Document:

EXHIBIT 10.1

                MATERIAL TRANSFER AGREEMENT-COOPERATIVE RESEARCH
                            AND DEVELOPMENT AGREEMENT

This Material Transfer  Agreement-Cooperative Research and Development Agreement
("MTA-CRADA")  has been  adopted for use by the  National  Institutes  of Health
("NIH"),  the Food and Drug Administration  ("FDA"), and the Centers for Disease
Control and Prevention  ("CDC"),  collectively  referred to herein as the Public
Health Service ("PHS"),  for transfers of essential research material ("Research
Material") not otherwise reasonably available for PHS research.

         1.   Alpha   1   Biomedicals,   Inc.,   hereinafter   referred   to  as
"Collaborator,"  agrees to transfer to PHS's  investigator,  Dr. Hynda Kleinman,
the following "Research Material":

                            thymosin beta4 (***)

This MTA-CRADA involves no other exchange of personnel or resources.

         2. This Research  Material  will be used solely in connection  with the
research plan ("Research  Plan"),  attached as Appendix A, by PHS's investigator
in his/her laboratory under suitable containment conditions.

         2(a). Are the Research Materials of human origin?

                           ___ Yes
                            X  No
                           ---

         2(b). If Yes in 2(a), were the Research Materials  collected  according
to 45 CFR Part 46, "Protection of Human Subjects?"

                           __ Yes (Please provide Assurance Number: __________)
                           __ No

         2(c). Will the Research Materials be used in human subjects?

                          ___ Yes (Please provide Assurance Number: __________)
                           X  No
                          ---

         3. In all oral  presentations  or written  publications  concerning the
Research Plan, PHS will acknowledge Collaborator's contribution of this Research
Material unless requested otherwise.  To the extent permitted by law, PHS agrees
to treat in  confidence,  for a period of three  (3) years  from the date of the
disclosure  to the PHS, any of  Collaborator's  written  information  about this
Research Material that is stamped  "CONFIDENTIAL" or any of Collaborator's  oral
information  about  this  Research  Material  that is  identified  in writing as
"CONFIDENTIAL"  within  ten  (10)  days  of  the  oral  disclosure,  except  for
information  that was  previously  known to PHS or that is or  becomes  publicly
available or which is disclosed to PHS without a confidentiality obligation. PHS
may publish or otherwise publicly disclose the results of the Research Plan, but
if Collaborator has given CONFIDENTIAL information to PHS such public disclosure
may be made only  after  Collaborator  has had  thirty  (30) days to review  the
proposed  disclosure to determine if it contains any  CONFIDENTIAL  information,
except  when a  shortened  time  period  under  court  order or the  Freedom  of
Information Act pertains.

Model PHS MTA-CRADA
Form 053096 Page 1 of 4

<PAGE>

         4. This Research  Material  represents a significant  investment on the
part of  Collaborator  and is  considered  proprietary  to  Collaborator.  PHS's
investigator therefore agrees to retain control over this Research Material, and
further  agrees not to transfer the Research  Material to other people not under
her or his direct supervision  without advance written approval of Collaborator.
Collaborator  reserves the right to distribute  the Research  Material to others
and to use it for its own  purposes.  When the Research Plan is completed or one
(1) year has elapsed,  whichever  occurs first,  or the MTA-CRADA is terminated,
the Research Material will be disposed of as directed by Collaborator.

         5. This  Research  Material is  provided  as a service to the  research
community.  IT IS BEING SUPPLIED TO PHS WITH NO WARRANTIES,  EXPRESS OR IMPLIED,
INCLUDING ANY WARRANTY OF  MERCHANTABLITY  OR FITNESS FOR A PARTICULAR  PURPOSE.
Collaborator makes no representations that the use of the Research Material will
not  infringe  any  patent or  proprietary  rights of third  parties.  It is the
intention  of PHS that  Collaborator  not be liable  for any  claims or  damages
arising from PHS's use of the Research Material;  however, no indemnification is
provided or intended.

