Document:

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WHEREVER CONFIDENTIAL INFORMATION IS OMITTED HEREIN (SUCH OMISSIONS ARE DENOTED
BY AN ASTERISK), SUCH CONFIDENTIAL INFORMATION HAS BEEN SUBMITTED SEPARATELY TO
THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT
Exhibit 10.1
                                LICENSE AGREEMENT

This is an Agreement dated as of the 24th day of July, 2000 by and between
Repligen Corporation, a Delaware corporation having its principal office at 117
Fourth Avenue, Needham, MA 02194 (hereinafter "Repligen"), and the Regents of
the University of Michigan, a constitutional corporation of the State of
Michigan having an office at 475 East Jefferson Street, Ann Arbor, Michigan
48109-1248 (hereinafter "UM").

WHEREAS, UM possesses certain intellectual property pertaining to immune
regulation mediated by B7, CD28, and CTLA-4; and

WHEREAS, UM and Repligen have previously entered an agreement, dated May 28,
1992, pursuant to which Repligen was granted exclusive rights to said
intellectual property, and

WHEREAS, Repligen transferred said intellectual property rights to Genetics
Institute (hereinafter "GI") and GI subsequently returned to Repligen, from said
intellectual property rights, certain sole and exclusive rights pertaining to
uses and compositions of CTLA-4, and

WHEREAS, UM wishes to acknowledge the specific and non-overlapping fields in
which rights to said intellectual property have been granted solely and
exclusively to each of Repligen and GI, and

WHEREAS, UM and Repligen further wish to ratify and amend the terms for the
exclusive license by UM to Repligen of the aforesaid CTLA4 rights;

NOW, THEREFORE, UM and Repligen agree as follows:

I.       Definitions

1.1      "Parties" in singular or plural usage as required by the context, means
         Repligen and/or UM.

1.2      "Licensed Field" means the Repligen Field as defined in the agreement
         made by and between the Parties and GI on November 17, 1999 a copy of
         which is attached hereto as Exhibit A. The

                       *CONFIDENTIAL TREATMENT REQUESTED

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1.3      Parties acknowledge and agree that GI has an exclusive and
         non-overlapping license to the UM Patents outside of the Licensed
         Field.

1.4      "Licensed Patents" means any of the following to the extent that UM
         has, or at any time acquires, the right to grant licenses thereto:

         1.3.1    any patent or patent application which claims priority from
                  any of the following patent applications (a) USSN 07/275,433,
                  filed 11/23/88; (b) USSN 07/864,805, filed 4/7/92; (c) USSN
                  07/864,866, filed 4/7/92; (d) USSN 07/864,807, filed 4/7/92;
                  including all foreign equivalent patent applications and
                  Patent Cooperation Treaty filings, and all patents issuing
                  therefrom in which UM has a property interest or under which
                  UM acquires licensing rights and any divisions or
                  continuations of the patents or patent applications set forth
                  above, including any reissue, reexamination or extension of
                  the above-described patents, any extended or restored term,
                  and any confirmation patent, registration patent, or patent of
                  addition,

         1.3.2    the following rights, all to the extent covering inventions to
                  which inventive contributions were made as of May 28, 1992
                  (solely or jointly) by former UM faculty member Craig B.
                  Thompson in the scope of his duties for UM and the Howard
                  Hughes Medical Institute: U.S. Patent No. 5,434,131 (the "'131
                  Patent") and/or U.S. Patent No. 5,521,288 (the "'288 Patent")
                  and (a) any patent applications or patents issuing therefrom
                  claiming or entitled to priority from an application from
                  which the '131 Patent or '288 patent issued; (b) any patent
                  application or patent issuing therefrom claiming or entitled
                  to priority from any application from which the '131 Patent or
                  '288 Patent claims or is entitled to priority; (c) all foreign
                  equivalent patent applications of (a) or (b) above including
                  Patent Cooperation Treaty filings, and all patents issuing
                  therefrom; (d) any divisions or continuations (a), (b), or (c)
                  above, including any reissue, reexamination, or extension of
                  the above described patents, any extended or restored term,
                  and any confirmation patent, registration patent, or patent of
                  addition.

1.5      "Valid Claim(s)" means any claim (s) pending in a patent application or
         in an unexpired patent included within the Licensed Patents which has
         not been held unenforceable, unpatentable, or invalid by a decision of
         a court or other governmental agency of competent jurisdiction,
         unappealable or unappealed within the time allowed for appeal, and
         which has not been admitted

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         to be invalid or unenforceable through reissue or disclaimer. If in any
         country there should be two or more such decisions conflicting with
         respect to the validity of the same claim, the decision of the higher
         or highest tribunal shall thereafter control; however, should the
         tribunals be of equal rank, then the decision or decisions upholding
         the claim shall prevail when the conflicting decisions are equal in
         number, and the majority of decisions shall prevail when the
         conflicting decisions are unequal in number.

1.6      "Licensed Product" means any product in the Licensed Field whose
         manufacture, use or sale in any country would, but for either ownership
         of or a license under the Licensed Patents, comprise an infringement,
         including contributory infringement, of one or more Valid Claims in
         such country.

1.7      "Combination Product" means any Licensed Product sold in combination
         with a second discrete product containing one or more active
         ingredients which are not Licensed Products.

1.8      "Sublicensee" means any person or entity (other than an Affiliate)
         sublicensed by Repligen (or Affiliates, where authorized by Repligen)
         to practice one or more Licensed Patent.

1.8      "Net Sales" means the sum of all amounts received and all other
         consideration received (when in a form other than cash or its
         equivalent, the fair market value thereof when received) by Repligen,
         its Affiliates or Sublicensees, as the case may be, from persons or
         entities who are not Affiliates or Sublicensees by reason of the sale,
         distribution or use of Licensed Products, including Combination
         Products, less the following deductions and offsets but in the case of
         the deductions and offsets described in clauses (a) - (d) below only to
         the extent the monies represented by such deductions and offsets have
         actually been included in the sum referred to above

                  (a)      trade quantity discounts actually allowed and taken;

                  (b)      returns, rebates and allowances when actually taken;

                  (c)      retroactive price reductions, if any, when actually
                           credited;

                  (d)      uncollected invoices for Licensed Products, to the
                           extent written off as uncollectible on Repligen's
                           Affiliates' or Sublicensees' books, as the case may
                           be;

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                  (e)      with regard to sales in the United States, four
                           percent (4%) of the amount invoiced and paid to cover
                           cash discounts, sales or excise taxes, transportation
                           and insurance charges; and with regard to sales
                           outside the United States six percent (6%) to include
                           the above and additional special packaging, duties,
                           and other governmental charges

1.9      "Territory" means all countries of the world.

