product in the Territory for
the Term of this Agreement.

          (c) In  order to  assure  the  quality  of goods  marketed  under  the
Licensed  Trademarks,  Licensor  shall have the right to inspect  samples of the
Products  and,  upon  reasonable  notice from  Licensor,  Licensee  shall supply
Licensor with  quantities of Product  sufficient for such  inspection.  Licensee
shall  conduct its business in a manner which will  enhance the  reputation  and
goodwill  attached to the Licensed  Trademarks,  and goodwill shall inure to the
benefit of Licensor as owner of the marks.

          (d) Licensee agrees to use the Licensed Trademarks only to offer, sell
and  distribute  the Product in the Territory for the Term of this Agreement and
not for any other purpose.

     2.3 Marketing Information  Licenses.  Licensor agrees to permit Licensee to
have  non-Exclusive  access and use of the database of information  developed by
Licensor   with   respect  to   historical   communications   with  health  care
professionals, pharmacists, consumers, and others. Licensee shall be responsible
for paying any license fees to third parties is are necessary to allow  Licensee
to use such database.

     2.4 Domain Name.  Licensor hereby grants  Licensee an Exclusive  license to
use the domain name  www.nitebit.com in connection with the manufacture,  offer,
sale and  distribution  of the  Product  in the  Territory  for the Term of this
Agreement, and to maintain and modify the world wide web site designated by such
domain name.



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     2.5 Toll Free Telephone  Number.  Subject to the consent of the provider of
the  telephone  service to) such transfer and to the release by such provider of
all  responsibilities of Licensor,  Licensor will transfer to Licensee Exclusive
rights to the use of the toll free telephone number 800-795-1880.

     2.6 Sublicenses. Licensee shall not have the right to sublicense any of its
rights under this  Section 2 without  Licensor's  prior  written  consent,  Such
consent shall be subject to the negotiation of economic,  terms  satisfactory to
Licensor  and to such  other  conditions  as  n-lay  be  reasonably  imposed  by
Licensor. Nothing in this Agreement shall prohibit Licensee from contracting for
the services of third parties in the performance of Licensee's duties hereunder.

                 3.  LICENSE FEE AND ROYALTIES

     3.1 License  Fee.  Licensee  shall pay to Licensor a license fee of $25,000
upon execution of this Agreement.  This license fee shall be non-refundable  and
shall not be creditable against any future payments due to Licensor.

     3.2  Royalties.

          (a)  Royalty  payment.  In  consideration  of the  license  granted to
Licensee  herein,  Licensee  shall pay to Licensor a royalty equal to 12% of Net
Sales of Product  during the Term,  following the  expiration of the  Transition
Period.

          (b) Minimum Royalty  Payment.  For each calendar year during which the
licenses  are in effect,  beginning  in 1999,  Licensee  shall pay to Licensor a
minimum royalty payment in the amount set forth in Exhibit D with respect to Net
Sales of  Products  in North  America.  The  minimum  royalty  payment  for each
calendar year shall be due and payable on or before  thirty (30) days  following
the end of the  calendar  year  for  which  payment  is due.  Royalties  paid to
Licensor  under  Section 3.2 for Net Sales made during a calendar  year shall be
credited toward the minimum royalty payments due for that calendar year.

     3.3 Currency.  The royalty on sales in currencies  other than U.S.  Dollars
shall be  calculated  using  the  appropriate  foreign  exchange  rate into U.S.
Dollars for such currency as quoted by the Wall Street Journal, New York, U.S.A.
on the close of business on the last banking day of each month. Royalty payments
to Licensor shall be in U.S. Dollars.

           4. REPORTS AND PAYMENTS; ACCOUNTING; TAXES



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     4.1 Monthly Royalty Payment and Report. Licensee shall make written reports
and royalty  payments to Licensor  within thirty (30) days after the end of each
calendar month following the expiration of the Transition  Period and during the
term of this  Agreement.  This report shall state the number,  description,  and
aggregate  Net Sales of  Products  during such  completed  calendar  month,  and
resulting  calculation of earned royalty payment due Licensor for such completed
month.  Concurrent  with the making of each such report,  Licensee shall include
payment due Licensor of royalties for the calendar month covered by such report.

     4.2  Accounting.  Licensee  agrees to keep  records  during the Term of the
Agreement,  and  for  a  period  of  two  (2)  years  thereafter,   showing  the
manufacturing,  sales,  use, and other disposition of Products sold or otherwise
disposed of under the licenses herein granted in sufficient detail to enable the
royalties payable hereunder by Licensee to be determined,  and further agrees to
permit its books and  records to be  examined  from time to time by a  certified
public  accountant of a nationally  recognized  accounting firm, who is selected
and paid for by Licensor.