         6. The PHS  shall  promptly  report to  Collaborator  in  writing  each
Subject Invention and any patent  applications  filed thereon resulting from the
research  conducted  under  this  MTA-CRADA  that  is  reported  to  PHS  by its
employees.  Subject  Invention means any invention,  conceived or first actually
reduced to practice in the  performance  of the research plan during the term of
this MTA-CRADA, that is or may be patentable under 35 U.S.C. ss. 101 or ss. 161,
protectable under 7 U.S.C. ss. 2321, or otherwise  protectable by other types of
U.S. or foreign intellectual property rights.

         7. With  respect  to  Government  intellectual  property  rights to any
Subject  Invention not made solely by the  Collaborator's  employees for which a
patent or other intellectual property application is filed, PHS hereby grants to
the   Collaborator   an   option   to  elect  an   exclusive   or   nonexclusive
commercialization license, which is substantially in the form of the appropriate
model PHS license  agreement.  This option does not apply to Subject  Inventions
conceived prior to the effective date of this CRADA that are reduced to practice
under this CRADA, if prior to that reduction to practice, PHS has filed a patent
application  on the  invention and has licensed it or offered to license it to a
third  party.  The terms of the license  will  fairly  reflect the nature of the
invention,  the relative  contributions  of the Parties to the invention and the
CRADA,  the risks  incurred  by the  Collaborator  and the  costs of  subsequent
research and development  needed to bring the invention to the marketplace.  The
field of use of the license will be commensurate  with the scope of the research
plan.

         8.  Within  three  (3)  months   after  PHS  provides   notice  to  the
Collaborator  that the  patent or other  intellectual  property  application  is
filed,  the license  option must be  exercised by written  notice  mailed to the
designated PHS official. Exercise of this option by the Collaborator initiates a
license  negotiation  period that  expires  nine (9) months  after the patent or
other intellectual property application filing date. If the last proposal by the
Collaborator  has not been  responded  to in writing by PHS within this nine (9)
month period,  the negotiation  period shall be extended to expire one (1) month
after PHS so responds, during which month the Collaborator may accept in writing
the final license proposal of PHS. In the absence of such  acceptance,  PHS will
be free to license such  intellectual  property  rights to others.  In the event
that  Collaborator  elects  the  option for an  exclusive  license,  but no such
license is executed  during the  negotiation  period,  PHS agrees not to make an
offer on more  favorable  terms to third  party for a period  of six (6)  months
without first offering  Collaborator those more favorable terms. These times may
be  extended at the sole  discretion  of PHS upon good cause shown in writing by
the Collaborator.

         9. Pursuant to 15 U.S.C.  3710a(b)(1)(A),  for  inventions  made by PHS
employees or jointly with a Collaborator under this MTA-CRADA,  the Collaborator
grants to PHS a nonexclusive,  nontransferable,  irrevocable, paid-up license to
practice the invention or have the invention  practiced  throughout the world by
or on behalf of the Government.  In the exercise of such license, the Government
shall not publicly disclose trade secrets or commercial or financial information
that is privileged or confidential  within the meaning of 5 U.S.C.  552(b)(4) or
which would be  considered  as such if it had been  obtained  from a non-Federal
party.

Model PHS MTA-CRADA
Form 053096 Page 2 of 4

<PAGE>

         10.  Pursuant to 15 U.S.C.  3710a(b)(2),  for inventions made solely by
Collaborator  employees under this MTA-CRADA,  the Collaborator  grants to PHS a
nonexclusive,  nontransferable,  irrevocable,  paid-up  license to practice  the
invention or have the invention  practiced  throughout the world by or on behalf
of the Government for research or other Government purposes.

