<PAGE>   1

                                                                    EXHIBIT 10.1


"[ * ]" = omitted, confidential material, which material has been separately
filed with the Securities and Exchange Commission pursuant to a request for
confidential treatment.

                              PUBLIC HEALTH SERVICE

                       PATENT LICENSE AGREEMENT--EXCLUSIVE

                                   COVER PAGE

For PHS internal use only:


        Patent License Number: 268-L-99/0


        Serial Number(s) of Licensed Patent(s) and/or Patent Application(s):

        PCT/US99/ 17282 (F- 131-98/1): 60/094.690 (E- 131-98/0)

        Licensee:

        RegeneRx Biopharmaceuticals Inc..

        Cooperative Research and Development Agreement (CRADA) Number (if
        applicable):

        MTA Crada C-l 14-1997/0

        Additional Remarks:

        Company did not exercise their option under the MTA-CRADA

        License was granted under procedures for Exclusive Licenses not

        pursuant to a CRADA. with full Notice and Comment Period


        Public Benefit(s):

        Under certain conditions as set forth in Para2raph 10.03. in the event

        PHS sponsors clinical trials on behalf of Licensee, Licensee has

        agreed to supply clinical grade thymosin a4 to the PHS sponsored

        clinical trial at cost


This Patent License Agreement, hereinafter referred to as the "Agreement",
consists of this Cover Page, an attached Agreement, a Signature Page, Appendix A
(List of Patent(s) and/or Patent Application(s)), Appendix B (Fields of Use and
Territory), Appendix C (Royalties), Appendix D (Modifications), Appendix E
(Benchmarks), and Appendix F (Commercial Development Plan).



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The Parties to this Agreement are:

1)      The National Institutes of Health ("NIH"), the Centers for Disease
        Control and Prevention ("CDC"), or the Food and Drug Administration
        ("FDA"), hereinafter singly or collectively referred to as "PHS",
        agencies of the United States Public Health Service within the
        Department of Health and Human Services ("DHHS"); and

2)      RegeneRx Biopharmaceuticals Inc., a corporation of Delaware, having
        offices at 3 Bethesda Metro Center, Suite 700, Bethesda, MD 20814, and
        having done business as Alpha 1 Biomedicals, Inc. a corporation of
        Delaware having offices at 3 Bethesda Metro Center, Suite 700, Bethesda,
        MD 20814 until December 14, 2000, hereinafter referred to as "Licensee".












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                     PHS PATENT LICENSE AGREEMENT--EXCLUSIVE


PHS and Licensee agree as follows:

1.      BACKGROUND

        1.01    In the course of conducting biomedical and behavioral research,
                PHS investigators made inventions that may have commercial
                applicability.

        1.02    By assignment of rights from PHS employees and other inventors,
                DHHS, on behalf of the United States Government, owns
                intellectual property rights claimed in any United States and/or
                foreign patent applications or patents corresponding to the
                assigned inventions. DHHS also owns any tangible embodiments of
                these inventions actually reduced to practice by PHS.

        1.03    The Secretary of DHHS has delegated to PHS the authority to
                enter into this Agreement for the licensing of rights to these
                inventions.

        1.04    PHS desires to transfer these inventions to the private sector
                through commercialization licenses to facilitate the commercial
                development of products and processes for public use and
                benefit.

        1.05    Licensee desires to acquire commercialization rights to certain
                of these inventions in order to develop processes, methods,
                and/or marketable products for public use and benefit.

2.      DEFINITIONS

        2.01    "Benchmarks" mean the performance milestones that are set forth
                in Appendix E.

        2.02    "Commercial Development Plan" means the written
                commercialization plan attached as Appendix F.

        2.03    "First Commercial Sale" means the initial transfer by or on
                behalf of Licensee or its sublicensees of Licensed Products or
                the initial practice of a Licensed Process by or on behalf of
                Licensee or its sublicensees in exchange for cash or some
                equivalent to which value can be assigned for the purpose of
                determining Net Sales.

        2.04    "Government" means the Government of the United States of
                America.

        2.05    "Licensed Fields of Use" means the fields of use identified in
                Appendix B.

        2.06    "Licensed Patent Rights" shall mean:

                a)      Patent applications (including provisional patent
                        applications and PCT patent applications) and/or patents
                        listed in Appendix A, all divisions and continuations of
                        these applications, all patents issuing from such
                        applications, divisions, and continuations, and any
                        reissues, reexaminations, and extensions of all such
                        patents;


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                b)      to the extent that the following contain one or more
                        claims directed to the invention or inventions disclosed
                        in a) above: i) continuations-in-part of a) above; ii)
                        all divisions and continuations of these
                        continuations-in-part; iii) all patents issuing from
                        such continuations-in-part, divisions, and
                        continuations; iv) priority patent application(s) of a)
                        above; and v) any reissues, reexaminations, and
                        extensions of all such patents;

                c)      to the extent that the following contain one or more
                        claims directed to the invention or inventions disclosed
                        in a) above: all counterpart foreign and U.S. patent
                        applications and patents to a) and b) above, including
                        those listed in Appendix A.

                Licensed Patent Rights shall not include b) or c) above to the
                extent that they contain one or more claims directed to new
                matter which is not the subject matter disclosed in a) above.

        2.07    "Licensed Process(es)" means processes which, in the course of
                being practiced would, in the absence of this Agreement,
                infringe one or more claims of the Licensed Patent Rights that
                have not been held invalid or unenforceable by an unappealed or
                unappealable judgment of a court of competent jurisdiction.

        2.08    "Licensed Product(s)" means tangible materials which, in the
                course of manufacture, use, offer to sell, sale, or importation
                would, in the absence of this Agreement, infringe one or more
                claims of the Licensed Patent Rights that have not been held
                invalid or unenforceable by an unappealed or unappealable
                judgment of a court of competent jurisdiction.

        2.09    "Licensed Territory" means the geographical area identified in
                Appendix B.

        2.10    "Net Sales" means the total gross receipts for sales of Licensed
                Products or practice of Licensed Processes by or on behalf of
                Licensee or its sublicensees, and from leasing, renting, or
                otherwise making Licensed Products available to others without
                sale or other dispositions, whether invoiced or not, less
                returns and allowances, packing costs, insurance costs, freight
                out, taxes or excise duties imposed on the transaction (if
                separately invoiced), and wholesaler and cash discounts in
                amounts customary in the trade to the extent actually granted.
                No deductions shall be made for commissions paid to individuals,
                whether they be with independent sales agencies or regularly
                employed by Licensee, or sublicensees, and on its payroll, or
                for the cost of collections.

        2.11    "Practical Application" means to manufacture in the case of a
                composition or product, to practice in the case of a process or
                method, or to operate in the case of a machine or system; and in
                each case, under such conditions as to establish that the
                invention is being utilized and that its benefits are to the
                extent permitted by law or Government regulations available to
                the public on reasonable terms.

        2.12    "Research License" means a nontransferable, nonexclusive license
                to make and to use the Licensed Products or Licensed Processes
                as defined by the Licensed Patent Rights for purposes of
                research and not for purposes of commercial manufacture or
                distribution or in lieu of purchase.



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3.      GRANT OF RIGHTS

        3.01    PHS hereby grants and Licensee accepts, subject to the terms and
                conditions of this Agreement, an exclusive license under the
                Licensed Patent Rights in the Licensed Territory to make and
                have made, to use and have used, to sell and have sold, to offer
                to sell, and to import any Licensed Products in the Licensed
                Fields of Use and to practice and have practiced any Licensed
                Processes in the Licensed Fields of Use.

        3.02    This Agreement confers no license or rights by implication,
                estoppel, or otherwise under any patent applications or patents
                of PHS other than Licensed Patent Rights regardless of whether
                such patents are dominant or subordinate to Licensed Patent
                Rights.

4.      SUBLICENSING

        4.01    Upon written approval by PHS, which approval will not be
                unreasonably withheld, Licensee may enter into sublicensing
                agreements under the Licensed Patent Rights.

        4.02    Licensee agrees that any sublicenses granted by it shall provide
                that the obligations to PHS of Paragraphs 5.01-5.04, 8.01,
                10.01, 10.02, 12.05, and 13.07-13.09 of this Agreement shall be
                binding upon the sublicensee as if it were a party to this
                Agreement. Licensee further agrees to attach copies of these
                Paragraphs to all sublicense agreements.

        4.03    Any sublicenses granted by Licensee shall provide for the
                termination of the sublicense, or the conversion to a license
                directly between such sublicensees and PHS, at the option of the
                sublicensee, upon termination of this Agreement under Article
                13. Such conversion is subject to PHS approval and contingent
                upon acceptance by the sublicensee of the remaining provisions
                of this Agreement.

        4.04    Licensee agrees to forward to PHS a copy of each fully executed
                sublicense agreement postmarked within thirty (30) days of the
                execution of such agreement. To the extent permitted by law, PHS
                agrees to maintain each such sublicense agreement in confidence.

5.      STATUTORY AND PHS REQUIREMENTS AND RESERVED GOVERNMENT RIGHTS

        5.01    (a)     PHS reserves on behalf of the Government an irrevocable,
                        nonexclusive, nontransferable, royalty-free license for
                        the practice of all inventions licensed under the
                        Licensed Patent Rights throughout the world by or on
                        behalf of the Government and on behalf of any foreign
                        government or international organization pursuant to any
                        existing or future treaty or agreement to which the
                        Government is a signatory. Prior to the First Commercial
                        Sale, Licensee agrees to provide PHS reasonable
                        quantities of Licensed Products or materials made
                        through the Licensed Processes for PHS research use.


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                (b)     In the event that Licensed Patent Rights are Subject
                        Inventions made under a Cooperative Research and
                        Development Agreement (CRADA), Licensee grants to the
                        Government, pursuant to 15 U.S.C. 3710a(b)(1)(A), a
                        nonexclusive, nontransferable, irrevocable, paid-up
                        license to practice Licensed Patent Rights or have
                        Licensed Patent Rights practiced throughout the world by
                        or on behalf of the Government. In the exercise of such
                        license, the Government shall not publicly disclose
                        trade secrets or commercial or financial information
                        that is privileged or confidential within the meaning of
                        5 U.S.C. 552(b)(4) or which would be considered as such
                        if it had been obtained from a non-Federal party. Prior
                        to the First Commercial Sale, Licensee agrees to provide
                        PHS reasonable quantities of Licensed Products or
                        materials made through the Licensed Processes for PHS
                        research use.

        5.02    Licensee agrees that products used or sold in the United States
                embodying Licensed Products or produced through use of Licensed
                Processes shall be manufactured substantially in the United
                States, unless a written waiver is obtained in advance from PHS.