     4.3 Withholding  Taxes. In the event Licensee is required to withhold taxes
imposed  upon  Licensor  for any  payment by  Licensee  to  Licensor  under this
Agreement, by virtue of the statutes, laws, codes or governmental regulations of
a country  in which  Products  are  sold,  then  such  payments  will be made by
Licensee  on behalf of  Licensor by  deducting  them from the  payment  then due
Licensor and remitting  such taxes to the proper  authorities on a timely basis,
and such tax payments shall count toward the royalty  payments due under Section
3 above.  Licensee  shall  obtain a receipt as  promptly  as  possible  from the
relevant taxing  authorities for all withholding taxes paid and promptly forward
such  receipts to  Licensor to enable  Licensor to claim any and all tax credits
and refunds for which it may be eligible.

                     5.  TRANSITION PERIOD

     5.1  Operations.  During the Transition Period:

          (a)  Licensee  shall  commence  marketing  and  prepare  for sales and
distribution of the Product in North America.

(b) Licensor shall continue to sell the Product and payment for all such sale of
the Product shall be made directly to Licensor.

          (c) Licensor shall use commercially  reasonable efforts to continue to
do business in the ordinary course.

     5.2  Sales and Marketing Support.  During the Transition Period,


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Licensor or shall provide, at its own expense,  transitional sales and marketing
support services.

     5.3  Returns.  With  respect  to any  Product  sold prior to the end of the
Transition  Period that is returned to Licensee by the purchaser of such Product
within the three (3) months  following the expiration of the Transition  Period,
Licensor shall reimburse Licensee for any amounts refunded to such purchaser.

               6. CERTAIN OBLIGATIONS OF LICENSOR

     6.1 Transfer of Technology and Documentation.  Licensor agrees to convey to
Licensee the following items:

          (a) Technology  Documentation.  On the Effective Date,  Licensor shall
transfer  to  Licensee  the   documentation   that  describes  or  embodies  the
Technology.

          (b) Product  Documentation.  On the  Effective  Date,  Licensor  shall
transfer to Licensee copies of all regulatory  filings,  governmental  licenses,
approvals and communications, test results, clinical trial documentation and all
Other written  materials  reasonably  requested  pertaining to the  manufacture,
research and development of the Product prior to the Effective Date.

          (c) Sales and Marketing  Information.  On the Effective Date, Licensor
shall provide Licensee with all information reasonably requested relating to the
marketing, sale and distribution of the Product,  including, but not limited to,
marketing materials and customer lists.

     6.2  Inventory.  On or prior  to the  Effective  Date,  the  Parties  shall
mutually agree on certain  quality and dating  standards to be used to determine
whether  existing  inventory of the Product is marketable or suitable for use as
samples. On the expiration date of the Transition Period, Licensor shall deliver
to Licensee at its warehouse  all existing  Product  inventory  which meets such
agreed-upon  standards  (the  "Inventory").  Licensee  may  request  delivery of
certain  portions of the  Inventory at  particular  times during the  Transition
Period,  and  Licensor  shall,  it such  times,  deliver  such  portions  of the
Inventory as Licensee may reasonably  have requested so long as such amounts are
not  necessary  for   Licensor's   sales  during  the  Transition   Period.   As
consideration  for the Inventory  determined  marketable  under mutually  agreed
quality and dating  standards,  Licensee  shall pay,  within  fifteen  (15) days
following the delivery of inventory a price for the Inventory  equal to the cost
paid by Licensor to the  manufacturer  of the  Inventory  and to  transport  the
Inventory from the manufacturer to Boston plus the cost of delivery to


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Licensee's  warehouse.  As  consideration  for the Inventory not  marketable but
determined  suitable  for  samples  under  mutually  agreed  quality  and dating
standards, Licensee shall pay within fifteen (15) days following the delivery of
inventory a price for the  Inventory  equal to fifty  percent  (50%) of the cost
paid by Licensor to the  manufacturer  of the  Inventory  and to  transport  the
Inventory from the manufacturer to Boston plus one hundred percent (100%) of the
cost of delivery to Licensee's warehouse.

