Ixion Biotechnology, Inc. is a corporation organized under the laws of the State
of Delaware, whose offices are located at 13709 Progress Blvd., Box 13, Alachua,
FL 32615, (hereinafter referred to as "Ixion"). The University Surgical Group of
Cincinnati, Inc. is a corporation organized under the laws of the State of Ohio,
whose  offices  are  located  at 231  Albert  B.  Sabin  Way,  Cincinnati,  Ohio
45267-0558  (hereinafter  referred to as "USGC").  USGC,  under a contract  from
Ixion, will carry out experiments in the Islet Stem Cell Research Project.  This
Funded  Research  Program is  effective  on the date of  signing  by  authorized
officials of Ixion and USGC. The parties to this Funded  Research  Program agree
as follows:

1.       Scope of Work

Ixion and USGC agree to collaborate  on studies  designed to test the safety and
efficacy of Ixion's proprietary  diabetes therapy as provided in this Agreement.
"Funded Research Program" shall mean testing by USGC of Ixion's  islet/stem cell
preparations,  with appropriate  controls, as described in Exhibit A, the "Islet
Stem Cell  Research  Project."  Ixion shall  conduct the expansion of pancreatic
tissue, whether obtained from USGC or otherwise, to islet/stem cell preparations
and shall provide these islet/stem cell  preparations to USGC for testing.  (The
islet/stem  cell   preparations   shall   hereinafter  be  referred  to  as  the
"Materials.")  Funding  will be  provided  by Ixion,  in the amount set forth in
Exhibit B, the "Budget." Ixion may choose to contract out certain work, and will
independently fund such efforts. Parties involved in such contract work shall be
under obligation of confidentiality to both Ixion and USGC.

2.       Use of Materials

USGC shall use the Materials for research purposes only and solely in connection
with the Funded  Research  Program  described in Exhibit A. USGC MAY NOT USE THE
MATERIALS IN HUMANS.  USGC shall comply with all Federal laws, rules, orders and
regulations applicable to the Materials.

USGC may not sell, distribute,  release, or disclose the Materials to any person
other than employees of USGC or the University of Cincinnati with a need to have
the  Materials  to perform  the  Funded  Research  Program  and who are bound to
maintain the Materials as confidential.

Ixion may, in its sole  discretion,  distribute  its Materials to others and use
the Materials for its own purposes. Unless otherwise specifically stated in this
Agreement,  USGC  shall  have no  rights  in the  Materials  provided  by Ixion,
including any patent,  copyright or other  intellectual  property  right. At the
request of Ixion, USGC will return all unused Materials belonging to Ixion.

THE MATERIALS  DELIVERED  PURSUANT TO THIS AGREEMENT ARE EXPERIMENTAL IN NATURE,
AND IXION MAKES NO REPRESENTATIONS AND
<PAGE>
EXTENDS NO WARRANTIES OF ANY KIND, EITHER
EXPRESS  OR   IMPLIED.   THERE  ARE  NO  EXPRESS   OR  IMPLIED   WARRANTIES   OF
MERCHANTABILITY  OR FITNESS  FOR A  PARTICULAR  PURPOSE,  OR THAT THE USE OF THE
MATERIALS WILL NOT INFRINGE ANY PATENT, COPYRIGHT, TRADEMARK, OR OTHER RIGHTS.

Notwithstanding the foregoing, Ixion represents and warrants to USGC that (i) to
the  best of  Ixion's  knowledge  the  Materials  do not  infringe  any  patent,
copyright, trademark, or other rights of any third party; and (ii) the Materials
comply with all Federal laws,  rules,  orders and regulations  applicable to the
Materials.

USGC MAKES NO  REPRESENTATIONS  AND EXTENDS NO  WARRANTIES  OF ANY KIND,  EITHER
EXPRESS  OR   IMPLIED.   THERE  ARE  NO  EXPRESS   OR  IMPLIED   WARRANTIES   OF
MERCHANTABILITY  OR FITNESS  FOR A  PARTICULAR  PURPOSE,  OR THAT THE USE OF THE
MATERIALS WILL NOT INFRINGE ANY PATENT, COPYRIGHT, TRADEMARK, OR OTHER RIGHTS.

