-----------------



THIS LICENSE AGREEMENT (hereinafter "AGREEMENT"), made as of the ___ day of June

2001 between SMITHKLINE BEECHAM PLC (doing business as GlaxoSmithKline), a

corporation incorporated in England and Wales, having a principal place of

business at New Horizons Court, Brentford Middlesex, England and PACIFIC HEALTH

LABORATORIES INC., a corporation of the State of Delaware, having a principal

place of business at 1480 Route 9 North, Suite 204, Woodbridge, New Jersey

07095.



                                WITNESSETH THAT:

                                ----------------



         WHEREAS, PACIFIC, as defined below, is the owner of all right, title

and interest in certain patents, identified in Appendix A hereto, and know-how

relating to certain products in the field of appetite suppression, meal

replacement, weight loss and/or weight management under development and/or

marketed by PACIFIC under the brand name "Satietrol(R)"; and

         WHEREAS, GSK, as defined below, desires to obtain certain licenses from

PACIFIC to develop and commercialize such products under the aforesaid patents

and know-how, and PACIFIC is willing to grant to GSK such licenses;

















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         NOW, THEREFORE, in consideration of the covenants and obligations

expressed herein, and intending to be legally bound, and otherwise to be bound

by proper and reasonable conduct, the parties agree as follows:



1.       DEFINITIONS

         -----------

         1.01  "AFFILIATES" shall mean any corporation, firm, partnership or

other entity, whether de jure or de facto, which directly or indirectly owns, is

owned by or is under common ownership with a party to this AGREEMENT to the

extent of at least fifty percent (50%) of the equity (or such lesser percentage

which is the maximum allowed to be owned by a foreign corporation in a

particular jurisdiction) having the power to vote on or direct the affairs of

the entity and any person, firm, partnership, corporation or other entity

actually controlled by, controlling or under common control with such party.

         1.02  "EFFECTIVE DATE" shall mean the date upon which this AGREEMENT is

effective and shall be the date of this AGREEMENT first written above.

         1.03. "FIELD" shall mean all human uses of LICENSED PRODUCT.

         1.04  "GSK" shall mean SmithKline Beecham plc and its AFFILIATES.

         1.05  "KNOW-HOW" shall mean all present and future technical

information and know-how in the FIELD which is owned or controlled by PACIFIC

and relates to LICENSED PRODUCT and shall include, without limitation, all

formulation, biological, chemical, pharmacological, toxicological, clinical,

assay, control and manufacturing data and any other information relating to

LICENSED PRODUCT and useful for the development and commercialization of

LICENSED PRODUCT.

         1.06  "NET SALES" shall mean the gross receipts representing sales of

LICENSED PRODUCT in the TERRITORY under this AGREEMENT by GSK and its

sublicensees ("the Selling Party") to THIRD PARTIES in finished product form

(i.e., packaged and labeled for sale to the ultimate consumer) less deductions

for:

          (i)  transportation charges to the extent they are included in the

               selling price or otherwise paid by the THIRD PARTY purchaser,

               including insurance, for transporting LICENSED PRODUCT;













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             (ii) sales and excise taxes and duties and any other governmental

                  charges imposed upon the production, importation, use or sale

                  of such LICENSED PRODUCT;

            (iii) trade, quantity and cash discounts and/or trade rebates (in

                  each case, excluding advertising and promotional

                  considerations included in the selling price ) allowed on

                  LICENSED PRODUCT;

             (iv) allowances or credits to customers on account of rejection or

                  return of LICENSED PRODUCT or on account of retroactive price

                  reductions affecting such LICENSED PRODUCT.

      Sales between GSK and its sublicensees shall be excluded from the

computation of NET SALES and no royalties will be payable on such sales.

         1.07 "LICENSED PRODUCT" shall mean all products concerning or relating

to appetite suppression, meal replacement products used in weight management,

weight loss and/or weight management under development by PACIFIC as of the

Effective Date and/or marketed by PACIFIC under the brand name "Satietrol(R)" as

of the EFFECTIVE DATE, the manufacture, use, sale or import of which, but for

the license granted under this AGREEMENT, infringes any PATENT or employs any

KNOW HOW; together with all improvements, line extensions and enhancements to

such products created by or on behalf of PACIFIC during the term of the License

Agreement.

         1.08 "PACIFIC" shall mean Pacific Health Laboratories Inc. and its

AFFILIATES.

         1.09 "PATENTS" shall mean all patents and patent applications in the

FIELD which are or become owned or controlled by PACIFIC, or to which PACIFIC

otherwise has, now or in the future, the right to grant licenses, which

generically or specifically claim LICENSED PRODUCT, a process for manufacturing

or formulating LICENSED PRODUCT, an intermediate used in such process or a use

of LICENSED PRODUCT. Included within the definition of PATENTS are all

continuations, continuations-in-part, divisions, patents of addition, reissues,

renewals or extensions thereof and all SPCs. Also included within the definition

of PATENTS are any patents or patent applications which generically or

specifically claim any improvements on LICENSED PRODUCT or intermediates or

manufacturing processes required or useful for production of LICENSED PRODUCT













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which are developed by PACIFIC, or which PACIFIC otherwise has the right to

grant licenses, now or in the future, during the term of this AGREEMENT. The

current list of patent applications and patents encompassed within PATENTS is

set forth in Appendix A attached hereto.

         1.10 "PER PRODUCT BASIS" shall mean each distinct form or presentation

or use of LICENSED PRODUCT, for example, and without limitation to the

foregoing, a meal replacement product is a distinct form of LICENSED PRODUCT to

a pre-meal beverage, and the addition of vitamins to an existing formulation

will not constitute a distinct form or presentation of LICENSED PRODUCT. In

determining whether a particular LICENSED PRODUCT is a distinct form or

presentation, no account will be taken of minor changes, such as flavor,

packaging or enhancements to an existing form or presentation of LICENSED

PRODUCT. In the event that two existing forms and/or presentations of LICENSED

PRODUCT are packaged in combination and sold together to THIRD PARTIES, the NET

SALES pertaining to such a combination will be apportioned between each

individual form or presentation of such LICENSED PRODUCTS in accordance with the

relative selling price of each such LICENSED PRODUCT when sold individually by

GSK and/or its sublicensees.

       1.11 "SPC" shall mean a right based upon a PATENT to exclude others from

making, using or selling LICENSED PRODUCT, such as a Supplementary Protection

Certificate

       1.12 "TERRITORY" shall mean worldwide.

       1.13 "THIRD PARTY(IES)" shall mean any party other than GSK, PACIFIC and

their respective AFFILIATES.

       1.14 "USA" shall mean the United States of America, including all of its

territories and possessions.



2.       GRANT AND RIGHT OF FIRST REFUSAL

         --------------------------------

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