        5.03    Licensee acknowledges that PHS may enter into future Cooperative
                Research and Development Agreements (CRADAs) under the Federal
                Technology Transfer Act of 1986 that relate to the subject
                matter of this Agreement. Licensee agrees not to unreasonably
                deny requests for a Research License from such future
                collaborators with PHS when acquiring such rights is necessary
                in order to make a Cooperative Research and Development
                Agreement (CRADA) project feasible. Licensee may request an
                opportunity to join as a party to the proposed Cooperative
                Research and Development Agreement (CRADA).

        5.04    (a)     In addition to the reserved license of Paragraph 5.01
                        above, PHS reserves the right to grant nonexclusive
                        Research Licenses directly or to require Licensee to
                        grant nonexclusive Research Licenses on reasonable
                        terms. The purpose of this Research License is to
                        encourage basic research, whether conducted at an
                        academic or corporate facility. In order to safeguard
                        the Licensed Patent Rights, however, PHS shall consult
                        with Licensee before granting to commercial entities a
                        Research License or providing to them research samples
                        of materials made through the Licensed Processes.


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                (b)     In exceptional circumstances, and in the event that
                        Licensed Patent Rights are Subject Inventions made under
                        a Cooperative Research and Development Agreement
                        (CRADA), the Government, pursuant to 15 U.S.C.
                        37l0a(b)(l)(B), retains the right to require the
                        Licensee to grant to a responsible applicant a
                        nonexclusive, partially exclusive, or exclusive
                        sublicense to use Licensed Patent Rights in Licensee's
                        field of use on terms that are reasonable under the
                        circumstances; or if Licensee fails to grant such a
                        license, the Government retains the right to grant the
                        license itself. The exercise of such rights by the
                        Government shall only be in exceptional circumstances
                        and only if the Government determines (i) the action is
                        necessary to meet health or safety needs that are not
                        reasonably satisfied by Licensee; (ii) the action is
                        necessary to meet requirements for public use specified
                        by Federal regulations, and such requirements are not
                        reasonably satisfied by the Licensee; or (iii) the
                        Licensee has failed to comply with an agreement
                        containing provisions described in 15 U.S.C.
                        37l0a(c)(4)(B). The determination made by the Government
                        under this Article is subject to administrative appeal
                        and judicial review under 35 U.S.C. 203(2).

6.      ROYALTIES AND REIMBURSEMENT

        6.01    Licensee agrees to pay to PHS a noncreditable, nonrefundable
                license issue royalty as set forth in Appendix C within thirty
                (30) days from the date that this Agreement becomes effective.

        6.02    Licensee agrees to pay to PHS a nonrefundable minimum annual
                royalty as set forth in Appendix C. The minimum annual royalty
                is due and payable on January 1 of each calendar year and may be
                credited against any earned royalties due for sales made in that
                year. The minimum annual royalty due for the first calendar year
                of this Agreement may be prorated according to the fraction of
                the calendar year remaining between the effective date of this
                Agreement and the next subsequent January 1.

        6.03    Licensee agrees to pay PHS earned royalties as set forth in
                Appendix C.

        6.04    Licensee agrees to pay PHS benchmark royalties as set forth in
                Appendix C.

        6.05    Licensee agrees to pay PHS sublicensing royalties as set forth
                in Appendix C.

        6.06    A patent or patent application licensed under this Agreement
                shall cease to fall within the Licensed Patent Rights for the
                purpose of computing earned royalty payments in any given
                country on the earliest of the dates that a) the application has
                been abandoned and not continued, b) the patent expires or
                irrevocably lapses, or c) the claim has been held to be invalid
                or unenforceable by an unappealed or unappealable decision of a
                court of competent jurisdiction or administrative agency.

        6.07    No multiple royalties shall be payable because any Licensed
                Products or Licensed Processes are covered by more than one of
                the Licensed Patent Rights.

        6.08    On sales of Licensed Products by Licensee to sublicensees or on
                sales made in other than an arm's-length transaction, the value
                of the Net Sales attributed under this Article 6 to such a
                transaction shall be that which would have been received in an
                arm's-length transaction, based on sales of like quantity and
                quality products on or about the time of such transaction.


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        6.09    With regard to expenses associated with the preparation, filing,
                prosecution, and maintenance of all patent applications and
                patents included within the Licensed Patent Rights incurred by
                PHS prior to the effective date of this Agreement, Licensee
                shall pay to PHS, as an additional royalty, within sixty (60)
                days of PHS's submission of a statement and request for payment
                to Licensee, an amount equivalent to such patent expenses
                previously incurred by PHS.

        6.10    With regard to expenses associated with the preparation, filing,
                prosecution, and maintenance of all patent applications and
                patents included within the Licensed Patent Rights incurred by
                PHS on or after the effective date of this Agreement, PHS, at
                its sole option, may require Licensee:

                (a) to pay PHS on an annual basis, within sixty (60) days of
                PHS's submission of a statement and request for payment, a
                royalty amount equivalent to all such patent expenses incurred
                during the previous calendar year(s); or

                (b) to pay such expenses directly to the law firm employed by
                PHS to handle such functions. However, in such event, PHS and
                not Licensee shall be the client of such law firm.

                In limited circumstances, Licensee may be given the right to
                assume responsibility for the preparation, filing, prosecution,
                or maintenance of any patent application or patent included with
                the Licensed Patent Rights. In that event, Licensee shall
                directly pay the attorneys or agents engaged to prepare, file,
                prosecute, or maintain such patent applications or patents and
                shall provide to PHS copies of each invoice associated with such
                services as well as documentation that such invoices have been
                paid.

        6.11    Licensee may elect to surrender its rights in any country of the
                Licensed Territory under any Licensed Patent Rights upon ninety
                (90) days written notice to PHS and owe no payment obligation
                under Article 6.10 for patent-related expenses incurred in that
                country after ninety (90) days of the effective date of such
                written notice.

7.      PATENT FILING, PROSECUTION. AND MAINTENANCE

        7.01    Except as otherwise provided in this Article 7, PHS agrees to
                take responsibility for, but to consult with, the Licensee in
                the preparation, filing, prosecution, and maintenance of any and
                all patent applications or patents included in the Licensed
                Patent Rights and shall furnish copies of relevant
                patent-related documents to Licensee.

        7.02    Upon PHS's written request, Licensee shall assume the
                responsibility for the preparation, filing, prosecution, and
                maintenance of any and all patent applications or patents
                included in the Licensed Patent Rights and shall on an ongoing
                basis promptly furnish copies of all patent-related documents to
                PHS. In such event, Licensee shall, subject to the prior
                approval of PHS, select registered patent attorneys or patent
                agents to provide such services on behalf of Licensee and PHS.
                PHS shall provide appropriate powers of attorney and other
                documents necessary to undertake such actions to the patent
                attorneys or patent agents providing such services. Licensee and
                its attorneys or agents shall consult with PHS in all aspects of
                the preparation, filing, prosecution and maintenance of patent
                applications and patents included within the Licensed Patent
                Rights and shall provide PHS sufficient opportunity to comment
                on any document that Licensee intends to file or to cause to be
                filed with the relevant intellectual property or patent office.


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        7.03    At any time, PHS may provide Licensee with written notice that
                PHS wishes to assume control of the preparation, filing,
                prosecution, and maintenance of any and all patent applications
                or patents included in the Licensed Patent Rights. If PHS elects
                to assume such responsibilities, Licensee agrees to cooperate
                fully with PHS, its attorneys, and agents in the preparation,
                filing, prosecution, and maintenance of any and all patent
                applications or patents included in the Licensed Patent Rights
                and to provide PHS with complete copies of any and all documents
                or other materials that PHS deems necessary to undertake such
                responsibilities. Licensee shall be responsible for all costs
                associated with transferring patent prosecution responsibilities
                to an attorney or agent of PHS's choice.

        7.04    Each party shall promptly inform the other as to all matters
                that come to its attention that may affect the preparation,
                filing, prosecution, or maintenance of the Licensed Patent
                Rights and permit each other to provide comments and suggestions
                with respect to the preparation, filing, prosecution, and
                maintenance of Licensed Patent Rights, which comments and
                suggestions shall be considered by the other party.

8.      RECORD KEEPING

        8.01    Licensee agrees to keep accurate and correct records of Licensed
                Products made, used, sold, or imported and Licensed Processes
                practiced under this Agreement appropriate to determine the
                amount of royalties due PHS. Such records shall be retained for
                at least five (5) years following a given reporting period and
                shall be available during normal business hours for inspection
                at the expense of PHS by an accountant or other designated
                auditor selected by PHS for the sole purpose of verifying
                reports and payments hereunder. The accountant or auditor shall
                only disclose to PHS information relating to the accuracy of
                reports and payments made under this Agreement. If an inspection
                shows an underreporting or underpayment in excess of five
                percent (5%) for any twelve (12) month period, then Licensee
                shall reimburse PHS for the cost of the inspection at the tune
                Licensee pays the unreported royalties, including any late
                charges as required by Paragraph 9.08 of this Agreement. All
                payments required under this Paragraph shall be due within
                thirty (30) days of the date PHS provides Licensee notice of the
                payment due.

        8.02    Licensee agrees to have an audit of sales and royalties
                conducted by an independent auditor at least every two (2) years
                if annual sales of the Licensed Product or Licensed Processes
                are over two (2) million dollars. The audit shall address, at a
                minimum, the amount of gross sales by or on behalf of Licensee
                during the audit period, terms of the license as to percentage
                or fixed royalty to be remitted to the Government, the amount of
                royalty funds owed to the Government under this Agreement, and
                whether the royalty amount owed has been paid to the Government
                and is reflected in the records of the Licensee. The audit shall
                also indicate the PHS license number, product, and the time
                period being audited. A report certified by the auditor shall be
                submitted promptly by the auditor directly to PHS on completion.
                Licensee shall pay for the entire cost of the audit.

9.      REPORTS ON PROGRESS, BENCHMARKS. SALES. AND PAYMENTS

        9.01    Prior to signing this Agreement, Licensee has provided to PHS
                the Commercial Development Plan at Appendix F, under which
                Licensee intends to bring the subject matter of the Licensed
                Patent Rights to the point of Practical Application. This
                Commercial Development Plan is hereby incorporated by reference
                into this Agreement. Based on this plan, performance Benchmarks
                are determined as specified in Appendix E.