1.10     "Affiliate (s)" means any individual, corporation, partnership,
         proprietorship or other entity controlled by, controlling or under
         common control with Repligen through equity ownership, ability to elect
         directors, or by virtue of a majority of overlapping directors and
         shall include any individual, corporation, partnership, proprietorship
         or other entity directly or indirectly owning, owned by or under common
         ownership with the party in question to the extent of fifty percent
         (50%) or more of the equity or voting shares, including shares owned
         beneficially by such party.

1.11     "Royalty Quarters" means the three (3) months ending on the last day of
         March, June, September, and December of each year.

1.12     "Effective Date" means the date upon which this Agreement has been
         entered into as mentioned in its introductory paragraph.

II.      License Grant

2.1      Subject to the terms and conditions of this Agreement, UM grants to
         Repligen an exclusive license of UM's interest under the Licensed
         Patents for the purpose of making, having made, manufacturing,
         importing, using, marketing and selling Licensed Products, solely
         within the Licensed Field, in the Territory, with the right to grant
         sublicenses to Affiliates and Sublicensees.

2.2      UM retains the right to grant to the Howard Hughes Medical Institute
         ("HHMI") a non-exclusive, irrevocable, royalty-free license, without
         the right to grant sublicenses, to the Licensed Patents, as required by
         UM's Patent and Intellectual Property Agreement with HHMI. UM retains
         the right to use all aspects of the Licensed Patents, and to practice
         the Licensed Patents by any means, solely for internal research and
         education purposes.

                       *CONFIDENTIAL TREATMENT REQUESTED
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III.     Representations, Warranties, and Covenants

3.1      UM represents and warrants to its knowledge that (i) it is the sole and
         rightful assignee of the rights of former UM faculty member, Dr. Craig
         B. Thompson during the period of his employment at and by UM for
         inventive activity occurring within the scope of his employment, and
         (ii) that it has the full right, power and authority to enter into this
         Agreement and to grant the licenses under Article II hereof.

3.2      Repligen has agreed in the Letter Agreement of February 8, 2000 between
         the Parties to reimburse to UM the expenses of a mutually agreeable
         outside counsel to provide the services as described in Paragraph 3 of
         that Letter Agreement. The expenses of such outside counsel will be
         fully creditable toward earned royalties under this Agreement, subject
         to Subsection 8.11 below.

3.3      UM has agreed to join Repligen in certain litigation as described in
         the Letter Agreement of February 8, 2000 between the Parties, attached
         hereto as Exhibit D. Repligen shall bear all the expense of such
         litigation and all such actual documented expenses shall be fifty
         percent (50%) creditable toward earned royalties payable to UM under
         this Agreement, subject to Subsection 8.11 below.

IV.      Patent Protection and Validity

4.1      UM (and/or its joint owner in the case of co-owned Licensed Patents)
         shall control all aspects of prosecuting and maintaining the Licensed
         Patents. UM shall not voluntarily relinquish its own right as a joint
         owner to participate in the control of the prosecution and maintenance
         of the Licensed Patents. UM shall promptly notify Repligen of all
         information received by UM relating to the prosecution and maintenance
         of Licensed Patents, including without limitation any lapse,
         revocation, surrender, invalidation or abandonment of any of the
         Licensed Patents.

4.2      Repligen agrees to ensure that UM is fully reimbursed for the costs
         associated with prosecution and maintenance of Licensed Patents in the
         Licensed Field in accordance with this Agreement and the agreement made
         November 17, 1999 by and between the Parties and GI and attached hereto
         as Exhibit A. Repligen acknowledges and agrees that UM is to be
         reimbursed, in a matter

                       *CONFIDENTIAL TREATMENT REQUESTED
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         appropriately apportioned between GI and Repligen, for all expenses of
         all Licensed Patents. Unless and until otherwise arranged by the
         Parties and GI, Repligen shall reimburse all expenses related to US
         Applications 08/314,851, 08/475,741, and 08/385,194 and all related
         filings (including continuations, foreign equivalents, and resulting
         patents.

4.3      The Parties acknowledge that UM has paid a third party attorney $44,000
         in respect of previously rendered services related to the correction of
         certain patents within the Licensed Patents and agree that the
         reimbursement of this expenditure is in dispute. Repligen agrees,
         immediately upon the execution of this Agreement, to pay to UM 50% of
         the aforesaid amount. The Parties agree to cooperate in the resolution
         of the aforesaid dispute.

4.4      Fifty percent (50%) of Repligen's payments and expenses under
         Subsections 4.2 and 4.3 hereof shall be credited against earned
         royalties, subject to the limitations of Subsection 8.11, and amounts
         so credited shall then be deemed recovered.

4.5      In the event either Party shall learn of any potential infringement of
         a claim of any of the Licensed Patents, that Party shall immediately
         supply the other Party and GI with written notice of such potential
         infringement. The right of either Party or of GI to institute and
         control actions brought for infringement shall be in accordance with
         the terms and conditions of the License Agreement of May 28, 1992 (as
         amended by an Agreement dated June 26, 1992 between UM and Repligen, an
         Amendment dated August 31, 1995 between UM and Repligen, and an
         Agreement dated August 30, 1995 between UM, Repligen, and GI) and
         further modified by (i) an Agreement dated November 17, 1999 between
         UM, Repligen, and GI and attached hereto as Exhibit A, (ii) an
         Agreement dated June 8, 1999 between UM, Repligen, and GI and attached
         hereto as Exhibit B, and (iii) an Agreement dated June 8, 1999 between
         Repligen and GI and attached hereto as Exhibit C.

4.6      In the event either Party shall initiate or carry on legal proceedings
         to enforce any of the Licensed Patents against an alleged infringer
         according to the terms and conditions of this Agreement, the other
         Party shall fully cooperate with, and supply all reasonable assistance
         requested by, the Party initiating or carrying on such proceedings with
         all expenses to be borne by the initiating Party.

                       *CONFIDENTIAL TREATMENT REQUESTED
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4.7      Any recovery obtained by either UM or Repligen as the result of legal
         proceedings initiated and paid for by Repligen to enforce any of the
         Licensed Patents against an alleged infringer, whether obtained by
         settlement or otherwise, shall after payment of all otherwise
         unrecovered expenses attributable to such action paid by Repligen or by
         UM or by both Repligen and UM, including without limitation fees paid
         to outside counsel or consultants, and reasonable travel expenses, but
         not including any part of any UM employee's salary or Repligen
         employee's salary, be paid 85% to Repligen and 15% to UM. Any recovery
         obtained as the result of legal proceedings initiated and paid for by
         UM to enforce any of the Licensed Patents against an alleged infringer
         in the Licensed Field, whether obtained by settlement or otherwise,
         shall after payment of all otherwise unrecovered expenses attributable
         to such action paid by Repligen or by UM or by both Repligen and UM,
         including without limitation fees paid to outside counsel or
         consultants, and reasonable travel expenses, but not including any part
         of any UM employee's salary or Repligen employee's salary, be paid 85%
         to UM and 15% to Repligen.

