EXCLUSIVE LICENSE AGREEMENT

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Exhibit 10.12

UIC Intellectual Property Office

EXCLUSIVE LICENSE AGREEMENT

for UIC's technology

Betulinic Acid as Anti-Melanoma (CN43)

Semi-Synthesis of Betulinic Acid and Derivatives (CQ15)

Use of Betulinic Acid for Cancer Treatment (CQ16)

Treatment and Prevention of Human Melanoma with Betulinic Acid

Derivatives (CQ17)

TABLE OF CONTENTS

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PREAMBLE

ARTICLES:

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I DEFINITIONS

II GRANT

III DUE DILIGENCE

IV PAYMENTS

V REPORTS AND RECORDS

VI PATENT PROSECUTION

VII INFRINGEMENT

VIII PRODUCT LIABILITY

IX EXPORT CONTROLS

X NON-USE OF NAMES

XI ASSIGNMENTS

XII TERMINATION

XIII PAYMENTS, NOTICES AND OTHER COMMUNICATIONS

XIV MISCELLANEOUS PROVISIONS

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UIC Intellectual Property Office

This Agreement is entered into this second day of December, 1999 ("Effective

Date") by and between THE BOARD OF TRUSTEES OF THE UNIVERSITY OF ILLINOIS, a

body corporate and politic of the State of Illinois through its Office of The

Vice Chancellor for Research, Intellectual Property Office, 1737 West Polk

Street, Chicago, Illinois 60612 and on behalf of the Chicago campus and units

reporting to it (hereinafter "UNIVERSITY") and Advanced Life Sciences, a

corporation of the State of Illinois with principal offices at 12305 S.

New Avenue, Suite E, Lemont, IL, 60439, (hereinafter "LICENSEE").

WITNESSETH

WHEREAS, in the course of research conducted under UNIVERSITY auspices, John M.

Pezzuto, Tapas K. DasGupta, Darrick S.H.L. Kim, Mary Lou Schmidt, Konrad Marc

Kuzmanoff, and Lydia Ling-Indeck, of UNIVERSITY, (the "INVENTOR(S)"), have

produced inventions entitled "Betulinic Acid as Anti-Melanoma" (CN43), and/or,

"Semi-Synthesis of Betulinic Acid and Derivatives" (CQ15), and/or, "Use of

Betulinic Acid for Cancer Treatment" (CQ16), and/or, "Treatment and Prevention

of Human Melanoma with Betulinic Acid Derivatives" (CQ17) (collectively called

the "INVENTION");

WHEREAS, pursuant to assignments by the INVENTORS to UNIVERSITY of all

their right, title and interest in and to the INVENTION and any patents

resulting therefrom, UNIVERSITY is the owner of the INVENTION and the

corresponding Patent Rights, and has the right to grant licenses under said

Patent Rights;

WHEREAS, UNIVERSITY desires to have the Patent Rights utilized in the

public interest and is willing to grant a license to its interest thereunder;

WHEREAS, LICENSEE seeks to commercially develop the Patent Rights through a

thorough, vigorous and diligent program of exploiting the Patent Rights whereby

public utilization shall result therefrom; and

NOW, THEREFORE, in consideration of the premises and the mutual covenants

contained herein, the parties hereto agree as follows:

ARTICLE I - DEFINITIONS

For the purpose of this Agreement, the following words and phrases shall

have the following meanings:

1.1 "LICENSEE" shall mean Advanced Life Sciences.

1.2. "Affiliate" shall mean any person, firm, corporation or other

entity controlling, controlled by, or under common control with a party hereto.

The term "control" wherever used throughout this Agreement shall mean ownership,

directly or indirectly, of more than 50% of the

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equity capital. Other than LICENSEE, any corporation, company, partnership,

joint venture, firm, individual or other entity which does not come within this

definition shall be a "Non-Affiliate".

