Document:

<Page>

                                                                   Exhibit 10.2

June 1, 2002

Michael T. Flavin, Ph.D.
Chief Executive Officer and Chairman
Advanced Life Sciences, Inc.
1005 Internationale Parkway
Woodridge, IL  60517

Dear Dr. Flavin:

We know that you have been Chief Executive Officer and Chairman of the Board of
Advanced Life Sciences, Inc. (the "Company") since its incorporation on December
17, 1998. We also understand that, until August 1, 2002, you have chosen not to
receive salary and/or benefits from Advanced Life Sciences, even though you have
provided services to the Company on a regular basis since incorporation. In
recognition of the fact that you have now joined the Company on a full-time
basis, and that you desire to be compensated, we outline your employment
agreement going forward in this letter (the "Agreement"):

DUTIES:             During the Employment Term, you will serve as the Company's
                    Chief Executive Officer and devote your full time and best
                    efforts, talents, knowledge and experience to serving as the
                    Company's Chief Executive Officer.

EMPLOYMENT TERM:    Your employment with the Company began December 17, 1998.
                    The term of this Agreement will begin on August 1, 2002 (the
                    "Effective Date"), and will continue thereafter until three
                    years from the Effective Date and will be automatically
                    extended for subsequent one (1) day periods for each day
                    that passes after the Effective Date, unless sooner
                    terminated by either party. The intent of the foregoing
                    provision is that the Agreement becomes "evergreen" on the
                    Effective Date so that on each passing day after the
                    Effective Date the Employment Term automatically extends to
                    a full three-year period.

ANNUAL SALARY:      $180,000 with a salary review annually at the anniversary
                    of your date

<Page>

                    of hire, December 17, 1998, which was also the date of
                    incorporation of Advanced Life Sciences, Inc. Payment of
                    your salary will begin on August 1, 2002, and will be made
                    according to payroll practices in effect for senior
                    executive officers of the Company.

INCENTIVE BONUS:    1/2% commission on each equity financial deal you make
                    that brings cash into the Company. The 1/2% would be
                    applied to the dollar amount of cash flow into the Company.
                    In the event of termination without cause, any financial
                    deal you substantially contributed to making that closes
                    within twelve months of your termination date will be
                    eligible for this incentive bonus.

HEALTH INSURANCE:   Eligible for coverage on the first day of employment with
                    the Company. The Company currently pays 89% of monthly
                    premiums for family coverage. Your portion of the premium is
                    deducted from your biweekly paycheck on a pre-tax basis.

                    Currently, $10.00 Co-pay for PPO office visits; preventative
                    care included; $200 deductible per person and $600 per
                    family. Maximum out-of-pocket expenses for family coverage
                    in the PPO network is $4,350. Maximum out-of-pocket expenses
                    for NON-PPO for family coverage is $5,250.

                    Currently, prescription drug cards are issued with the
                    medical insurance, which have a $10.00 co-pay for generic
                    and $15 co-pay for brand name drugs.

LIFE INSURANCE:     Eligible on the first day of employment. $50,000 group term
                    insurance for the employee through The Guardian. (The
                    Company currently pays the premium.)

ACCIDENTAL DEATH/
DISMEMBERMENT
INSURANCE:          Eligible on the first day of employment. $50,000 group
                    insurance through The Guardian. (The Company currently pays
                    the premium.)

                    COVERAGE UNDER THE ABOVE INSURANCE policies IS BASED ON
                    APPROVAL OF THE INSURABILITY OF THE EMPLOYEE BY THE GUARDIAN
                    LIFE INSURANCE COMPANY OF AMERICA.

DISABILITY
INSURANCE:          Short Term and Long Term Disability Insurance is available
                    at the Company for all full time employees and
                    hourly-employees who work no less than 30 hours per week.
                    Short Term Disability Insurance will provide an employee
                    with 60% of

<Page>

                    his/her weekly salary up to a maximum of $500 per week, for
                    up to 13 weeks in the event he/she is unable to work due to
                    a non-work related accident or illness. If a person's
                    disability continues past 90 days (13 weeks) Long Term
                    Disability Insurance will go into effect and provide 60% of
                    his/her monthly salary, up to a maximum of $6,000 per month.
                    The Company pays the premium on this policy.

DENTAL INSURANCE:   Currently, 100% preventative care; 100% diagnostic; ($150
                    family deductible). One-year wait period for anything other
                    than preventative or what is considered basic dental service
                    is covered.

                    The Company currently pays 60% of the monthly premium and
                    the employee pays 40% of the monthly premium. Your portion
                    of the premium is deducted from your biweekly paycheck on a
                    pre-tax basis.

VACATION:           25 vacation days annually, renewable each year on your
                    anniversary date, which is December 17.

HOLIDAYS:           8 paid holidays throughout the year.

EQUITY STAKE:       In connection with your employment, the Company will
                    include you in any future senior management stock option
                    program and will award you non-qualified stock options to
                    purchase common stock of the Company based on compensation
                    benchmarks and performance under specific stock option
                    plans.

                    The exercise price will be based on the Company's fair
                    market value as of the date of the option award. Based on
                    the most recent market appraisal by Willamette dated May 19,
                    1999, the per share price is $.625.

                    The option will vest pro rata monthly over 3 years from the
                    date of a stock option program initiation. There will be
                    100% acceleration of vesting in the event of a Change in
                    Control of the Company (as defined below).

401 (K) PLAN:       Eligible to participate on September 1, 2002. There is a
                    Company match of 50 cents for each dollar contribution up to
                    6% of income.

SEVERANCE BENEFITS: If the Company terminates your employment without Cause (as
                    defined below), the Company will continue monthly base

<Page>

                    salary and employee benefit plan coverage (including
                    medical, dental, life, AD&D, disability, and Company match
                    to 401(k) for a period of 24 months. Any unused vacation
                    days as of the date of termination will be paid in a lump
                    sum at termination. Stock options will also be exercisable
                    for 24 months following the termination date. Any bonuses
                    earned as of the termination date will be paid in a lump sum
                    at termination. Any outstanding notes payable to you will be
                    repaid, along with the interest due, at termination. You
                    will remain a member of the Board of Directors of the
                    Company for as long as you are a shareholder. In the event
                    that the Company cannot provide coverage under its existing
                    employee benefit plans, the Company will provide similar
                    coverage to you at its expense for the 24-month period.
                    Termination includes demotion, pay and/or benefit cut,
                    transfer against your wishes or decrease in responsibilities
                    and/or authority.

                    If, within 24 months of a Change in Control of the Company,
                    the Company terminates your employment without Cause, the
                    Company will pay you a lump sum cash amount equal to two (2)
                    years of your annual salary, and continue your employee
                    benefit plan coverage (including medical, dental, life,
                    AD&D, disability, and Company match to 401(k)) for a period
                    of 24 months. Such lump sum payment shall be made within ten
                    (10) business days following your termination of employment.
                    If you become entitled to severance payments and benefits
                    under this paragraph, you will not also be entitled to
                    severance payments and benefits under the preceding
                    paragraph.

                    For purposes of this Agreement, a Change in Control of the
                    Company means a transaction or series of transactions
                    (including by way of merger, consolidation, sale of stock,
                    recapitalization or otherwise) the result of which is that
                    you no longer own, directly or indirectly (E.G., including
                    any partnerships or trusts controlled by you), an equity
                    interest in the Company that represents at least fifty
                    percent (50%) of the Company's outstanding stock, or at
                    least fifty percent (50%) of the equity interest of an
                    entity that is a successor to the Company or owns
                    substantially all of the Company's voting stock.

                    For purposes of this Agreement, "Cause" shall mean your: (i)
                    fraud or embezzlement with respect to the Company; (ii)
                    material violation of this Agreement; (iii) failure to
                    adhere to any reasonable and lawful rule or directive of the
                    Company's Board of Directors; or (iv) gross or willful
                    neglect of duties. If

<Page>

                    the purported cause termination is one of the reasons set
                    forth in (ii), (iii) or (iv) above, the Company must give
                    you written notice specifying the purported cause and allow
                    you 30 days to cure the purported cause.

MISCELLANEOUS:      The Company shall maintain you as an insured party on all
                    directors' and officers' insurance maintained by the Company
                    on at least the same basis as other directors and officers
                    of the Company and provide you with at least the same
                    corporate indemnification as it provides to its other senior
                    executive officers.

                    The Company may not assign this Agreement by without your
                    written consent but the Company's obligations the under this
                    Agreement shall be the binding legal obligations of any
                    successor to the Company by merger, consolidation or
                    otherwise, and in the event of any business combination or
                    transaction that results in the transfer of substantially
                    all of the assets or business of the Company, the Company
                    will cause the transferee to assume the obligations of the
                    Company under this Agreement. You may not assign this
                    Agreement during your life, and upon your death, the
                    Agreement will inure to the benefit of your heirs, legatees
                    and legal representatives of your estate.

                    The validity, interpretation, construction and performance
                    of this Agreement will be governed by the laws of the State
                    of Illinois, without regard to the conflict of law
                    principles thereof. The invalidity or unenforceability of
                    any provision of this Agreement shall not affect the
                    validity or enforceability of any other provision of this
                    Agreement.

                    The Company may withhold from any payment that it is
                    required to make under this Agreement amounts sufficient to
                    satisfy applicable withholding requirements under any
                    federal, state or local law.

                    The Company and you may amend this Agreement at any time by
                    written agreement.

                    This Agreement may be executed in one or more counterparts,
                    all of which together shall constitute but one Agreement.

Dr. Flavin, we look forward to continuing a long and productive working
relationship with you and wish you every success in leading the Company forward.
Please

<Page>

indicate your acceptance of the terms of this Agreement by signing and returning
it to my attention. You may retain the enclosed copy for your files.

Best regards,

-----------------------------------
On Behalf of the Board of Directors
of Advanced Life Sciences

-------------------------------     ------------
Terry Osborn, Ph.D.                 Date

-------------------------------     ------------
Israel Rubinstein, M.D.             Date

-------------------------------     ------------
Rosalie Sagraves, Pharm.D.          Date

-------------------------------     ------------
Thomas Thornton                     Date

-------------------------------     ------------
Julius Vida, Ph.D.                  Date

Acknowledged and Agreed this ______day of ________________.

-----------------------------------
Michael T. Flavin, Ph.D.<Page>

                                                                    Exhibit 10.7

                                                                      $5,000,000

                                 LOAN AGREEMENT

                                     BETWEEN

                     THE GOVERNMENT OF THE STATE OF SARAWAK

                                       AND

                      SARAWAK MEDICHEM PHARMACEUTICALS INC.

(A USD 5,000,000.00 Loan to Sarawak MediChem Pharmaceuticals Inc. to complete
Phase 1 and part finance Phase II Calanolide A Clinical Trials).

Date:

                                        1
<Page>

AN AGREEMENT made this 25th day of November 1999 between THE GOVERNMENT OF THE
STATE OF SARAWAK (hereinafter called "the Lender" of the one part and SARAWAK
MEDICHEM PHARMACEUTICALS INC., a Delaware corporation (hereinafter called the
"Borrower") of the other part.