         11.  Pursuant  to 15 U.S.C.  3710a(1)(B),  if PHS  grants an  exclusive
license to a Subject  Invention  made wholly by PHS  employees or jointly with a
Collaborator  under this  MTA-CRADA,  the  Government  shall retain the right to
require the  Collaborator  to grant to a responsible  applicant a  nonexclusive,
partially   exclusive,   or  exclusive   sublicense  to  use  the  invention  in
Collaborator's  licensed  field of use on terms  that are  reasonable  under the
circumstances;  or if the Collaborator  fails to grant such a license,  to grant
the license itself.  The exercise of such rights by the Government shall only be
in  exceptional  circumstances  and only if the  Government  determines  (i) the
action is  necessary  to meet  health or safety  needs  that are not  reasonably
satisfied by Collaborator, (ii) the action is necessary to meet requirements for
public use  specified  by Federal  regulations,  and such  requirements  are not
reasonably  satisfied by the Collaborator;  or (iii) the Collaborator has failed
to  comply  with an  agreement  containing  provisions  described  in 15  U.S.C.
3710a(c)(4)(B). The determination made by the Government under this paragraph is
subject to administrative appeal and judicial review under 35 U.S.C. 203(2).

         12. Any dispute arising under this MTA-CRADA that is not disposed of by
agreement  of the  Principal  Investigators  shall be  submitted  jointly to the
signatories of this MTA-CRADA.  If the signatories are unable to jointly resolve
the dispute within thirty (30) days after  notification  thereof,  the Assistant
Secretary  for  Health  (or  his/her  designee  or  successor)  shall  propose a
resolution.  Nothing in this article  shall  prevent any Party from pursuing any
additional  administrative  remedies that may be available and, after exhaustion
of such administrative remedies, pursuing all available judicial remedies.

         13. The  illegality or invalidity of any  provisions of this  MTA-CRADA
shall not impair, affect or invalidate the other provisions of this MTA-CRADA.

         14.  Neither this  MTA-CRADA nor any rights or obligations of any Party
hereunder shall be assigned or otherwise transferred by either Party without the
prior written consent of the other Party.

         15. All notices pertaining to or required by this MTA-CRADA shall be in
writing  and  shall be  signed  by an  authorized  representative  and  shall be
delivered by hand or sent by certified  mail,  return  receipt  requested,  with
postage  prepaid,  to the  addresses  indicated on the  signature  page for each
Party.  Notices regarding the exercise of license options shall be made pursuant
to  Article 8. Any Party may change  such  address by notice  given to the other
Party in the manner set forth above.

         16.  By  entering  into  this  MTA-CRADA,  PHS  does  not  directly  or
indirectly endorse any product or service provided,  or to be provided,  whether
directly  or  indirectly  related to either this  MTA-CRADA  or to any patent or
other intellectual property license or agreement which implements this MTA-CRADA
by its successors,  assignees,  or licensees.  The Collaborator shall not in any
way state or imply that this  MTA-CRADA is an endorsement of any such product or
service by the U.S. Government or any of its organizational units or employees.

         17. Either the PHS or the Collaborator may unilaterally  terminate this
entire  Agreement at any time by giving written notice at least thirty (30) days
prior to the desired termination date.

         18. This MTA-CRADA constitutes the entire agreement between the Parties
concerning  the  subject  matter  of this  MTA-CRADA  and  supersedes  any prior
understanding or written or oral agreement.

         19. This MTA-CRADA shall be construed in accordance with Federal law as
applied by the Federal courts in the District of Columbia.

Model PHS MTA-CRADA
Form 053096 Page 3 of 4

<PAGE>

         20. The undersigned  expressly  certify and affirm that the contents of
any respective  statements  made or reflected in this MTA-CRADA are truthful and
accurate.

         21. This  MTA-CRADA  shall be effective  upon execution by the Parties.
Under the terms of the Federal Technology Transfer Act, PHS has thirty (30) days
to disapprove  this  MTA-CRADA in which case it shall be  considered  terminated
from the date of such  disapproval.  The term of this  MTA-CRADA  is twelve (12)
months from execution.

         22. The  provisions  of Articles 3, 5-10,  14 and 20 shall  survive the
termination of this MTA-CRADA.

FOR PHS:

--------------------------------------                    ----------------------
Harold C. Slavkin, D.D.S.                                  Date
Director, National Institute of Dental Research

Mailing Address for Notices:

Dr. Jacob A. Donkersloot
Technology Development Coordinator, NIDR

US Mail: 30 Convent Drive, MSC 4350    Federal Express etc: NIH, Bg. 30, Rm. 532
Bethesda, MD 20892-4350                Bethesda MD 20892

FOR THE COLLABORATOR:
/s/ Michael L. Berman                                       5/15/97
------------------------------                            ----------------------
Michael L. Berman, Ph.D.                                  Date
President and Chief Executive Officer, Alpha I Biomedicals, Inc.

