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                                                            EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (the "Agreement"), made this 1st day of October, 2001,
is entered into by Palatin Technologies, Inc., a Delaware corporation with its
principal place of business at 103 Carnegie Center, Suite 200, Princeton, New
Jersey 08540 (the "Company"), and Carl Spana, residing at 117 Winnebago Road,
Yonkers, New York, 10710 (the "Employee").


The Company desires to continue employing the Employee, and the Employee desires
to continue to be employed by the Company. In consideration of the mutual
covenants and promises contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged by
the parties hereto, the parties agree as follows:

1.0  TERM OF EMPLOYMENT. The Company hereby agrees to continue employing the
     Employee, and the Employee hereby accepts the continuation of employment
     with the Company, upon the terms set forth in this Agreement, for a two
     year period commencing on October 1, 2001 (the "Commencement Date") and
     ending on the second anniversary of the Commencement Date, provided,
     however, that on the second anniversary of the Commencement Date and on
     each anniversary thereafter, such period shall be automatically extended
     for additional one year periods unless, at least thirty (30) days prior
     thereto, either party shall deliver to the other written notice that such
     period shall not be extended, in which case this Agreement will terminate
     upon the expiration of its then existing term (such period, as it may be
     extended, the "Employment Period"), unless sooner terminated in accordance
     with the provisions of Section 4.

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2.0  POSITION TITLE & CAPACITY

     2.1  The Employee shall serve as Chief Executive Officer and President,
          with responsibilities consistent with this position and as the
          Company's Board of Directors (the "Board") may determine from time to
          time, with powers and duties as may be determined, from time to time,
          by the Board, consistent with the Employee's position. The Employee
          shall report to the Company's Board of Directors. The Employee shall
          be based at the Company's research facility, which is currently based
          in Edison, New Jersey, or corporate headquarters, which is currently
          based in Princeton, New Jersey, both of which are anticipated to be
          relocated to Cranbury, New Jersey in the latter part of calendar year
          2001 or early 2002. The Employee shall also be available for travel at
          such times and to such places as may be reasonably necessary in
          connection with the performance of his duties hereunder.

     2.2  The Employee hereby accepts such employment and agrees to undertake
          the duties and responsibilities inherent in such position and such
          other duties and responsibilities as the Board shall from time to time
          reasonably assign to him. The Employee agrees to devote substantially
          all of his business time, attention and energies to the business and
          interests of the Company during the Employment Period. The Employee
          agrees to abide by the rules, regulations, instructions, personnel
          practices and policies of the Company and any changes therein which
          may be adopted from time to time by the Company. The Employee
          acknowledges receipt of copies of all such rules and policies
          committed to writing as of the date of this Agreement.

     2.3  The Employee specifically covenants, warrants and represents to the
          Company that he has the full, complete and entire right and authority
          to enter into this Agreement, that he has no agreement, duty,
          commitment or responsibility of any kind or nature whatsoever with any
          corporation, partnership, firm, company, joint venture or other entity
          or other person which would conflict in any manner whatsoever with any
          of his duties, obligations or responsibilities to the Company pursuant
          to this Agreement, that he is not in possession of any document or
          other tangible property of any corporation, partnership, firm,
          company, joint venture or other entity or other person of a
          confidential or

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          proprietary nature which would conflict in any manner whatsoever with
          any of his duties, obligations or responsibilities to the Company
          pursuant to his Agreement, and that he is fully ready, willing and
          able to perform each and all of his duties, obligations and
          responsibilities to the Company pursuant to this Agreement.

3.0  COMPENSATION AND BENEFITS. During the Employment Period, unless sooner
     terminated in accordance with the provisions of Section 4, the Employee
     shall receive the following compensation and benefits:

     3.1  SALARY. The Company shall pay the Employee, in equal semi-monthly
          installments or otherwise in accordance with the Company's standard
          payroll policies as such policies may exist from time to time, an
          annual base salary of $290,000. Such salary shall be subject to review
          thereafter, as determined by the Company's Compensation Committee and
          approved by the Board, on an annual basis, but the Board shall not
          decrease the Employee's annual base salary at any such annual review.