WHEREAS at the request of the Borrower, the Lender has agreed to lend to the
Borrower a sum of money amounting to US DOLLARS FIVE MILLION ONLY (USD
5,000,000.00) (hereinafter called "the Loan") for the purpose specified in Part
I of the Second Schedule (hereinafter called "the Project") upon the terms and
conditions hereinafter appearing.

NOW THEREFORE IT IS HEREBY AGREED AS FOLLOWS:-

1.   AMOUNT OF LOAN

     Subject to the terms of this Agreement, the amount of Loan shall be US
     DOLLARS FIVE MILLION ONLY (USD 5,000,000.00)

2.   PURPOSE OF LOAN

     2.1    The Loan shall be applied by the Borrower for the purpose stipulated
            in Part I of the Second Schedule hereto upon the terms and
            conditions hereinafter contained.

     2.2    The proceeds of the Loan shall not be applied for any other purpose
            without the prior consent in writing of the Lender.

[STAMP]

                                        2
<Page>

3.          RELEASE OF LOAN

     3.1    The Loan shall be released by the Lender to the Borrower in the
            manner and at the times stipulated in the First Schedule.

     3.2    Every request for any release of the Loan shall be made in the Form
            prescribed in Part II of the Second Schedule and that Form must be
            accompanied by an up to date progress report on the Project which
            shall contain, inter alia, a time schedule for the implementation of
            the Project and the financial requirement or commitment in respect
            of each of the stages of implementation thereof.

     3.3    Within seven (7) days after the release of any installment of the
            Loan to the Borrower, the Borrower shall deliver to the Lender a
            receipt thereof signed by the Borrower or by his duly authorized
            representative, in the form set out in Part III of the Second
            Schedule hereto.

     3.4    Notwithstanding the provisions of sub-clause 3.1, the Lender shall
            be entitled to withhold or defer the release of any portion of the
            Loan or to cancel or withdraw any part of the Loan which has not
            been released to the Borrower upon the occurrence of any of the
            events stipulated in clause 5.3 below, or if the Lender is of the
            opinion that based on the progress report referred to in clause 3.2,
            the implementation of the Project has not been satisfactory.

                                        3
<Page>

4.          INTEREST

     4.1    The Loan is subject to interest of 7.75% per annum compounded
            annually and calculated on the basis of a 365-day year.

     4.2    If the Borrower fails to effect repayment of the Loan punctually on
            the date when the same becomes due under clause 5.1 hereto, then,
            without prejudice to the rights of the Lender under clause 5.3, the
            Borrower shall pay interest at the rate of 7.75% per annum on the
            sum of loan plus interest overdue from the date such sum is due for
            payment under the Third Schedule until the date of actual payment
            thereof and such interest shall be paid by the Borrower to the
            Lender on demand.

5.          REPAYMENT

     5.1    The Borrower shall repay the Loan in one lump sum (principal plus
            interest) on the 4th anniversary date from date of first draw down
            of the Loan which took place on 19th March, 1999.

     5.2.   The Borrower shall be entitled, at its option, at the expiration of
            not less than thirty (30) days' notice given in writing to the
            Lender to repay either the whole or any part principal amount of the
            Loan outstanding on the expiration of the said notice.

     5.3(1) The Loan shall become due and immediately payable, and the Lender
            shall be entitled forthwith to take appropriate action to receive
            the same upon the occurrence of any of the following events, viz:-

            (a)  if the Borrower shall default in the payment of any principal
                 moneys or interest thereon on the date when the same becomes
                 due under the Third Schedule whether formally demanded or not;

                                        4
<Page>

            (b)  if the Borrower shall default in the performance or observance
                 of any other covenants, stipulations, conditions or obligations
                 on the part of the Borrower to be performed or observed under
                 this Agreement;

            (c)  if, in the opinion of the Lender, the progress of the Project
                 is unsatisfactory because of gross negligence by Borrower or
                 the same has been abandoned or in danger of being abandoned or
                 has not been satisfactorily completed;

            (d)  if a distress or execution or other process of a Court of
                 competent jurisdiction has been levied upon or issued against
                 the Project or any of the property comprised therein;

     5.3(2) When the principal amount of the Loan becomes due and payable and if
            Borrower defaults as under 5.3(1)(a) as above provided, the Lender
            may at its option, appoint officers generally to take over the
            control and management of the Project or the affairs of the Borrower
            until such time as the Loan shall be repaid in full to the Lender.

6.   REPORTS

     6.1    Until the full and final settlement of the Loan, the Borrower shall
            furnish to the State Financial Secretary as from the date of this
            Agreement and thereafter at quarterly intervals, such reports as may
            from time to time be required by the State Financial Secretary
            regarding the financial status or position of the Borrower and the
            progress of the implementation of the Project, and to notify the
            Lender of any event, circumstance or occurrence which may have an
            adverse impact on the financial position of the Borrower.

                                        5
<Page>

     6.2    The Borrower shall promptly inform, the Lender of any condition or
            circumstance which may interfere or threaten to interfere with the
            successful implementation of the Project or with the maintenance of
            the service thereof.

7.   UNDERTAKINGS

     7.1    The Borrower irrevocably and unconditionally represents that it has
            taken all the necessary corporate and other actions to authorise the
            execution, delivery and performance of this agreement.

     7.2    The Borrower hereby undertakes to apply the Loan for the purpose as
            set out in Part I of the Second Schedule hereto and not to apply the
            same for any other purposes. The breach of this clause shall entitle
            the Lender to demand for full repayment of the Loan outstanding at
            the date of such breach.

     7.3    The Borrower hereby warrants and undertakes that in addition to the
            proceeds of the Loan, it has, and will apply, such other funds,
            facilities, services and other resources that it has available which
            may be required for the successful implementation of the Project as
            described in the Second Schedule.

     7.4    The Borrower hereby undertakes that the Project Work financed in
            part or in whole by the Loan shall be completed speedily and
            successfully with all due diligence, efficiency and in conformity
            with sound administrative and management practice.

                                        6
<Page>

     7.5    Whenever agents, consultants, and advisers are appointed by the
            Borrower for the execution of the Project, such appointment shall
            comply with the provisions of the Statutory Bodies (Accounting and
            Financial Procedure) Ordinance, 1995.

     7.6    The Borrower shall in consultation with the Lender ensure that the
            tariffs, rentals and revenue for the use, sale or disposal of the
            products, developed or produced through the successful
            implementation of the Project are consistent with sound financial
            and commercial practices and generate sufficient revenue to cover
            operating expenditure including the costs of maintenance and effects
            of depreciation.

     7.7    The Borrower hereby undertakes to afford or arrange to afford all
            reasonable opportunities and facilities to authorised
            representatives of the Lender to inspect such financial records of
            the Borrower as are required to be kept by the Borrower under the
            applicable law, and to observe the progress of the Project, and the
            Borrower shall give such assistance as may be required for such
            inspection and observation to be carried out.

     7.8    This agreement supersedes all previous loan agreement, arrangements,
            promises, undertaking or understanding between the parties relating
            to the loan.

8.   COSTS AND EXPENSES

     Each party shall bear and pay its own legal fees incurred in connection
     with the preparation and execution of this Agreement. Stamp duties, if any,
     incurred in the stamping of this Agreement shall be borne by the Borrower.

                                        7
<Page>

12.  REMEDIES

     12.1   No delay in exercising or omission to exercise any right, power or
            remedy accruing to the Lender under this Agreement upon any default
            by the Borrower shall impair any such right, power or remedy or be
            construed to be a waiver thereof or any acquiescence in such
            default; nor shall the action of the Lender in respect of any
            default of the Borrower or any acquiescence in any default affect or
            impair any right, power or remedy of the Lender in respect of any
            other or subsequent default.

     12.2   The terms and conditions of this Agreement may be amended from time
            to time subject to the agreement by the Lender by an exchange of
            letter between the Lender and the Borrower.

                                        9
<Page>

IN WITNESS WHEREOF THE PARTIES HERETO HAVE SET THEIR HANDS AND SEAL AT THE DAY
AND YEAR FIRST ABOVE WRITTEN.

Signed by the State Financial               )
Secretary for and on behalf of              )
the GOVERNMENT OF THE                       )  /s/ Datuk Wan Ali Tuanku Yubi
STATE OF SARAWAK (the Lender)               )  -----------------------------
in the presence of:

 Witness:

/s/ Hamim Yusuf
-----------------------------

HAMIM YUSUF
PEJABAT SETIAUSAHA KEWANGAN NEGERI
PENGARAH PEROLEHAN

The Common Seal of                      )
SARAWAK MEDICHEM                        )
PHARMACEUTICALS INC.                    )
(the Borrower) was hereunto             )      /s/ Michael T. Flavin
affixed in the presence Of            )        ----------------------------
                                                     MICHAEL T. FLAVIN
                                                        PRESIDENT

Witness:

/s/ Jena M. Dwyer
-----------------

                                       10
<Page>

                                 FIRST SCHEDULE

                                 RELEASE OF LOAN
<Table>
<Caption>
     DATE OF RELEASE              AMOUNT OF RELEASE      PROGRESSIVE TOTAL
     ---------------              -----------------      -----------------
                                     (US Dollars)          (US Dollars)

<S>  <C>                              <C>                    <C>
1.   19th March 1999                    500,000                500,000
2.   23rd April 1999                    600,000              1,100,000
3.   11th May1999                       500,000              1,600,000
4.   07th June 1999                     400,000              2,000,000
5.   26th July 1999                     500,000              2,500,000
6.   23rd August 1999                   500,000              3,000,000
7.   17th September 1999              1,000,000              4,000,000
8.   22nd September 1999              1,000,000              5,000,000
</Table>

                                       11
<Page>

                                 SECOND SCHEDULE
                                     PART I
                                   THE PROJECT

The whole US DOLLARS FIVE MILLION ONLY (USD 5,000,000.00) shall be used to
complete Phase 1 Clinical Trials and part finance Calanolide A Clinical Trials
Phase II.