Mailing Address for Notices:

Michael L. Berman, Ph.D.
6707 Democracy Blvd.
Suite 111
Bethesda MD 20817

Model PHS MTA-CRADA
Form 053096 Page 4 of 4

<PAGE>EXHIBIT 10.2

                     SETTLEMENT AGREEMENT AND MUTUAL RELEASE

THIS  SETTLEMENT  AGREEMENT AND MUTUAL  RELEASE is dated as of this 17th day of
March,  2000,  and is by and between ALPHA 1  BIOMEDICALS,  INC.  ("Alpha1"),  a
Delaware  corporation,   and  BACHEM  BIOSCIENCE  INC.  ("Bachem"),  a  Delaware
corporation.

WHEREAS:

A.   Alpha1 is  currently  indebted  to Bachem  in the  amount of  approximately
     US$543,000 plus simple interest accruing from August 1, 1999 to the present
     (the "Indebtedness");

B.   Bachem is in the process of manufacturing *** grams of GMP Thymosin
     (beta) 4 ("Product") for the account of Alpha1; and

C.   Alpha1  and Bachem  desire to settle and  discharge  the  Indebtedness  and
     provide  for  Alpha1  to  purchase  Product  on the  terms  and  conditions
     hereinafter set forth.

NOW,  THEREFORE,  in  consideration  of the  foregoing  and for  other  good and
valuable consideration, the receipt of which is hereby acknowledged, the parties
agree as follows:

1.   Bachem does hereby  forever  release and discharge  Alpha1 from any and all
     actions, causes of action, damages,  judgments,  liabilities,  obligations,
     claims and demands of any kind or nature  whatsoever,  whether in law or in
     equity,  whether  known or unknown,  which it now has or which it hereafter
     may have,  for or by reason of any matter  arising out of or in  connection
     with the  circumstances  relating  to the  Indebtedness,  other  than those
     obligations arising under this Settlement Agreement and Mutual Release.

2.   Alpha1 does hereby  forever  release and discharge  Bachem from any and all
     actions, causes of action, damages,  judgments,  liabilities,  obligations,
     claims and demands of any kind or nature  whatsoever,  whether in law or in
     equity,  whether  known or unknown,  which it now has or which it hereafter
     may have,  for or by reason of any matter  arising out of or in  connection
     with  the  circumstances   relating  to  Indebtedness,   other  than  those
     obligations arising under this Settlement Agreement and Mutual Release.

3.   In further consideration of, and as a further inducement for, the foregoing
     mutual releases, the parties agree as follows:

     a.  Immediately upon the execution of this Mutual Release, Alpha1 shall pay
         to Bachem  the sum of  US$125,000  (the  "Settlement  Amount")  by wire
         transfer of same day, cash available funds to an account  designated in
         writing by Bachem.

     b.  Immediately upon the execution of this Mutual Release, Alpha1 shall pay
         to Bachem the sum of US$50,000 (the "Down Payment") by wire transfer of
         same day, cash available  funds to an account  designated in writing by
         Bachem,  as an advance  against the Initial  Order  Purchase  Price (as
         hereinafter defined).

                                                       - 1 -
<PAGE>
     c.  Within  thirty (30) days after Alpha1 is granted an  exclusive  license
         (the  "License")  from the  National  Institutes  of Health  ("NIH") to
         certain rights  pertaining to the use of Thymosin (beta) 4, Alpha1 will
         place an order  (the  "Initial  Order")  with  Bachem  for *** grams of
         Product at a price of US *** per gram,  or  US$100,000 in the aggregate
         (the "Initial Order Purchase Price").