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        9.02    Licensee shall provide written annual reports on its product
                development progress or efforts to commercialize under the
                Commercial Development Plan for each of the Licensed Fields of
                Use within sixty (60) days after December 31 of each calendar
                year. These progress reports shall include, but not be limited
                to: progress on research and development, status of applications
                for regulatory approvals, manufacturing, sublicensing,
                marketing, importing, and sales during the preceding calendar
                year, as well as plans for the present calendar year. PHS also
                encourages these reports to include information on any of
                Licensee's public service activities that relate to the Licensed
                Patent Rights. If reported progress differs from that projected
                in the Commercial Development Plan and Benchmarks, Licensee
                shall explain the reasons for such differences. In any such
                annual report, Licensee may propose amendments to the Commercial
                Development Plan, acceptance of which by PHS may not be denied
                unreasonably. Licensee agrees to provide any additional
                information reasonably required by PHS to evaluate Licensee's
                performance under this Agreement. Licensee may amend the
                Benchmarks at any time upon written consent by PHS. PHS shall
                not unreasonably withhold approval of any request of Licensee to
                extend the time periods of this schedule if such request is
                supported by a reasonable showing by Licensee of diligence in
                its performance under the Commercial Development Plan and toward
                bringing the Licensed Products to the point of Practical
                Application as defined in 37 C.F.R. 404.3(d). Licensee shall
                amend the Commercial Development Plan and Benchmarks at the
                request of PHS to address any Licensed Fields of Use not
                specifically addressed in the plan originally submitted.

        9.03    Licensee shall report to PHS the dates for achieving Benchmarks
                specified in Appendix E and the First Commercial Sale in each
                country in the Licensed Territory within thirty (30) days of
                such occurrences.

        9.04    Licensee shall submit to PHS within sixty (60) days after each
                calendar half-year ending June 30 and December 31 a royalty
                report setting forth for the preceding half-year period the
                amount of the Licensed Products sold or Licensed Processes
                practiced by or on behalf of Licensee in each country within the
                Licensed Territory, the Net Sales, and the amount of royalty
                accordingly due. With each such royalty report, Licensee shall
                submit payment of the earned royalties due. If no earned
                royalties are due to PHS for any reporting period, the written
                report shall so state. The royalty report shall be certified as
                correct by an authorized officer of Licensee and shall include a
                detailed listing of all deductions made under Paragraph 2.10 to
                determine Net Sales made under Article 6 to determine royalties
                due.

        9.05    Licensee agrees to forward semi-annually to PHS a copy of such
                reports received by Licensee from its sublicensees during the
                preceding half-year period as shall be pertinent to a royalty
                accounting to PHS by Licensee for activities under the
                sublicense.

        9.06    Royalties due under Article 6 shall be paid in U.S. dollars. For
                conversion of foreign currency to U.S. dollars, the conversion
                rate shall be the New York foreign exchange rate quoted in The
                Wall Street Journal on the day that the payment is due. All
                checks and bank drafts shall be drawn on United States banks and
                shall be payable, as appropriate, to "NIH/Patent Licensing." All
                such payments shall be sent to the following address: NIH, P.O.
                Box 360120, Pittsburgh, PA 1525 1-6 120. Any loss of exchange,
                value, taxes, or other expenses incurred in the transfer or
                conversion to U.S. dollars shall be paid entirely by Licensee.
                The royalty report required by Paragraph 9.04 of this Agreement
                shall accompany each such payment, and a copy of such report
                shall also be mailed to PHS at its address for notices indicated
                on the Signature Page of this Agreement.

        9.07    Licensee shall be solely responsible for determining if any tax
                on royalty income is owed outside the United States and shall
                pay any such tax and be responsible for all filings with
                appropriate agencies of foreign governments.


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        9.08    Interest and penalties may be assessed by PHS on any overdue
                payments in accordance with the Federal Debt Collection Act. The
                payment of such late charges shall not prevent PHS from
                exercising any other rights it may have as a consequence of the
                lateness of any payment.

        9.09    All plans and reports required by this Article 9 and marked
                "confidential" by Licensee shall, to the extent permitted by
                law, be treated by PHS as commercial and financial information
                obtained from a person and as privileged and confidential, and
                any proposed disclosure of such records by the PHS under the
                Freedom of Information Act (FOIA). 5 U.S.C. Section 552 shall be
                subject to the predisclosure notification requirements of 45
                C.F.R. Section 5.65(d).

10.     PERFORMANCE

        10.01   Licensee shall use its reasonable best efforts to bring the
                Licensed Products and Licensed Processes to Practical
                Application. "Reasonable best efforts" for the purposes of this
                provision shall include adherence to the Commercial Development
                Plan at Appendix F and performance of the Benchmarks at Appendix
                F. The efforts of a sublicensee shall be considered the efforts
                of Licensee.

        10.02   Upon the First Commercial Sale, until the expiration of this
                Agreement, Licensee shall use its reasonable best efforts to
                make Licensed Products and Licensed Processes reasonably
                accessible to the United States public.

11.     INFRINGEMENT AND PATENT ENFORCEMENT

        11.01   PHS and Licensee agree to notify each other promptly of each
                infringement or possible infringement of the Licensed Patent
                Rights, as well as any facts which may affect the validity,
                scope, or enforceability of the Licensed Patent Rights of which
                either Party becomes aware.

        11.02   Pursuant to this Agreement and the provisions of Chapter 29 of
                title 35, United States Code, Licensee may: a) bring suit in its
                own name, at its own expense, and on its own behalf for
                infringement of presumably valid claims in the Licensed Patent
                Rights; b) in any such suit, enjoin infringement and collect for
                its use, damages, profits, and awards of whatever nature
                recoverable for such infringement; and c) settle any claim or
                suit for infringement of the Licensed Patent Rights provided,
                however, that PHS and appropriate Government authorities shall
                have the first right to take such actions. If Licensee desires
                to initiate a suit for patent infringement, Licensee shall
                notify PHS in writing. If PHS does not notify Licensee of its
                intent to pursue legal action within ninety (90) days, Licensee
                will be free to initiate suit. PHS shall have a continuing right
                to intervene in such suit. Licensee shall take no action to
                compel the Government either to initiate or to join in any such
                suit for patent infringement. Licensee may request the
                Government to initiate or join in any such suit if necessary to
                avoid dismissal of the suit. Should the Government be made a
                party to any such suit, Licensee shall reimburse the Government
                for any costs, expenses, or fees which the Government incurs as
                a result of such motion or other action, including any and all
                costs incurred by the Government in opposing any such motion or
                other action. In all cases, Licensee agrees to keep PHS
                reasonably apprised of the status and progress of any
                litigation. Before Licensee commences an infringement action,
                Licensee shall notify PHS and give careful consideration to the
                views of PHS and to any potential effects of the litigation on
                the public health in deciding whether to bring suit.


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<PAGE>   12


        11.03   In the event that a declaratory judgment action alleging
                invalidity or non-infringement of any of the Licensed Patent
                Rights shall be brought against Licensee or raised by way of
                counterclaim or affirmative defense in an infringement suit
                brought by Licensee under Paragraph 11.02, pursuant to this
                Agreement and the provisions of Chapter 29 of Title 35, United
                States Code or other statutes, Licensee may: a) defend the suit
                in its own name, at its own expense, and on its own behalf for
                presumably valid claims in the Licensed Patent Rights; b) in any
                such suit, ultimately to enjoin infringement and to collect for
                its use, damages, profits, and awards of whatever nature
                recoverable for such infringement; and c) settle any claim or
                suit for declaratory judgment involving the Licensed Patent
                Rights-provided, however, that PHS and appropriate Government
                authorities shall have the first right to take such actions and
                shall have a continuing right to intervene in such suit. If PHS
                does not notify Licensee of its intent to respond to the legal
                action within a reasonable time, Licensee will be free to do so.
                Licensee shall take no action to compel the Government either to
                initiate or to join in any such declaratory judgment action.
                Licensee may request the Government to initiate or to join any
                such suit if necessary to avoid dismissal of the suit. Should
                the Government be made a party to any such suit by motion or any
                other action of Licensee, Licensee shall reimburse the
                Government for any costs, expenses, or fees which the Government
                incurs as a result of such motion or other action. If Licensee
                elects not to defend against such declaratory judgment action,
                PHS, at its option, may do so at its own expense. In all cases,
                Licensee agrees to keep PHS reasonably apprised of the status
                and progress of any litigation. Before Licensee commences an
                infringement action, Licensee shall notify PHS and give careful
                consideration to the views of PHS and to any potential effects
                of the litigation on the public health in deciding whether to
                bring suit.

        11.04   In any action under Paragraphs 11.02 or 11.03, the expenses
                including costs, fees, attorney fees, and disbursements, shall
                be paid by Licensee. The value of any recovery made by Licensee
                through court judgment or settlement shall be treated as Net
                Sales and subject to earned royalties.

        11.05   PHS shall cooperate fully with Licensee in connection with any
                action under Paragraphs 11.02 or 11.03. PHS agrees promptly to
                provide access to all necessary documents and to render
                reasonable assistance in response to a request by Licensee.

12.     NEGATION OF WARRANTIES AND INDEMNIFICATION

        12.01   PHS offers no warranties other than those specified in
                Article 1.

        12.02   PHS does not warrant the validity of the Licensed Patent Rights
                and makes no representations whatsoever with regard to the scope
                of the Licensed Patent Rights, or that the Licensed Patent
                Rights may be exploited without infringing other patents or
                other intellectual property rights of third parties.

        12.03   PHS MAKES NO WARRANTIES, EXPRESSED OR IMPLIED, OF
                MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OF ANY
                SUBJECT MATTER DEFINED BY THE CLAIMS OF THE LICENSED PATENT
                RIGHTS OR TANGIBLE MATERIALS RELATED THERETO.

        12.04   PHS does not represent that it will commence legal actions
                against third parties infringing the Licensed Patent Rights.


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<PAGE>   13


        12.05   Licensee shall indemnify and hold PHS, its employees, students,
                fellows, agents, and consultants harmless from and against all
                liability, demands, damages, expenses, and losses, including but
                not limited to death, personal injury, illness, or property
                damage in connection with or arising out of: a) the use by or on
                behalf of Licensee, its sublicensees, directors, employees, or
                third parties of any Licensed Patent Rights; or b) the design,
                manufacture, distribution, or use of any Licensed Products,
                Licensed Processes or materials by Licensee, or other products
                or processes developed in connection with or arising out of the
                Licensed Patent Rights. Licensee agrees to maintain a liability
                insurance program consistent with sound business practice.

13.     TERM, TERMINATION, AND MODIFICATION OF RIGHTS

        13.01   This Agreement is effective when signed by all parties and shall
                extend to the expiration of the last to expire of the Licensed
                Patent Rights unless sooner terminated as provided in this
                Article 13.

        13.02   In the event that Licensee is in default in the performance of
                any material obligations under this Agreement, including but not
                limited to the obligations listed in Article 13.05, and if the
                default has not been remedied within ninety (90) days after the
                date of notice in writing of such default, PHS may terminate
                this Agreement by written notice and pursue outstanding amounts
                owed through procedures provided by the Federal Debt Collection
                Act.