4.8      The Parties shall cooperate with one another in gaining any patent term
         extension that may be applicable to the Licensed Patents in the
         Licensed Field, any and all filings for any such extension will be made
         by and at the expense of Repligen after consultation with UM.

V.       Sublicenses

5.1      Repligen shall have the exclusive right under the license granted in
         Article II herein to grant sublicenses to Affiliates and Sublicensees
         under Licensed Patents, provided:

         (a)      Repligen shall notify UM of every sublicense Agreement and
                  each amendment thereto, within thirty (30) days after their
                  execution, and indicate the name of the Sublicensee or
                  Affiliate, territory of the sublicense, scope of the
                  sublicense, and the nature, timing and amounts of all fees and
                  royalties to be paid thereunder;

         (b)      All sublicenses shall attach a copy of this Agreement as an
                  exhibit and shall be consistent with the terms of this
                  Agreement;

         (c)      All sublicenses shall contain acknowledgements of the
                  University's disclaimer of warranty and limitation on
                  liability as provided by Section 12 below; and

         (d)      All sublicenses shall require the Sublicensee or Affiliate to
                  accept duties equivalent to those accepted by Repligen herein
                  in Sections 4, 6, 7, 9, 10, 11, 12, 20, and 24.

                       *CONFIDENTIAL TREATMENT REQUESTED
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5.2      Any sublicense granted by Repligen shall provide for its termination
         upon the termination of this Agreement, provided, however, that a
         sublicense granted to any Sublicensee may permit such Sublicensee, by
         written notice to UM within sixty (60) days of the Sublicensee's
         receipt of written notice of such termination, to elect to continue its
         sublicense. No such election will be valid unless such Sublicensee
         agrees in writing at the time of election to assume in respect to UM
         all of the obligations (including obligation for payment) contained in
         its sublicense agreement with Repligen and this Agreement.

VI.      Confidentiality

6.1      All technical information of either Party relating to the Licensed
         Patents or Licensed Products, which is disclosed to the other Party
         during the term of this Agreement, in a writing marked "CONFIDENTIAL"
         (or, if initially orally disclosed, is confirmed in writing and
         designated as "CONFIDENTIAL" within thirty (30) days of such initial
         disclosure), shall be maintained in confidence by the receiving Party
         for a period of five (5) years from receipt and shall not be disclosed
         by the receiving Party during that period to any other person, firm or
         agency, governmental or private, without the prior written consent of
         the disclosing Party, except to the extent that the information:

         (a)      is known at the time of its receipt as documented in written
                  records, or

         (b)      is properly in the public domain, or

         (c)      is subsequently disclosed to the receiving Party by a third
                  party who may lawfully do so, or

         (d)      is required to be disclosed to governmental agencies in order
                  to gain approval to sell Licensed Products, or

         (e)      is necessary to be disclosed to agents, consultants,
                  Affiliates, Sublicensees and/or other third parties for the
                  research and development and/or marketing of Licensed Products
                  under this Agreement, which entities first agree to be bound
                  by confidentiality obligations contained in this Agreement, or

         (f)      is required to be disclosed by law or by court order.

         (such confidential information to be maintained in confidence under
         this section is referred to below as "Confidential Information".)

                       *CONFIDENTIAL TREATMENT REQUESTED
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6.2      Repligen recognizes that under UM policy, research relating to Licensed
         Patents or Licensed Products must be publishable, subject to the terms
         set forth herein. Repligen agrees that UM and HHMI researchers shall be
         permitted to present their results at symposia, national, or regional
         professional meetings, and to publish the results in journals, theses,
         or dissertations, or otherwise of their own choosing, provided,
         however, that Repligen shall have been furnished copies of any proposed
         publication or presentation relating to Licensed Patents or Licensed
         Products at least one month in advance of the submission of such
         proposed publication or presentation to a journal editor or other third
         party. Repligen shall have one month after receipt of said copies to
         object to such proposed presentation or proposed publication because
         there is patentable subject matter which needs protection or because it
         contains Confidential Information of Repligen.

6.3      In the event that Repligen makes an objection under 6.2 above, said
         researcher(s) shall, as the case may be, remove Repligen's Confidential
         Information from such publication or presentation for a maximum of four
         (4) months from date of receipt of such objection in order for UM or
         Repligen to file patent application(s) with the United States Patent
         and Trademark Office or foreign patent office(s) directed to the
         patentable subject matter contained in the proposed publication or
         presentation.

VII.     Commercialization

7.1      It is understood that Repligen shall be responsible for obtaining any
         governmental approvals which may be necessary to manufacture and/or
         sell Licensed Products. If Repligen decides in its sole discretion that
         it is feasible to manufacture and sell Licensed Products at an
         acceptable profit, Repligen shall use its best efforts to obtain such
         government approvals, and upon receipt thereof, to cause Licensed
         Products to be manufactured and sold. For the purpose hereof, "best
         efforts" shall mean the usual practice followed by Repligen in pursuing
         commercialization of its products. In the event Repligen shall breach
         any covenant set forth in this Section 7.1, UM's sole remedy with
         respect to such breach shall be to terminate this Agreement under
         Section 13.3.

7.2      Repligen shall keep UM informed in writing of any material developments
         with respect to Licensed Products. Repligen shall promptly inform UM of
         any patent applications, or similar

                       *CONFIDENTIAL TREATMENT REQUESTED
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         applications, relating to Licensed Products or improvements thereon,
         filed by or on behalf of Repligen or Affiliates anywhere in the world.

7.3      Repligen covenants to substantially manufacture and require Affiliates
         and Sublicensees to substantially manufacture within the United States
         all of their Licensed Products. Where domestic manufacture is not
         commercially feasible, UM will cooperate with Repligen to obtain
         appropriate waivers to this requirement from the United States
         government..

VIII.    Payments and Royalties

8.1      The license rights granted to Repligen herein are subject to Repligen's
         payment of royalties to UM according to the provisions of this Article
         VIII.

8.2      Upon execution of this Agreement, Repligen shall (i) pay * to UM, and
         (ii) grant to UM 50,000 warrants to purchase common stock in Repligen
         Corporation with the exercise price for such warrants to be set as the
         closing price for RGEN stock averaged over the five days preceeding
         the execution of this Agreement. Warrants may be exercised at any time
         up until three years from the date of grant at which point they will
         expire. The warrant agreement will be in a form mutually acceptable to
         the Parties and will be completed within 45 days of the execution of
         this Agreement.