                                       12
<Page>

                                 SECOND SCHEDULE
                                    PART III
                                 RECEIPT OF LOAN

Loan Agreement No.              :                       Date:

Amount of Loan                  :

Date of Payment to Borrower     :

1 hereby acknowledge receipt of the sum of US Dollars 3,000,000

    8/31/99                                             /s/ Michael T. Flavin
---------------                                      ---------------------------
Date of Receipt                                         Signature of Borrower

                                       14
<Page>

                                 THIRD SCHEDULE

                               REPAYMENT SCHEDULE

1.   Loan Amount             :     US$5,000,000.00

2.   Project                 :     Sarawak MediChem Pharmaceuticals Inc.

3.   Loan Period             :     48 Months

4.   Repayment Date          :     19.03.2003

5.   Interest Rate           :     7.75% per annum
                                   (compounded annually and calculated on the
                                   basis of a 365-day year)

                               DETAILS OF RELEASE

<Table>
<Caption>
Release No.   Effective Date of Loan     Amount Released     Aggregate Amount
-----------   ----------------------     ---------------     ----------------
                                              (USD)
    <S>          <C>                       <C>                <C>
    1.           19.03.1999                  500,000.00         500,000.00
    2.           23.04.1999                  600,000.00       1,100,000.00
    3.           11.05.1999                  500,000.00       1,600,000.00
    4.           07.06.1999                  400,000.00       2,000,000.00
    5.           26.07.1999                  500,000.00       2,500,000.00
    6.           23.08.1999                  500,000.00       3,000,000.00
    7.           17.09.1999                1,000,000.00       4,000,000.00
    8.           22.09.1999                1,000,000.00       5,000,000.00
</Table>

<Table>
<Caption>
                          Compounded
No.    Repayment Date      Interest        Principal           Total
-------------------------------------------------------------------------
                              USD            USD                USD
 <S>     <C>             <C>             <C>              <C>
 1       19.03.2003      1,586,248.14    5,000,000.00       6,586,248.14
                                                          ---------------
                            Repayment in one lump sum:    US$6,586,248.14

</Table>

/s/ Datuk Wan Ali Tuanku Yubi                          /s/ Michael T. Flavin
------------------------------                      -------------------------
Lender Signature                                        Borrower Signature

Datuk Wan Ali Tuanku Yubi                               MICHAEL T. FLAVIN
-------------------------                           -------------------------
           Name                                                Name

State Financial Secretary                                   PRESIDENT
-------------------------                           -------------------------
       Designation                                         Designation

 25th November 1999                                         8/31/99
-------------------------                           -------------------------
          Date                                                Date

                                       15

<Page>

                                 LOAN AGREEMENT

                                     BETWEEN

                     THE GOVERNMENT OF THE STATE OF SARAWAK

                                       AND

                      SARAWAK MEDICHEM PHARMACEUTICALS INC.

(A USD2,000,000.00 Loan to Sarawak MediChem Pharmaceuticals Inc. to part finance
the costs of Phase I/II Safety & Efficacy Confirmation Study, Phase I/II
Drug-Drug Interaction Study and Pilot Phase II Study covering period from
October 2000 to March 2001)

Date:

<Page>

AN AGREEMENT made this           day of           2000 between THE GOVERNMENT
OF THE STATE OF SARAWAK (hereinafter called "the Lender") of the one part and
SARAWAK MEDICHEM PHARMACEUTICALS INC., a Delaware corporation (hereinafter
called the "Borrower") of the other part.

WHEREAS the Borrower has requested and the Lender has agreed to lend to the
Borrower a sum of money amounting to US DOLLARS TWO MILLION ONLY (USD
2,000,000.00) (hereinafter called "the Loan") for the purpose specified in Part
I of the Second Schedule (hereinafter called "the Project") upon the terms and
conditions hereinafter appearing.

NOW THEREFORE IT IS HEREBY AGREED AS FOLLOWS:-

1.   AMOUNT OF LOAN

     Subject to the terms of this Agreement, the amount of Loan shall be US
     DOLLARS TWO MILLION ONLY (USD 2,000,000.00)

2.   PURPOSE OF LOAN

     2.1    The Loan shall be applied by the Borrower for the purpose stipulated
            in Part I of the Second Schedule hereto upon the terms and
            conditions hereinafter contained.

     2.2    The proceeds of the Loan shall not be applied for any other purpose
            without the prior consent in writing of the Lender.

                                        1
<Page>

3.          RELEASE OF LOAN

     3.1    The Loan shall be released by the Lender to the Borrower in the
            manner and at the times stipulated in the First Schedule.

     3.2    Every request for any release of the Loan shall be made in the Form
            prescribed in Part II of the Second Schedule and that Form must be
            accompanied by an up to date progress report on the Project which
            shall contain, inter alia, a time schedule for the implementation of
            the Project and the financial requirement or commitment in respect
            of each of the stages of implementation thereof.

     3.3    Within SEVEN (7) days after the release of any installment of the
            Loan to the Borrower, the Borrower shall deliver to the Lender a
            receipt thereof signed by the Borrower or by his duly authorized
            representative, in the form set out in Part III of the Second
            Schedule hereto.

     3.4    Notwithstanding the provisions of sub-clause 3.1, the Lender shall
            be entitled to withhold or defer the release of any portion of the
            Loan or to cancel or withdraw any part of the Loan which has not
            been released to the Borrower upon the occurrence of any of the
            events stipulated in clause 5.3 below, or if the Lender is of the
            opinion that based on the progress report referred to in clause 3.2,
            the implementation of the Project has not been satisfactory.

                                        2
<Page>

4.          INTEREST

     4.1    The Loan is subject to interest of 7.75% per annum compounded
            annually and calculated on the basis of a 365 - day year.

     4.2    If the Borrower fails to effect repayment of the Loan punctually on
            the date when the same becomes due under clause 5.1 hereto, then,
            without prejudice to the rights of the Lender under clause 5.3, the
            Borrower shall pay interest at the rate of 7.75% per annum on the
            sum of loan plus interest overdue from the date such sum is due for
            payment under the Third Schedule until the date of actual payment
            thereof and such interest shall be paid by the Borrower to the
            Lender on demand.

5.          REPAYMENT

     5.1    The Borrower shall repay the Loan in one lump sum (principal plus
            interest) on the 4th anniversary date from date of first draw down
            of the Loan.

     5.2.   The Borrower shall be entitled, at its option, at the expiration of
            not less than THIRTY (30) days' notice given in writing to the
            Lender to repay either the whole or any part principal amount of the
            Loan outstanding on the expiration of the said notice.

     5.3(1) The Loan shall become due and immediately payable, and the Lender
            shall be entitled forthwith to take appropriate action

                                        3
<Page>

            to receive the same upon the occurrence of any of the following
            events, viz:-

            (a)  if the Borrower shall default in the payment of any principal
                 moneys or interest thereon on the date when the same becomes
                 due under the Third Schedule whether formally demanded or not;

            (b)  if the Borrower shall default in the performance or observance
                 of any other covenants, stipulations, conditions or obligations
                 on the part of the Borrower to be performed or observed under
                 this Agreement;

            (c)  if, in the opinion of the Lender, the progress of the Project
                 is unsatisfactory because of gross negligence by the Borrower
                 or the same has been abandoned or in danger of being abandoned
                 or has not been satisfactorily completed;

            (d)  if a distress or execution or other process of a Court of
                 competent jurisdiction has been levied upon or issued against
                 the Project or any of the property comprised therein;

     5.3(2) When the principal amount of the Loan becomes due and payable as
            above provided, the Lender may at its option, appoint officers
            generally to take over the control and management of the Project or
            the affairs of the Borrower until such time as the Loan shall be
            repaid in full to the Lender.

                                        4
<Page>

6.   REPORTS

     6.1    Until the full and final settlement of the Loan, the Borrower shall
            furnish to the State Financial Secretary as from the date of this
            Agreement and thereafter at quarterly intervals, such reports as may
            from time to time be required by the State Financial Secretary
            regarding the financial status or position of the Borrower and the
            progress of the implementation of the Project, and to notify the
            Lender of any event, circumstance or occurrence which may have an
            adverse impact on the financial position of the Borrower.

     6.2    The Borrower shall promptly inform, the Lender of any condition or
            circumstance which may interfere or threaten to interfere with the
            successful implementation of the Project or with the maintenance of
            the service thereof.

7.   UNDERTAKINGS

     7.1    The Borrower irrevocably and unconditionally represents that it has
            taken all the necessary corporate and other actions to authorise the
            execution, delivery and performance of this Agreement.

     7.2    The Borrower hereby undertakes to apply the Loan for the purpose as
            set out in Part I of the Second Schedule hereto and not to apply the
            same for any other purposes. The breach of this clause shall entitle
            the Lender to demand for full repayment of the Loan outstanding at
            the date of such breach.

                                        5
<Page>

     7.3    The Borrower hereby warrants and undertakes that in addition to the
            proceeds of the Loan, it has, and will apply, such other funds,
            facilities, services and other resources that it has available which
            may be required for the successful implementation of the Project.

     7.4    The Borrower hereby undertakes that the Project financed in part or
            in whole by the Loan shall be completed speedily and successfully
            with all due diligence, efficiency and in conformity with sound
            administrative and management practice.

     7.5    Whenever agents, consultants, and advisers are appointed by the
            Borrower for the execution of the Project, such appointment shall
            comply with the provisions of the Statutory Bodies (Accounting and
            Financial Procedure) Ordinance, 1995.

     7.6    The Borrower shall in consultation with the Lender ensure that the
            tariffs, rentals and revenue for the use, sale or disposal of the
            products, developed or produced through the successful
            implementation of the Project are consistent with sound financial
            and commercial practices and generate sufficient revenue to cover
            operating expenditure including the costs of maintenance and effects
            of depreciation.

                                        6
<Page>

     7.7    The Borrower hereby undertakes to afford or arrange to afford all
            reasonable opportunities and facilities to authorised
            representatives of the Lender to inspect such financial records of
            the Borrower as are required to be kept by the Borrower under the
            applicable law, and to observe the progress of the Project, and the
            Borrower shall give such assistance as may be required for such
            inspection and observation to be carried out.

     7.8    This Agreement supersedes all previous agreements arrangements,
            promises, undertakings or understandings between the parties
            relating to the Loan.

8.   COSTS AND EXPENSES

     Each party shall bear and pay its own legal fees incurred in connection
     with the preparation and execution of this Agreement. Stamp duties, if any,
     incurred in the stamping of this Agreement shall be borne by the Borrower.

9.   ARBITRATION

     If any dispute shall arise between the Lender and the Borrower as to the
     meaning or otherwise in connection with any matter arising out of this
     Agreement, the same shall be referred to a single Arbitrator to be agreed
     upon between the Lender and Borrower and the provisions of the Arbitration
     Act, 1952 (Revised - 1972) (Act 93) of Malaysia with such statutory
     modifications or re-enactments thereof for the time being in force shall
     apply to such reference.

                                        7
<Page>

10.  NOTICE

     Any notice to be given to the Lender under this Agreement shall be deemed
     to be duly given if delivered or addressed by prepaid registered post to
     the STATE FINANCIAL SECRETARY AT HIS OFFICE IN KUCHING, and any notice to
     be given to the Borrower shall be deemed to have been duly given if
     delivered or addressed by prepaid registered post to THE PRESIDENT, SARAWAK
     MEDICHEM PHARMACEUTICALS INC. 12305 S. NEW AVENUE, SUITE O, LEMONT, IL
     60439 USA and a notice so addressed shall be deemed to have been given at
     the time at which it would have been delivered in the ordinary course of
     post.

11.  TIME

     Time wherever mentioned herein shall be of the essence of this Agreement.

12.  REMEDIES

     12.1   No delay in exercising or omission to exercise any right, power or
            remedy accruing to the Lender under this Agreement upon any default
            by the Borrower shall impair any such right, power or remedy or be
            construed to be a waiver thereof or any acquiescence in such
            default; nor shall the action of the Lender in respect of any
            default of the Borrower or any acquiescence in any default affect or
            impair any right, power or remedy of the Lender in respect of any
            other or subsequent default.