     6.3 Support. During the Term of this Agreement, Licensor shall provide such
scientific  support to Licensee  with  respect to the  Product as  Licensee  may
reasonably  request.  Such scientific support shall include,  but not be limited
to:  providing  interpretation  and results of clinical trials that Licensor has
completed as of the Effective  Date, has in process as of the Effective Date, or
may choose,  at its  discretion,  to conduct in the future,  and  responding  to
reasonable  requests for information which may pertain to the  classification of
the Product as a "medical food" as defined by 21 U.S.C.  360ee(b)(3);  and shall
otherwise  assist  Licensee in providing  information  to the U.S. Food and Drug
Administration or any other governmental  agency,  provided,  however,  that all
such  assistance  shall  not  exceed  8 hours  per  month  and 250  hours in the
aggregate.
     6.4 Assignment of Supply Agreement. Licensor hereby assigns to Licensee the
Supply Agreement between Nellson Nutraceutical and Medical Foods, Inc. dated May
28,  1997 (a copy of  which  is  attached  hereto  as  Exhibit  E) (the  "Supply
Agreement")  and all  rights,  and  obligations  thereunder,  pursuant  To which
Nellson Nutraceutical has manufactured the Product for the Licensor and Licensee
hereby  assumes all of such  obligations  with respect to activities  during the
Term of this Agreement.

               7. CERTAIN OBLIGATIONS OF LICENSEE

     7.1  Minimum Royalties, Commercial Sales.

          (a) If Licensee fails to pay the minimum  royalty payment due pursuant
to Section 3.2(b) for any calendar year, such failure shall be a material breach
of this Agreement.

          (b)  Following  December 31, 2000,  those Tier One  Countries in which
Licensee has not achieved Commercial Sales shall thereafter be excluded from the
Territory.

          (c)  Following  December 31, 2001,  those Tier Two  Countries in which
Licensee has not achieved Commercial Sales shall thereafter be excluded from the
Territory.

     7.2  Covenant not to Sell Competitive Product. Licensee hereby


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covenants not to manufacture,  market, sell or distribute directly or indirectly
through one or more third parties,  any timed release  glucose  products,  other
than the Product, in the Territory during the Term of this Agreement.

     7.3 Acknowledgment of Licensor.  Licensee agrees to acknowledge Licensor as
developer  of the  Product  and owner of the  Trademarks  on its  packaging  and
promotional materials in accordance with the specifications in Exhibit F.

               8. REPRESENTATIONS AND WARRANTIES

     8.1 Representations and Warranties of Licensor.  Licensor hereby represents
and warrants as follows:

          (a) Corporate  Power.  Licensor is duly organized and validly existing
under the laws of Delaware and has full  corporate  power and authority to enter
into this Agreement and to carry Out the provisions hereof.

          (b) Due  Authorization.  Licensor  is duly  authorized  to execute and
deliver this Agreement and to perform its obligations hereunder.

          (c) Binding Agreement.  This Agreement is a legal and valid obligation
binding upon Licensor and is enforceable in accordance with its terms.  Licensor
has the right to grant  Licensee the licenses  granted  herein.  The  execution,
delivery and  performance  of this Agreement by Licensor and the granting of the
licenses  granted  herein do not  conflict  with any  agreement,  instrument  or
understanding,  oral or  written,  to  which it is a party or by which it may be
bound,  nor violate any law or  regulation  of any court,  governmental  body or
administrative  or other  agency  having  authority  over it,  Licensor  has not
granted  any  rights in the  Technology,  the  Patent  Rights  and the  Licensed
Trademarks, or any other right in the Product to any third party.

          (d)  Licensed  Trademarks.  Licensor  is the  owner  of  the  Licensed
Trademarks.  Licensee  is and  shall  be  free to use  the  Licensed  Trademarks
pursuant to this  Agreement in all  commercially  reasonable  ways in connection
with the Product  without  restriction.  To  Licensor's  knowledge,  there is no
unauthorized use,  infringement,  or misappropriation of the Licensed Trademarks
by any third  party,  including  any  employee or former  employee of  Licensor.
Licensor  has no  knowledge  or  belief  that  Licensee's  use  of the  Licensed
Trademarks  pursuant to this  Agreement  will infringe the rights of others.  No
person or entity has asserted or  threatened  to assert any material  claim with
respect to the Licensed Trademarks.

          (e)  Patent Rights.  Licensor has no knowledge that has caused it


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to believe that the practice of the Patent rights will be blocked by or infringe
the patent rights of others.  Licensor has no knowledge of any information which
it  believes  is  likely  to  have  a  material   effect  on  the   validity  or
enforceability  of any Patent Right or claim  thereof which was not disclosed in
the Patent  Applications at the time such  applications were filed or during the
pendency of such applications.