Notwithstanding the foregoing, USGC represents and warrants to Ixion that to the
best of USGC's  knowledge,  USGC's  performance  of the  services  described  in
Exhibit A will not infringe any patent, copyright, trademark, or other rights of
any third party.

3.       Key Personnel

The Funded Research Program will be performed under the direction of Dr. Horacio
Rilo,  Director,   Cellular  Transplantation  Program,  Department  of  Surgery,
University  of  Cincinnati  College  of  Medicine.  In the event he is unable or
unwilling to continue with the Funded Research Program,  USGC will promptly give
Ixion written notice  thereof and shall  endeavor to find a mutually  acceptable
substitute.  If no mutually  agreeable  substitutes can be found, this Agreement
will be terminated in accordance with Section 11.3.

4.       Term and Conditions

The term of this Funded Research  Project is from December 2001 through December
2002 or upon  earlier  completion  of the work  described  in  Exhibit  A.  This
Agreement may be replaced by a subcontract under a grant which may be awarded in
the future to either  IXION or USGC which  supports  the same  research.  In the
event of replacement, the parties will cooperate to obtain the maximum permitted
reimbursement from the granting authority for Ixion.

5.       Reports

Quarterly,  during  the  conduct of this  research  and upon  completion  of the
research or termination  of the  Agreement,  USGC will provide to Ixion detailed
written  reports of all  research  results  arising  from this  Funded  Research
Program..
<PAGE>

6.       Method of Billing and Payment

Subject  to  Sections  4 and  11,  Ixion  agrees  to  pay  USGC a  total  sum of
$520,054.63 and in addition, will make off-site purchases, as needed, to support
the  Research  Project per Exhibit B. Upon  execution of this  Agreement,  Ixion
shall pay to USGC $130,000,  to be followed (beginning January,  2002) by twelve
monthly  payments of $32,500 each.  The payment  schedule may be modified by the
parties in the event of an early  projected  completion of the work described in
Exhibit A. Checks will be paid by Ixion  [payable  to "The  University  Surgical
Group of Cincinnati, Inc."] referring to this Agreement and will be sent by mail
to the attention of Mr. Anthony  Pandolfo,  University of  Cincinnati,  Dept. of
Surgery (ML 558),  P.O. Box 670558,  Cincinnati,  Ohio  45267-0558 [Tax I.D. No.
31-1008027].

7.       Equipment

Title to any  capital  equipment  purchased  by USGC in the  performance  of the
Funded  Research  Program with funds  provided  under this Agreement will be the
property of USGC.

8.       Publications

USGC  is  free to  publish,  present,  or use  any  results  arising  out of the
performance  of  this  Agreement  for  its  own  instructional,   research,   or
publication  objectives provided that the publication,  presentation or use does
not disclose any proprietary  information furnished by Ixion under Paragraph 10.
USGC  agrees  that any  proposed  publication  or  presentation  relating to (or
stemming from) the Funded Research Program will be submitted to Ixion for review
at least 45 days prior to submission  for  publication or  presentation.  In the
event that the proposed publication or presentation  contains patentable subject
matter that Ixion chooses to protect, USGC will, upon written request from Ixion
within the 45-day review period,  delay the  publication or  presentation  for a
maximum of an  additional  90 days to allow  Ixion  and/or USGC to file a patent
application.  If publication  results from research  using the  Materials,  USGC
agrees to  acknowledge  Ixion  and/or  give  credit to  Ixion's  scientists,  as
scientifically  appropriate,  based  on any  contribution  they  may make to the
research.