     3.2  CASH PERFORMANCE BONUS. The Employee will be included in the Company's
          annual discretionary bonus compensation program based on a June 30th
          year end in an amount to be decided by the Company's Compensation
          Committee and approved by the Board, payable no later than September
          30th of each year during the Employment Period. Such performance bonus
          compensation shall be based upon yearly objectives mutually agreed
          upon by and between the Employee and the Company.

     3.3  STOCK OPTIONS. As additional compensation for services rendered, the
          Company has granted to the Employee, the right and option (the
          "Option") to purchase 100,000 shares of the Company's Common Stock
          (the "Option Shares"), subject to the vesting schedule set forth in
          subparagraph c hereof and the adjustments set forth in subparagraph g
          hereof. The Option is intended to be, to the maximum extent possible,
          a qualified incentive stock option, subject to the aggregate fair
          market value and other provisions of the Internal Revenue Service
          Code, as described in the Company's 1996 Stock Option Plan (the
          "Plan"), a copy of which is attached hereto as Exhibit A. The Option
          is in all respects limited and conditioned as provided hereunder, and
          pursuant to the provisions of the Plan. To the extent there are any
          inconsistencies between this Agreement and the provisions of the Plan,
          the provisions of the Plan shall govern.

          (a)  PURCHASE PRICE. Except as otherwise provided in subparagraph g
               hereof, the purchase price (the "Option Price")

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               of the Option Shares shall be $3.19, representing the closing
               sales price per share on October 1, 2001, as stated on the option
               grant as approved by the Company's Board of Directors.

          (b)  OPTION TERM. Except as otherwise provided in the Plan or in this
               Agreement, the Option shall expire on the first to occur of: (i)
               24 months following the Employee's termination of employment, or
               (ii) 10 years from the Commencement Date.

          (c)  EXERCISE OF OPTION.

               (i)  Except as otherwise provided in the Plan and under section
                    3.3b hereof, the right of the Employee to exercise the
                    Option is conditioned upon the Employee: (A) being in the
                    employ of the Company, whether pursuant to this Agreement or
                    otherwise, or (B) serving as a director of the Company.

               (ii) The Options shall vest (except as otherwise provided in the
                    Plan) as to 25,000 Option Shares on the Commencement Date
                    and 25,000 Option Shares on each of the next three (3)
                    anniversaries of the Commencement Date. (iii) The Options
                    may be exercised, to the extent vested, in whole or in part,
                    at any time or times prior to the expiration or other
                    termination thereof.

          (d)  METHOD OF EXERCISING OPTIONS.

               (i)  The Option may be exercised by giving written notice, in
                    form substantially as set forth in the Company's Stock
                    Option Exercise Form, a copy of which is attached hereto as
                    Exhibit B, to the Company at its principal office,
                    specifying the number of Option Shares to be purchased and
                    accompanied by payment in full of the aggregate purchase
                    price for such Option Shares. Only full shares shall be
                    delivered and any fractional share which might otherwise be
                    deliverable upon exercise of the Option shall be forfeited.

               (ii) The purchase price for the Option Shares shall be payable
                    (A) in cash or its equivalent, or (B) at the discretion of
                    the Committee, in accordance with a cashless exercise
                    program established with a securities brokerage firm, and
                    approved by the Committee.

               (iii) Upon receipt of such notice and payment, the Company,
                    within three (3) business days after Exercise, shall deliver
                    or cause to be delivered a certificate or certificates
                    representing the Option Shares with respect to which the
                    Option is exercised. The certificate or certificates for
                    such Option Shares shall be registered in the name of the

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                    person exercising the Option (or, if the Employee shall so
                    request in the notice exercising the Option, in the name of
                    the Employee and his spouse, jointly, with right of
                    survivorship) and shall be delivered as provided above to or
                    upon the written order of the person exercising the Option.

               (iv) In the event the Option is exercised by any person after the
                    death or Disability of the Employee, such notice shall be
                    accompanied by appropriate proof of the right of such person
                    to exercise the Option. All Option Shares purchased upon the
                    exercise of the Option as provided herein shall be fully
                    paid and non-assessable by the Company.

          (e)  NON-TRANSFERABILITY OF OPTION. The Option may not be assigned or
               transferred, in whole or in part, by the Employee, otherwise than
               by will or by the laws of descent and distribution. During the
               lifetime of the Employee, the Option shall be exercisable only by
               the Employee or, in the event of his Disability, by his legal
               representative.