          (f) Right to License.  Licensor  represents and warrants that Licensor
has obtained written release and/or assignments from each person who contributed
to the Product or the Technology to the extent necessary to vest in Licensor all
right, title and interest in such contributions  (including the right to license
such contributions free and clear of any liens or encumbrances).

          (g) Licensor  Licenses from Third  Parties.  Licensor  represents  and
warrants that Exhibit G, attached hereto,  is a complete list of all persons and
entities from whom Licensor has licensed any of the Technology,  Trademarks,  or
other  rights  relating  to the  rights  licensed  hereunder  and  copies of all
agreements and related documentation.  Licensee acknowledges that this Agreement
may be  terminated  or  assigned  to Beth  Israel  Deaconess  Medical  Center in
accordance with section 3.2 of the agreement attached hereto as Exhibit G should
that agreement be terminated.

          (h) Supply Agreement.  Licensor represents and warrants that it is not
in material breach of the Supply  Agreement,  that Licensor has fulfilled all of
its obligation  (including without limitation,  payment  obligation)  thereunder
throughout  the Effective  Date,  and that it has the right to assign the Supply
Agreement to Licensee, as set forth in Section 6.4 hereof.

     8.2 Representations and Warranties of Licensee.  Licensee hereby represents
and warrants as follows:

          (a) Corporate  Power.  Licensee is duly organized and validly existing
under the laws of Nevada and has full  corporate  power and  authority  to enter
into this Agreement, and to carry out the provisions hereof.

          (b) Due  Authorization.  Licensee  is duly  authorized  to execute and
deliver this Agreement and to perform its obligations hereunder.

          (c) Binding Agreement.  This Agreement is a legal and valid obligation
binding upon  Licensee and is  enforceable  in  accordance  with its terms.  The
execution,  delivery and  performance  of this  Agreement  by Licensee  does not
conflict with any agreement,  instrument or understanding,  oral or written,  to
which  it is a Party  or by  which  it may be  bound,  nor  violate,  any law or
regulation of any court, governmental body or administrative or other


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agency having authority over it.

                9. INTELLECTUAL PROPERTY RIGHTS

     9.1  Ownership  of  Intellectual  Property.  Subject  to the  terms of this
agreement, Licensor shall retain all of its rights, title and interest in and to
the Technology,  including but not limited to all copyrights, patents, including
but not limited to the Patent Rights,  trademarks,  including but not limited to
the  Licensed  Trademarks,   and  trade  names  and  all  other  industrial  and
intellectual property embodied in or related to the Product. Notwithstanding the
foregoing,  Licensee  shall  retain all rights,  title,  and interest to (a) all
brand  names,  marks,  trade dress,  marketing  programs,  advertising  copy and
related  materials it creates or has created for it in connection with the sale,
marketing,  and distribution of the Products, and (b) all research,  development
and technical improvements (including  copyrightable materials) Licensee creates
or has created for it at Licensee's  own expense that pertain to the  Technology
and the Products.

     9.2 Prosecution of Patent Applications.  Licensor shall have the sole right
to file and prosecute  patent  applications and maintain patents relating to the
Technology  and any  improvements  thereto made by the Licensor.  Licensee shall
reimburse  Licensor for all costs incurred in connection  with the  preparation,
filing,  prosecution  and  maintenance  of any patent  applications  and patents
referred to in the preceding  sentence that are within the  Territory.  Licensee
shall  cooperate with Licensor in regard to such  maintenance  and  prosecution.
Licensor  shall  provide  Licensee  with  copies  of all  filings  and  relevant
documentation  and an opportunity to comment thereon prior to their  submission.
Should Licensor determine not to file, to abandon prosecution of, or to cease to
maintain,  any  patent or patent  application  in any  jurisdiction  within  the
Territory,  Licensor shall so notify Licensee and shall permit Licensee,  should
Licensee choose to do so at Licensee's  expense,  to file, continue to prosecute
or maintain such patent in such jurisdiction,  and Licensor shall cooperate with
Licensee in regard thereto.