8.3      With respect to each Royalty Quarter, Repligen shall pay UM a royalty
         equal to * of Repligen's and Affiliates' Net Sales of Licensed Products
         during such Royalty Quarter.

8.4      With respect to Combination Products, the fair market sales price of
         the active ingredient(s) of the discrete product(s) which are not
         themselves Licensed Products shall be subtracted from the selling price
         used to calculate Net Sales with respect to such Combination Product;
         provided that in the case of a Combination Product which includes one
         or more Licensed Products which are also sold in non-Combination
         Product form, the resulting Net Sales figure upon which UM's

                       *CONFIDENTIAL TREATMENT REQUESTED
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         royalty is based shall not be reduced to less than the normal aggregate
         Net Sales for such Licensed Product(s) when not sold as Combination
         Product.

8.5      The obligation to pay UM a royalty under this Article VIII is imposed
         only once with the respect to the same unit of Licensed Product
         regardless of the number of Valid Claims or Licensed Patents covering
         the same; however, for purposes of determination of payments due
         hereunder, whenever the term Licensed Product may apply to a property
         during various stages of manufacture, use or sale, Net Sales, as
         otherwise defined shall be derived from the sale, distribution of such
         Licensed Product by Repligen, Affiliates or Sublicensees, as the case
         may be, at the stage of its highest invoiced value to unrelated third
         parties.

8.6      With respect to each Royalty Quarter, Repligen shall pay UM * of any
         royalties received during such Royalty Quarter by Repligen or
         Affiliate(s) with respect to Net Sales of Sublicensee(s), and no other
         royalties with respect to such Net sales of Sublicensee(s). In the
         event that the royalty received by Repligen is less than *
         Sublicensee(s) except and unless: (1) license fees are due to BMS from
         either of Repligen or Repligen's Sublicensee(s) or (2) a royalty-free
         sublicense has been granted to GI according to Paragraph 4.1 of the
         Letter Agreement dated November 17, 1999 between the Parties and GI and
         attached hereto as Exhibit A. In the event that license fees are due to
         BMS, 50% of said fees shall be deducted from the payments due UM under
         this Section 8.6, except that under no circumstances shall such
         deduction result in UM's share being less than *. In the event that a
         royalty-free sublicense has been granted to GI as described above, no
         royalty shall be due or payable by Repligen to UM for such sublicense.

8.7      In addition, with respect to each Royalty Quarter, Repligen shall pay
         to UM * of any upfront or lump sum payments which Repligen or its
         Affiliates receives during such Royalty Quarter from any Sublicensee in
         consideration of the grant of its sublicense. For the purpose hereof,
         upfront or lump sum payments shall not include any payment made to
         Repligen as a royalty on Net Sales of Sublicensee(s) or any Research
         Milestone Payment or Clinical Milestone (as hereinafter defined).

8.8      (a) "Research Milestone Payment" means any payment received by Repligen
         from any Sublicensee which is payable by reason of the attainment of a
         research or development

                       *CONFIDENTIAL TREATMENT REQUESTED
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         objective relating to technology described in Licensed Patent(s) or to
         Licensed Product(s) themselves. With respect to each Royalty Quarter,
         Repligen shall pay to UM * of each Research Milestone Payment received
         during such Royalty Quarter.

         (b)      "Clinical Milestone Payment" means any payment received by
                  Repligen from any Sublicensee which is payable by reason of
                  the attainment of a clinical objective relating to one or more
                  Licensed Product(s). With respect to each Royalty Quarter,
                  Repligen shall pay to UM * of each Clinical Milestone Payment
                  received during such Royalty Quarter.

         (c)      Fifty percent (50%) of all amounts paid to UM under this
                  Section 8.8 shall be credited against earned royalties,
                  subject to the limitations contained in Section 8.11.

8.9      (a)      If Repligen is required to pay an unrelated third party a
                  royalty in a given country in order to sell the Licensed
                  Products in that country, then fifty percent (50%) of that
                  royalty will be deducted from the royalty otherwise payable
                  hereunder for Net Sales of such Licensed Products in that
                  country, provided that the royalty thus payable by Repligen
                  shall not be reduced below * of Repligen's or Affiliates' Net
                  Sales of Licensed Products in that country unless Repligen is
                  required to pay Bristol-Meyers Squibb, Inc. a royalty in which
                  case the royalty thus payable by Repligen shall not be reduced
                  below * of Repligen's or Affiliates' Net Sales of Licensed
                  Products in that country. Upon the mutual Agreement of the
                  parties the royalty percentage for a particular Licensed
                  Product may be reduced based on specific indications and
                  associated market size and conditions.

         (b)      If Repligen is required to pay a royalty to the United States
                  Navy or to HHMI in order to obtain the exclusive right as to
                  the U.S. Navy or HHMI, to practice any of the patents or
                  patent applications included in Licensed Patents, in a given
                  country, then, in addition to any amounts deducted under
                  subparagraph (a) above, one-hundred percent (100%) of that
                  royalty may be deducted from the royalty otherwise payable
                  hereunder for Net Sales of Licensed Product in that country,
                  provided that: (i) in no event shall the amounts deducted
                  under this subparagraph (b) exceed * of the Net Sales of
                  Licensed Product in that country; and (ii) in no event shall
                  the royalty thus payable by Repligen, after all

                       *CONFIDENTIAL TREATMENT REQUESTED
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                  deductions under this subparagraph (b) and subparagraph (a)
                  above, be reduced below * of Repligen's or Affiliates' Net
                  Sales of Licensed Product in that country.

8.10     One year following the execution of this Agreement and thereafter
         annually, Repligen agrees to pay a minimum royalty of * to UM during
         the term of this Agreement. All minimum royalties paid for a given year
         which are in excess of that year's earned royalties shall be credited
         against future earned royalties otherwise payable under this Agreement,
         subject to the limitations in Section 8.11.

8.11     Notwithstanding anything to the contrary in this Agreement, the Parties
         agree that in no event shall the aggregate reduction of earned
         royalties on account of credits allowed by UM to Repligen under this
         Agreement in any Royalty Quarter exceed fifty percent (50%) of the
         earned royalties otherwise payable under this Agreement for such
         Royalty Quarter. Any credits in excess of these limitations shall be
         carried forward and applied against earned royalties in subsequent
         Royalty Quarters until fully credited or until termination of this
         Agreement. Upon termination of this Agreement, Repligen shall have no
         right to recover unused credits except to the extent that they may
         continue to be credited against up to fifty percent (50%) of the
         royalties payable after termination, subject to the limitations set
         forth herein.