          (f)  WITHHOLDING OF TAXES. The obligation of the Company to deliver
               Option Shares upon the exercise of any Option shall be subject to
               any applicable federal, state and local tax withholding
               requirements.

          (g)  ADJUSTMENTS. The number of Option Shares and the Option Price
               shall be adjusted as set forth herein:

               (i)  In the event that a stock dividend shall be declared on the
                    Common Stock payable in shares of the Common Stock, the
                    Option Shares shall be adjusted by adding to each Option
                    Share the number of shares which would be distributed
                    thereon if such Option Share had been outstanding on the
                    date fixed for determining the shareholders entitled to
                    receive such stock dividend.

               (ii) In the event that the outstanding shares of the Common Stock
                    shall be changed into or exchanged for a different number or
                    kind of shares of stock or other securities of the Company
                    whether through re-capitalization, stock split, combination
                    of shares, or otherwise, then there shall be substituted for
                    each Option Share the number and kind of shares of stock or
                    the securities into which each outstanding share of the
                    Common Stock shall be so changed or for which each such
                    share shall be exchanged.

               (iii) In the event that the outstanding shares of the Common
                    Stock shall be changed into or exchanged for shares of stock
                    or other securities of another corporation, whether through
                    reorganization, sale of assets, merger or consolidation in
                    which the Company is the surviving corporation, then there
                    shall be substituted for each Option Share the number and
                    kind of shares of stock or the securities into which

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                    each outstanding share of the Common Stock shall be so
                    changed or for which each such share shall be exchanged.

          (h)  SHARE OWNERSHIP. Neither the Employee nor the Employee's legal
               representatives nor the executors or administrators of his estate
               shall be or be deemed to be the holder of any share of Common
               Stock covered by an Option unless and until a certificate for
               such share shall have been issued.

     3.4  FRINGE-BENEFITS. The Employee shall be entitled to participate in all
          benefit programs that the Company establishes and makes available to
          its employees, if any, to the extent that the Employee's position,
          tenure, salary, age, health and other qualifications make him eligible
          to participate. The Employee shall also be entitled to holidays and
          annual vacation leave in accordance with the Company's policy as it
          exists from time to time.

     3.5  REIMBURSEMENT OF EXPENSES. The Company shall reimburse the Employee
          for all reasonable travel, entertainment and other expenses incurred
          or paid by the Employee in connection with, or related to, the
          performance of his duties, responsibilities or services under this
          Agreement, upon presentation by the Employee of documentation, expense
          statements, vouchers and/or such other supporting information as the
          Company may request, provided however, that the amount available for
          such travel, entertainment and other expenses may be fixed in advance
          by the Board.

     3.6  INSURANCE. The Employee will be covered under the Company's Directors'
          and Officers' liability insurance to the same extent the Company's
          directors and other officers are covered.

4.0  EMPLOYMENT TERMINATION. The employment of the Employee by the Company
     pursuant to this Agreement shall terminate upon the occurrence of any of
     the following:

     4.1  Expiration of the Employment Period in accordance with Section 1;

     4.2  At the election of the Company, for Cause (as defined in Section 6),
          immediately upon written notice by the Company to the Employee, which
          notice of termination shall have been approved by a majority of the
          Board;

     4.3  Immediately upon the death or determination of Disability (as defined
          in Section 6) of the Employee;

     4.4  At the election of the Employee, for Good Reason (as defined in
          Section 6), immediately upon written

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          notice of not less than sixty (60) days prior to termination by the
          Employee to the Company;

     4.5  At the election of the Employee, within twelve (12) months following a
          Change in Control (as defined in Section 6), immediately upon written
          notice by the Employee to the Company; 4.6 At the election of either
          party, upon written notice of termination (the "Notice of
          Termination").

5.0  EFFECT OF TERMINATION

     5.1  COMPENSATION & BENEFITS

          (a)  As referenced in this section, compensation following the
               Employee's termination shall be in the form of severance.
               Severance will be based on the employee's base salary in effect
               as of the employee's last day of employment, and will be paid in
               installments in accordance with the Company's regular payroll
               schedule in effect at the time of termination.