1.3 "Patent Rights" shall mean all of the following UNIVERSITY

intellectual property:

(a) the United States patent applications entitled " Method and

Composition for Selectively Inhibiting Melanoma Using Betulinic

Acid", filed in the United States Patent Office on March 3,

1995, and assigned Serial Number 08/407,756; "Methods of

Manufacturing Betulinic Acid", filed in the United States

Patent Office on March 27, 1997, and assigned Serial Number

08/826,217; "Method and Composition for Selectively Inhibiting

Melanoma Using Betulinic Acid", filed in the United States

Patent Office on May 16, 1997, and assigned Serial Number

08/858,011; "Method and Composition for Treating Cancers",

filed in the United States Patent Office on May 16, 1997, and

assigned Serial Number 08/857,413, and all foreign patent

applications based on this U.S. application;

(b) United States and foreign patents issued from this application,

and divisionals and continuations of this application;

(c) claims of U.S. and foreign continuation-in-part applications,

and of the resulting patents, which are directed to subject

matter specifically described in the U.S. patent applications

Serial Numbers as listed herein;

(d) any reissues or re-examinations of patents described in (a),

(b), or (c), above.

1.4 A "Licensed Product" shall mean any product or part thereof

developed by or on behalf of LICENSEE which:

(a) is covered in whole or in part by an issued, unexpired claim or

a pending claim contained in the Patent Rights in the country

in which any product is made, used or sold; or

(b) is manufactured by using a process which is covered in whole or

in part by an issued, unexpired claim or a pending claim

contained in the Patent Rights in the country in which any such

process is used or in which any such product is used or sold.

1.5 A "Licensed Process" shall mean any process which is covered in

whole or in part by an issued, unexpired claim or a pending claim contained in

the Patent Rights in any country in which such process is practiced.

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1.6 "Net Sales" shall mean LICENSEE's or Affiliate's billings for sales

of Licensed Products or Licensed Processes produced hereunder less the sum of

the following:

(a) discounts allowed in amounts customary in the trade;

(b) sales, tariff duties and/or use taxes directly imposed and with

reference to particular sales;

(c) outbound transportation prepaid or allowed;

(d) amounts allowed or credited on returns; and

(e) bad debts and uncollectible receivables.

No deductions shall be made for commissions paid to individuals whether

they be with independent sales agencies or regularly employed by LICENSEE of

Affiliates and on its payroll, or for cost of collections. Licensed Products

shall be considered "sold" when billed or invoiced.

1.7 "Sublicense" shall mean the right to make, use or sell Licensed

Products or Licensed Processes, other than by outright sale to any non-Affiliate

(including any non-Affiliated distributor).

1.8 "FIELD OF USE" shall mean the use of the INVENTION in the field of

human therapeutics.

1.9 "TERRITORY" shall mean the use of the INVENTION in the area of the

World.

ARTICLE II - GRANT

2.1 UNIVERSITY hereby grants to LICENSEE an exclusive worldwide right

and license in the FIELD OF USE and in the TERRITORY, including the right to

sublicense, to make, have made, use, lease and sell products, processes and

other applications which is or are covered by, embodied in, or derived from the

INVENTION, and/or the Patent Rights until the end of the last to expire patent

of the Patent Rights or until this Agreement shall be terminated, as hereinafter

provided, whichever occurs first, and subject to the rights reserved or observed

in Section 2.2 below.

2.2 Notwithstanding any other provisions of this Agreement, it is agreed

that UNIVERSITY shall retain the right to practice the licensed Patent Rights

for its own non-commercial teaching and research activities.

2.3 LICENSEE hereby agrees that every sublicensing agreement to which it

shall be party and which shall relate to the rights, privileges and license

granted hereunder shall contain a statement describing the date upon which

LICENSEE'S exclusive rights, privileges and license hereunder shall terminate.

2.4 LICENSEE agrees that any sublicenses granted by it shall provide

that the obligations to UNIVERSITY of Article III, Sections 3.1 and 3.2(c), V,

VII, VIII, IX, X, XII, and

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XIV of this Agreement shall be binding upon the sublicensee as if it were a

party to this Agreement. LICENSEE further agrees to attach copies of these

Articles to sublicense agreements.

2.5 LICENSEE agrees to forward to UNIVERSITY a copy of any and all fully

executed sublicense agreements, and further agrees to forward to UNIVERSITY

annually a copy of such reports received by LICENSEE from its sublicensees

during the preceding twelve (12) month period under the sublicenses as shall be

pertinent to a royalty accounting under said sublicense agreements.

2.6 If LICENSEE receives from sublicensees anything of value in lieu of

cash payments based upon payment obligations of any sublicense under this

Agreement, LICENSEE shall pay UNIVERSITY royalty income based on the fair market

value of such payment, unless UNIVERSITY waives in writing such payment

obligation.