8.12     If at any time or from time to time an unrelated third party in any
         country shall, under right of a compulsory license granted or ordered
         to be granted by a competent governmental authority, manufacture, use
         or sell any Licensed Product with respect to which royalties shall be
         payable pursuant to Section 8.3 herein, then Repligen, upon notice to
         UM and during the period such compulsory license shall be effective,
         shall have the right to reduce such royalty to UM on each unit of
         Licensed Product sold in such country to an amount no greater than the
         amount payable by said third party in consideration of its compulsory
         license.

8.13     Repligen agrees to refrain from any business dealing relating to
         Licensed Products in which a significant purpose or result would be to
         lower UM's share of income or actual income resulting from this
         Agreement or the sale, use or commercialization of Licensed Products.
         This Section 8.13 shall not be construed in such a way as to (i)
         enlarge Repligen's obligations under Section 7.1 or (ii) provide any
         remedy to UM if Repligen terminates this Agreement under Section 13.4.

                       *CONFIDENTIAL TREATMENT REQUESTED
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IX.      Reports

9.1      Within sixty (60) days after the close of each Royalty Quarter during
         the term of this Agreement (including any Royalty Quarter which closes
         following any termination of this Agreement), Repligen shall report to
         UM all royalties or other payments accruing to UM under Article VIII
         during such Royalty Quarter. Such quarterly reports shall indicate for
         each Royalty Quarter the gross sales and Net Sales of Licensed
         Products; such reports shall also indicate the source and amount of all
         other revenues with respect to which payments are due to UM and the
         amount of such payments, as well as the various calculations used to
         arrive at said amounts, including the quantity, description
         (nomenclature and type designation), country of sale and country of
         manufacture of Licensed Products. In case no payment is due for any
         such period, Repligen shall so report.

9.2      Repligen shall keep and it shall cause Affiliates and Sublicensees to
         keep, true and accurate records and books of account containing data
         reasonably required for the computation and verification of payments to
         be made as provided by this Agreement, which records and books shall be
         open for inspection upon reasonable notice during business hours by
         either UM auditor(s) or an independent certified accountant selected by
         UM, except one to whom Repligen has a reasonable objection, for the
         purpose of verifying the amount of payments due and payable. Said right
         of inspection may exercised not more than once in any calendar year,
         but will exist for four (4) years from the date of origination of any
         such record and this requirement and right of inspection shall survive
         any termination of this Agreement. UM shall be responsible for all
         expenses of its auditor(s) or independent accountants associated with
         such inspection. However, in the event that such inspection reveals an
         underpayment of royalties to UM in excess of ten percent (10%), then
         said inspection shall be at Repligen's expense and such underpayment
         shall become immediately due and payable to UM. If such inspection
         reveals an overpayment of royalties to UM, at Repligen's election, UM
         shall promptly reimburse Repligen to the extent of such overpayment or
         credit such overpayment against Repligen's next royalty payment to UM.

9.3      The reports provided for hereunder shall be certified by an authorized
         representative of Repligen to be correct to the best of Repligen's
         knowledge and information.

                       *CONFIDENTIAL TREATMENT REQUESTED
<PAGE>

X.       Time and Currencies of Payments

10.1     Payments accrued at the close of each Royalty Quarter shall be due and
         payable in Ann Arbor, Michigan on the date each quarterly report,
         provided for under Article IX above, is due and shall be paid in United
         States dollars. Repligen agrees to make all payments due hereunder to
         UM by check made payable to the Regents of the University of Michigan
         and sent by prepaid, certified mail, return receipt requested, to the
         address set forth in Article XVIII herein.

10.2     On all amounts outstanding and payable to UM, interest shall accrue
         from the date such amounts are due and payable at a rate of two (2)
         points above the prime lending rate as established by the Chase
         Manhattan Bank, N. A. in New York City, New York, or at such lower rate
         as may be required by law.

10.3     In the case of sales of Licensed Products transacted in foreign
         currency, such foreign currency shall be converted into its equivalent
         in United States dollars at the exchange rate of such currency as
         reported (or if erroneously reported, as subsequently corrected) in the
         Wall Street Journal on the last business day of the Royalty Quarter
         during which such payments are received by Repligen, Affiliates or
         Sublicensees, as the case may be (or if not reported on that date, as
         quoted by the Chase Manhattan Bank, N.A. in New York City, New York).

10.4     Except as provided in the definition of Net Sales, all royalty payment
         to UM under this Agreement shall be without deduction for sales, use,
         excise, personal property or other similar taxes or other duties
         imposed on such payments by the government of any country or any
         political subdivision thereof; and any and all such taxes or duties
         shall be assumed by and paid by Repligen. Repligen shall have no
         liability for any income taxes levied against UM on account of
         royalties or other payments received by UM under this Agreement. If
         laws or regulations require that any such taxes be withheld by
         Repligen, Repligen shall deduct such taxes from the payment due UM, pay
         the taxes so withheld to the taxing authority, and send proof of
         payment to UM within sixty (60) days following such payment.

                       *CONFIDENTIAL TREATMENT REQUESTED
<PAGE>

XI.      Product Liability

11.1     Repligen, Affiliates, and Sublicensees assume all risk of damage or
         injury to persons or property arising out of the clinical testing,
         manufacture, use, distribution or sale of the Licensed Products by them
         or authorized by them and shall hold harmless and indemnify UM, its
         officers and employees from and against any and all personal injury,
         property damage, product liability or similar claims, losses and
         liabilities arising out or Repligen's, Affiliates' or Sublicensees' (or
         any business associated of any of these) clinical testing, manufacture,
         use, distribution or sale of the Licensed Products, including
         reasonable attorneys fees and other costs or defense. UM shall,
         promptly upon receipt of any claim that may be subject to
         indemnification hereunder, give written notice to Repligen of such
         claim, and Repligen shall assume the defense thereof, including the
         employment of counsel reasonably satisfactory to UM. UM shall have the
         right to employ separate counsel in any such action and to participate
         in the defense thereof, but the fees and expenses thereof shall be at
         UM's expense. Repligen shall not be liable for any settlement of any
         such claim, action or proceeding effected without its written consent.

11.2     Repligen shall purchase and maintain, and require Affiliates and
         Sublicensees to purchase and maintain, in effect a policy of product
         liability insurance covering all claims with respect to any Licensed
         Product used, manufactured, sold, licensed or otherwise distributed by
         Repligen within the term of this Agreement, and shall specify UM as an
         additional insured. Repligen shall furnish a certificate of such
         insurance to UM, upon request.