          (b)  Severance is not considered compensation for purposes of employee
               and employer matching contributions under the 401(k) plan;

          (c)  As referenced in this section, upon termination of the Employee's
               employment with the Company, medical and dental benefits will be
               available to the Employee, at his election, solely pursuant to
               the provisions of COBRA with the Company paying the full cost of
               COBRA coverage for a period up to 18 months if employment is
               terminated for any reason except an Employee resignation without
               Good Reason (as defined in Section 6) and a Company discharge for
               Cause. If the Employee is discharged for Cause or the Employee
               resigns without Good Reason, the Employee will be required to
               remit the COBRA cost (102% of total benefit cost) of coverage .

          (d)  Upon termination of the Employee's employment with the Company,
               apart from the Employee's election under COBRA to continue
               medical and dental benefits (as described in Section 5.1c), the
               Employee will cease to be eligible for participation in the
               Company's health and welfare insurance and any other fringe
               benefit programs that pursuant to their contracts or Company
               policy require an active employee status.

     5.2  TERMINATION BY THE COMPANY OR AT ELECTION OF THE EMPLOYEE (OTHER THAN
          FOR GOOD REASON).

          (a)  If the Employee elects to terminate employment pursuant to
               Section 4.6, no severance and/or benefits shall be paid, and the
               Employee shall be entitled only to receive payment of his earned
               but unpaid salary, and accrued vacation, as of his last day of
               actual employment by the Company (the "Date of Termination");

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          (b)  If the Company terminates the Employee pursuant to Section 4.6,
               the Company shall pay to the Employee his salary in effect at
               that time for the greater of an twenty-four (24) month period
               following the Date of Termination, or for the duration of the
               then current Employment Period, plus medical and dental benefits
               (as described in Section 5.1c);

          (c)  If the Company terminates the Employee for Cause pursuant to
               Section 4.2, no severance and/or benefits shall be paid, and the
               Employee shall be entitled only to receive payment of his earned
               but unpaid salary, and accrued vacation, as of the Date of
               Termination. Employee may elect COBRA medical and dental
               benefits, in which case the Employee will be required to remit
               the COBRA cost (102% of total benefit cost) of coverage.

     5.3  TERMINATION BY EMPLOYEE ELECTION FOR GOOD REASON. If the Employee
          terminates employment at his election for Good Reason pursuant to
          Section 4.4, the Company shall pay to the Employee his salary in
          effect at that time for the greater of an eighteen (24) month period
          following the Date of Termination, or for the duration of the then
          current Employment Period, plus medical and dental benefits (as
          described in Section 5.1c).

     5.4  TERMINATION FOLLOWING A CHANGE IN CONTROL. If the Employee or Company
          terminates the employment relationship following a Change In Control
          pursuant to Section 4.5:

          (a)  The Company shall pay to the Employee his annual salary in effect
               at that time in a lump sum amount, calculated at two (2.0) times
               such annual salary, within five (5) business days following the
               Date of Termination plus medical/dental care benefits (as
               described in Section 5.1c); (

          b)   All options to purchase shares of capital stock of the Company
               previously granted to the Employee pursuant to any stock option
               plan with the Company which have not vested at such time shall
               immediately vest and become fully exercisable in accordance with
               their terms, and shall remain exercisable for a period of 24
               months following the Date of Termination;

          (c)  For a six (6) month period after the Date of Termination, the
               Company shall reimburse the Employee for reasonable fees and
               expenses incurred by him for the purpose of locating employment
               in an amount, not to exceed $25,000, mutually agreed upon by and
               between the Employee and the Company, including the fees and
               expenses of consultants and other persons retained by him for
               such purpose, promptly, within ten days, receipt by the Company
               of satisfactory evidence of payment of such fees and expenses.

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     5.5  TERMINATION BY REASON OF THE EMPLOYEE'S DEATH OR DISABILITY. If, prior
          to the expiration of the Employment Period, the Employee's employment
          is terminated by the Employee's death or Disability pursuant to
          Section 4.3,

          (a)  The Company shall pay to the Employee, or in the case of the
               Employee's death, to the estate of the Employee, the severance
               and medical and dental benefits (as described in Section 5.1c).

          (b)  All options to purchase shares of capital stock of the Company
               previously granted to the Employee pursuant to any stock option
               plan with the Company which have not vested at such time shall
               immediately vest and become fully exercisable in accordance with
               their terms, and shall remain exercisable for a period of 24
               months following the Date of Termination.