                                        8
<Page>

     12.2   The terms and conditions of this Agreement may be amended from time
            to time, subject to the agreement of the Lender, by exchange of
            letters between the Lender and the Borrower.

            [THE REST OF THIS PAGE HAS BEEN LEFT BLANK INTENTIONALLY]

                                        9
<Page>

IN WITNESS WHEREOF THE PARTIES HERETO HAVE SET THEIR HANDS AND SEAL THE DAY AND
YEAR FIRST ABOVE WRITTEN.

Signed by the state Financial               )
Secretary for and on behalf of              )
THE GOVERNMENT OF THE                       )        ---------------------------
STATE OF SARAWAK (the lender)               )
in the presence of:

 Witness:

----------------------------
            Name

----------------------------
           Address

----------------------------
         Occupation

The common seal of                         )
SARAWAK MEDICHEM                            )
PHARMACEUTICALS INC.                        )          /s/ Michael T. Flavin
(the Borrower) was hereunto                 )        ---------------------------
affixed in the presence Of                  )             MICHAEL T. FLAVIN
                                                                  PRESIDENT

Witness:

/s/ Kristine A. Gryyb
----------------------------
            Name

8112 Middlebury
Woodridge, IL 60517
----------------------------
           Address

Admin Assistant
----------------------------
         Occupation

                                       10
<Page>

                                 FIRST SCHEDULE

                                 RELEASE OF LOAN

<Table>
<Caption>
    DATE OF RELEASE            AMOUNT OF RELEASE        PROGRESSIVE TOTAL
    ---------------            -----------------        -----------------
                                  (US Dollars)             (US Dollars)

<S>                                <C>                     <C>
October 2000                       400,000.00                400,000.00

November 2000                      400,000.00                800,000.00

December 2000                      300,000.00              1,100,000.00

January 2001                       300,000.00              1,400,000.00

February 2001                      300,000.00              1,700,000.00

March 2001                         300,000.00              2,000,000.00
</Table>

                                       11
<Page>

                                 SECOND SCHEDULE

                                     PART I

                                   THE PROJECT

The whole US DOLLARS TWO MILLION ONLY (USD 2,000,000.00) shall be used to part
finance the costs of Phase I/II safety & Efficacy confirmation study, Phase I/II
Drug-Drug interaction study and Pilot Phase II Study covering period from
October 2000 to March 2001.

                                       12
<Page>

                                 SECOND SCHEDULE

                                    PART III

                                 RECEIPT OF LOAN

Loan Agreement No.          :                                   Date: 2/25/2001

Amount of Loan              :

Date of Payment to Borrower        :

I hereby acknowledge receipt of the sum of US Dollars 600,000

   2/25/2001                                           /s/ Michael T. Flavin
---------------                                    -----------------------------
Date of Receipt                                         Signature of Borrower

                                       13
<Page>

                                 SECOND SCHEDULE
                                     PART II
                           REQUEST FOR RELEASE OF LOAN

                                                         Ref:
                                                         Date:
To:

Setiausaha Kewangan Negeri Sarawak
Pejabat Setiausaha Kewangan Negeri
Tingkat 17-18, Wisma Bapa Malaysia
93502 Petra Jaya, KUCHING

Dear Sir,

Agreement Number    :   --------------------------------------------------------
Agreement Date      :   --------------------------------------------------------
Approved Loan       :   --------------------------------------------------------
Name of Project     :   --------------------------------------------------------

With reference to the above agreement, I would be most grateful if you could
kindly approve the release of US Dollars 600,000 on MARCH, 2001

2.   I hereby certify that:-

     (i)    Total expenditure for the above
            project as at FEBRUARY 15, 2001             =  USD 1,400,000
                                                              -----------
     (ii)   Total loan releases that have been
            received as at FEBRUARY 25, 2001            =  USD 1,400,000
                                                              -----------

     (iii)  Amount of release requested through
            this notice                                 =  USD   600,000
                                                              -----------

     (iv)   Balance of loan after the release in
            para (iii) above                            =  USD   -0-
                                                              -----------

3.   A progress report on the subject is attached.

                                            /s/ Michael T. Flavin
                                          -------------------------
                                            Signature of Borrower
                                            (CEO/GM of Borrower)

                                       14
<Page>

                                 SECOND SCHEDULE
                                     PART II
                           REQUEST FOR RELEASE OF LOAN

                                                           Ref:
                                                           Date:
To:

Setiausaha Kewangan Negeri Sarawak
Pejabat Setiausaha Kewangan Negeri
Tingkat 17-18, Wisma Bapa Malaysia
93502 Petra Jaya, KUCHING

Dear Sir,

Agreement Number    :   --------------------------------------------------------
Agreement Date      :   --------------------------------------------------------
Approved Loan       :   --------------------------------------------------------
Name of Project     :   --------------------------------------------------------

With reference to the above agreement, I would be most grateful if you could
kindly approve the release of us Dollars 600,000 on JANUARY 16, 2001

2.   I hereby certify that:-

     (i)    Total expenditure for the above
            project as at JANUARY 15, 2001              =  USD 1,400,000
                                                              -----------

     (ii)   Total loan releases that have been
            received as at DECEMBER 15, 2000            =  USD   800,000
                                                              -----------

     (iii)  Amount of release requested through
            this notice                                 =  USD   600,000
                                                              -----------

     (iv)   Balance of loan after the release in
            para (iii) above                            =  USD   600,000
                                                              -----------

3.   A progress report on the subject is attached.

                                           /s/ Michael T. Flavin
                                         -------------------------
                                           Signature of Borrower
                                           (CEO/GM of Borrower)

                                       15
<Page>

                                 THIRD SCHEDULE
                                 LOAN REPAYMENT

1.   Loan Amount           :       US$2,000,000.00

2.   Project               :       Sarawak MediChem Pharmaceuticals Inc.

3.   Loan Period           :       48 months

4.   Repayment Date        :

5.   Interest Rate         :       7.75% per annum
                                   (Compounded annually and calculated on
                                   the basis of a 365-day year)

6.   Penalty interest      :       7.75% per annum

                               DETAILS OF RELEASE

<Table>
<Caption>
   RELEASE NO      DATE OF RELEASE      AMOUNT RELEASED      AGGREGATE AMOUNT
   ----------      ---------------      ---------------      ----------------
                                              (USD)                (USD)
<S>                <C>                  <C>                  <C>

</Table>

<Table>
<Caption>
No       Repayment Date            Interest                 Principal                  Total
--------------------------------------------------------------------------------------------
                                      US$                      US$                      US$
<S>      <C>                       <C>                      <C>                        <C>

                   Repayment in one lump sum
</Table>

                                                         /s/ Michael T. Flavin
------------------------                                ------------------------
    Lender Signature                                       Borrower Signature

------------------------                                ------------------------
          Name                                                    Name

------------------------                                ------------------------
      Designation                                              Designation

------------------------                                ------------------------
         Date                                                     Date

                                       16

<Page>

                                 LOAN AGREEMENT

                                     BETWEEN

                     THE GOVERNMENT OF THE STATE OF SARAWAK

                                       AND

                      SARAWAK MEDICHEM PHARMACEUTICALS INC.

(A USD2,000,000.00 Loan to Sarawak MediChem Pharmaceuticals Inc. to enable Phase
II Clinical Trials to proceed and in particular to ensure the completion of the
21-day Phase I/II safety and efficacy confirmation study, including the pilot
Phase II study)

Date:

                                                                            COPY

<Page>

AN AGREEMENT made this            day of             2000 between THE GOVERNMENT
OF THE STATE OF SARAWAK (hereinafter called "the Lender") of the one part and
SARAWAK MEDICHEM PHARMACEUTICALS INC., a Delaware corporation (hereinafter
called the "Borrower") of the other part.

WHEREAS pursuant to an agreement dated the 25th day of November, 1999 executed
between the Borrower and the Lender, at the request of the Borrower, the Lender
has lent to the Borrower USD 5,000,000 (US Dollars Five Million Only) for the
purpose and upon the terms and conditions stated therein.

WHEREAS the Borrower has requested and the Lender has agreed to lend to the
Borrower an additional sum of money amounting to US DOLLARS TWO MILLION ONLY
(USD 2,000,000.00) (hereinafter called "the Loan") for the purpose specified in
Part I of the Second Schedule (hereinafter called "the Project") upon the terms
and conditions hereinafter appearing.

NOW THEREFORE IT IS HEREBY AGREED AS FOLLOWS:-

1.   AMOUNT OF LOAN

     Subject to the terms of this Agreement, the amount of Loan shall be US
     DOLLARS TWO MILLION ONLY (USD 2,000,000.00)

2.   PURPOSE OF LOAN

     2.1    The Loan shall be applied by the Borrower for the purpose stipulated
            in Part I of the Second Schedule hereto upon the terms and
            conditions hereinafter contained.

                                        1
<Page>

     2.2    The proceeds of the Loan shall not be applied for any other purpose
            without the prior consent in writing of the Lender.

3.          RELEASE OF LOAN

     3.1    The Loan shall be released by the Lender to the Borrower in the
            manner and at the times stipulated in the First Schedule.

     3.2    Every request for any release of the Loan shall be made in the Form
            prescribed in Part II of the Second Schedule and that Form must be
            accompanied by an up to date progress report on the Project which
            shall contain, inter alia, a time schedule for the implementation of
            the Project and the financial requirement or commitment in respect
            of each of the stages of implementation thereof.

     3.3    Within SEVEN (7) days after the release of any installment of the
            Loan to the Borrower, the Borrower shall deliver to the Lender a
            receipt thereof signed by the Borrower or by his duly authorized
            representative, in the form set out in Part III of the Second
            Schedule hereto.

     3.4    Notwithstanding the provisions of sub-clause 3.1, the Lender shall
            be entitled to withhold or defer the release of any portion of the
            Loan or to cancel or withdraw any part of the Loan which has not
            been released to the Borrower upon the occurrence of any of the
            events stipulated in clause 5.3 below, or if the Lender is of the
            opinion that based on the progress report referred to in clause 3.2,
            the implementation of the Project has not been satisfactory.

                                        2
<Page>

4.          INTEREST

     4.1    The Loan is subject to interest of 7.75% per annum compounded
            annually and calculated on the basis of a 365 - day year.

     4.2    If the Borrower fails to effect repayment of the Loan punctually on
            the date when the same becomes due under clause 5.1 hereto, then,
            without prejudice to the rights of the Lender under clause 5.3, the
            Borrower shall pay interest at the rate of 7.75% per annum on the
            sum of loan plus interest overdue from the date such sum is due for
            payment under the Third Schedule until the date of actual payment
            thereof and such interest shall be paid by the Borrower to the
            Lender on demand.