        13.03   In the event that Licensee becomes insolvent, files a petition
                in bankruptcy, has such a petition filed against it, determines
                to file a petition in bankruptcy, or receives notice of a third
                party's intention to file an involuntary petition in bankruptcy,
                Licensee shall immediately notify PHS in writing. Furthermore,
                PHS shall have the right to terminate this Agreement immediately
                upon Licensee's receipt of written notice.

        13.04   Licensee shall have a unilateral right to terminate this
                Agreement and/or any licenses in any country or territory by
                giving PHS sixty (60) days written notice to that effect.

        13.05   PHS shall specifically have the right to terminate or modify, at
                its option, this Agreement, if PHS determines that the Licensee:
                1) is not executing the Commercial Development Plan submitted
                with its request for a license and the Licensee cannot otherwise
                demonstrate to PHS's satisfaction that the Licensee has taken,
                or can be expected to take within a reasonable time, effective
                steps to achieve Practical Application of the Licensed Products
                or Licensed Processes; 2) has not achieved the Benchmarks as may
                be modified under Paragraph 9.02; 3) has willfully made a false
                statement of, or willfully omitted, a material fact in the
                license application or in any report required by the license
                Agreement; 4) has committed a material breach of a covenant or
                agreement contained in the license; 5) is not keeping Licensed
                Products or Licensed Processes reasonably available to the
                public after commercial use commences; 6) cannot reasonably
                satisfy unmet health and safety needs; or 7) cannot reasonably
                justify a failure to comply with the domestic production
                requirement of Paragraph 5.02 unless waived. In making this
                determination, PHS will take into account the normal course of
                such commercial development programs conducted with sound and
                reasonable business practices and judgment and the annual
                reports submitted by Licensee under Paragraph 9.02. Prior to
                invoking this right, PHS shall give written notice to Licensee
                providing Licensee specific notice of, and a ninety (90) day
                opportunity to respond to, PHS's concerns as to the previous
                items 1) to 7). If Licensee fails to alleviate PHS's concerns as
                to the previous items 1) to 7) or fails to initiate corrective
                action to PHS's satisfaction, PHS may terminate this Agreement.


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<PAGE>   14


        13.06   When the public health and safety so require, and after written
                notice to Licensee providing Licensee a sixty (60) day
                opportunity to respond, P1-IS shall have the right to require
                Licensee to grant sublicenses to responsible applicants, on
                reasonable terms, in any Licensed Fields of Use under the
                Licensed Patent Rights, unless Licensee can reasonably
                demonstrate that the granting of the sublicense would not
                materially increase the availability to the public of the
                subject matter of the Licensed Patent Rights. PHS will not
                require the granting of a sublicense unless the responsible
                applicant has first negotiated in good faith with Licensee.

        13.07   PHS reserves the right according to 35 U.S.C. Section 209(0(4)
                to terminate or modify this Agreement if it is determined that
                such action is necessary to meet requirements for public use
                specified by federal regulations issued after the date of the
                license and such requirements are not reasonably satisfied by
                Licensee.

        13.08   Within thirty (30) days of receipt of written notice of PHS's
                unilateral decision to modify or terminate this Agreement,
                Licensee may, consistent with the provisions of 37 C.F.R.
                404.11, appeal the decision by written submission to the
                designated PHS official. The decision of the designated PHS
                official shall be the final agency decision. Licensee may
                thereafter exercise any and all administrative or judicial
                remedies that may be available.

        13.09   Within ninety (90) days of expiration or termination of this
                Agreement under this Article 13, a final report shall be
                submitted by Licensee. Any royalty payments, including those
                incurred but not yet paid (such as the full minimum annual
                royalty), and those related to patent expense, due to PHS shall
                become immediately due and payable upon termination or
                expiration. If terminated under this Article 13, sublicensees
                may elect to convert their sublicenses to direct licenses with
                PHS pursuant to Paragraph 4.03. Unless otherwise specifically
                provided for under this Agreement, upon termination or
                expiration of this Agreement, Licensee shall return all Licensed
                Products or other materials included within the Licensed Patent
                Rights to PHS or provide PHS with certification of the
                destruction thereof.

14.     GENERAL PROVISIONS

        14.01   Neither Party may waive or release any of its rights or
                interests in this Agreement except in writing. The failure of
                the Government to assert a right hereunder or to insist upon
                compliance with any term or condition of this Agreement shall
                not constitute a waiver of that right by the Government or
                excuse a similar subsequent failure to perform any such term or
                condition by Licensee.

        14.02   This Agreement constitutes the entire agreement between the
                Parties relating to the subject matter of the Licensed Patent
                Rights, and all prior negotiations, representations, agreements,
                and understandings are merged into, extinguished by, and
                completely expressed by this Agreement.

        14.03   The provisions of this Agreement are severable, and in the event
                that any provision of this Agreement shall be determined to be
                invalid or unenforceable under any controlling body of law, such
                determination shall not in any way affect the validity or
                enforceability of the remaining provisions of this Agreement.

        14.04   If either Party desires a modification to this Agreement, the
                Parties shall, upon reasonable notice of the proposed
                modification by the Party desiring the change, confer in good
                faith to determine the desirability of such modification. No
                modification will be effective until a written amendment is
                signed by the signatories to this Agreement or their designees.


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<PAGE>   15


        14.05   The construction, validity, performance, and effect of this
                Agreement shall be governed by Federal law as applied by the
                Federal courts in the District of Columbia.

        14.06   All notices required or permitted by this Agreement shall be
                given by prepaid, first class, registered or certified mail or
                by an express/overnight delivery service provided by a
                commercial carrier, properly addressed to the other Party at the
                address designated on the following Signature Page, or to such
                other address as may be designated in writing by such other
                Patty. Notices shall be considered timely if such notices are
                received on or before the established deadline date or sent on
                or before the deadline date as verifiable by U.S. Postal Service
                postmark or dated receipt from a commercial carrier. Parties
                should request a legibly dated U.S. Postal Service postmark or
                obtain a dated receipt from a commercial carrier or the U.S.
                Postal Service. Private metered postmarks shall not be
                acceptable as proof of timely mailing.

        14.07   This Agreement shall not be assigned by Licensee except: a) with
                the prior written consent of PHS, such consent not to be
                withheld unreasonably; or b) as part of a sale or transfer of
                substantially the entire business of Licensee relating to
                operations which concern this Agreement. Licensee shall notify
                PHS within ten (10) days of any assignment of this Agreement by
                Licensee, and Licensee shall pay PHS, as an additional royalty,
                [ * ] of the fair market value of any consideration received for
                any assignment of this Agreement within thirty (30) days of such
                assignment.

        14.08   Licensee agrees in its use of any PHS-supplied materials to
                comply with all applicable statutes, regulations, and
                guidelines, including PHS and DHHS regulations and guidelines.
                Licensee agrees not to use the materials for research involving
                human subjects or clinical trials in the United States without
                complying with 21 C.F.R. Part 50 and 45 C.F.R. Part 46. Licensee
                agrees not to use the materials for research involving human
                subjects or clinical trials outside of the United States without
                notifying PHS, in writing, of such research or trials and
                complying with the applicable regulations of the appropriate
                national control authorities. Written notification to PHS of
                research involving human subjects or clinical trials outside of
                the United States shall be given no later than sixty (60) days
                prior to commencement of such research or trials.

        14.09   Licensee acknowledges that it is subject to and agrees to abide
                by the United States laws and regulations (including the Export
                Administration Act of 1979 and Arms Export Control Act)
                controlling the export of technical data, computer software,
                laboratory prototypes, biological material, and other
                commodities. The transfer of such items may require a license
                from the cognizant Agency of the U.S. Government or written
                assurances by Licensee that it shall not export such items to
                certain foreign countries without prior approval of such agency.
                PHS neither represents that a license is or is not required or
                that, if required, it shall be issued.

        14.10   Licensee agrees to mark the Licensed Products or their packaging
                sold in the United States with all applicable U.S. patent
                numbers and similarly to indicate "Patent Pending" status. All
                Licensed Products manufactured in, shipped to, or sold in other
                countries shall be marked in such a manner as to preserve PHS
                patent rights in such countries.

        14.11   By entering into this Agreement, PHS does not directly or
                indirectly endorse any product or service provided, or to be
                provided, by Licensee whether directly or indirectly related to
                this Agreement. Licensee shall not state or imply that this
                Agreement is an endorsement by the Government, PHS, any other
                Government organizational unit, or any Government employee.
                Additionally, Licensee shall not use the names of NIH, CDC, PHS,
                or DHHS or the Government or their employees in any advertising,
                promotional, or sales literature without the prior written
                consent of PHS.

"[ * ]" = omitted, confidential material, which material has been separately
filed with the Securities and Exchange Commission pursuant to a request for
confidential treatment.



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<PAGE>   16


        14.12   The Parties agree to attempt to settle amicably any controversy
                or claim arising under this Agreement or a breach of this
                Agreement, except for appeals of modifications or termination
                decisions provided for in Article 13. Licensee agrees first to
                appeal any such unsettled claims or controversies to the
                designated PHS official, or designee, whose decision shall be
                considered the final agency decision. Thereafter, Licensee may
                exercise any administrative or judicial remedies that may be
                available.

        14.13   Nothing relating to the grant of a license, nor the grant
                itself, shall be construed to confer upon any person any
                immunity from or defenses under the antitrust laws or from a
                charge of patent misuse, and the acquisition and use of rights
                pursuant to 37 C.F.R. Part 404 shall not be immunized from the
                operation of state or Federal law by reason of the source of the
                grant.

        14.14   Paragraphs 4.03, 8.01, 9.05-9.07, 12.01-12.05, 13.08, 13.09, and
                14.12 of this Agreement shall survive termination of this
                Agreement.

                          SIGNATURES BEGIN ON NEXT PAGE




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<PAGE>   17


                     PHS PATENT LICENSE AGREEMENT--EXCLUSIVE

                                 SIGNATURE PAGE


For PHS:


<TABLE>
<S>                                                                             <C>
 /s/ Jack Spiegel                                                                 2/5/01
------------------------------------------------                                --------------------------
Jack Spiegel, Ph.D.                                                             Date
Director, Division of Technology Development and Transfer
Office of Technology Transfer
National Institutes of Health
</TABLE>

Mailing Address for Notices:

Office of Technology Transfer
National Institutes of Health
6011 Executive
Boulevard, Suite 325
Rockville, Maryland 20852-3804 U.S.A.