     9.3 Defense of Intellectual Property Suits. If a third party asserts that a
patent,  trademark  or  other  proprietary  right  owned by it is  infringed  or
otherwise  violated  by the  manufacture,  offer,  distribution  or  sale of the
Product in the Territory, the Party against whom such a claim was asserted shall
immediately  provide the other Party notice of such claim and the related  facts
in  reasonable  detail.  Licensee  shall  have  the  first  right,  but  not the
obligation,  to control such  defense.  If Licensee  shall fail to take any such
action against any such third party,  Licensor shall have the right, but not the
obligation,  upon  notice  to  Licensee,  to take any  steps  Licensor  may deem
appropriate  with  respect  to such  third  party  at  Licensor's  own  expense,
including asserting control of any such defense. If Licensee assumes the


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defense,  Licensor shall to the extent which is reasonable in the  circumstances
cooperate with Licensee and shall have the right to be represented separately by
counsel of its own choice. If Licensor will assume control of the defense,  then
Licensor shall have the right, but not the obligation, to so control the defense
by counsel of its own  choice.  In such event,  Licensee  shall  cooperate  with
Licensor to the extent which is reasonable in the  circumstances  and shall have
the right to be represented  separately by counsel of its own choice. The entity
(whether  Licensor or Licensee)  that controls the defense of a given claim with
respect to the  manufacture,  offer,  sale or distribution of the Product in the
Territory  shall  also have the  right to  control  settlement  of such a claim;
provided,  however, that no settlement shall be entered into without the consent
of the other Party if such  settlement  would  materially  adversely  affect the
interests  of such  other  Party in the  Product  in the  Territory  in a manner
different from the interests of the Party  controlling the defense.  If Licensee
controls the defense,  it shall not enter into any settlement that may adversely
affect the Product  outside the Territory  without the prior written  consent of
Licensor.  If  Licensee  assumes  the  control  of the  defense  and  settlement
negotiation of any claim,  pursuant to this Section 9.3, Licensee shall bear the
cost of such defense and settlement negotiation.

     9.4  Enforcement  of  Intellectual  Property  Rights.  In the  case  of any
infringement  of any Patent  Rights or any  violation of any other  intellectual
property right  contained in the Technology by any third party (an  "Infringer")
in the  Territory  during the term of this  Agreement.  Licensee  shall have the
right, but not the obligation,  at Licensee's expense, to cause such third party
to cease such  infringement and to otherwise  enforce such Patent Rights or such
other  intellectual  property  right.  Any amount  recovered  as a result of any
action  taken  by  Licensee  hereunder  shall be first  applied  to  reimbursing
Licensee for its out-of-pocket expenses incurred in connection therewith and the
remainder,  if any, shall be divided appropriately between Licensee and Licensor
with  reference  to the  relative  monetary  injury  suffered by each of them by
reason of the infringement  for which said amounts are recovered.  If, following
reasonable  notice  from the  Licensor,  Licensee  shall fail to take any action
against any Infringer  which Licensor may reasonably deem necessary or desirable
to prevent such infringement or violation,  or to recover damages  therefor,  in
addition to any other remedy available to it, Licensor shall have the right, but
not the obligation, upon notice to Licensee, to take any steps Licensor may deem
appropriate  against such  Infringer at Licensor's  own expense.  Licensee shall
assist Licensor,  at Licensee's expense,  as reasonably  requested in taking any
such action against any such Infringer.  Any amount recovered as a result of any
such action  taken by Licensor  shall be retained by  Licensor.  This  paragraph
shall survive the termination or expiration of this Agreement.

     9.5  Additional Proprietary Rights. Licensee may, in its sole


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discretion and at its expense,  use, develop,  apply for,  prosecute,  record or
maintain any additional  proprietary rights relating to the Product,  including,
without  limitation,  patents,  trademarks,  servicemarks,  copyrights and trade
secrets,  as it may desire,  and rights therein shall be retained by Licensee as
set forth in Section 9.1. Licensor shall provide  reasonable  cooperation in any
such effort, including, without limitation, execution of necessary documents and
provision of testimony in the form of affidavits.

                      10. CONFIDENTIALITY

     10.1 Confidentiality  Obligations.  During the term of this Agreement,  and
for a period  of three (3) years  after  termination  hereof,  each  Party  will
maintain all Confidential Information in trust and confidence, will not disclose
any  Confidential  Information  to  any  third  party  or use  any  Confidential
Information  for  any  unauthorized  purpose  and  will  otherwise  protect  the
Confidential  Information  of the other  Party with at least the same  degree of
care as it uses for its own materials of a like nature.  Each Party may use such
Confidential  Information only to the extent required to accomplish the purposes
of this Agreement. Confidential Information shall not be used for any purpose or
in any manner  that would  constitute  a violation  of any laws or  regulations,
including  without  limitation  the export  control  laws of the United  States.
Confidential  Information shall not be reproduced in any form except as required
to accomplish the intent of this Agreement. No Confidential Information sha1l be
disclosed to any employee,  agent, consultant,  sublicensee or supplier who does
not  have a  need  for  such  information.  To the  extent  that  disclosure  is
authorized by this Agreement,  the disclosing  Party will obtain prior agreement
from its  employees,  agents,  consultants,  sublicenses  or  suppliers  to whom
disclosure  is to be  made  to  hold in  confidence  and  not  make  use of such
information for any purpose other than those  permitted by this Agreement.  Each
Party  promptly  notify  the other upon  discovery  of any  unauthorized  use or
disclosure of the Confidential Information.