9.       Ownership of Inventions/Right to License

9.1.      Ixion and USGC shall be joint owners of  inventions  made at USGC as a
          result of the Funded Research Program.  USGC grants to Ixion the first
          option to an  exclusive,  world-wide  royalty-bearing  license  (under
          terms at least as favorable as USGC may offer to any third party) or a
          non-exclusive  world-wide,  paid-up,  royalty-free license to all USGC
          rights in said inventions for Ixion's own internal use and not for any
          commercial  exploitation  of any such  inventions.  USGC  shall have a
          non-exclusive  world-wide,  paid-up  royalty-free license to all Ixion
          rights  in said  inventions,  but only for  USGC's  own  internal  use
          (including  educational,  research and patient care  purposes) and not
          for  any  commercial  exploitation  of  any  such  inventions.  As  to
          inventions  described under this  paragraph,  Ixion shall further have
          the option to sublicense rights to said inventions, provided Ixion has
          elected a license that is royalty-bearing.
<PAGE>

9.2.     Subject to any patent rights of USGC as stated  above,  Ixion will have
         the  right  to use the  results  and raw  data of the  Funded  Research
         Program in any manner deemed appropriate to Ixion's business interests.
         Subject to any patent rights of Ixion as stated  above,  USGC will have
         the  right  to use the  results  and raw  data of the  Funded  Research
         Program for internal use, including  educational,  research and patient
         care purposes.

10.      Confidentiality

10.1 The  parties  agree to use their  best  efforts to hold in  confidence,  in
accordance with this paragraph,  any information  disclosed under this Agreement
and identified in writing as  confidential  ("Information").  For the purpose of
this  Agreement,  "hold in  confidence"  means that each party will  protect the
information  received from the  disclosing  party in the same manner in which it
protects its own  confidential  information of similar  nature.  The Information
will remain the property of the disclosing  party, and will be disclosed only to
those persons necessary for the performance of this Agreement.

10.2.  The  obligation  of the  parties to maintain  confidentiality  under this
Agreement will survive its expiration or termination and will endure for 5 years
from the date of disclosure.

10.3  Ixion  may  disclose   Information  to  consultants   and/or  third  party
contractors having an obligation of confidentiality to Ixion.

10.4.    The obligation of non-disclosure will not apply to the following:

         a.  Information  that is  publicly  available  through  no fault of the
         parties;  b. Information that is disclosed by a third party entitled to
         disclose  the  Information;  c.  Information  that is already  known to
         recipient, provided recipient so advises the disclosing party within 30
         days  after  disclosure  of  the  Information  to  recipient;   and  d.
         Information  that is  required to be  disclosed  by law,  provided  the
         obligated party promptly  notifies the other party in writing of lawful
         disclosure.

11.      Termination

11.1.  Unless otherwise  terminated,  this Agreement will remain in force during
the Term  provided in Section 4. Except as otherwise  provided in Sections 8, 9,
10,  and 11,  all  rights and  obligations  under  this  Agreement  end with its
expiration or termination.

11.2.  Ixion reserves the right to terminate this Agreement upon 30 days written
notice for  business/scientific  reasons  relating  to the results of the Funded
Research Program. However, Ixion will continue payment of all personnel expenses
associated with the Funded Research  Program (except Dr. Rilo's) for a period of
60 days after giving notice, and will continue payment of personnel expenses for
Dr. Rilo  associated  with the Funded  Research  Program for a period of 30 days
after giving notice.

11.3 . If USGC  fails to  continuously  staff  the  project  with  adequate  and
competent  personnel,
<PAGE>

Ixion may terminate this Agreement upon 30 days writtennotice to USGC,  provided
that if within 30 days of the receipt of such notice USGC cures the said failure
to the reasonable  satisfaction  of Ixion,  the Agreement will continue in force
and effect.

11.4. In the event that either party defaults or breaches any material provision
of this  Agreement,  the other party may terminate  this  Agreement upon 30 days
written  notice to the party in default or  breach,  provided  that if the party
defaulting,  breaching, or failing, within 30 days of the receipt of such notice
cures the said default,  breach or failure to the reasonable satisfaction of the
non-defaulting party, the Agreement will continue in force and effect.