For LICENSEE (Upon, information and belief, the undersigned expressly certifies
or affirms that the contents of any statements of LICENSEE made or referred to
in this document are truthful and accurate.):

by:


<TABLE>
<S>                                                                             <C>
 /s/ Allen L. Goldstein                                                           2/6/01
-----------------------------------------------------                           --------------------------
Signature of Authorized Official


  Allan L. Goldstein
-----------------------------------------------------
Printed Name


  President & CEO
-----------------------------------------------------
Title
</TABLE>

Official and Mailing Address for Notices:

RegeneRx Biopharmaceuticals Inc.
3 Bethesda Metro Center, Suite 700
Bethesda, MD 20814
Attention: JJ Finkelstein

Any false or misleading statements made, presented, or submitted to the
GOVERNMENT, including any relevant omissions, under this AGREEMENT and during
the course of negotiation of this AGREEMENT are subject to all applicable civil
and criminal statutes including Federal statutes 31 U.S.C. Sections 3801-3812
(civil liability) and 18 U.S.C. Section 1001 (criminal liability including
fine(s) and/or imprisonment).


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<PAGE>   18


                 APPENDIX A--Patent(s) or Patent Application(s)


Patent(s) or Patent Application(s):

        (A)     PCT/US99/l7282 (PHS Ref. E-13 1-98/1) entitled "Thymosin a4
                Promotes Wound Repair" filed July 29, 1999 which claims the
                benefit of U.S. Provisional Application USSN 60/094,690 (PHS
                Ref. F- 131-98/0) entitled "Thymosin a4 Promotes Wound Repair"
                filed July 30, 1998, now abandoned.












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<PAGE>   19


                APPENDIX B--Licensed Fields of Use and Territory


Licensed Fields of Use:

        Development of therapeutic applications, including compositions and
methods, to be used in the treatment of wounds and tissue repair.



Licensed Territory:

        Worldwide








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<PAGE>   20


                              APPENDIX C--Royalties


Royalties:

1.      Licensee agrees to pay to PHS a nonrefundable license issue royalty
        pursuant to Paragraph 6.01 of this Agreement in the amount of [ * ].


II.     Licensee agrees to pay to PHS a nonrefundable minimum annual royalty
        pursuant to Paragraph 6.02 of this Agreement in the amount of [ * ]
        until the first United States Patent, within the Licensed Patent Rights
        as defined in Paragraph 2.06 of this Agreement, issues ("Pre-issuance
        Minimum Annual Royalty") and in the amount of [ * ] after the issuance
        of the first United States Patent within the Licensed Patent Rights as
        defined in Paragraph 2.06 of this Agreement ("Post-issuance Minimum
        Annual Royalty").


III.    Licensee agrees to pay PHS earned royalties on Net Sales by or on behalf
        of Licensee and its sublicensees pursuant to Paragraph 6.03 of this
        Agreement as follows:

        A.      [ * ] of Net Sales

        The obligation to pay PHS earned royalties on Net Sales by or on behalf
        of Licensee and its sublicensees pursuant to Paragraph 6.03 of this
        Agreement begins with the First Commercial Sale by or on behalf of
        Licensee and its sublicensees and requires only that manufacture, use,
        offer for sale, sale, or importation of the Licensed Product or the
        Licensed Process involve a claim in any pending application or issued
        patent within the Licensed Patent Rights. In the event that no patent
        application within the Licensed Patent Rights is pending in any country
        the obligation to pay PHS earned royalties under Paragraph 6.03 of this
        Agreement requires that the manufacture, use, offer for sale, sale, or
        importation of the Licensed Product or the Licensed Process involve a
        claim of an issued patent within the Licensed Patent Rights. In the
        event that the manufacture, use, offer for sale, sale, or importation of
        the Licensed Product or the Licensed Process does not involve a claim of
        any pending patent application or issued patent within the Licensed
        Patent Rights then Licensee and its sublicensees are not obligated to
        pay earned royalties under Paragraph 6.03 of this Agreement.

IV.     Licensee agrees to pay PHS benchmark royalties pursuant to Paragraph
        6.04 of this Agreement as follows:

        A.      [ * ] upon receipt of marketing approval by the United States
                Food and Drug Administration.

        B.      [ * ] upon receipt of marketing approval from the applicable
                regulatory agency in each of the following countries: Canada,
                China, France, Germany, Italy, Japan, Mexico, Spain, Taiwan and
                the United Kingdom.

        C.      [ * ] upon receipt of marketing approval from the applicable
                regulatory agency of any other country for which patent
                protection has been received in such country for the Licensed
                Patent Rights.


V.      Licensee agrees to pay PHS additional sublicensing royalties pursuant to
        Paragraph 6.05 of this Agreement as follows:

        [ * ] of the fair market value of any consideration received for
        granting each sublicense.

"[ * ]" = omitted, confidential material, which material has been separately
filed with the Securities and Exchange Commission pursuant to a request for
confidential treatment.



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<PAGE>   21


                            APPENDIX D--Modifications


PHS and Licensee agree to the following modifications to the Articles and
Paragraphs of this Agreement:

Article I.      BACKGROUND

Paragraphs 1.01 through 1.02 are amended to read as follows:

        1.01    In the course of conducting biomedical and behavioral research,
                PHS investigators and others have made inventions that may have
                commercial applicability.

        1.02    By assignment of rights from PHS employees and other inventors,
                DHHS, on behalf of the United States Government, owns certain
                interests in intellectual property rights claimed in certain
                United States and foreign patent applications or patents
                corresponding to the assigned inventions. DHHS also owns any
                tangible embodiments of these inventions actually reduced to
                practice by PHS, to the extent of PHS's interest therein.

New Paragraph 1.06 is added to read as follows:

        1.06    Allan L. Goldstein, who, along with PHS developed the inventions
                which are the subject of this Agreement, has assigned all of his
                rights in and to such inventions to Licensee, and, therefore,
                Licensee is the owner of an undivided and equal interest in and
                to such inventions and may practice such inventions without the
                benefit of this Agreement. By this Agreement, however, PHS and
                Licensee intend for Licensee to have the exclusive right to
                practice such inventions within the Fields of Use as specified
                in Appendix B of this Agreement.

Article 2.      DEFINITIONS

Paragraphs 2.01 through 2.03, 2.06 and 2.12 are amended to read as follows:

        2.01    "Benchmarks" mean the performance milestones that are set forth
                in Appendix F, as may be amended from time to time by the mutual
                written consent of PHS and Licensee.

        2.02    "Commercial Development Plan" means the written
                commercialization plan attached as Appendix F, as may be amended
                from time to time by the mutual written consent of PHS and
                Licensee.

        2.03    "First Commercial Sale" means the initial transfer by or on
                behalf of Licensee or its sublicensees of Licensed Products or
                the initial practice of a Licensed Process by or on behalf of
                Licensee or its sublicensees in exchange for cash or some
                equivalent to which value can be assigned for the purpose of
                determining Net Sales, provided, however, First Commercial Sale
                shall not include transfers at or below cost by or on behalf of
                Licensee, its Affiliates, or its sublicensees of Licensed
                Products or the practice of Licensed Processes in connection
                with compassionate use, emergency use, treatment Investigational
                New Drug Applications (IND's), or the like authorized by the FDA
                or corresponding foreign agencies.



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<PAGE>   22


        2.06    "Licensed Patent Rights" shall mean:

                a)      Patent applications (including provisional patent
                        applications and PCT patent applications) and/or patents
                        listed in Appendix A, all divisions and continuations of
                        these applications, all patents issuing from such
                        applications, divisions, and continuations, and any
                        reissues, reexaminations, reregistrations, and
                        extensions of all such patents;

                b)      to the extent that the following contain one or more
                        claims directed to the invention or inventions disclosed
                        in a) above: i) continuations-in-part of a) above; ii)
                        all divisions and continuations of these
                        continuations-in-part; iii) all patents issuing from
                        such continuations-in-part, divisions, and
                        continuations; iv) priority patent application(s) of a)
                        above; and v) any reissues, reexaminations,
                        reregistrations, and extensions of all such patents;

                c)      to the extent that the following contain one or more
                        claims directed to the invention or inventions disclosed
                        in a) above: all counterpart foreign and U.S. patent
                        applications and patents to a) and b) above, including
                        those listed in Appendix A.

                Licensed Patent Rights shall not include b) or c) above to the
                extent that they contain one or more claims directed to new
                matter which is not the subject matter disclosed in a) above.

        2.12    "Research License" means a nontransferable, nonexclusive license
                to make and to use the Licensed Products or Licensed Processes
                as defined by the Licensed Patent Rights solely for purposes of
                research and not for purposes of commercial manufacture or
                distribution or in lieu of purchase.

New Paragraphs 2.13 through 2.15 are added to the Agreement and read as follows:

        2.13    "FDA" means the U.S. Food and Drug Administration.

        2.14    "Affiliate(s)" means any corporation or other business entity
                controlling, controlled by, or under common control with
                Licensee. For this purpose, "control" means direct or indirect
                beneficial ownership of at least fifty percent (50%) interest in
                the income of such corporation or other business.

        2.15    "Combined Product" means a product that contains a Licensed
                Product along with at least one other active component or active
                ingredient not covered by the Licensed Patent Rights.


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<PAGE>   23


Article 3.      GRANT OF RIGHTS

Paragraphs 3.01 and 3.02 are amended to read as follows:

        3.01    PHS hereby grants to Licensee and its Affiliate(s) and Licensee
                and its Affiliate(s) accept, subject to the terms and conditions
                of this Agreement, an exclusive license under the Licensed
                Patent Rights in the Licensed Territory to make and have made,
                to use and have used, to sell and have, sold, to offer to sell,
                and to import any Licensed Products in the Licensed Fields of
                Use and to practice and have practiced any Licensed Processes in
                the Licensed Fields of Use. Licensee shall notify PHS, in
                writing, of any Affiliate included under this Paragraph 3.01,
                and for the purposes of this Agreement, the term Licensee shall
                include such Affiliate

        3.02    This Agreement confers no license or rights by implication,
                estoppel, or otherwise to either party under any patent
                applications or patents (or rights therein) of PHS or of
                Licensee other than Licensed Patent Rights regardless of whether
                such patents are dominant or subordinate to Licensed Patent
                Rights.

New Paragraphs 3.03 through 3.05 are added to the Agreement and read as follows:

        3.03    PHS grants Licensee the benefit of any patent term extensions
                and reregistrations applicable to the Licensed Patent Rights
                and, as long as Licensed Patent Rights are in existence, the
                benefit of any Orphan Drug Act registrations applicable to
                Licensed Products and Licensed Processes and comparable
                extensions and registrations in foreign countries within the
                Licensed Territory. PHS agrees to submit applications to
                appropriate governmental agencies at the request and expense of
                Licensee or to otherwise cooperate, at Licensee's expense, in
                connection with applying for and obtaining such extensions and
                registrations.