     5.6  WITHHOLDING AND DEDUCTIONS. (a) All payments hereunder shall be
          subject to withholding and to such other deductions as shall at the
          time of such payment be required pursuant to any income tax or other
          law, whether of the United States or any other jurisdiction, and, in
          the case of payments to the executors or administrators to the
          Employee's estate, the delivery to the Company of all necessary tax
          waivers and other documents. (b) In the event the Employee is required
          pursuant to Section 4999 of the Internal Revenue Code to pay (through
          withholding or otherwise) an excise tax on "excess parachute payments"
          (as defined in Section 280G(b) of the Code) made by the Company
          pursuant to Section 5.4 of this Agreement, the Company shall pay the
          Employee such additional amounts as are necessary to place the
          Employee in the same after tax financial position that he would have
          been in if he had not incurred any tax liability under Section 4999 of
          the Code. (c) In the event the Employee is required to pay any
          federal, state or local income taxes as a result of the Company's
          payment of the Employee's COBRA premiums under this Section 5, the
          Company shall pay the Employee such additional amounts as are
          necessary to place the Employee in the same after-tax financial
          position that he would have been in if he had not incurred any such
          tax liability.

     5.7  RELEASE OF CLAIMS. The Employee's entitlement to severance, payment of
          COBRA premiums, and accelerated vesting of options under any
          subparagraph of this Section 5, is contingent upon the Employee's
          execution of a general release of claims in a form prepared by the
          Company and presented to the Employee upon termination of his
          employment hereunder, as well as the Employee's compliance with the
          provisions of Section 7 hereof.

     5.8  NO REQUIREMENT TO MITIGATE. The Employee shall not be required to
          mitigate the amount of any payment

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          provided for in this Section 5 by seeking other employment or
          otherwise.

6.0  DEFINITIONS. For purposes of this Agreement the following definitions
     apply:

     6.1  "CAUSE" shall mean the occurrence of any of the following
          circumstances:

          (a)

               (i)  the Employee's material breach of, or habitual neglect or
                    failure to perform the material duties which he is required
                    to perform under, the terms of this Agreement;

               (ii) the Employee's material failure to follow the reasonable
                    directives or policies established by or at the direction of
                    the Board; or

               (iii) the Employee's engaging in conduct that is materially
                    detrimental to the interests of the Company such that the
                    Company sustains a material loss or injury as a result
                    thereof, provided that the breach or failure of performance
                    by the Employee under subparagraphs (i) through (iii) hereof
                    is not cured, to the extent cure is possible, within ten
                    (10) days of the delivery to the Employee of written notice
                    thereof;

          (b)  the willful breach by the Employee of Section 7 of this Agreement
               or any provision of any confidentiality, invention and
               non-disclosure, non-competition or similar agreement between the
               Employee and the Company; or

          (c)  the conviction of the Employee of, or the entry of a pleading of
               guilty or nolo contendere by the Employee to, any crime involving
               moral turpitude or any felony.

     6.2  "DISABILITY" shall mean the inability of the Employee, by reason of
          illness, accident or other physical or mental disability, for a period
          of 120 days, whether or not consecutive, during any 360-day period, to
          perform the services contemplated under this Agreement. A
          determination of disability shall be made by a physician satisfactory
          to both the Employee and the Company; provided, however, that if the
          Employee and the Company do not agree on a physician, the Employee and
          the Company shall each select a physician and these two together shall
          select a third physician, whose determination as to disability shall
          be binding on all parties.

     6.3  "GOOD REASON" shall mean the occurrence of any of the following
          circumstances, and the Company's failure to cure such circumstances
          within thirty (30) days of the delivery to the Company of written
          notice by the Employee of such circumstances:

          (a)  any significant diminution in the Employee's duties and
               responsibilities as described in Section 2.1 hereof, or
               assignment of duties and responsibilities inconsistent with the
               Employee's position;

          (b)  any reduction in the Employee's salary as in effect on the
               Commencement Date or as the same may be

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               increased from time to time;

          (c)  the failure of the Company to continue in effect any material
               compensation or benefit plan in which the Employee participates
               as in effect on the Commencement Date, unless an equitable
               arrangement (embodied in an ongoing substitute or alternative
               plan) has been made with respect to such plan, or the failure by
               the Company to continue the Employee's participation therein (or
               in such substitute or alternative plan) on a basis not materially
               less favorable, both in terms of the amount of benefits provided
               and the level of the Employee's participation relative to other
               participants, as in effect on the Commencement Date;