11.5. If either party should become  insolvent or should make any assignment for
the  benefit of  creditors,  or should be  adjudged  bankrupt,  or should file a
petition in  bankruptcy,  or is named as a debtor in an  involuntary  bankruptcy
proceedings,  or if a receiver  or trustee of the  property  of either  party is
appointed,  then  this  Agreement,  at the  option  of  the  other  party,  will
terminate, effective on the date notice of such termination is given.

11.6. Termination of this Agreement for any reason will not relieve either party
of the duties and  obligations  accruing to the other party under this Agreement
previous to the effective date of such termination.

12.      Assignment

Neither  party may assign this  Agreement  or any part of it without the written
consent of the other party.

13.      Miscellaneous

13.1.  The headings in this  Agreement are intended  solely for  convenience  or
reference and will be given no effect in the construction or  interpretation  of
this Agreement.

13.2. This Agreement sets forth the entire Agreement of the parties with respect
to the  subject  matter  hereof  and may not be  altered  or  amended  except in
writing, signed by an authorized representative of each party hereto.

13.3. The construction and enforcement of this Agreement will be governed by the
laws of the State of  Florida,  United  States  of  America,  without  regard to
principles of choice of law.

13.4. No waiver of any default, condition, provision or breach of this Agreement
will be  deemed  to  imply or  constitute  waiver  of any  other  like  default,
condition, provision or breach of this Agreement.

13.5. If any paragraph,  term,  condition or provision of this Agreement will be
found, by a court of competent jurisdiction, to be invalid or unenforceable,  or
if any paragraph, term, condition or provision is found to violate or contravene
the laws of the  State  of  Florida,  then the  paragraph,
<PAGE>

term,  condition  or  provision  so  found  will be  deemed  severed  from  this
Agreement, but other paragraphs, terms, conditions and provisions will remain in
full force and effect.

13.6.   Nothing   contained   herein  will  be  construed  as   establishing  an
employer-employee,   joint  venture,  or  principal-agent  relationship  between
parties.  In  addition,  neither  party will have the right to incur any debt or
expense for the other party  except as may  expressly  be agreed upon by written
agreement.

14.      Export Controls

It is  understood  that USGC is subject to United  States  laws and  regulations
controlling  the  export  of  technical  data,  computer  software,   laboratory
prototypes,  and  other  commodities,  and  that it  obligations  hereunder  are
contingent  on  compliance  with  applicable  U.S.  export laws and  regulations
(including   the  Arms  Export   Control   Act,  as  amended,   and  the  Export
Administration  Act of  1979).  The  transfer  of  certain  technical  data  and
commodities may require a license from the cognizant agency of the United States
Government  and /or written  assurances  by Ixion that Ixion will not  re-export
data or commodities to certain foreign  countries  without prior approval of the
cognizant  government  agency.  While USGC agrees to  cooperate  in securing any
license  which the  cognizant  agency deems  necessary in  connection  with this
Agreement, USGC cannot guarantee that such licenses will be granted.

15.      Force Majeure

Neither party shall be responsible to the other party for failure to perform any
of the  obligations  imposed by this  Agreement,  provided such failure shall be
occasioned  by  fire,  flood,  explosion,  lightning,   windstorm,   earthquake,
subsidence of soil, failure or destruction, in whole or in part, of machinery or
equipment  or failure  of supply of  materials,  discontinuity  in the supply of
power,  governmental  interference,  civil commotion,  riot, war, strikes, labor
disturbance,  transportation  difficulties,  labor shortage, or any cause beyond
the reasonable control of such party.

16.      Use of Names

Neither party will use the name of the other in any advertising or other form of
publicity  without the written  permission  of the other,  except as required by
law.

         IN WITNESS  WHEREOF,  the parties  hereto  have  caused this  Agreement
signed by their respective officers duly authorized as of the date written.

Ixion Biotechnology,  Inc.         University Surgical Group of Cincinnati, Inc.
BY:                                BY:


Name:    Louis G. Kessler, Ph.D.            Name:  Anthony Pandolfo
Title:   V.P., Corporate Development                 Title:    Administrator
Date:    November 15, 2001                  Date:    November 19, 2001