        3.04    This Agreement provides no rights to PHS to utilize rights to
                Licensee's solely owned intellectual property, know-how, data or
                regulatory submissions or to disseminate such information to
                third parties, except with Licensee's consent or as otherwise
                required by law.

        3.05    Notwithstanding the grant set forth in Paragraph 3.01 herein, or
                any other provisions of this Agreement, in the event that a
                third party submits a bona fide Application to License PHS
                Inventions to PHS requesting a Non-Exclusive license to an
                indication within the Licensed Field of Use as defined in
                Paragraph 2.05, Licensee will have a period of ninety (90) days
                from the date which Licensee is notified in writing by PHS of
                the third party's application for a Non-Exclusive license to
                submit to PHS an acceptable detailed, written Commercial
                Development Plan and Benchmarks for the indication for which
                third party has applied for a Non-Exclusive license. In the
                event that Licensee fails to submit to PHS the Commercial
                Development Plan and Benchmarks for the indication requested by
                the third party by the end of the ninety (90) day period
                specified in this Paragraph 3.05 such failure will result in the
                grant pursuant to Paragraph 3.01 becoming Non-Exclusive for the
                indication for which the third party has requested a
                Non-Exclusive License.


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<PAGE>   24


Article 4.      SUBLICENSING

Paragraph 4.03 is amended to read as follows:

        4.03    Any sublicenses granted by Licensee shall provide for the
                termination of the sublicense, or the conversion to a license
                directly between such sublicensees, on the one hand, and PHS and
                Licensee, on the other hand, at the option of the sublicensee,
                upon termination of this Agreement under Article 13. Any
                sublicense granted by Licensee shall further provide for the
                termination of the sublicense or the conversion to a license
                directly between such sublicensee, on the one hand, and PHS and
                Licensee, on the other hand at the option of the sublicensee, if
                PHS rescinds a Licensed Field of Use to Licensee and said
                Licensed Field of Use was granted by the Licensee in said
                sublicense. A conversion, in either of such cases, is subject to
                PHS approval, which shall not be unreasonably withheld, and is
                contingent upon acceptance by the sublicensee of the remaining
                provisions of this Agreement.

Article 5.      STATUTORY AND PHS REQUIREMENTS AND RESERVED GOVERNMENT RIGHTS

Paragraphs 5.01, 5.03, and 5.04 are amended to read as follows:

        5.01    PHS reserves on behalf of the Government an irrevocable,
                nonexclusive, nontransferable, royalty-free license for the
                practice of all inventions licensed under the Licensed Patent
                Rights throughout the world by or on behalf of the Government
                and on behalf of any foreign government or international
                organization pursuant to any existing or future treaty or
                agreement to which the Government is a signatory. Prior to the
                First Commercial Sale, Licensee agrees to provide PHS reasonable
                quantities of Licensed Products or materials made through the
                Licensed Processes solely for PHS research use and not for
                purposes of commercial development, manufacture or distribution,
                at a price equal to Licensee's cost of such.

        5.03    Licensee acknowledges that PHS may enter into future Cooperative
                Research and Development Agreements (CRADAs) under the Federal
                Technology Transfer Act of 1986 that relate to the subject
                matter of this Agreement. PHS agrees to notify Licensee, as soon
                as is practical of any proposed CRADA that relates to the
                subject matter of this Agreement. Licensee agrees not to
                unreasonably deny requests for a Research License from such
                future collaborators with PHS when acquiring such rights is
                necessary in order to make a Cooperative Research and
                Development Agreement (CRADA) project feasible. As of the
                effective date of this Agreement, Licensee requests that
                Licensee have an opportunity to join as a party to any proposed
                Cooperative Research and Development Agreement (CRADA).

        5.04    In addition to the reserved license of Paragraph 5.01 above, PHS
                reserves the right to grant such nonexclusive Research Licenses
                directly or to require Licensee to grant nonexclusive Research
                Licenses on commercially reasonable terms. The purpose of this
                Research License is to encourage basic research, whether
                conducted at an academic or corporate facility. In order to
                safeguard the Licensed Patent Rights, however, PHS shall consult
                with Licensee before granting to commercial entities a Research
                License or providing to them research samples of Licensed
                Products or materials made through the Licensed Processes,
                provided however that PHS will not provide materials obtained
                from Licensee under Paragraph 5.01 above to third parties,
                except with Licensee's prior written consent, which shall not be
                unreasonably withheld.





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<PAGE>   25


Article 6.      ROYALTIES AND REIMBURSEMENT

Paragraphs 6.01, 6.02, 6.04, 6.06, and 6.08 through 6.10 are amended to read as
follows:

        6.01    Licensee agrees to pay to PHS a nonrefundable license issue
                royalty as set forth in Appendix C within thirty (30) days from
                the date that this Agreement becomes effective, in part to
                reimburse PHS for the preparation, filing, prosecution, and
                maintenance of all patent applications and patents included
                within the Licensed Patent Rights incurred by PHS prior to the
                effective date of this Agreement. Within sixty (60) days of the
                effective date of this Agreement, PHS shall submit to Licensee a
                detailed statement of such patent expenses previously incurred
                by PHS.

        6.02    Licensee agrees to pay to PHS a nonrefundable minimum annual
                royalty as set forth in Appendix C. The minimum annual royalty
                is due and payable on January 1 of each calendar year and may be
                credited against any earned royalties due for sales made in that
                year. The minimum annual royalty due for the first calendar year
                of this Agreement may be prorated according to the fraction of
                the calendar year remaining between the effective date of this
                Agreement and the next subsequent January 1, and shall be due
                upon the effective date of this Agreement and payable within
                sixty (60) days after the date that this Agreement becomes
                effective. In the event that the first United States Patent
                issues after the payment of the minimum annual royalty for the
                year in which the first United States Patent issues, the first
                payment of the Post-issuance Minimum Annual Royalty will be due
                beginning the January 1 subsequent to the issuance of the
                patent. In the event that the minimum annual royalty, for any
                year, exceeds the earned royalty payable under Paragraph 6.03
                for that same year, the excess minimum annual royalty may be
                carried as a credit against the earned royalties for succeeding
                periods until used in full.

        6.04    Licensee agrees to pay PHS benchmark royalties as set forth in
                Appendix C. The benchmark royalties payable under this Paragraph
                may be credited against any earned royalties due for sales made
                in the year the benchmark royalty is payable. In the event that
                the benchmark royalty, for any year, exceeds the earned royalty
                payable under Paragraph 6.03 for that same year, the excess
                benchmark royalty may be carried as a credit against the earned
                royalties for succeeding periods until used in full.

        6.06    A claim of a patent or patent application licensed under this
                Agreement shall cease to fall within the Licensed Patent Rights
                for the purpose of computing earned royalty payments in any
                given country in the Licensed Territory on the earliest of the
                dates that a) the claim has been abandoned and not continued, b)
                the patent expires or irrevocably lapses, or c) the claim has
                been held to be invalid or unenforceable by an unappealed or
                unappealable decision of a court of competent jurisdiction or
                administrative agency.

        6.08    On sales of Licensed Products by Licensee to sublicensees or
                Affiliates, other than sales of Licensed Products intended for
                resale, or on sales made in other than an arm's-length
                transaction, the value of the Net Sales attributed under this
                Article 6 to such a transaction shall be that which would have
                been received in an arm's-length transaction, based on sales of
                like quantity and quality products on or about the time of such
                transaction. On sales of Licensed Products by Licensee to
                sublicensees or Affiliates which are intended for resale,
                royalties shall be calculated on the basis of Net Sales of
                Licensed Products by any such sublicensee or Affiliate to
                someone other than an Affiliate as provided in Paragraph 6.03
                hereof.




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<PAGE>   26


        6.09    With regard to expenses associated with the preparation, filing,
                prosecution, and maintenance of all patent applications and
                patents included within the Licensed Patent Rights incurred by
                PHS prior to the effective date of this Agreement, and to the
                extent that such expenses exceed the License Issue Royalty as
                set forth in Paragraph 6.01 of this Agreement, Licensee shall
                pay to PHS, as an additional royalty, within sixty (60) days of
                PHS's submission of a statement and request for payment to
                Licensee, an amount equivalent to the difference between the
                License Issue Royalty as set forth in Paragraph 6.01 of this
                Agreement and the total of such patent expenses previously
                incurred by PHS.

        6.10    With regard to expenses associated with the preparation, filing,
                prosecution, and maintenance of all patent applications and
                patents included within the Licensed Patent Rights incurred by
                PHS on or after the effective date of this Agreement, PHS, at
                its sole option, may require Licensee:

                        (a) to pay PHS on an annual basis, within sixty (60)
                        days of PHS's submission of a statement and request for
                        payment, a royalty amount equivalent to all such patent
                        expenses incurred during the previous calendar year(s);
                        or

                        (b) to pay such expenses directly to the law firm
                        employed by PHS to handle such functions within thirty
                        (30) days of Licensee's receipt of such law firm's
                        submission and a statement and request for payment.
                        However, in such event, PHS and not Licensee shall be
                        the client of such law firm.

                Under exceptional circumstances, Licensee may be given the right
                to assume responsibility for the preparation, filing,
                prosecution, or maintenance of any patent application or patent
                included with the Licensed Patent Rights. In that event,
                Licensee shall directly pay the attorneys or agents engaged to
                prepare, file, prosecute, or maintain such patent applications
                or patents and shall provide to PHS copies of each invoice
                associated with such services as well as documentation that such
                invoices have been paid. Any right not assumed by Licensee under
                this Paragraph 6.09 shall be performed by PHS in accordance with
                Article 7.

New Paragraph 6.12 is added to this Agreement and reads as follows:

        6.12    If the Licensee, its sublicensee(s) or Affiliate(s) sells a
                Combined Product, the Net Sales for purposes of earned royalty
                determination under this Article 6 shall be calculated by
                multiplying the Net Sales of the Combined Product by the
                fraction a/(ai-b), where a is the total market price of the
                Licensed Product if sold separately and b is the total market
                price of any other product or component in the Combined Product
                if sold separately. If the Licensed Product is not sold
                separately, then, for purposes of this Paragraph 6.11, the
                market price of such component or product shall be determined by
                assuming a market price at which such component or product
                reasonably could be sold as a separate item. Notwithstanding the
                foregoing, in no event should the royalty on Net Sales due and
                payable to PHS under this Paragraph be reduced to an amount
                equivalent to an earned royalty due under Paragraph 6.03 of
                [ *] or the Minimum Annual Royalty due under Paragraph 6.02
                whichever is less.