5.          REPAYMENT

     5.1    The Borrower shall repay the Loan in one lump sum (principal plus
            interest) on the 4th anniversary date from date of first draw down
            of the Loan which took place on 10th February 2000.

     5.2.   The Borrower shall be entitled, at its option, at the expiration of
            not less than THIRTY (30) days' notice given in writing to the
            Lender to repay either the whole or any part principal amount of the
            Loan outstanding on the expiration of the said notice.

                                        3
<Page>

     5.3(1) The Loan shall become due and immediately payable, and the Lender
            shall be entitled forthwith to take appropriate action to receive
            the same upon the occurrence of any of the following events, viz:-

            (a)  if the Borrower shall default in the payment of any principal
                 moneys or interest thereon on the date when the same becomes
                 due under the Third Schedule whether formally demanded or not;

            (b)  if the Borrower shall default in the performance or observance
                 of any other covenants, stipulations, conditions or obligations
                 on the part of the Borrower to be performed or observed under
                 this Agreement;

            (c)  if, in the opinion of the Lender, the progress of the Project
                 is unsatisfactory because of gross negligence by the Borrower
                 or the same has been abandoned or in danger of being abandoned
                 or has not been satisfactorily completed;

            (d)  if a distress or execution or other process of a Court of
                 competent jurisdiction has been levied upon or issued against
                 the Project or any of the property comprised therein;

     5.3(2) When the principal amount of the Loan becomes due and payable as
            above provided, the Lender may at its option, appoint officers
            generally to take over the control and management of the Project or
            the affairs of the Borrower

                                        4
<Page>

            until such time as the Loan shall be repaid in full to the Lender.

6.   REPORTS

     6.1    Until the full and final settlement of the Loan, the Borrower shall
            furnish to the State Financial Secretary as from the date of this
            Agreement and thereafter at quarterly intervals, such reports as may
            from time to time be required by the State Financial Secretary
            regarding the financial status or position of the Borrower and the
            progress of the implementation of the Project, and to notify the
            Lender of any event, circumstance or occurrence which may have an
            adverse impact on the financial position of the Borrower.

     6.2    The Borrower shall promptly inform, the Lender of any condition or
            circumstance which may interfere or threaten to interfere with the
            successful implementation of the project or with the maintenance of
            the service thereof.

7.   UNDERTAKINGS

     7.1    The Borrower irrevocably and unconditionally represents that it has
            taken all the necessary corporate and other actions to authorise the
            execution, delivery and performance of this Agreement.

     7.2    The Borrower hereby undertakes to apply the Loan for the purpose as
            set out in Part I of the Second Schedule hereto and not to apply the
            same for any other purposes. The breach of

                                        5
<Page>

            this clause shall entitle the Lender to demand for full repayment of
            the Loan outstanding at the date of such breach.

     7.3    The Borrower hereby warrants and undertakes that in addition to the
            proceeds of the Loan, it has, and will apply, such other funds,
            facilities, services and other resources that it has available which
            may be required for the successful implementation of the Project.

     7.4    The Borrower hereby undertakes that the Project financed in part or
            in whole by the Loan shall be completed speedily and successfully
            with all due diligence, efficiency and in conformity with sound
            administrative and management practice.

     7.5    Whenever agents, consultants, and advisers are appointed by the
            Borrower for the execution of the Project, such appointment shall
            comply with the provisions of the Statutory Bodies (Accounting and
            Financial Procedure) Ordinance, 1995.

     7.6    The Borrower shall in consultation with the Lender ensure that the
            tariffs, rentals and revenue for the use, sale or disposal of the
            products, developed or produced through the successful
            implementation of the Project are consistent with sound financial
            and commercial practices and generate sufficient revenue to cover
            operating expenditure including the costs of maintenance and effects
            of depreciation.

                                        6
<Page>

     7.7    The Borrower hereby undertakes to afford or arrange to afford all
            reasonable opportunities and facilities to authorised
            representatives of the Lender to inspect such financial records of
            the Borrower as are required to be kept by the Borrower under the
            applicable law, and to observe the progress of the Project, and the
            Borrower shall give such assistance as may be required for such
            inspection and observation to be carried out.

     7.8    This Agreement supersedes all previous agreements arrangements,
            promises, undertakings or understandings between the parties
            relating to the Loan.

8.   COSTS AND EXPENSES

     Each party shall bear and pay its own legal fees incurred in connection
     with the preparation and execution of this Agreement. Stamp duties, if any,
     incurred in the stamping of this Agreement shall be borne by the Borrower.

9.   ARBITRATION

     If any dispute shall arise between the Lender and the Borrower as to the
     meaning or otherwise in connection with any matter arising out of this
     Agreement, the same shall be referred to a single Arbitrator to be agreed
     upon between the Lender and Borrower and the provisions of the Arbitration
     Act, 1952 (Revised - 1972) (Act 93) of Malaysia with such statutory
     modifications or re-enactments thereof for the time being in force shall
     apply to such reference.

                                        7
<Page>

10.  NOTICE

     Any notice to be given to the Lender under this Agreement shall be deemed
     to be duly given if delivered or addressed by prepaid registered post to
     the STATE FINANCIAL SECRETARY AT HIS OFFICE IN KUCHING, and any notice to
     be given to the Borrower shall be deemed to have been duly given if
     delivered or addressed by prepaid registered post to THE PRESIDENT, SARAWAK
     MEDICHEM PHARMACEUTICALS INC. 12305 S. NEW AVENUE, SUITE O, LEMONT, IL
     60439 USA and a notice so addressed shall be deemed to have been given at
     the time at which it would have been delivered in the ordinary course of
     post.

11.  TIME

     Time wherever mentioned herein shall be of the essence of this Agreement.

12.  REMEDIES

     12.1   No delay in exercising or omission to exercise any right, power or
            remedy accruing to the Lender under this Agreement upon any default
            by the Borrower shall impair any such right, power or remedy or be
            construed to be a waiver thereof or any acquiescence in such
            default; nor shall the action of the Lender in respect of any
            default of the Borrower or any acquiescence in any default affect or
            impair any right, power or remedy of the Lender in respect of any
            other or subsequent default.

                                        8
<Page>

     12.2   The terms and conditions of this Agreement may be amended from time
            to time, subject to the agreement of the Lender, by exchange of
            letters between the Lender and the Borrower.

            [THE REST OF THIS PAGE HAS BEEN LEFT BLANK INTENTIONALLY]

                                        9
<Page>

IN WITNESS WHEREOF THE PARTIES HERETO HAVE SET THEIR HANDS AND SEAL THE DAY AND
YEAR FIRST ABOVE WRITTEN.

Signed by the State Financial          )
Secretary for and on behalf of         )
the GOVERNMENT OF THE                  )    -----------------------------
STATE OF SARAWAK (the Lender)          )
in the presence of:

 Witness:

------------------------------
             Name

------------------------------
           Address

------------------------------
          Occupation

The Common Seal of                  )
SARAWAK MEDICHEM                    )
PHARMACEUTICALS INC.                )
(the Borrower) was hereunto         )          /s/ Michael T. Flavin
affixed in the presence Of          )       -----------------------------
                                                     MICHAEL T. FLAVIN
                                                             PRESIDENT

Witness:

/s/ [ILLEGIBLE]
------------------------------
             Name

8112 Middlebury, Woodridge, IL
------------------------------
           Address

Admin Assistant
------------------------------
          Occupation

                                       10
<Page>

                                 FIRST SCHEDULE

                                 RELEASE OF LOAN

<Table>
<Caption>
DATE OF RELEASE       AMOUNT OF RELEASE       PROGRESSIVE TOTAL
---------------       -----------------       -----------------
                         (US Dollars)           (US Dollars)
  <S>                    <C>                    <C>
  10.02.2000             1,000,000.00           1,000,000.00
  04.04.2000             1,000,000.00           2,000,000.00
</Table>

                                       11
<Page>

                                 SECOND SCHEDULE
                                     PART I
                                   THE PROJECT

The whole US DOLLARS TWO MILLION ONLY (USD 2,000,000.00) shall be used to enable
Phase II Clinical Trials to proceed and in particular to ensure the completion
of the 21-day Phase I/II safety and efficacy confirmation study, including the
pilot Phase II study.

                                       12
<Page>

                                 SECOND SCHEDULE
                                     PART II
                           REQUEST FOR RELEASE OF LOAN

                                                        Ref:
                                                        Date:
To:

Setiausaha Kewangan Negeri Sarawak
Pejabat Setiausaha Kewangan Negeri
Tingkat 17-18, Wisma Bapa Malaysia
93502 Petra Jaya, KUCHING

Dear Sir,

Agreement Number      :   ------------------------------------------------------
Agreement Date        :   ------------------------------------------------------
Approved Loan         :   ------------------------------------------------------
Name of Project       :   ------------------------------------------------------

With reference to the above agreement, I would be most grateful if you could
kindly approve the release of US Dollars _______________on ______________

2.   I hereby certify that:-

     (i)    Total expenditure for the above
            project as at_______________________    =  USD ______________

     (ii)   Total loan releases that have been
            received as at______________________    =  USD ______________

     (iii)  Amount of release requested through
            this notice                             =  USD ______________

     (iv)   Balance of loan after the release in
            para (iii) above                        =  USD ______________

3.   A progress report on the subject is attached.

                                       /s/ Michael T. Flavin, President
                                       --------------------------------
                                             Signature of Borrower
                                             (CEO/CM of Borrower)

                                       13
<Page>

                                 SECOND SCHEDULE
                                    PART III
                                 RECEIPT OF LOAN

Loan Agreement No.          :                                 Date:

Amount of Loan              :

Date of Payment to Borrower      :

I hereby acknowledge receipt of the sum of US Dollars______________

                                              /s/ Michael T. Flavin, President
---------------                              ---------------------------------
Date of Receipt                                    Signature of Borrower

                                       14
<Page>

                                 THIRD SCHEDULE
                                 LOAN REPAYMENT

1.   Loan Amount           :       US$2,000,000.00

2.   project               :       Sarawak MediChem Pharmaceuticals Inc.

3.   Loan Period           :       48 months

4.   Repayment Date        :       10.02.2004

5.   Interest Rate         :       7.75% per annum
                                   (Compounded annually and calculated on
                                     the basis of a 365-day year)

6.   Penalty Interest      :       7.75% per annum

                               DETAILS OF RELEASE

<Table>
<Caption>
RELEASE NO   DATE OF RELEASE   AMOUNT RELEASED  AGGREGATE AMOUNT
----------   ---------------   ---------------  ----------------
                                   (USD)             (USD)
    <S>        <C>              <C>               <C>
    1.         10.02.2000       1,000,000.00      1,000,000.00

    2.         04.04.2000       1,000,000.00      2,000,000.00
</Table>

<Table>
<Caption>
 NO   Repayment Date     Interest       Principal           Total
-----------------------------------------------------------------------
                           US$             US$               US$
 <S>    <C>            <C>            <C>              <C>
 1      10.02.2004     USD683,139.96  USD2,000,000.00  USD2,683,139.96

                Repayment in one lump sum              USD2,683,139.96
</Table>

                                                      /s/ Michael T. Flavin
---------------------                               ------------------------
   Lender Signature                                    Borrower Signature

                                                      /s/ Michael T. Flavin
---------------------                               ------------------------
       Name                                                  Name

---------------------                               ------------------------
     Designation                                          Designation

---------------------                               ------------------------
       Date                                                  Date

                                       15

<Page>

                                 LOAN AGREEMENT

                                     BETWEEN

                     THE GOVERNMENT OF THE STATE OF SARAWAK

                                       AND

                      SARAWAK MEDICHEM PHARMACEUTICALS INC.