          (d)  the failure by the Company to continue to provide the Employee
               with benefits substantially similar to those enjoyed by the
               Employee under any of the Company's health and welfare insurance,
               retirement and other fringe-benefit plans insurance, which the
               Employee was participating as in effect on the Commencement Date,
               the taking of any action by the Company which would directly or
               indirectly materially reduce any of such benefits, or the failure
               by the Company to provide the Employee with the number of paid
               vacation days to which he is entitled in accordance with the
               Company's normal vacation policy in effect on the Commencement
               Date or in accordance with any agreement between the Employee and
               the Company existing at that time; or

          (e)  the relocation of the Employee to a location which is greater
               than fifteen (15) miles from Cranbury, New Jersey or the
               Company's current locations in Edison or Princeton, New Jersey.

     6.4  "CHANGE IN CONTROL" shall mean the occurrence of any of the following
          events:

          (a)  any "person," as such term is used in Sections 13(d) and 14(d) of
               the Securities Exchange Act of 1934, as amended (the "Exchange
               Act") (other than the Company, any trustee or other fiduciary
               holding securities under an employee benefit plan of the Company,
               or any corporation owned directly or indirectly by the
               stockholders of the Company in substantially the same proportion
               as their ownership of stock of the Company) is or becomes the
               "beneficial owner" (as defined in Rule 13d-3 under the Exchange
               Act), directly or indirectly, of securities of the Company
               representing 50% or more of the combined voting power of the
               Company's then outstanding securities;

          (b)  individuals who, as of the Commencement Date, constitute the
               Board (the "Incumbent Board") cease for

                                                                   Page 11 of 16

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               any reason to constitute at least a majority of the Board,
               provided that any person becoming a director subsequent to the
               Commencement Date whose election, or nomination for election by
               the Company's stockholders, was approved by a vote of at least a
               majority of the directors then comprising the Incumbent Board
               (other than an election or nomination of an individual whose
               initial assumption of office is in connection with an actual or
               threatened election contest relating to the election of the
               directors of the Company, as such terms are used in Rule 14a-11
               of Regulation 14A under the Exchange Act) shall be, for purposes
               of this Agreement, considered as though such person were a member
               of the Incumbent Board;

          (c)  the stockholders of the Company approve a merger or consolidation
               of the Company with any other corporation, other than (i) a
               merger or consolidation which would result in the voting
               securities of the Company outstanding immediately prior thereto
               continuing to represent (either by remaining outstanding or by
               being converted into voting securities of the surviving entity)
               more than 80% of the combined voting power of the voting
               securities of the Company or such surviving entity outstanding
               immediately after such merger or consolidation or (ii) a merger
               or consolidation effected to implement a re-capitalization of the
               Company (or similar transaction) in which no "person" (as defined
               in Section 6.4(a)) acquires more than 50% of the combined voting
               power of the Company's then outstanding securities; or

          (d)  a sale of all or substantially all of the assets of the Company.

7.0  RESTRICTIVE COVENANTS

     (a)  For the purposes of this Agreement:

          (i)  "Competing Products" means any products or processes of any
               person or organization other than the Company in existence or
               under development, which are substantially the same, may be
               substituted for, or applied to substantially the same end use as
               the products or processes that the Company is developing or has
               developed or commercialized during the time of the Employee's
               employment with the Company.

          (ii) "Competing Organization" means any person or organization engaged
               in, or with definitive plans to become engaged in, research or
               development, production, distribution, marketing or selling of a
               Competing Product.

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     (b)  The Employee acknowledges that he has, on or prior to the date of the
          Agreement, executed and delivered to the Company an Employee Agreement
          on Confidentiality, Intellectual Property, Debarment Certification and
          Conflict of Interest (the "Confidentiality Agreement") and the
          Employee hereby affirms and ratifies his obligations thereunder; and
          the Employee agrees that after termination by the Company for Cause
          pursuant to Section 4.2 (except in the case where such termination
          occurs within 12 months following a Change in Control), by the
          Employee pursuant to Section 4.6, or by either party upon expiration
          of the Employment Period, he will not render services of any nature,
          directly or indirectly, to any Competing Organization in connection
          with any Competing Product within any geographical territory as the
          Company and such Competing Organization are or would be in actual
          competition, for a period of six (6) months, commencing on the Date of
          Termination.