     10.2 Terms of this Agreement. The Parties agree that the material financial
terms of this  Agreement  will be considered  Confidential  Information  of both
Parties.  However,  each Party  shall have the right to  disclose  the  material
financial terms of this Agreement to any potential acquirer,  merger partner, or
other  bona  fide  potential  financial  or  strategic  partner,  subject  to  a
requirement of all reasonable efforts to secure  confidential  treatment of such
information.

     10.3  Authorized  Disclosure.  Notwithstanding  any other provision of this
Agreement, each Party may disclose Confidential Information if such disclosure:



<PAGE>




          (a) is in response  to a valid order of a court or other  governmental
body of the  United  States  or any  political  subdivision  thereof,  provided,
however  that the  responding  Party shall first have given  notice to the other
Party  hereto and shall  have made a  reasonable  effort to obtain a  protective
order requiring that the Confidential  Information so disclosed be used only for
the purposes for which the order was issued;

          (b) is otherwise  necessary to file or prosecute patent  applications,
prosecute  or  defend   litigation  or  comply  with   applicable   governmental
regulations  or otherwise  establish  rights or enforce  obligations  under this
Agreement,  but  only to the  extent  that  any such  disclosure  is  necessary,
provided that the  disclosing  Party rakes all available  steps to designate the
information as confidential and to prevent further  disclosure by the recipient;
or

          (c) is otherwise  required by law,  provided that the disclosing Party
takes all available steps to designate the  information as  confidential  and to
prevent further disclosure by the recipient.

     10.4      Return of Confidential Information.

          (a) Upon the receipt of a written  request from the disclosing  Party,
the receiving Party shall promptly  return to the disclosing  Party that Party's
Confidential  Information,  unless retention is otherwise  expressly  authorized
hereunder or is reasonably necessary to the receiving Party's performance of any
continuing duties or obligations, or its exercise of any continuing rights under
this Agreement or any other agreement with the disclosing Party.

          (b) As soon as practicable after the termination of this Agreement for
any  reason,  the  receiving  Party  shall  return to the  disclosing  Party all
Confidential  Information and all copies thereof in the  possession,  custody or
control of the  receiving  Party or shall  destroy or render  unusable  a11 such
Confidential  Information and all copies thereof and shall certify in writing to
the disclosing Party all such Confidential Information has been delivered to the
disclosing Party or destroyed;  provided,  however, that this Section 10.4 shall
not  apply to any  Confidential  Information  retention  of  which is  otherwise
expressly authorized hereunder or which is reasonably necessary to the receiving
Party's  performance of any continuing duties or obligation,  or its exercise of
any  continuing  rights  under this  Agreement or any other  agreement  with the
disclosing Party, or which is required to be maintained to be in compliance with
applicable U.S. governmental regulations and other regulations applicable to the
Territory.

     10.5 Remedies.  Any breach of Section 10.1 or Section 10.2 hereof shall


<PAGE>




cause immediate and irreparable  injury to the other Party, and monetary damages
shall be inadequate to  compensate  for such breach.  Thus, in the event of such
breach, the injured Party shall be entitled to injunctive relief and any and all
other remedies available at law or in equity.

     10.6  Survival.  The  provisions  of this  Section  10  shall  survive  any
termination of this Agreement or the suspension or termination of either Party's
duties hereunder.


                    11. TERM AND TERMINATION

     11.1 Term. This Agreement shall become effective on the Effective Date and,
unless  earlier  terminated  pursuant to this Section 11, shall remain in effect
until the tenth  anniversary of the Effective Date  ("Term").  Licensee,  in its
sole discretion,  may extend the Term for an additional five (5) years by giving
written notice to Licensor not fewer than 180 days before this  Agreement  would
otherwise expire.

     11.2  Termination by Either Party.  Notwithstanding  anything herein to the
contrary,  each Party shall have the right, in addition and without prejudice to
any other rights or remedies, to terminate this Agreement if,

          (a) the other Party  commits any  material  breach of the terms hereof
which,  in the case of a breach capable of remedy,  shall not have been remedied
within  sixty  (60)  days of the  receipt  by the  Party in  default  of  notice
specifying the breach; or

          (b) the other shall dissolve, liquidate, or cease to carry on business
operations.