(A USD500,000.00 Loan to Sarawak MediChem Pharmaceuticals Inc. to fund the
Calanolide Work Plan until the end of 2001, including completion of Phase I/II
Clinical Studies and gathering expert opinion regarding scientific and
commercial prospects for Calanolide A)

Date:

<Page>

AN AGREEMENT made this           day of                 2001 between THE
GOVERNMENT OF THE STATE OF SARAWAK (hereinafter called "the Lender") of the one
part and SARAWAK MEDICHEM PHARMACEUTICALS INC., a Delaware corporation
(hereinafter called the "Borrower") of the other part.

WHEREAS pursuant to an agreement dated the 25th day of November, 1999 executed
between the Borrower and the Lender, at the request of the Borrower, the Lender
has lent to the Borrower USD 5,000,000 (US DOLLARS FIVE MILLION ONLY) for the
purpose and upon the terms and conditions stated therein.

WHEREAS pursuant to a subsequent agreement dated the 27th day of November, 2000
executed between the Borrower and the Lender, at the request of the Borrower,
the Lender has further lent to the Borrower USD 2,000,000.00 (US DOLLARS TWO
MILLION ONLY) for the purpose and upon the terms and conditions stated therein.

WHEREAS pursuant to a further agreement dated 20th day of January, 2001 executed
between the Borrower and the Lender, at the request of the Borrower, the Lender
has also lent to the Borrower USD2,000,000.00 (US DOLLARS TWO MILLION ONLY) for
the purpose and upon the terms and conditions stated therein.

WHEREAS the Borrower has now requested and the Lender has agreed to lend to the
Borrower an additional sum of money amounting to US DOLLARS FIVE HUNDRED
THOUSAND ONLY (USD500,000.00) (Hereinafter called "the Loan") for the purpose
specified in Part I of the Second Schedule (hereinafter called "the Project")
upon the terms and conditions hereinafter appearing.

                                        1
<Page>

1.   AMOUNT OF LOAN

     Subject to the terms of this Agreement, the amount of Loan shall be US
     DOLLARS FIVE HUNDRED THOUSAND ONLY (USD500,000.00).

2.   PURPOSE OF LOAN

     2.1      The Loan shall be applied by the Borrower for the purpose
              stipulated in Part I of the Second Schedule hereto upon the terms
              and conditions hereinafter contained.

     2.2      The proceeds of the Loan shall not be applied for any other
              purpose without the prior consent in writing of the Lender.

3.   RELEASE OF LOAN

     3.1      The Loan shall be released by the Lender to the Borrower in the
              manner and at the times stipulated in the First Schedule.

     3.2      Every request for any release of the Loan shall be made in the
              Form prescribed in Part II of the Second Schedule and that Form
              must be accompanied by an up to date progress report on the
              Project which shall contain, inter alia, a time schedule for the
              implementation of the Project and the financial requirement or
              commitment in respect of each of the stages of implementation
              thereof.

     3.3      Within SEVEN (7) days after the release of any installment of the
              Loan to the Borrower, the Borrower shall deliver to the

                                        2
<Page>

              Lender a receipt thereof signed by the Borrower or by his duly
              authorized representative, in the form set out in Part III of the
              Second Schedule hereto.

     3.4      Notwithstanding the provisions of sub-clause 3.1, the Lender shall
              be entitled to withhold or defer the release of any portion of the
              Loan or to cancel or withdraw any part of the Loan which has not
              been released to the Borrower upon the occurrence of any of the
              events stipulated in clause 5.3 below, or if the Lender is of the
              opinion that based on the progress report referred to in clause
              3.2, the implementation of the Project has not been satisfactory.

4.            INTEREST

     4.1      The Loan is subject to interest of 7.75% per annum compounded
              annually and calculated on the basis of a 365 - day year.

     4.2      If the Borrower fails to effect repayment of the Loan punctually
              on the date when the same becomes due under clause 5.1 hereto,
              then, without prejudice to the rights of the Lender under clause
              5.3, the Borrower shall pay interest at the rate of 7.75% per
              annum on the sum of loan plus interest overdue from the date such
              sum is due for payment under the Third Schedule until the date of
              actual payment thereof and such interest shall be paid by the
              Borrower to the Lender on demand.

                                        3
<Page>

5.            REPAYMENT

     5.1      The Borrower shall repay the Loan in one lump sum (principal plus
              interest) on the 4th anniversary date from date of first draw down
              of the Loan.

     5.2.     The Borrower shall be entitled, at its option, at the expiration
              of not less than THIRTY (30) days' notice given in writing to the
              Lender to repay either the whole or any part principal amount of
              the Loan outstanding on the expiration of the said notice.

     5.3(1)   The Loan shall become due and immediately payable, and the Lender
              shall be entitled forthwith to take appropriate action to receive
              the same upon the occurrence of any of the following events, viz:-

              (a)   if the Borrower shall default in the payment of any
                    principal moneys or interest thereon on the date when the
                    same becomes due under the Third Schedule whether formally
                    demanded or not;

              (b)   if the Borrower shall default in the performance or
                    observance of any other covenants, stipulations, conditions
                    or obligations on the part of the Borrower to be performed
                    or observed under this Agreement;

              (c)   if, in the opinion of the Lender, the progress of the
                    Project is unsatisfactory because of gross negligence by the
                    Borrower or the same has been abandoned or in

                                        4
<Page>

                    danger of being abandoned or has not been satisfactorily
                    completed;

              (d)   if a distress or execution or other process of a Court of
                    competent jurisdiction has been levied upon or issued
                    against the Project or any of the property comprised
                    therein;

     5.3(2)   When the principal amount of the Loan becomes due and payable as
              above provided, the Lender may at its option, appoint officers
              generally to take over the control and management of the Project
              or the affairs of the Borrower until such time as the Loan shall
              be repaid in full to the Lender.

6.   REPORTS

     6.1      Until the full and final settlement of the Loan, the Borrower
              shall furnish to the State Financial Secretary as from the date of
              this Agreement and thereafter at quarterly intervals, such reports
              as may from time to time be required by the State Financial
              Secretary regarding the financial status or position of the
              Borrower and the progress of the implementation of the Project,
              and to notify the Lender of any event, circumstance or occurrence
              which may have an adverse impact on the financial position of the
              Borrower.

                                        5
<Page>

     6.2      The Borrower shall promptly inform, the Lender of any condition or
              circumstance which may interfere or threaten to interfere with the
              successful implementation of the Project or with the maintenance
              of the service thereof.

7.   UNDERTAKINGS

     7.1      The Borrower irrevocably and unconditionally represents that it
              has taken all the necessary corporate and other actions to
              authorise the execution, delivery and performance of this
              Agreement.

     7.2      The Borrower hereby undertakes to apply the Loan for the purpose
              as set out in Part I of the Second Schedule hereto and not to
              apply the same for any other purposes. The breach of this clause
              shall entitle the Lender to demand for full repayment of the Loan
              outstanding at the date of such breach.

     7.3      The Borrower hereby warrants and undertakes that in addition to
              the proceeds of the Loan, it has, and will apply, such other
              funds, facilities, services and other resources that it has
              available which may be required for the successful implementation
              of the Project.

     7.4      The Borrower hereby undertakes that the Project financed in part
              or in whole by the Loan shall be completed speedily and
              successfully with all due diligence, efficiency and in

                                        6
<Page>

              conformity with sound administrative and management practice.

     7.5      Whenever agents, consultants, and advisers are appointed by the
              Borrower for the execution of the Project, such appointment shall
              comply with the provisions of the Statutory Bodies (Accounting and
              Financial Procedure) Ordinance, 1995.

     7.6      The Borrower shall in consultation with the Lender ensure that the
              tariffs, rentals and revenue for the use, sale or disposal of the
              products, developed or produced through the successful
              implementation of the Project are consistent with sound financial
              and commercial practices and generate sufficient revenue to cover
              operating expenditure including the costs of maintenance and
              effects of depreciation.

     7.7      The Borrower hereby undertakes to afford or arrange to afford all
              reasonable opportunities and facilities to authorised
              representatives of the Lender to inspect such financial records of
              the Borrower as are required to be kept by the Borrower under the
              applicable law, and to observe the progress of the Project, and
              the Borrower shall give such assistance as may be required for
              such inspection and observation to be carried out.

     7.8      This Agreement supersedes all previous agreements arrangements,
              promises, undertakings or understandings between the parties
              relating to the Loan.

                                        7
<Page>

8.   COSTS AND EXPENSES

     Each party shall bear and pay its own legal fees incurred in connection
     with the preparation and execution of this Agreement. Stamp duties, if any,
     incurred in the stamping of this Agreement shall be borne by the Borrower.

9.   ARBITRATION

     If any dispute shall arise between the Lender and the Borrower as to the
     meaning or otherwise in connection with any matter arising out of this
     Agreement, the same shall be referred to a single Arbitrator to be agreed
     upon between the Lender and Borrower and the provisions of the Arbitration
     Act, 1952 (Revised - 1972) (Act 93) of Malaysia with such statutory
     modifications or re-enactments thereof for the time being in force shall
     apply to such reference.

10.  NOTICE

     Any notice to be given to the Lender under this Agreement shall be deemed
     to be duly given if delivered or addressed by prepaid registered post to
     the STATE FINANCIAL SECRETARY AT HIS OFFICE IN KUCHING, and any notice to
     be given to the Borrower shall be deemed to have been duly given if
     delivered or addressed by prepaid registered post to THE PRESIDENT, SARAWAK
     MEDICHEM PHARMACEUTICALS INC. 12305 S. NEW AVENUE, SUITE O, LEMONT, IL
     60439 USA and a notice so addressed shall be deemed to have been given at
     the time at which it would have been delivered in the ordinary course of
     post.

                                        8
<Page>

11.  TIME

     Time wherever mentioned herein shall be of the essence of this Agreement.

12.  REMEDIES

     12.1     No delay in exercising or omission to exercise any right, power or
              remedy accruing to the Lender under this Agreement upon any
              default by the Borrower shall impair any such right, power or
              remedy or be construed to be a waiver thereof or any acquiescence
              in such default; nor shall the action of the Lender in respect of
              any default of the Borrower or any acquiescence in any default
              affect or impair any right, power or remedy of the Lender in
              respect of any other or subsequent default.

     12.2     The terms and conditions of this Agreement may be amended from
              time to time, subject to the agreement of the Lender, by exchange
              of letters between the Lender and the Borrower.