XII.     No Warranty; Limitations of Liability

12.1     EXCEPT AS PROVIDED IN SECTION 3.1, UM MAKES NO REPRESENTATIONS, EXTENDS
         NO WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDING BUT NOT
         LIMITED TO THE IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A
         PARTICULAR PURPOSE. AND ASSUMES NO RESPONSIBILITIES WHATEVER WITH
         RESPECT TO DESIGN, DEVELOPMENT, MANUFACTURE, USE, SALE OR OTHER
         DISPOSITION BY REPLIGEN OR AFFILIATES OR SUBLICENSEES OF LICENSED
         PRODUCT.

                       *CONFIDENTIAL TREATMENT REQUESTED
<PAGE>

12.2     THE ENTIRE RISK AS TO PERFORMANCE OF LICENSED PRODUCT IS ASSUMED BY
         REPLIGEN AND AFFILIATES AND SUBLICENSEES. In no event shall UM be
         responsible or liable for any direct, indirect, special, incidental, or
         consequential damages or lost profits to Repligen, affiliates,
         sublicensees, users or any other individual or entity regardless of
         legal theory. The above limitations on liability apply even though UM
         may have been advised of the possibility of such damage.

12.3     Repligen, Affiliates and Sublicensees shall make no statements,
         representations or warranties or accept any liabilities or
         responsibilities whatsoever to or with regard to any person or entity
         which are inconsistent with any disclaimer or limitation included in
         this Article XII.

XIII.    Term and Termination

13.1     Upon any termination of this Agreement, and except as provided herein
         to the contrary, all rights and obligations of the Parties hereunder
         shall cease, except as follows:

         13.1.1   Obligations to pay royalties and other sums accruing hereunder
         up to the day of such termination;

         13.1.2   The right to complete the manufacture and sale of Licensed
         Product which qualify as "work in process" under generally accepted
         cost accounting standards or which are in stock at the date of
         termination, and the obligation to pay royalties on Net Sales of such
         Licensed Product;

         13.1.3   Obligation for record keeping and accounting reports for so
         long as Licensed Product are sold pursuant to Paragraph 13.1.2 above.
         At such time after termination of this Agreement when sales or other
         dispositions of Licensed Product have ceased, Repligen shall render a
         final report and royalty payment, if required;

         13.1.4   UM's rights to inspect books and records as described in
         Article IX;

         13.1.5   Obligations of defense and indemnity under Article XI;

                       *CONFIDENTIAL TREATMENT REQUESTED
<PAGE>

         13.1.6   Any cause of action or claim of Repligen or UM accrued or to
         accrue because of any breach or default by the other Party hereunder;

         13.1.7   All other terms, provisions, representations, rights and
         obligations contained in this Agreement that by their sense and context
         are intended to survive until performance thereof by either or both
         Parties.

13.2     This Agreement will become effective on its Effective Date and, unless
         terminated under another specific provision of this Agreement, will
         remain in effect until, and terminate upon, the expiration of the last
         to expire of Licensed Patents.

13.3     Upon any material breach by either Party under this Agreement, the
         other Party may terminate this Agreement, the other Party may terminate
         this Agreement by ninety (90) days' written notice to the breaching
         Party, specifying the material breach, default or other defect. Without
         limiting the generality of the foregoing, any default by Repligen in
         the payment of any royalty or the making of any report hereunder, or
         the insolvency of Repligen shall be deemed to be a material breach. The
         termination shall become effective at the end of the ninety day period
         unless the breaching Party cures the breach during the ninety (90) day
         period.

13.4     Notwithstanding anything in this Agreement to the contrary, Repligen
         may terminate this Agreement by giving UM a notice of termination,
         which shall include a statement of the reasons, whatever they may be,
         for such termination and the termination date established by Repligen,
         which date shall not be sooner than ninety (90) days after the date of
         the notice. Such notice shall be deemed by the Parties to be final and,
         immediately upon receipt of such notice of termination, UM shall have
         the right to begin negotiations, and enter into Agreements, with others
         for the manufacture, sale and use of Licensed Product, and may, at its
         option, disclose to said others any and all information related to
         Licensed Product which UM, in its sole discretion, deems appropriate,
         other than information which is subject to confidentiality under any
         Agreement between UM and Repligen. During the period of time from the
         notice of termination until termination pursuant to this provision,
         Repligen shall

                       *CONFIDENTIAL TREATMENT REQUESTED
<PAGE>

         continue any efforts ongoing immediately prior to the termination
         notice to manufacture and sell Licensed Product.

XIV.     Governing Law and Venue

         This Agreement and the relationships between the Parties shall be
         governed in all respects by the law of the State of Michigan
         (notwithstanding any provisions governing conflict of laws under such
         Michigan law to the contrary), except that questions affecting the
         construction and effect to any patent shall be determined by the law of
         the country in which the patent has been granted. The Parties
         understand and expressly agree that any claims, demands, or actions
         asserted against the Regents of the University of Michigan, its agents
         or employees, shall be brought in the appropriate court of the State of
         Michigan.

XV.      Assignment and Non-Pledge for Security

         Due to the unique relationship between the Parties, this Agreement
         shall not be assignable by either Party without the prior written
         consent of the other Party, which consent shall not be unreasonably
         withheld; and any attempt to assign this Agreement without such consent
         shall be void form the beginning. Notwithstanding the foregoing,
         Repligen may assign this Agreement without UM's consent to any assignee
         or purchaser of all or substantially all of Repligen's business
         provided the intended assignee agrees in writing to accept all of the
         terms and condition of this Agreement. Further, Repligen shall refrain
         from pledging any of the license rights granted in this Agreement for
         security for any creditor.

XVI.     Registration or Recordation

16.1     If the terms of this Agreement, or any assignment of license under this
         Agreement are or become such as to require that the Agreement or
         license or any part thereof be registered with or reported to a
         national or supranational agency of any area in which Repligen,
         Affiliates or Sublicensees would do business, Repligen will, at its
         expense, undertake such registration or report. Prompt

                       *CONFIDENTIAL TREATMENT REQUESTED
<PAGE>

         notice and appropriate verification of the act of registration or
         report of any agency ruling resulting from it will be supplied by
         Repligen to UM.

16.2     Any formal recordation of this Agreement or any license herein granted
         which is required by the law of any country as a prerequisite to
         enforceability of the Agreement or license in the courts of any such
         country of for other reasons shall also be carried out by Repligen at
         its expense, and appropriately verified proof of recordation shall be
         promptly furnished to UM.