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"[ * ]" = omitted, confidential material, which material has been separately
filed with the Securities and Exchange Commission pursuant to a request for
confidential treatment.



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<PAGE>   27


Article 7.      PATENT FILING. PROSECUTION AND MAINTENANCE

Paragraphs 7.01 through 7.03 are amended to read as follows:

        7.01    Except as otherwise provided in Article 6 or in this Article 7,
                PHS agrees to take responsibility for, but to consult with, the
                Licensee in the preparation, filing, prosecution, and
                maintenance of any and all patent applications or patents
                included in the Licensed Patent Rights and shall furnish copies
                of relevant patent-related documents to Licensee or PHS shall
                instruct its patent representative to provide said copies
                directly to Licensee. At Licensee's request and expense, PHS
                shall cooperate with Licensee in preparing, filing, prosecuting,
                and maintaining such patent applications and patents included in
                the Licensed Patent Rights as reasonably requested by Licensee
                from time to time. Notwithstanding the foregoing, PHS will
                retain principal power of attorney and primary control over the
                preparation, filing, prosecution and maintenance of said patent
                applications and patents. PHS shall provide Licensee with
                reasonable opportunity to comment on any document PHS intends to
                file or causes to be filed with the relevant patent office.

        7.02    Upon PHS's written request, or at Licensee's option, Licensee
                shall assume the responsibility for the preparation, filing,
                prosecution, and maintenance of any and all patent applications
                or patents included in the Licensed Patent Rights and shall, on
                an ongoing basis, promptly furnish copies of all relevant
                patent-related documents to PHS. In such event, Licensee shall,
                subject to the prior approval of PHS, select registered patent
                attorneys or patent agents to provide such services on behalf of
                Licensee and PHS. PHS shall provide appropriate powers of
                attorney and other documents necessary to undertake such actions
                to the patent attorneys or patent agents providing such
                services, and PHS shall otherwise cooperate fully with Licensee,
                its attorneys and agents in the preparation, filing,
                prosecution, and maintenance of any and all patent applications
                or patents included in the Licensed Patent Rights and shall
                provide Licensee with complete copies of any and all documents
                or other materials that Licensee deems necessary to undertake
                such responsibilities. Licensee and its attorneys or agents
                shall consult with PHS in all aspects of the preparation,
                filing, prosecution and maintenance of patent applications and
                patents included within the Licensed Patent Rights and shall
                provide PHS sufficient opportunity to comment on any document
                that Licensee intends to file or to cause to be filed with the
                relevant intellectual property or patent office.

        7.03    At any time, following Licensee's assumption of the
                responsibility for patent matters at PHS's request in accordance
                with Paragraph 7.02, PHS may provide Licensee with written
                notice that PHS wishes to assume control of the preparation,
                filing, prosecution, and maintenance of any and all patent
                applications or patents included in the Licensed Patent Rights.
                If PHS elects to assume such responsibilities, Licensee agrees
                to cooperate fully with PHS, its attorneys, and agents in the
                preparation, filing, prosecution, and maintenance of any and all
                patent applications or patents included in the Licensed Patent
                Rights and to provide PHS with complete copies of any and all
                documents or other materials that PHS deems necessary to
                undertake such responsibilities. Licensee shall be responsible
                for all costs associated with transferring patent prosecution
                responsibilities to an attorney or agent of PHS's choice,
                provided, however, that if PHS elects to assume control of the
                preparation, filing, prosecution and maintenance of any and all
                patent applications or patents included in the Licensed Patent
                Rights for a reason other than Licensee's failure to perform
                under this Agreement, then PHS shall be responsible for all
                costs associated with transferring patent prosecution
                responsibilities to an attorney or agent of PHS's choice.


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<PAGE>   28


Article 8.      RECORD KEEPING

Paragraph 8.01 is amended to read as follows:

        8.01    Licensee agrees to keep accurate and correct records of Licensed
                Products made, used, sold, or imported and Licensed Processes
                practiced under this Agreement appropriate to determine the
                amount of royalties due PHS. Such records shall be retained for
                at least five (5) years following a given reporting period and
                shall be available during normal business hours upon five (5)
                business days prior written notice from PHS to Licensee for
                inspection at the expense of PHS by an accountant or other
                designated auditor selected by PHS for the sole purpose of
                verifying reports and payments hereunder. The accountant or
                auditor shall only disclose to PHS information relating to the
                accuracy of reports and payments made under this Agreement. If
                an inspection shows an under reporting or underpayment in excess
                of five percent (5%) for any twelve (12) month period, then
                Licensee shall reimburse PHS for the cost of the inspection at
                the time Licensee pays the unreported royalties, including any
                late charges as required by Paragraph 9.08 of this Agreement.
                All payments required under this Paragraph shall be due within
                thirty (30) days of the date PHS provides Licensee notice of the
                payment due.


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<PAGE>   29


Article 9.      REPORTS ON PROGRESS. BENCHMARKS. SALES AND PAYMENTS

Paragraphs 9.02, 9.04, and 9.06 are amended to read as follows:

        9.02    Licensee shall provide written annual reports on its product
                development progress or efforts to commercialize under the
                Commercial Development Plan for each of the Licensed Fields of
                Use within sixty (60) days after December 31 of each calendar
                year. These progress reports shall include, but not be limited
                to: progress on research and development, status of applications
                for regulatory approvals, manufacturing, sublicensing,
                marketing, importing, and sales during the preceding calendar
                year, as well as plans for the present calendar year. PHS also
                encourages these reports to include information on any of
                Licensee's public service activities that relate to the Licensed
                Patent Rights. If reported progress differs from that projected
                in the Commercial Development Plan and Benchmarks, Licensee
                shall explain the reasons for such differences. To the extent
                such differences are not the result of Licensee's failure to
                perform in accordance with the requirements of Paragraph 10.01
                hereunder, Licensee and PHS shall amend the Commercial
                Development Plan and Benchmarks accordingly. The parties
                recognize and acknowledge that the Commercial Development Plan
                and Benchmarks represent an estimate of the time frames and
                steps necessary for development of the Licensed Product(s). As
                the profiles of the Licensed Product(s) and the Licensed
                Process(es) become more fully understood by the parties hereto,
                including without limitation, the emerging
                pharmacologic/toxicologic profile in human subjects and
                technical issues relating to the manufacture of Licensed
                Product(s), adjustments and modifications to the Commercial
                Development Plan and Benchmarks may be necessary. In addition,
                preclinical and clinical work in addition to that noted in the
                Commercial Development Plan may be reasonable or necessary in
                order to satisfy the FDA or other regulatory requirements,
                requests, or concerns regarding the Licensed Product(s) or
                Licensed Process(es). Accordingly, in any such annual report,
                Licensee may propose amendments to the Commercial Development
                Plan and/or the Benchmarks, acceptance of which by PHS may not
                be denied unreasonably. Licensee agrees to provide any
                additional information reasonably required by PHS to evaluate
                Licensee's performance under this Agreement. Licensee may amend
                the Benchmarks at any time upon written consent by PHS. PHS
                shall not unreasonably withhold approval of any request of
                Licensee to extend the time periods of this schedule if such
                request is supported by a reasonable showing by Licensee of
                diligence in its performance under the Commercial Development
                Plan and toward bringing the Licensed Products to the point of
                Practical Application as defined in 37 C.F.R. 404.3(d). Licensee
                shall amend the Commercial Development Plan and Benchmarks at
                the request of PHS to address any Licensed Fields of Use not
                specifically addressed in the plan originally submitted.

        9.04    Licensee shall submit to PHS within sixty (60) days after each
                calendar half-year ending June 30 and December 31 a royalty
                report setting forth for the preceding half-year period the
                amount of the Licensed Products sold or Licensed Processes
                practiced by or on behalf of Licensee in each country within the
                Licensed Territory, the Net Sales, and the amount of royalty
                accordingly due. With each such royalty report, Licensee shall
                submit payment of the earned royalties due. If no earned
                royalties are due to PHS for any reporting period, the written
                report shall so state. The royalty report shall be certified as
                correct by an authorized officer of Licensee and shall include a
                detailed listing of all deductions made under Paragraph 2.10 to
                determine Net Sales and the calculations made under Article 6 to
                determine royalties due.

        9.06    Royalties due under Article 6 shall be paid in U.S. dollars. For
                conversion of foreign currency to U.S. dollars, the conversion
                rate shall be the New York foreign exchange rate quoted in The
                Wall Street Journal on the day prior to the day that the payment
                is due. All checks and bank drafts shall be drawn on United
                States banks and shall be payable, as appropriate, to
                "NIH/Patent Licensing." All such payments shall be sent to the
                following



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<PAGE>   30


                address: NIH, P.O. Box 360120, Pittsburgh, PA 15251-6120. Any
                loss of exchange, value, taxes, or other expenses incurred in
                the transfer or conversion to U.S. dollars shall be paid
                entirely by Licensee. The royalty report required by Paragraph
                9.04 of this Agreement shall accompany each such payment, and a
                copy of such report shall also be mailed to PHS at its address
                for notices indicated on the Signature Page of this Agreement.

Article 10.     PERFORMANCE

Paragraph 10.01 is amended to read as follows:

        10.01   Licensee shall use its reasonable best efforts to bring the
                Licensed Products and Licensed Processes to Practical
                Application. "Reasonable best efforts" for the purposes of this
                provision shall include substantial adherence to the Commercial
                Development Plan at Appendix F and substantial performance of
                the Benchmarks at Appendix E as may be amended from time to time
                by mutual written consent. The efforts of sublicensees and
                Affiliates shall be considered the efforts of Licensee. To the
                extent that the Benchmarks or development obligations set forth
                in Appendix E differ from or conflict with those set forth in
                the Commercial Development Plan in Appendix F, Appendix E shall
                be considered to supersede Appendix F and the Commercial
                Development Plan in Appendix F shall be amended to be consistent
                with Appendix E.

New Paragraph 10.03 is added to this Agreement and reads as follows:

        10.03   In the event that an investigator is conducting clinical trials
                related to the Licensed Products and/or Licensed Processes and
                that clinical trial is sponsored or funded by PHS under a grant
                or contract from PHS and Licensee enters into a separate
                agreement with the investigator or the investigator's
                Institution to provide Licensee with preclinical and/or clinical
                data, including but not limited to, Investigational New Drug
                Applications (IND's), Safety Reports for Serious and Unexpected
                Adverse Events as defined in 37 C.F.R. Section 312.32(a)
                submitted to the FDA, and IND Annual Reports submitted to the
                FDA, relating to the Licensed Products and Licensed Processes
                from said clinical trial sponsored or funded by PHS under a
                grant or contract from PHS, Licensee agrees to provide, at
                Licensee's cost of such, to said investigators conducting
                clinical trials sponsored or funded by PHS under grant or
                contract from PHS, sufficient quantities of Licensed Products in
                a form suitable for conducting said clinical trial to complete
                the aforesaid clinical trial carried out under said PHS grant or
                contract.