            [THE REST OF THIS PAGE HAS BEEN LEFT BLANK INTENTIONALLY]

                                        9
<Page>

IN WITNESS WHEREOF THE PARTIES HERETO HAVE SET THEIR HANDS AND SEAL THE DAY AND
YEAR FIRST ABOVE WRITTEN.

Signed by the State Financial        )
Secretary for and on behalf of       )
the GOVERNMENT OF THE                )     __________________________
STATE OF SARAWAK (the Lender)        )
in the presence of:

 Witness:

-----------------------------
            Name

-----------------------------
           Address

-----------------------------
         Occupation

The Common Seal of                   )
SARAWAK MEDICHEM                     )
PHARMACEUTICALS INC.                 )
(the Borrower) was hereunto          )
affixed in the presence Of           )         /s/ Michael T. Flavin
                                            --------------------------
                                                MICHAEL T. FLAVIN
                                                        PRESIDENT

Witness:

/s/ [ILLEGIBLE]
-----------------------------
            Name

8112 Middlebury
Woodridge, IL 60517
-----------------------------
           Address

Admin Assistant
-----------------------------
         Occupation

                                       10
<Page>

                                 FIRST SCHEDULE

                                 RELEASE OF LOAN

<Table>
<Caption>
DATE OF RELEASE       AMOUNT OF RELEASE       PROGRESSIVE TOTAL
---------------       -----------------       -----------------
                         (US Dollars)           (US Dollars)
    <S>                  <C>                      <C>
    2001                 500,000.00               500,000.00
</Table>

                                       11
<Page>

                                 SECOND SCHEDULE
                                     PART I
                                   THE PROJECT

The whole US DOLLARS FIVE HUNDRED THOUSAND ONLY (USD500,000.00) shall be used to
fund the Calanolide Work Plan until the end of 2001, including completion of
Phase I/II Clinical Studies and gathering expert opinion regarding scientific
and commercial prospects for Calanolide A.

                                       12
<Page>

                                 SECOND SCHEDULE
                                     PART II
                           REQUEST FOR RELEASE OF LOAN

                                                    Ref:
                                                    Date:

TO:

Setiausaha Kewangan Negeri Sarawak
Pejabat Setiausaha Kewangan Negeri
Tingkat 17-18, Wisma Bapa Malaysia
93502 Petra Jaya, KUCHING

Dear Sir,

Agreement Number      :
                              ----------------------------------------
Agreement Date        :
                              ----------------------------------------
Approved Loan         :
                              ----------------------------------------
Name of Project       :
                              ----------------------------------------

With reference to the above agreement, I would be most grateful if you could
kindly approve the release of US Dollars_________________on_________________

2.   I hereby certify that:-

<Table>
     <S>   <C>                                           <C>  <C>
     (i)   Total expenditure for the above
           project as at............................     =    USD___________

     (ii)  Total loan releases that have been
           received as at...........................     =    USD$500,000

     (iii) Amount of release requested through
           this notice                                   =    USD___________

     (iv)  Balance of loan after the release in
           para (iii) above                              =    USD___________
</Table>

3.   A progress report on the project is attached.

                            /s/ Michael T. Flavin
                        ------------------------------
                            Signature of Borrower
                            (CEO/GM of Borrower)

                                       13
<Page>

                                 SECOND SCHEDULE
                                    PART III
                                 RECEIPT OF LOAN

Loan Agreement No.          :                        Date: 9/28/01

Amount of Loan              : $500,000.00

Date of Payment to Borrower    :

I hereby acknowledge receipt of the sum of US Dollars $500,000

  9/28/01
---------------             ------------------------------
Date of Receipt                 Signature of Borrower

                                       14
<Page>

                                 THIRD SCHEDULE
                                 LOAN REPAYMENT

1.   Loan Amount      :      US$500,000.00

2.   Project          :      Sarawak MediChem Pharmaceuticals Inc.

3.   Loan Period      :      48 months

4.   Repayment Date   :

5.   Interest Rate    :      7.75% per annum
                             (Compounded annually and calculated on
                             the basis of a 365-day year)

6.   Penalty Interest :      7.75% per annum

                               DETAILS OF RELEASE

<Table>
<Caption>
RELEASE NO     DATE OF RELEASE       AMOUNT RELEASED     AGGREGATE AMOUNT
----------     ---------------       ---------------     ----------------
                                         (USD)                (USD)
<S>            <C>                   <C>                 <C>

</Table>

<Table>
<Caption>
 No   Repayment Date     Interest       Principal         Total
--------------------------------------------------------------------
                           US$             US$             US$
 <S>  <C>                <C>            <C>               <C>

                Repayment in one lump sum
</Table>

                                                      /s/ Michael T. Flavin
---------------------                               ------------------------
   Lender Signature                                    Borrower signature

---------------------                               ------------------------
       Name                                                  Name

---------------------                               ------------------------
     Designation                                          Designation

---------------------                               ------------------------
       Date                                                  Date

                                       15

<Page>

                                 LOAN AGREEMENT

                                     BETWEEN

                     THE GOVERNMENT OF THE STATE OF SARAWAK

                                       AND

                      SARAWAK MEDICHEM PHARMACEUTICALS INC.

(A USD2,500,000.00 Loan to Sarawak MediChem Pharmaceuticals Inc. to maintain and
complete the 12-month clinical development of Calanolide A and to pursue efforts
to negotiate and close a deal with a pharmaceutical company or other third
party)

Date:

<Page>

                       STATE FINANCIAL SECRETARY'S OFFICE

                       AGREEMENT NO: SMP/2001/03

                       DATE: 29.10.01

                                 LOAN AGREEMENT

                                     BETWEEN

                     THE GOVERNMENT OF THE STATE OF SARAWAK

                                       AND

                      SARAWAK MEDICHEM PHARMACEUTICALS INC.

(A USD2,500,000.00 Loan to Sarawak MediChem Pharmaceuticals Inc. to maintain and
complete the 12-month clinical development of Calanolide A and to pursue efforts
to negotiate and close a deal with a pharmaceutical company or other third
party)

Date: 29.10.01

<Page>

AN AGREEMENT made this 29th day of October 2001 between THE GOVERNMENT OF THE
STATE OF SARAWAK (hereinafter called "the Lender") of the one part and SARAWAK
MEDICHEM PHARMACEUTICALS INC., a Delaware corporation (hereinafter called the
"Borrower") of the other part.

WHEREAS pursuant to an agreement dated the 25th day of November, 1999 executed
between the Borrower and the Lender, at the request of the Borrower, the Lender
has lent to the Borrower USD 5,000,000.00 (US DOLLARS FIVE MILLION ONLY) for the
purpose and upon the terms and conditions stated therein.

WHEREAS pursuant to a subsequent agreement dated the 27th day of November, 2000
executed between the Borrower and the Lender, at the request of the Borrower,
the Lender has further lent to the Borrower USD2,000,000.00 (US DOLLARS TWO
MILLION ONLY) for the purpose and upon the terms and conditions stated therein.

WHEREAS pursuant to a further agreement dated 20th day of January, 2001 executed
between the Borrower and the Lender, at the request of the Borrower, the Lender
has also lent to the Borrower USD2,000,000.00 (US DOLLARS TWO MILLION ONLY) for
the purpose and upon the terms and conditions stated therein.

WHEREAS pursuant to another further agreement dated 4th day of September 2001
executed between the Borrower and the Lender at the request of the Borrower, the
Lender has further also lent to the Borrower USD500,000.00 (US DOLLARS FIVE
HUNDRED THOUSAND ONLY) for the purpose and upon the terms and conditions stated
therein.

[SEAL]

                                        1
<Page>

WHEREAS the Borrower has now requested and the Lender has agreed to lend to the
Borrower an additional sum of money amounting to US DOLLARS TWO MILLION AND FIVE
HUNDRED THOUSAND ONLY (USD2,500,000.00) (hereinafter called "the Loan") for the
purpose specified in Part I of the Second Schedule (hereinafter called "the
Project") upon the terms and conditions hereinafter appearing.

NOW THEREFORE IT IS HEREBY AGREED AS FOLLOWS:-

1.   AMOUNT OF LOAN

     Subject to the terms of this Agreement, the amount of Loan shall be US
     DOLLARS TWO MILLION AND FIVE HUNDRED THOUSAND ONLY
     (USD2,500,000.00).

2.   PURPOSE OF LOAN

     2.1     The Loan shall be applied by the Borrower for the purpose
             stipulated in Part I of the Second Schedule hereto upon the terms
             and conditions hereinafter contained.

     2.2     The proceeds of the Loan shall not be applied for any other purpose
             without the prior consent in writing of the Lender.

3.   RELEASE OF LOAN

     3.1     The Loan shall be released by the Lender to the Borrower in the
             manner and at the times stipulated in the First Schedule.

                                        2
<Page>

     4.2     If the Borrower fails to effect repayment of the Loan punctually on
             the date when the same becomes due under clause 5.1 hereto, then,
             without prejudice to the rights of the Lender under clause 5.3, the
             Borrower shall pay interest at the rate of 7.75% per annum on the
             sum of loan plus interest overdue from the date such sum is due for
             payment under the Third Schedule until the date of actual payment
             thereof and such interest shall be paid by the Borrower to the
             Lender on demand.

5.   REPAYMENT

     5.1     The Borrower shall repay the Loan in one lump sum (principal plus
             interest) on the 4th anniversary date from date of first draw down
             of the Loan.

     5.2.    The Borrower shall be entitled, at its option, at the expiration of
             not less than THIRTY (30) days' notice given in writing to the
             Lender to repay either the whole or any part principal amount of
             the Loan outstanding on the expiration of the said notice.

     5.3(1)  The Loan shall become due and immediately payable, and the Lender
             shall be entitled forthwith to take appropriate action to receive
             the same upon the occurrence of any of the following events, viz:-

             (a)  if the Borrower shall default in the payment of any principal
                  moneys or interest thereon on the date when the same becomes
                  due under the Third Schedule whether formally demanded or not;

                                        4
<Page>

             (b)  if the Borrower shall default in the performance or observance
                  of any other covenants, stipulations, conditions or
                  obligations on the part of the Borrower to be performed or
                  observed under this Agreement;

             (c)  if, in the opinion of the Lender, the progress of the Project
                  is unsatisfactory because of gross negligence by the Borrower
                  or the same has been abandoned or in danger of being abandoned
                  or has not been satisfactorily completed;

             (d)  if a distress or execution or other process of a Court of
                  competent jurisdiction has been levied upon or issued against
                  the Project or any of the property comprised therein;

     5.3(2)  When the principal amount of the Loan becomes due and payable as
             above provided, the Lender may at its option, appoint officers
             generally to take over the control and management of the Project or
             the affairs of the Borrower until such time as the Loan shall be
             repaid in full to the Lender.