XVII.    Export Laws and Regulations of the United States

17.1     The Export Regulations of the United States Department of Commerce
         prohibit the exportation from the United States of certain types of
         technical data and commodities (listed in the Export Administration
         Regulations), unless the exporter (e.g., Repligen, Affiliates or
         Sublicensees) has received the required General License or Validated
         License, whichever is applicable. In addition, the exporter may be
         required to obtain certain written assurances regarding re-export from
         the foreign importer for certain types of technical data and
         commodities. Prior to its engaging in any export activity, Repligen has
         advised UM that it will receive a copy of the then current Export
         Administration Regulations of the United States Department of Commerce
         and will arrange for a subscription under which it will receive
         Supplementary Bulletins from the United States Department of Commerce
         upon their issuance. Should the Export Administration Regulations apply
         to the activities contemplated under this Agreement, Repligen hereby
         agrees to comply with, and to required Affiliates to comply with, the
         Export Administration Regulations of the Unites Department of Commerce;
         and Repligen hereby gives UM the assurances called for in the Export
         Administration Regulations, including the assurances called for in Part
         779.4 and any successor provisions of such regulations.

17.2     This Agreement shall by subject to all United Stated Government laws
         and regulations now or hereafter applicable to the subject matter of
         this Agreement.

                       *CONFIDENTIAL TREATMENT REQUESTED
<PAGE>

XVIII.   Notices

         Any notice, request, report, or payment required or permitted to be
         given or made under this Agreement by any Party shall be given by
         sending such notice by certified mail, return receipt requested, to the
         address set forth below or such other address as such party shall have
         specified by written notice given in conformity herewith. Any notice
         not so given shall not be valid unless and until actually received, and
         any notice given in accordance the provisions of this section shall be
         effective when mailed to:

         Repligen Corporation
         117 Fourth Avenue
         Needham, MA 02194
         Attn: President

         Notice to UM shall be addressed to:
         The University of Michigan
         Technology Management Office
         2071 Wolverine Tower
         3003 S. State Street
         Ann Arbor, Michigan 48109-1280

XIX.     Invalidity

         In the event that any term, provision, or covenant of this Agreement
         shall be determined by a court of competent jurisdiction to be invalid,
         illegal, or unenforceable, that term will be curtailed, limirted, or
         deleted, but only to the extent necessary to remove such invalidity,
         illegality or unenforceability, and the remaining terms, provisions,
         and covenants shall not in any way be affected or impaired thereby. In
         the event that the time period of any covenant shall be held
         unenforceable as a matter of law, said covenant will be interpreted to
         be effective for an enforceable time period.

                       *CONFIDENTIAL TREATMENT REQUESTED
<PAGE>

XX.      Publicity

20.1     Each Party agrees to refrain from using (and in the case of Repligen to
         require Affiliates and Sublicensees to refrain from using) the name of
         the other Party in publicity or advertising without the prior written
         approval of the other Party. Reports in scientific literature and
         presentations of joint research and development work are not considered
         publicity. If a Party wishes, but is not legally obligated, to use the
         name of the other Party in financial disclosures, such Party must
         obtain prior written approval from the other Party, which approval will
         not be unreasonably withheld. Any disclosure which is required of a
         Party by law will not require the prior approval of the other Party.

20.2     Any announcements or similar publicity with respect to this Agreement
         or the transactions contemplated herein shall be at such time an in
         such manner as UM and Repligen shall mutually agree, provided that
         nothing herein shall prevent either Party from making such public
         announcements as such party's legal obligations require.

XXI.     Bankruptcy

         The parties hereto intend that the Agreement shall not be deemed an
         executory contract under the United States Bankruptcy Code. If during
         the term of this Agreement, Repligen shall make an assignment for the
         benefit of auditors, or if proceedings in voluntary or involuntary
         bankruptcy shall be instituted in behalf of or against Repligen, and
         not be dismissed within sixty (60) days after such proceedings are
         instituted, or if a receiver or trustee shall be appointed for the
         property of Repligen, UM may, at its option, terminate this Agreement
         and revoke the license herein granted by written notice to Repligen.

XXII.    Financing Statements

         Repligen agrees to cooperate with UM in the execution and filing (not
         earlier than 120 days after execution of this Agreement) of financial
         statements under the Uniform Commercial Code, and

                       *CONFIDENTIAL TREATMENT REQUESTED
<PAGE>

         of similar statements, providing notice of this License Agreement, in
         the United States Patent and Trademark Office, or other federal agency
         or court as deemed appropriate by UM.

XXIII.   Force Majeure

         No failure or omission by the Parties hereto in the performance of any
         obligation of this Agreement shall be deemed a breach of this Agreement
         or create any liability if the same shall arise from any cause or
         causes beyond the control of the Parties, including, but not limited
         to, the following: act of God; acts or omissions of any government; any
         rules, regulations or orders issued by any governmental authority or by
         any office, department, agency or instrumentality thereof; fire; storm;
         flood; earthquake; accident; war; rebellion; insurrection; riot;
         invasion; strikes, and lockouts and provided that such failure or
         omission resulting from one of the above causes is cured as soon as is
         practicable after the occurrence of one or more of the above-mentioned
         causes.

XXIV.    Product Marking

         Repligen agrees to mark, and to require Affiliates and Sublicensees to
         mark, Licensed Product with the appropriate patent notice as approved
         by UM, such approval not to be unreasonably withheld.

XXV.     Non-Waiver

         No waiver, other than as agreed to in writing by the Parties, no matter
         how long continuing or how many times extended, by either Party of a
         breach of any term or condition of this Agreement shall be considered
         as a permanent waiver or as an amendment to this instrument.

                       *CONFIDENTIAL TREATMENT REQUESTED
<PAGE>

XXVI.    Article Headings

         The Article headings herein are for purposes of convenient reference
         only and shall not be used to construe or modify the terms written in
         the text of this Agreement.

XIX.     No Agency Relationship

         Except as clearly and specifically provided under the terms and
         provisions of this Agreement, neither Party shall be deemed to be an
         agent of the other in connection with the exercise of any right or
         authority to assume or create any obligations or responsibility on
         behalf of the other.

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their duly authorized representatives as of the date first written above.

                                              FOR THE REGENTS OF

FOR REPLIGEN CORPORATION                      The UNIVERSITY OF MICHIGAN

BY/s/Daniel P. Witt, Ph.D.                     By /s/Marvin G. Parnes
---------------------------------
                  Daniel P. Witt, Ph.D.        Associate Vice President
                  Vice President               Interim Director,
                  Busisness Development        Technology Management Office

      Date   7/24/00                           Date   7/25/00
             -------                                  -------

                       *CONFIDENTIAL TREATMENT REQUESTED<PAGE>

                                  NON-STATUTORY
                             STOCK OPTION AGREEMENT
                                       OF
                                  AETHLON, INC.