     11.3  Early  Termination  by  Licensee.  Licensee  shall  have the right to
terminate  this  Agreement at any time upon ninety (90) days  written  notice to
Licensor and payment of all amounts due Licensor  through the effective  date of
termination.

     11.4 Effect of Termination.  Upon the effective date of expiration or early
termination of this Agreement, the following shall occur:

          (a) Termination of Licenses. The licenses set forth in Section 2 shall
terminate and Licensee shall immediately discontinue all manufacture, marketing,
sales  and  distribution  of  the  Product  in  the  Territory.  Licensee  shall
discontinue   all  use  of  the   Licensed   Trademarks   and  the   Technology.
Notwithstanding  the foregoing,  Licensee shall have the right, for a period not
to exceed ninety (90) days to sell any Products remaining in inventory and to


<PAGE>




fill any orders  outstanding on the date of termination.  Sales of Products made
during such 90 day period shall be subject to royalties  pursuant to Section 12.
Except to the extent of selling its  remaining  inventory  as  permitted by this
Section 11.4(a),  after expiration or termination,  Licensee shall not represent
or  hold  itself  out  as   authorized   manufacturer,   distributor   or  sales
representative for the Product in the Territory or engage in any practices which
might  make  it  appear  that  Licensee  is  such  an  authorized  manufacturer,
distributor or sales representative.

          (b) Accrued Rights Upon Termination.  The rights of either Party which
may have accrued up to the date of such termination shall not be affected.

          (c)  Minimum  Royalty   Payments.   Licensee  shall  have  no  further
obligations to make any minimum royalty  payments under Section 3.2 other than a
pro rata portion of the minimum  royalty  payments due for the year during which
the effective date of termination occurs based on the portion of such year which
occurred prior to such effective date.

     11.5 No Other  Rights  Upon  Termination.  Neither  Party  hereto  shall be
responsible to the other for compensation,  damages, or otherwise as a result of
termination of this Agreement in accordance  with its terms.  Obligations  which
arose prior to such termination shall survive such termination.

     11.6 Survival.  The provisions of Sections 4.1, 4.2, 4.3, 7.2, 8, 9.1, 9.2,
9.4, 10, 11.4,  11.5, 11.6 and 12 shall survive any expiration or termination of
this Agreement.

                  12. MISCELLANEOUS PROVISIONS

     12.1 Governing  Law. This  Agreement  shall be governed by and construed in
accordance  with the  substantive  laws of the  Commonwealth  of  Massachusetts,
without regard to its principles of conflicts of laws.

     12.2 Force  Majeure.  The  failure of any party  hereunder  to perform  any
obligation  otherwise  due as a result of  governmental  action,  law,  order or
regulation,  or as a result of war, act of public  enemy,  strike or other labor
disturbance,  fire,  flood,  act of God or other  causes of like kind beyond the
reasonable  control of such  party,  shall be excused  for so long as said cause
exists to the extent such failure is caused by such an event.

     12.3 Notice.  All notices and  requests  required or  authorized  hereunder
shall be made in  writing  and  shall  be  deemed  to have  been  duly  given if
delivered  personally,  delivered by  facsimile  with  confirmation  of receipt,
delivered by commercial overnight courier, or three (3) days after mailing, if


<PAGE>




delivered by United States  certified  mail,  postage  prepaid,  return  receipt
requested, to a Party at its address set forth below or at such address as shall
be specified by such party to the other in accordance with this Section 12.3.



If to Licensor:


Medical Foods, Inc.
Five Cambridge Center
8th Floor
Cambridge, MA 02142
Attention: Alan T. Barber
Telephone: (617)588-1600
Facsimile:     (617)542-2241

with a copy to:

     Mintz, Levin, Colin, Ferris, Glovsky and Popeo, PC
     One Financial Center
     41st Floor
     Boston, MA 02111
     Attention: Douglas A, Zingale, Esq.
     Telephone: (617) 542-6000
     Facsimile: (617) 542-2241

If to Licensee:

Biomune Systems, Inc.
2401 South Foothill Drive
Salt Lake City, Utah 84109
Attention: Randy Olshen
Telephone: (8OI) 466-3441
Facsimile:     (801) 466-3741

With a copy to:

Durham, Evans, Jones & Pinegar
Key Bank Tower
50 South Main Street
Suite 850
Salt Lake City, Utah 84144
Attention:     Kevin R. Pinegar


<PAGE>




Telephone:     (8O1) 538-2424
Facsimile:     (8O1) 538-2425

     12.4  Severability.  If any term or provision of this Agreement is found to
be invalid  under any  applicable  statute or rule of law then,  that  provision
notwithstanding,  this Agreement  shall remain in full force and effect and such
provision  shall be amended to  reflect as fully as  possible  the intent of the
Parties and, at the same time, to be valid, unless such amendment cannot be made
without  materially  defeating  the intent of the parties in entering  into this
Agreement,  in which case this Agreement shall terminate,  with the consequences
set forth in Section 11.