     d.  Contemporaneously  with the placement of the Initial Order, Alpha1 will
         tender the balance of the Initial  Order  Purchase  Price (the "Balance
         Payment") of US$50,000 to Silver,  Freedman & Taff,  L.L.P.,  as Escrow
         Agent, by wire transfer of same day, cash available funds to an account
         to be  designated  in writing by the Escrow  Agent.  Interest,  if any,
         earned on funds held by the Escrow  Agent  pursuant to this  Settlement
         Agreement and Mutual Release, shall accrue to the benefit of Alpha1.

     e.  Upon  Alpha1's  receipt  of  the  Initial  Order  of  Product  and  its
         acceptance  thereof,  Alpha1 shall instruct the Escrow Agent to release
         the Balance Payment to Bachem. For the purpose hereof, acceptance shall
         be deemed to have occurred when Alpha1  receives the full amount of the
         Initial  Order  of  Product  and  the  Product  meets  or  exceeds  the
         Specifications  set forth on Exhibit A hereto.  If Alpha1 has  received
         the full amount of the Initial  Order of Product,  but it does not meet
         or exceed the Specifications, then Alpha1 shall so notify Bachem within
         thirty (30) days of Alpha1's  receipt of the full amount of the Initial
         Order of Product.  If Alpha1 does not notify  Bachem within thirty (30)
         days of Alpha1's  receipt of the full  amount of the  Initial  Order of
         Product  that the Product  does not meet or exceed the  Specifications,
         then the Initial  Order of Product will be deemed to have been accepted
         by Alpha1. If Alpha1 timely notifies Bachem in writing that the Product
         does not meet or exceed the Specifications, and if Bachem contests that
         determination  in a written  notice to Alpha1  within ten (10) calendar
         days after Alpha1's  notice is given,  then the parties shall appoint a
         mutually-agreeable, qualified independent laboratory (the "Laboratory")
         to test the  Product for  compliance  with the  Specifications.  If the
         Laboratory  concludes in a written report  delivered to the parties and
         to  the  Escrow   Agent  that  the   Product   meets  or  exceeds   the
         Specifications,  then (i) such  determination  shall be final, (ii) the
         Escrow  Agent shall  release the Balance  Payment to Bachem,  and (iii)
         Alpha1 shall be solely  responsible for the  Laboratory's  fees. If the
         Laboratory  concludes in a written report  delivered to the parties and
         to the  Escrow  Agent  that the  Product  does not meet or  exceed  the
         Specifications, then (i) such determination shall be final, (ii) Bachem
         shall be solely  responsible for the  Laboratory's  fees, and (iii) the
         Escrow Agent shall retain the Balance Payment until such time as Alpha1
         receives  the full  amount  of the  Initial  Order of  Product  and the
         Product meets or exceeds the Specifications.

     f.  The  Escrow  Agent  shall  hold and  disburse  the  Balance  Payment in
         accordance with the terms of the Escrow  Agreement,  attached hereto as
         Exhibit B.

                                      - 2 -
<PAGE>

     g.  Bachem agrees to sell to Alpha1 at such time and in such quantities as
         Alpha1 may  request,  up to an  additional  *** grams of  Product at a
         price of US*** per gram and upon such other terms as the parties  shall
         mutually agree. To avoid misunderstanding, the foregoing sentence gives
         Alpha1 the right to purchase up to an additional  *** grams of Product,
         but does not impose an obligation on Alpha1 to do so.

     h.  For  Alpha1's  requirements  of Product in excess of *** grams,  Alpha1
         shall recognize  Bachem as a preferred (but not exclusive)  supplier of
         Product,  and Bachem agrees to sell Product to Alpha1 upon such pricing
         and other terms as the parties shall mutually agree.

4.   The releases set forth in  Paragraphs 1 and 2 above shall become  effective
     only upon the  payment of the  Settlement  Amount  and the Down  Payment by
     Alpha1 to Bachem in accordance  with  Paragraphs 3.a and 3.b above.  In the
     event NIH has not  granted  the  License to Alpha1  within the two (2) year
     period  beginning  on the  date of this  Settlement  Agreement  and  Mutual
     Release,  then Alpha1  hereby agrees to  nevertheless  purchase the Initial
     Order on the terms set forth in Paragraphs 3.c, 3.d, 3.e and 3.f above.