     (c)  The Employee agrees that he will not, during the Employment Period and
          for a period of nine (9) months commencing on the Date of Termination,
          directly or indirectly employ, solicit for employment, or advise or
          recommend to any other person that they employ or solicit for
          employment, any person whom he knows to be an employee of the Company
          or any parent, subsidiary or affiliate of the Company.

     (d)  In the event a court of competent jurisdiction should find any
          provision in this Section 7 to be unfair or unreasonable, such finding
          shall not render such provision unenforceable, but, rather, this
          provision shall be modified as to subject matter, time and geographic
          area so as to render the entire section valid and enforceable.

8.0  NOTICES. All notices required or permitted under this Agreement shall be in
     writing and shall be deemed effective upon either: (a) personal delivery;
     or (b) three (3) days following deposit in the United States Post Office
     for delivery by registered or certified mail, postage prepaid, or one (1)
     day following deposit with a reputable overnight courier service, addressed
     to the other party at the address shown above, or at such other address or
     addresses as either party shall designate to the other in accordance with
     this Section 8.

9.0  PRONOUNS. Whenever the context may require, any pronouns used in this
     Agreement shall include the corresponding masculine, feminine or neuter
     forms, and the singular forms of nouns and pronouns shall include the
     plural, and vice versa.

                                                                   Page 13 of 16

<PAGE>


10.0 ENTIRE AGREEMENT. This Agreement, together with the "Confidentiality
     Agreement", constitutes the entire agreement between the parties and
     supersedes all prior agreements and understandings, whether written or
     oral, relating to the subject matter of this Agreement.

11.0 AMENDMENT. This Agreement may be amended or modified only by a written
     instrument executed by both the Company and the Employee.

12.0 GOVERNING LAW. This Agreement shall be construed, interpreted and enforced
     in accordance with the laws of New Jersey, without regard to its principles
     of conflict of laws.

13.0 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure to
     the benefit of both parties and their respective successors and assigns,
     including any corporation with which or into which the Company may be
     merged or which may succeed to its assets or business; provided, however,
     that the obligations of the Employee are unique and personal and shall not
     be assigned by him.

14.0 WAIVER OF BREACH.

     14.1 Waiver by the Company. No delay or omission by the Company in
          exercising any right under this Agreement shall operate as a waiver of
          that or any other right. A waiver or consent given by the Company on
          any one occasion shall be effective only in that instance and shall
          not be construed as a bar or waiver of any right on any other
          occasion. No waiver by the Company shall be valid unless in a writing
          signed by an authorized officer of the Company and approved by a
          majority of the Board.

     14.2 Waiver by the Employee. No delay or omission by the Employee in
          exercising any right under this Agreement shall operate as a waiver of
          that or any other right. A waiver or consent given by the Employee on
          any one occasion shall be effective only in that instance and shall
          not be construed as a bar or waiver of any right on any other
          occasion. No waiver by the Employee shall be valid unless in a writing
          signed by the Employee.

15.0 MISCELLANEOUS.

     15.1 The captions of the sections of this Agreement are for convenience of
          reference only and in no way define, limit or affect the scope or
          substance of any section of this Agreement.

     15.2 In case any provision of this Agreement shall be invalid, illegal or
          otherwise unenforceable, the validity, legality and enforceability of
          the remaining provisions shall in no way be affected or impaired
          thereby.

                                                                   Page 14 of 16

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16.0 SURVIVAL. The provisions of Sections 3.3, 5, 6, 7 and 8 shall survive the
     termination of this Agreement.

17.0 ATTORNEY'S FEES. The Company shall reimburse the Employee for all legal
     fees and expenses associated with the negotiation and drafting of this
     Agreement, upon reasonable documentation thereof, up to a maximum of
     $5,000.

                                                                   Page 15 of 16

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as an
instrument under seal as of the day and year set forth above.


PALATIN TECHNOLOGIES, INC.                  EMPLOYEE

By:_____________________________            ________________________________
Name: Dr. John Prendergast                  Carl Spana
Title: Chairman of the Board                Chief Executive Officer/President

Date:____________________________           Date: ____________________________




                                                                   Page 16 of 16