2.7 The license granted hereunder shall not be construed to confer any

rights upon LICENSEE by implication, estoppel or otherwise as to any technology

not included in the Patent Rights.

ARTICLE III - DUE DILIGENCE

3.1 LICENSEE and its sublicensees shall use their best efforts to bring

Licensed Products or Licensed Processes to market through a thorough, vigorous

and diligent program for exploitation of the Patent Rights.

3.2 In addition, LICENSEE shall adhere to the following milestones:

(a) LICENSEE shall deliver to UNIVERSITY, within six months of the

date of execution of this Agreement, its detailed business,

research and development plan including relevant schedules of

capital investments needed to implement the plan, financial,

equipment and facility plans, number and kind of personnel and

time planned for each phase of development of the Patents

Rights for a three year period. Similar reports shall be

provided to UNIVERSITY annually to relay update and status

information on LICENSEE's business, research and development

progress, including projections of activity anticipated for the

next reporting year.

(b) LICENSEE shall be responsible for diligently and promptly

taking all reasonable steps to secure all required and/or

necessary governmental approvals to sell, exploit, or market

any and all Licensed Products. LICENSEE shall advise

UNIVERSITY, through annual reports to be provided after

December 31 of each year pursuant to Section 5.2 below, of its

program of development for and status of obtaining said

approvals. In the event UNIVERSITY, after full examination of

each such report,

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determines that the LICENSEE is not taking reasonable steps to

secure all required and/or necessary governmental approvals as

specified above, UNIVERSITY shall notify LICENSEE. If LICENSEE

fails to so satisfy UNIVERSITY, then UNIVERSITY shall give

notice of same and may terminate this Agreement pursuant to

Section 12.3 below.

(c) LICENSEE shall initiate at its expense, Phase I clinical trials

within three months of the approval of an Investigational New

Drug application (IND) by the U.S. Food and Drug Administration

(FDA).

3.3 LICENSEE's failure to perform in accordance with Sections 3.1 and

3.2 above shall be grounds for UNIVERSITY to terminate this Agreement pursuant

to Section 12.3 below.

ARTICLE IV - PAYMENTS

4.1 For the rights, privileges and licenses granted hereunder, LICENSEE

shall pay to the UNIVERSITY, in the manner hereinafter provided, until the end

of the last to expire patent of the Patent Rights or until this Agreement shall

be terminated, as hereinafter provided, whichever occurs first:

(a) a nonrefundable license issue fee of Fifteen Thousand Dollars

($15,000), payable immediately upon signing this Agreement;

(b) a royalty in an amount equal to six percent (6%) of the Net

Sales by LICENSEE or any Affiliate of the Licensed Products or

Licensed Processes;

(c) a royalty of six percent (6%) of Net Sales made by Sublicensee

and twenty percent (20%) of all income, other than Net Sales

based income, paid by Sublicensee to LICENSEE;

(d) milestone payments as follows: (i) Ten Thousand Dollars ($

10,000) upon the filing of an IND; (ii) Twenty Five Thousand

($25,000) upon the filing of a New Drug Application (NDA) from

the FDA for each Licensed Product for which LICENSEE receives a

NDA; (iii) One Hundred Thousand Dollars ($100,000) upon receipt

of a NDA from the Food and Drug Administration for each

Licensed Product for which LICENSEE receives a NDA; and

(e) during the term of this agreement, LICENSEE agrees to pay

UNIVERSITY annual Minimum Royalty Payments, starting after the

first sale of LICENSED PRODUCTS in the amount of Five Thousand

Dollars ($5,000) per Royalty Year.

(f) LICENSEE shall reimburse UNIVERSITY for patent costs pursuant

to ARTICLE VI, section 6.3, herein.

4.2 No multiple royalties shall be payable because any Licensed Product,

its manufacture, use, lease or sale are or shall be covered by more than one of

the Patent Rights

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patent applications or Patent Rights patents licensed under this Agreement, or

to be covered in more than one subsection of Section 4.1 hereof.

4.3 Royalty payments shall be paid in United States dollars in Chicago,

Illinois, or at such other place as UNIVERSITY may reasonably designate

consistent with applicable laws and regulations. If any currency conversion

shall be required in connection with the payment of royalties hereunder, such

conversion shall be made by using