5.   It is the intention of the parties in executing this  Settlement  Agreement
     and Mutual Release and in providing the consideration  acknowledged  and/or
     required  by  this  Settlement  Agreement  and  Mutual  Release  that  this
     Settlement  Agreement  and  Mutual  Release  is a full,  final,  mutual and
     complete  release of and from the matters  referred to  Paragraphs  1 and 2
     above.

6.   All notices, requests, demands and other communications between the parties
     shall be in  writing  and shall be  deemed  to have been duly  given (a) if
     personally delivered and a receipt obtained therefor,  then on the date and
     at the time of delivery,  (b) if mailed by certified  or  registered  mail,
     postage  prepaid,  return receipt  requested,  then three (3) business days
     after mailing, (c) if by overnight courier,  then on the date following the
     date given to the courier firm, or (d) if  transmitted  by fax, then on the
     date of  transmission  (but only if the  sending  fax  machine  produces  a
     confirmation that the fax machine to which the notice was sent received the
     fax),  to the parties at the  following  addresses  or fax numbers (or such
     other  addresses  or fax numbers  which shall be given in writing by either
     party to the other):

                  If to Alpha1:             Alpha 1 Biomedicals, Inc.
                  ------------              3 Bethesda Metro Center
                                            Suite 700
                                            Bethesda, Maryland 20814
                                            Fax:     (301) 961-1991

                                      - 3 -
<PAGE>

                  If to Bachem:             Bachem Bioscience Inc.
                  ------------              3700 Horizon Drive
                                            King of Prussia, Pennsylvania 19406
                                            Fax:     (610) 239-0800

7.   This Settlement  Agreement and Mutual Release shall inure to the benefit of
     each  party's  officers,  directors,   stockholders  and  employees,  their
     respective heirs,  administrators,  personal representatives and executors,
     and the Company's successors and assigns.

8.   This  Settlement  Agreement  and Mutual  Release may be amended  only by an
     instrument in writing signed by all of the parties hereto.

9.   This Mutual  Release  shall be  construed  and  governed by the laws of the
     State of  Maryland  without  regard to its  conflict  of law rules.  If any
     provision  of this Mutual  Release is held to be invalid or  unenforceable,
     such  invalidity  or  unenforceability  will not  affect  the  validity  or
     enforceability  of the other  provisions of this Mutual Release,  the other
     provisions  of this Mutual  Release shall be enforced as fully as possible,
     and the  unenforceable  provision  shall be deemed  modified to the limited
     extent  required  to  permit  its  enforcement  in a  manner  most  closely
     approximating the intention of the parties as expressed herein.

10.  This Settlement Agreement and Mutual Release may be executed simultaneously
     in one or more counterparts, each of which shall be deemed an original, but
     all of which together will constitute one and the same instrument.

11.  Each of the parties agrees to execute all further instruments and documents
     and to take all further action as the other party may reasonably request in
     order to give effect to the terms and purpose of this Settlement  Agreement
     and Mutual Release.

12.  Each person  executing  this  Settlement  Agreement  and Mutual  Release on
     behalf  of  a  party  to  this  Settlement  Agreement  and  Mutual  Release
     represents  and  warrants  that  he or she is duly  authorized  to do so on
     behalf of such party.

                                      - 4 -
<PAGE>
IN WITNESS  WHEREOF,  this  Settlement  Agreement  and Mutual  Release  has been
executed by the parties,  the corporate party acting through its duly authorized
officers, as of the date and year first above written.

                                            ALPHA1:
                                            ------

                                            ALPHA 1 BIOMEDICALS, INC.

                                            By:/s/ Allan L. Goldstein
                                               -----------------------------
                                               Allan L. Goldstein,
                                               Chief Executive Officer

                                            BACHEM:
                                            ------

                                            BACHEM BIOSCIENCE INC.

                                            By: /s/ Thomas Fruh
                                               ------------------------------
                                               Thomas Fruh, Vice President and
                                               Chief Operating Officer

                                      - 5 -

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