6.   REPORTS

     6.1     Until the full and final settlement of the Loan, the Borrower shall
             furnish to the State Financial Secretary as from the date of this
             Agreement and thereafter at quarterly intervals, such reports as
             may from time to time be required by the State

                                        5
<Page>

             Financial Secretary regarding the financial status or position of
             the Borrower and the progress of the implementation of the Project,
             and to notify the Lender of any event, circumstance or occurrence
             which may have an adverse impact on the financial position of the
             Borrower.

     6.2     The Borrower shall promptly inform the Lender of any condition or
             circumstance which may interfere or threaten to interfere with the
             successful implementation of the Project or with the maintenance of
             the service thereof.

7.   UNDERTAKINGS

     7.1     The Borrower irrevocably and unconditionally represents that it has
             taken all the necessary corporate and other actions to authorise
             the execution, delivery and performance of this Agreement.

     7.2     The Borrower hereby undertakes to apply the Loan for the purpose as
             set out in Part I of the Second Schedule hereto and not to apply
             the same for any other purposes. The breach of this clause shall
             entitle the Lender to demand for full repayment of the Loan
             outstanding at the date of such breach.

     7.3     The Borrower hereby warrants and undertakes that in addition to the
             proceeds of the Loan, it has, and will apply, such other funds,
             facilities, services and other resources that it has available
             which may be required for the successful implementation of the
             Project.

                                        6
<Page>

     7.4     The Borrower hereby undertakes that the Project financed in part or
             in whole by the Loan shall be completed speedily and successfully
             with all due diligence, efficiency and in conformity with sound
             administrative and management practice.

     7.5     Whenever agents, consultants, and advisers are appointed by the
             Borrower for the execution of the Project, such appointment shall
             comply with the provisions of the Statutory Bodies (Accounting and
             Financial Procedure) Ordinance, 1995.

     7.6     The Borrower shall in consultation with the Lender ensure that the
             tariffs, rentals and revenue for the use, sale or disposal of the
             products, developed or produced through the successful
             implementation of the Project are consistent with sound financial
             and commercial practices and generate sufficient revenue to cover
             operating expenditure including the costs of maintenance and
             effects of depreciation.

     7.7     The Borrower hereby undertakes to afford or arrange to afford all
             reasonable opportunities and facilities to authorised
             representatives of the Lender to inspect such financial records of
             the Borrower as are required to be kept by the Borrower under the
             applicable law, and to observe the progress of the Project, and the
             Borrower shall give such assistance as may be required for such
             inspection and observation to be carried out.

                                        7
<Page>

     7.8     This Agreement supersedes all previous agreements arrangements,
             promises, undertakings or understandings between the parties
             relating to the Loan.

8.   COSTS AND EXPENSES

     Each party shall bear and pay its own legal fees incurred in connection
     with the preparation and execution of this Agreement. Stamp duties, if any,
     incurred in the stamping of this Agreement shall be borne by the Borrower.

9.   ARBITRATION

     If any dispute shall arise between the Lender and the Borrower as to the
     meaning or otherwise in connection with any matter arising out of this
     Agreement, the same shall be referred to a single Arbitrator to be agreed
     upon between the Lender and Borrower and the provisions of the Arbitration
     Act, 1952 (Revised - 1972) (Act 93) of Malaysia with such statutory
     modifications or re-enactments thereof for the time being in force shall
     apply to such reference.

10.  NOTICE

     Any notice to be given to the Lender under this Agreement shall be deemed
     to be duly given if delivered or addressed by prepaid registered post to
     the STATE FINANCIAL SECRETARY AT HIS OFFICE IN KUCHING, and any notice to
     be given to the Borrower shall be deemed to have been duly given if
     delivered or addressed by prepaid registered post to THE PRESIDENT, SARAWAK
     MEDICHEM PHARMACEUTICALS INC. 12305 S. NEW AVENUE, SUITE O, LEMONT, IL

                                        8
<Page>

     60439 USA and a notice so addressed shall be deemed to have been given at
     the time at which it would have been delivered in the ordinary course of
     post.

11.  TIME

     Time wherever mentioned herein shall be of the essence of this Agreement.

12.  REMEDIES

     12.1    No delay in exercising or omission to exercise any right, power or
             remedy accruing to the Lender under this Agreement upon any default
             by the Borrower shall impair any such right, power or remedy or be
             construed to be a waiver thereof or any acquiescence in such
             default; nor shall the action of the Lender in respect of any
             default of the Borrower or any acquiescence in any default affect
             or impair any right, power or remedy of the Lender in respect of
             any other or subsequent default.

     12.2    The terms and conditions of this Agreement may be amended from time
             to time, subject to the agreement of the Lender, by exchange of
             letters between the Lender and the Borrower.

             [THE REST OF THIS PAGE HAS BEEN LEFT BLANK INTENTIONALLY]

                                        9
<Page>

IN WITNESS WHEREOF THE PARTIES HERETO HAVE SET THEIR HANDS AND SEAL THE DAY AND
YEAR FIRST ABOVE WRITTEN.

Signed by the State Financial                   )         /s/ Chin Jew Bui
Secretary for and on behalf of                  )        --------------------
the GOVERNMENT OF THE                           )           CHIN JEW BUI
STATE OF SARAWAK (the Lender)                   )      State Financial Secretary
in the presence of:

Witness:

        /s/ Than Kui Nyit
         Than Kui Nyit
---------------------------------------
               Name

  State Financial Secretary's Office
---------------------------------------
              Address

     Principal Assistant Secretary
---------------------------------------
              (Finance)
             Occupation

The Common Seal of                         )
SARAWAK MEDICHEM                           )
PHARMACEUTICALS INC.                       )
(the Borrower) was hereunto                )             /s/ Michael T. Flavin
affixed in the presence Of                 )            ------------------------
                                                             MICHAEL T. FLAVIN
                                                                     PRESIDENT

Witness:

         /s/ Kristine A. Gryyb
---------------------------------------
                 Name

         8112 Middlebury Ave
         Woodridge, IL 60517
---------------------------------------
               Address

           Admin Assistant
---------------------------------------
             Occupation

                                       10
<Page>

                                 FIRST SCHEDULE

                                 RELEASE OF LOAN

<Table>
<Caption>
DATE OF RELEASE          AMOUNT OF RELEASE              PROGRESSIVE TOTAL
---------------          -----------------              -----------------
                           (US Dollars)                   (US Dollars)
<S>                          <C>                           <C>
1.   Nov 2001                500,000                         500,000

2.   Jan 2002                500,000                       1,000,000

3.   March 2002              500,000                       1,500,000

4.   May 2002                500,000                       2,000,000

5.   July 2002               500,000                       2,500,000
</Table>

                                       11
<Page>

                                 SECOND SCHEDULE

                                     PART I

                                   THE PROJECT

The whole of US DOLLARS TWO MILLION AND FIVE HUNDRED THOUSAND ONLY
(USD2,500,000.00) shall be used to maintain and complete the 12-month clinical
development of Calanolide A and to pursue efforts to negotiate and close a deal
with a pharmaceutical company or other third party as per details below :-

(a)  CRO COSTS                         US$600,000

     Estimated costs for consultants and contract research organizations
     (CROs) which have been hired for clinical monitoring services; data
     management; and biostatistics.

(b)  PROJECT MANAGEMENT                US$310,000

     Estimated CRO costs for project management related to the on-going clinical
     development of Calanolide A.

(c)  PRINCIPAL INVESTIGATOR COSTS      US$240,000

     Estimated for physicians and their hospitals to screen, recruit, and treat
     HIV patients enrolled onto the clinical on-going studies.

(d)  ANALYTICAL COSTS                  US$400,000

     Estimated costs for the blood plasma and other human sample analyses that
     will be needed during the experimental analysis of Sarawak MediChem's
     clinical studies.

                                       12
<Page>

(e)  PATIENT MEDICATION                US$380,000

     Estimated costs to provide the patients who have been enrolled onto the
     clinical studies with follow-on anti-HIV medication for 6 months after they
     have participated in the studies.

(f)  CONSULTANCY FEES                  US$230,000

     Estimated costs for consultants providing HIV/AIDS expertise, and expertise
     in business, marketing and licensing.

(g)  ADMINISTRATION                    US$170,000

(h)  PATENT & LEGAL FEES               US$170,000

                                       13
<Page>

                                 SECOND SCHEDULE
                                     PART II
                           REQUEST FOR RELEASE OF LOAN

                                                    Ref:
                                                    Date:

To:

Setiausaha Kewangan Negeri Sarawak
Pejabat Setiausaha Kewangan Negeri
Tingkat 17-18, Wisma Bapa Malaysia
93502 Petra Jaya, KUCHING

Dear Sir,

Agreement Number    :   __________________________________________________
Agreement Date      :   __________________________________________________
Approved Loan       :   __________________________________________________
Name of Project     :   __________________________________________________

With reference to the above agreement, I would be most grateful if you could
kindly.approve the release of US Dollars 5 on ___________

2.   I hereby certify that:-

<Table>
     <S>     <C>                                        <C>    <C>
     (i)     Total expenditure for the above
             project as at_______________________       =      USD___________

     (ii)    Total loan releases that have been
             received as at______________________       =      USD___________

     (iii)   Amount of release requested through
             this notice                                =      USD___________

     (iv)    Balance of loan after the release in
             para (iii) above                           =      USD___________
</Table>

3.   A progress report on the project is attached.

                              /s/ Michael T. Flavin
                         ------------------------------
                              Signature of Borrower
                              (CEO/GM of Borrower)

                                       14
<Page>

                                 SECOND SCHEDULE

                                    PART III

                                 RECEIPT OF LOAN

Loan Agreement No.        :                             Date:

Amount of Loan            :

Date of Payment to Borrower    :

I hereby acknowledge receipt of the sum of US Dollars________________

                                  /s/ Michael T. Flavin
-------------                  ---------------------------
Date of Receipt                   Signature of Borrower

                                       15
<Page>

                                 THIRD SCHEDULE

                                 LOAN REPAYMENT

1.   Loan Amount       :       US$2,500,000.00

2.   Project           :       Sarawak MediChem Pharmaceuticals Inc.

3.   Loan Period       :       48 months

4.   Repayment Date    :

5.   Interest Rate     :       7.75% per annum
                               (Compounded annually and calculated on
                                the basis of a 365-day year)

6.   Penalty Interest  :       7.75% per annum

                               DETAILS OF RELEASE

<Table>
<Caption>
RELEASE NO   DATE OF RELEASE   AMOUNT RELEASED  AGGREGATE AMOUNT
----------   ---------------   ---------------  ----------------
                                   (USD)             (USD)
<S>          <C>               <C>              <C>

</Table>

<Table>
<Caption>
 No   Repayment Date     Interest       Principal         Total
--------------------------------------------------------------------
                           US$             US$             US$
 <S>  <C>                <C>            <C>               <C>

                Repayment In one lump sum
</Table>

                                                      /s/ Michael T. Flavin
---------------------                               ------------------------
   Lender Signature                                    Borrower Signature

---------------------                               ------------------------
       Name                                                  Name

---------------------                               ------------------------
     Designation                                          Designation

---------------------                               ------------------------
       Date                                                  Date

                                       16

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