Article 11:     INFRINGEMENT AND PATENT ENFORCEMENT

Paragraph 11.04 is amended to read as follows:

        11.04   In any action under Paragraphs 11.02 or 11.03, the expenses
                including costs, fees, attorney fees, and disbursements
                ("Licensee's Expenses"), shall be paid by Licensee. The value of
                any recovery, including, royalties, attorney fees, costs, fees,
                and disbursements ("Recovery"), less Licensee's Expenses,
                actually received by Licensee through court judgment,
                arbitration, or settlement shall be treated as Net Sales and
                subject to earned royalties. The payment due to PHS under this
                Paragraph can also be described in the following manner:

                Amount due to PHS = [ * ] * (Recovery - Licensee's Expenses).



"[ * ]" = omitted, confidential material, which material has been separately
filed with the Securities and Exchange Commission pursuant to a request for
confidential treatment.



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<PAGE>   31


Article 12:     NEGATION OF WARRANTIES AND INDEMNIFICATION

Paragraph 12.05 is amended to read as follows:

        12.05   Licensee shall indemnify and hold PHS, its employees, students,
                fellows, agents, and consultants (the "Indemnified Parties")
                harmless from and against all liability, demands, damages,
                expenses, and losses, including but not limited to death,
                personal injury, illness, or property damage (the "Indemnified
                Losses") suffered by an Indemnified Party in connection with or
                arising out of: a) the use by or on behalf of Licensee, its
                sublicensees, directors, employees, or third parties of any
                Licensed Patent Rights, or b) the design, manufacture,
                distribution, or use of any Licensed Products, Licensed
                Processes or materials by Licensee, or other products or
                processes developed in connection with or arising out of the
                Licensed Patent Rights. Licensee agrees to maintain a liability
                insurance program consistent with sound business practice.
                Notwithstanding any other provision to the contrary, Licensee
                shall have no obligation to indemnify an Indemnified Party from
                an Indemnified Loss in connection with or arising out of the
                design, manufacture, distribution or use of any Licensed Product
                or Licensed Process by or on behalf of the Indemnified Party.

Article 13.     TERM, TERMINATION AND MODIFICATION OF RIGHTS

Paragraphs 13.01, 13.03, 13.05, 13.06 and 13.09 are amended to read as follows:

        13.01   This Agreement is effective when signed by all parties and shall
                extend on a country by country basis to the expiration of the
                last to expire of the Licensed Patent Rights in each respective
                country unless sooner terminated as provided in this Agreement.

        13.03   In the event that Licensee becomes insolvent, files a petition
                in bankruptcy, has such a petition filed against it, determines
                to file a petition in bankruptcy, or receives notice of a third
                party's intention to file an involuntary petition in bankruptcy,
                Licensee shall immediately notify PHS in writing, and PHS shall
                thereupon have the right to terminate this Agreement.

        13.05   PHS shall specifically have the right to terminate or, with
                Licensee's consent, modify, at its option, this Agreement, if
                PHS determines that the Licensee: 1) is not using its reasonable
                best efforts to execute the Commercial Development Plan
                submitted with its request for a license and the Licensee cannot
                otherwise demonstrate to PHS's satisfaction that the Licensee
                has taken, or can be expected to take within a reasonable time,
                effective steps to achieve Practical Application of the Licensed
                Products or Licensed Processes; 2) has not used its reasonable
                best efforts to achieve the Benchmarks as may be modified under
                Paragraph 9.02; 3) has willfully made a false statement of, or
                willfully omitted, a material fact in the license application or
                in any report required by this Agreement; 4) has committed a
                material breach of a covenant or agreement contained in the
                license; 5) is not keeping Licensed Products or Licensed
                Processes reasonably available to the public after commercial
                use commences; 6) cannot reasonably satisfy unmet health and
                safety needs; or 7) cannot reasonably justify a failure to
                comply with the domestic production requirement of Paragraph
                5.02 unless waived. In making this determination, PHS will take
                into account the normal course of such commercial development
                programs conducted with sound and reasonable business practices
                and judgment and the annual reports submitted by Licensee under
                Paragraph 9.02. Prior to invoking this right, PHS shall give
                written notice to Licensee providing Licensee specific notice
                of, and a ninety (90) day opportunity to respond to, PHS's
                concerns as to the previous items 1) to 7). If Licensee fails to
                alleviate PHS's concerns as to the previous items 1) to 7) or
                fails to initiate corrective action to PHS's reasonable
                satisfaction, PHS may terminate this Agreement.



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        13.06   When the public health and safety so require, and after written
                notice to Licensee providing Licensee a sixty (60) day
                opportunity to respond, PHS shall have the right to require
                Licensee to grant sublicenses to responsible applicants, on
                commercially reasonable terms, in any Licensed Fields of Use
                under the Licensed Patent Rights, unless Licensee can reasonably
                demonstrate that the granting of the sublicense would not
                materially increase the availability to the public of the
                subject matter of the Licensed Patent Rights. PHS will not
                require the granting of a sublicense, as provided in this
                Paragraph 13.06, unless the responsible applicant has first
                negotiated in good faith with Licensee.

        13.09   Within ninety (90) days of expiration or termination of this
                Agreement under this Article 13, a final report shall be
                submitted by Licensee. Any royalty payments, including those
                incurred but not yet paid (such as the full minimum annual
                royalty), and those related to patent expense, due to PHS shall
                become immediately due and payable upon termination or
                expiration. If terminated under this Article 13, sublicensees
                may elect to convert their sublicenses to direct licenses with
                PHS and Licensee pursuant to Paragraph 4.03.

New Paragraph 13.10 is added to this Agreement and reads as follows:

        13.10   Any expiration or termination of this Agreement shall not
                preclude Licensee from exercising any rights it may have under
                applicable law with respect to the commercial or other
                exploitation of the Licensed Patent Rights.

Article 14.     GENERAL PROVISIONS

Paragraphs 14.01, 14.03, 14.06, 14.07, 14.10 through 14.11, are amended to read
as follows:

        14.01   Neither Party may waive or release any of its rights or
                interests in this Agreement except in writing. The failure of
                either Licensee or the Government to assert a right hereunder or
                to insist upon compliance with any term or condition of this
                Agreement shall not constitute a waiver of that right by such
                Party or excuse a similar subsequent failure to perform any such
                term or condition by the other Party.

        14.03   The provisions of this Agreement are severable, and in the event
                that any provision of this Agreement shall be determined by a
                court of competent jurisdiction to be invalid or unenforceable
                under any controlling body of law, such determination shall not
                in any way affect the validity or enforceability of the
                remaining provisions of the Agreement.

        14.06   All notices required or permitted by this Agreement shall be
                given by prepaid, first class, registered or certified mail or
                by a national express/overnight delivery service, properly
                addressed to the other Party at the address designated on the
                Signature Page hereto, or to such other address as may be
                designated in writing by such other Party. A notice shall be
                considered timely if such notice is received on or before the
                established deadline date or sent on or before the deadline date
                as verifiable by U.S. Postal Service postmark or dated receipt
                or other form indicating the date of deposit with a national
                express/overnight delivery service.






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        14.07   This Agreement shall not be assigned by Licensee except: a) with
                the prior written consent of PHS, such consent not to be
                withheld unreasonably; or b) without the prior written consent
                of PHS, to the successor of that part Licensee's business to
                which this Agreement pertains. Licensee shall notify PHS within
                ten (10) days of any assignment of this Agreement by Licensee,
                and Licensee shall pay PHS, as an additional royalty, [ * ] of
                the fair market value of any consideration received for any
                assignment of this Agreement within thirty (30) days of such
                assignment.

        14.10   Licensee agrees to mark the Licensed Products or their packaging
                sold in the United States with all applicable U.S. patent
                numbers and similarly to indicate "Patent Pending" status. All
                Licensed Products manufactured in, shipped to, or sold in other
                countries shall be marked in such a manner as to preserve PHS's
                and Licensee's patent rights in such countries, if any.

        14.11   By entering into this Agreement, PHS does not directly or
                indirectly endorse any product or service provided, or to be
                provided, by Licensee whether directly or indirectly related to
                this Agreement. Licensee shall not state or imply that this
                Agreement is an endorsement by the Government, PHS, any other
                Government organizational unit, or any Government employee.
                Additionally, Licensee shall not use the names of NIH, CDC, PHS,
                or DHHS or the Government or their employees in any advertising,
                promotional, or sales literature without the prior written
                consent of PHS, except that Licensee may publicly identify the
                existence of this Agreement and is not prohibited from using
                publicly available factual information regarding the Licensed
                Patent Rights, Licensed Products, and Licensed Processes
                specifically including, but not limited to, the names of the
                inventors as they appear on the Licensed Patent Rights and their
                associated NIH institutes, without such consent.

New Paragraphs 14.15 through 14.16 are added to this Agreement and read as
follows:

        14.15   Upon termination or expiration of this Agreement, Licensee and
                any sublicensee or Affiliates shall be entitled to sell any
                Licensed Products manufactured prior to the date of such
                termination or expiration for up to an additional six (6) month
                period subject to the obligations of Articles 6, 8 and 9.

        14.16   To the extent permitted by law, government regulation and PHS
                policy, PHS agrees to maintain in confidence and not disclose
                any confidential information provided by Licensee to PHS under
                this Agreement or the terms and conditions of this Agreement.
                Licensee will mark such information as confidential.


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"[ * ]" = omitted, confidential material, which material has been separately
filed with the Securities and Exchange Commission pursuant to a request for
confidential treatment.




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                     APPENDIX E--Benchmarks and Performance


Licensee agrees to the following Benchmarks for its performance under this
Agreement and, within thirty (30) days of achieving a Benchmark, shall notify
PHS that the Benchmark has been achieved.

RegeneRx Biopharmaceuticals Inc. (RegeneRx) intends to develop the Licensed
Product for Wound Healing. [ * ]





               The remainder of this page intentionally left blank
















"[ * ]" = omitted, confidential material, which material has been separately
filed with the Securities and Exchange Commission pursuant to a request for
confidential treatment.




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[ * ]





























"[ * ]" = omitted, confidential material, which material has been separately
filed with the Securities and Exchange Commission pursuant to a request for
confidential treatment.




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<PAGE>   36


                     APPENDIX F--Commercial Development Plan


[ * ]


























"[ * ]" = omitted, confidential material, which material has been separately
filed with the Securities and Exchange Commission pursuant to a request for
confidential treatment.




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<PAGE>   37








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