     12.5 Limitation of Liability. EXCEPT FOR BREACHES OF SECTIONS 7.2, 8 AND 10
HEREOF,  UNDER NO CIRCUMSTANCE SHALL EITHER PARTY BE LIABLE TO THE OTHER FOR ANY
CONSEQUENTIAL,  SPECIAL OR INCIDENTAL  DAMAGES ARISING OUT OF OR RELATED TO THIS
AGREEMENT  (INCLUDING LOSS OF PROFITS AND LOSS OF BUSINESS) EVEN IF AWARE OF THE
POSSIBILITY OF SUCH DAMAGES. LICENSEE'S DAMAGES SHALL BE LIMITED TO THE AMOUNTS,
IF ANY, OWED PURSUANT TO SECTION 3.
     12.6  Assignment.  Neither party shall assign any of its rights or delegate
any of its duties under this Agreement  without the prior written consent of the
other,  except that either Party may assign this Agreement  without such consent
to any  Affiliate  or successor  by merger or sale of  substantially  all of its
business  unit to which this  Agreement  relates.  Any  attempted  assignment or
delegation in contravention of this Article shall be void and of no effect.

     12.7  Amendment;  Waiver.  This  Agreement  may not be  modified,  amended,
rescinded,  canceled or waived in whole or part, except by a written  instrument
signed by the parties.  No waiver of any  provision of this  Agreement or of any
rights or obligations of any party hereunder shall be effective unless made in a
written instrument executed by the party or parties waiving compliance. Any such
waiver  shall be effective  only in the  specific  instance and for the specific
purpose stated in such writing.

     12.8 Counterparts.  This Agreement may be executed in counterparts with the
same  force  and  effect as if each of the  signatories  had  executed  the same
instrument.

     12.9  Independent  Contractors.  Each  Party  shall  act as an  independent
contractor  under the terms of this  Agreement.  Neither  Party is, nor shall it
represent itself to be, nor shall it be deemed to be, an employee, agent, co-


<PAGE>




venturer,  franchisee  or legal  representative  of the other  for any  purpose.
Neither party shall attempt to act, or represent  itself as having the power, to
bind the other or create any obligation on behalf of the other.

     12.10 Rights and Remedies Cumulative.  Except as expressly provided herein,
the rights and remedies  provided in this Agreement  shall be cumulative and not
exclusive of any other rights and remedies provided by law or otherwise.

     12.11  Captions.   The  captions  herein  have  been  inserted  solely  for
convenience of reference and in no way define or limit the scope or substance of
any provision of this Agreement.

     12.12 Meaning of Certain  Terms.  As used in this  Agreement,  "herein" and
"hereof" shall refer to this Agreement as a whole,  and  "including"  shall mean
"including  but not limited to." All dollar  amounts stated herein are expressed
in United States dollars.

     12.13 Complete Agreement. This Agreement and the Exhibits hereto constitute
and  express the final,  complete  and  exclusive  agreement  and  understanding
between the parties  with  respect to their  subject  matter and  supersede  all
previous communications, representations or agreements, whether written or oral,
with  respect to the subject  matter  hereof,  including  but not limited to the
non-binding, letter of intent between the parties dated September 2, 1998.


[Signatures on the following page]


<PAGE>




     IN WITNESS  WHEREOF,  the Parties  have each caused this  Agreement  to beI
signed and  delivered by their duly  authorized  representatives  as of the date
first written above.

                          Date: 9/27/98                 Date: 28 September 1998

                          MEDICAL FOODS, INC.           BIOMUNE SYSTEMS, INC.

                          By: /s/ Peter J. Vitulli      By: /s/ Michael G. Acton
                          ------------------------      ------------------------
                          Peter J. Vitulli              Michael G. Acton
                          President and CEO             President and CEO



[Exhibits Omitted]


<PAGE>





                       LIST OF EXHIBITS

Exhibit A:     Licensed Trademarks
Exhibit B:     Territory
]Exhibit C:    Minimum Commercial Sales by Country
Exhibit D:     Minimum Royalty Payments
Exhibit F:     Supply Agreement
Exhibit F:     Acknowledgment of Licensor as Developer
Exhibit G:     Third Party Licenses