     THIS NON-STATUTORY STOCK OPTION AGREEMENT, hereinafter referred to as the
"Option" or the "Agreement," is made as of the 3rd day of November, 2000,
between AETHLON, MEDICAL, INC., a Nevada corporation (hereinafter referred to as
the "COMPANY") and BRUCE H. HAGLUND (the "OPTIONEE"), residing at 20 Foxboro,
Irvine, California 92614.

     The Board of Directors of the COMPANY hereby grants an option on 200,000
shares of common stock of the COMPANY ("Common Stock") to the OPTIONEE at the
price and in all respects subject to the terms, definitions and provisions of
the Agreement.

     1. OPTION PRICE. The option price is $3.25 per share.

     2. EXERCISE OF OPTION.

          2.1 RIGHT TO EXERCISE. The options shall be exercisable by the
OPTIONEE, his personal representative, or his assignee, in whole or in part in
accordance with the terms of this Agreement and is exercisable for a period of
five (5) years from the date hereof; expiring on December 31, 2005.

          2.2 METHOD OF EXERCISE. This Option shall be exercisable by a written
notice which shall:

               (a) State the election to exercise the Option, the number of
shares in respect of which it is being exercised, the person in whose name the
shares are to be issued (if the shares are issued to individuals), the names,
addresses and Social Security Numbers of such persons; and

               (b) Contain such representations and agreements as to the
holder's investment intent with respect to such shares of Common Stock as are
required by law may be satisfactory to the COMPANY's counsel; and

               (c) Be signed by the person or persons entitled to exercise the
Option and, if the Option is being exercised by any person or persons other than
the OPTIONEE, be accompanied by proof, satisfactory to counsel for the COMPANY,
of the right of such person or persons to exercise the Option; and

               (d) Be accompanied by a payment for the purchase price of those
shares with respect to which the Option is being exercised in the form of a
certified or bank cashier's or teller's check. The certificate or certificates
for shares of Common Stock as to which the Option shall be exercised shall be
registered in the name of the person or persons exercising the Option.

                                       1
<PAGE>

          2.3 RESTRICTIONS ON EXERCISE. As a condition to his exercise of this
Option, the COMPANY may require the person exercising this Option to comply with
applicable laws or regulations.

     3. TRANSFERABILITY OF OPTION. This Option may be transferred in any manner
by will or the laws of descent or distribution and may be exercised during the
lifetime of the OPTIONEE by an assignee of the OPTIONEE.

     4. STOCK SUBJECT TO THE OPTION. The COMPANY shall set aside 200,000 shares
of the Common Stock which it now holds as authorized and unissued shares. If the
Option should expire or become unexercisable for any reason without having been
exercised in full, the unpurchased shares which were subject thereto shall be
free from any restrictions occasioned by this Option Agreement. If the COMPANY
has been listed on a stock exchange, the COMPANY will not be required to issue
or deliver any certificate or certificates for shares to be issued hereunder
until such shares have been listed (or authorized for listing upon official
notice of issuance) upon each stock exchange on which outstanding shares of the
same class may then be listed and until the COMPANY has taken such steps as may,
in the opinion of counsel for the CORPORATION, be required by law and applicable
regulations, including the rules and regulations of the Securities and Exchange
Commission, and state blue sky laws and regulations, in connection with the
issuance or sale of such shares, and the listing of such shares on each such
exchange. The COMPANY will use its best efforts to comply with any such
requirements forthwith upon the exercise of the Option.

     5. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. If all or any portion of the
Option is exercised subsequent to any stock dividend, split-up, capitalization,
combination or exchange of shares, merger, consolidation, acquisition of
property or stock, separation, reorganization, or other similar change or
transaction of or by the COMPANY, as a result of which shares of any class shall
be issued in respect of outstanding shares of the class covered by the Option or
shares of the class covered by the Option shall be changed into the same or a
different number of shares of the same or another class or classes, the person
or persons so exercising such an Option shall receive, for the aggregate option
price payable upon such exercise of the Option, the aggregate number and class
of shares equal to the number and class of shares he or she would have had on
the date of exercise had the shares been purchased for the same aggregate price
at the date the Option was granted and had not been disposed of, taking into
consideration any such stock dividend, split-up, recapitalization, combination
or exchange of shares, merger, consolidation, acquisition of property or stock,
separation, reorganization, or other similar change or transaction; provided,
however, that no fractional share shall be issued upon any such exercise, and
the aggregate price paid shall be appropriately reduced on account of any
fractional share not issued. Provided, however, any shares which are issued at
or about this option price or pursuant to a warrant or options whose exercise
price is at or above the exercise price provided in the agreement shall not be
considered to be diluted for the purpose of this agreement and no adjustment
will be made.

     6. NOTICES. Each notice relating to this Agreement shall be in writing and
delivered in person or by certified mail to the proper address. Each notice
shall be deemed to have been given on the date it is received. Each notice to
the COMPANY shall be addressed to it at its principal office, at 7825 Fay
Avenue, Suite 200, LaJolla, California 92037, to the attention of the Secretary
of the COMPANY. Each notice to the OPTIONEE or other person or persons then
entitled to exercise the Option shall be addressed to the OPTIONEE or such other
person or persons at the OPTIONEE's address set forth in the heading of this
Agreement. Anyone to whom a notice may be given under this Agreement may
designate a new address by notice to that effect.

                                       2
<PAGE>

     7. BENEFITS OF AGREEMENT. This Agreement shall inure to the benefit of and
be binding upon each successor of the COMPANY. All obligations imposed upon the
OPTIONEE and all rights granted to the COMPANY under this Agreement shall be
binding upon the OPTIONEE's heirs, legal representatives, and successors. This
Agreement shall be the sole and exclusive source of any and all rights which the
OPTIONEE, his heirs, legal representatives, or successors may have in respect to
the Plan or any options or Common Stock granted or issued thereunder, whether to
him, or herself, or to any other person.

     8. RESOLUTION OF DISPUTES. Any dispute or disagreement which should arise
under, or as a result of, or in any way relate to, the interpretation,
construction or application of this Agreement will be determined by the Board of
Directors of the COMPANY. Any determination made hereunder shall be final,
binding, and conclusive for all purposes.

     IN WITNESS WHEREOF, the COMPANY and the OPTIONEE have caused this Agreement
to be executed as of the day, month and year first above-written.

COMPANY:                                AETHLON MEDICAL, INC.
                                        a Nevada corporation

(CORPORATE SEAL)

                               By:
                                        ---------------------------------------
                                        Franklyn S. Barry, Jr.,  PRESIDENT

OPTIONEE:
                                        ---------------------------------------
                                        BRUCE H. HAGLUND

                                       3

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