Document:

EXHIBIT 10.12

                            STOCK EXCHANGE AGREEMENT

            THIS STOCK EXCHANGE  AGREEMENT (the "Agreement") is made and entered
into as of the 6th day of May,  2003 by and among  Molichem  Medicines,  Inc., a
Delaware  corporation  with its principal place of business at 100 Europa Drive,
Suite 421,  Chapel Hill,  North Carolina  27517  ("MMI");  Molichem R&D, Inc., a
North Carolina  corporation  with its principal  place of business at 100 Europa
Drive, Suite 421, Chapel Hill, North Carolina 27517 ("MRD"); and Lantibio, Inc.,
a North Carolina corporation ("Lantibio").

                                    PREAMBLE

            WHEREAS,  MMI,  through its operating  subsidiary MRD, is engaged in
the  discovery,  development  and marketing of  pharmaceutical  products for the
treatment of serious respiratory and related conditions; and

            WHEREAS,  MMI has been unable to  adequately  fund and  complete the
development of its proposed products; and

            WHEREAS,  MMI has had no  operating  revenues  from  the sale of its
products since inception,  has incurred  substantial  losses from operations and
anticipates  that  operating  losses will continue and could increase until such
time, if ever,  that its compounds are  developed,  approved,  and  successfully
marketed; and

            WHEREAS, all of MRD's issued and outstanding shares of capital stock
are owned by MMI (the "MRD Shares"); and

            WHEREAS,  Lantibio  desires to acquire MRD by way of its acquisition
of the MRD Shares in exchange for all of its common stock of MMI,  consisting of
an aggregate of thirteen million, three hundred fifty five thousand, two hundred
eighty  two  (13,355,282)   shares  (the  "MMI  Shares")  and  the  grant  of  a
non-exclusive  ten year, US license to MMI (the  "License"),  in the form of the
License Agreement annexed hereto as SCHEDULE A; and

            WHEREAS, MMI similarly desires to make such exchange.

            NOW,  THEREFORE,  in  consideration  of  the  premises,  and  of the
promises, covenants and conditions contained herein, the parties intending to be
legally bound, hereby agree as follows:

<PAGE>

                                   WITNESSETH:

                                    ARTICLE 1

                               EXCHANGE OF SHARES

            Subject to the hereinafter described  conditions,  MMI hereby agrees
to transfer  and  deliver  the MRD Shares to  Lantibio  in exchange  for the MMI
Shares and the grant of the License.

                                    ARTICLE 2
                                     CLOSING

            The  exchange  of the MRD  Shares  for the MMI  Shares  (the  "Share
Exchange")  and the execution of the License  Agreement  shall take place at the
offices of Kaplan  Gottbetter & Levenson,  LLP, 630 Third Avenue,  New York, New
York  10017,  or such  other  place  as the  parties  may  mutually  agree  (the
"Closing"). The Closing shall take place upon the execution of this Agreement or
as soon  thereafter as is  practicable.  The date on which the Closing occurs is
referred to herein as the "Closing Date". At the Closing:

            (a) Lantibio  shall  tender or commit to tender to MMI  certificates
representing  all of the MMI  Shares,  duly  executed  and in  proper  form  for
transfer to MMI, together with such executed consents, powers of attorney, stock
powers and other  items as shall be  required  to convey  such stock to MMI,  in
compliance with all applicable laws;

            (b) MMI shall tender to Lantibio  certificates  representing  all of
the MRD  Shares,  duly  executed  and in proper form for  transfer to  Lantibio,
together with such executed consents, powers of attorney, stock powers and other
items as shall be required to convey such stock to Lantibio,  in compliance with
all applicable laws;

            (c) MMI and MRD shall execute the License Agreement;

            (d) MMI shall accept the  resignations of Luis Molina and Ron Keeney
as directors of MMI;

            (e) Lantibio shall cause to be delivered to MMI for  cancellation an
aggregate of 637,114 MMI stock options  representing  all MMI stock options held
by Luis  Molina,  Terry  Williams,  Richard  Franco,  Richard  Martin and Ronald
Keeney; and

            (f) Cloutier and the  Purchasers  shall cause to be delivered to MMI
for  cancellation an aggregate of 1,000,000 MMI stock options  representing  all
MMI stock options held by Jacques Gagne, Vatche  Tchakamakian,  Gilles Cloutier,
Jean Guy Lambert and Claude Gendron.

                                    ARTICLE 3
                           EXEMPTION FROM REGISTRATION

            (a) Lantibio hereby represents, warrants, covenants and acknowledges
that:

               (1) The MRD  Shares are being  issued to it without  registration
under the provisions of Section 5 of the Securities Act of 1933, as amended (the
"Act"),  pursuant to  exemptions  provided  pursuant  to Sections  4(1) and 4(2)
thereof;

               (2) There is no present  market for the MRD Shares and all of the
certificates  for the MRD Shares will bear legends  restricting  their transfer,
sale, conveyance or hypothecation,  unless such MRD Shares are either registered
under  the  provisions  of  Section  5 of the Act  and  under  applicable  state
securities  laws,  or an  opinion  of  legal  counsel,  in  form  and  substance
satisfactory  to  legal  counsel  to

<PAGE>

MRD, is provided  certifying that such  registration is not required as a result
of applicable exemptions therefrom;

               (3) Lantibio is acquiring the MRD Shares for investment  purposes
only, and not with a view to further sale or distribution; and

               (4)  Lantibio,  by reason of its  shareholders'  past and present
affiliations  with MMI and MRD, is fully aware of the  operations  and financial
conditions  of such  entities,  has had full access to all reports  filed by MMI
with the  Securities  and Exchange  Commission and has examined all of MMI's and
MRD's  books,   records  and  financial  statements  and  fully  and  completely
questioned  MMI's and MRD's officers and directors to its satisfaction as to all
matters deemed pertinent.

            (b) MMI hereby  represents,  warrants,  covenants  and  acknowledges
that:

               (1)  The  MMI  Shares  are  being   transferred   to  it  without
registration under the provisions of Section 5 of the Act pursuant to exemptions
provided pursuant to Sections 4(1) and 4(2) thereof; and

               (2) MMI is acquiring  the MMI Shares for the purpose of canceling
them and returning them to the status of authorized but unissued shares.

                                    ARTICLE 4
                         REPRESENTATIONS, WARRANTIES AND
                                COVENANTS OF MMI

            MMI  hereby  represents,  warrants  and  covenants  to  Lantibio  as
follows:

            (a) MMI is a corporation duly organized,  validly  existing,  and in
good  standing  under the laws of the State of  Delaware,  and MMI has the legal
capacity and all  necessary  corporate  authority to enter into and perform this
Agreement and to consummate the transactions contemplated hereby;

            (b) MRD is a corporation duly organized,  validly  existing,  and in
good  standing  under the laws of the State of North  Carolina,  and MRD has the
legal capacity and all necessary  corporate  authority to enter into and perform
this Agreement and to consummate the transactions contemplated hereby;

            (c) At the Closing,  MRD shall have good and marketable title to all
of its  assets  free and  clear of all  liens,  claims,  charges,  and any other
encumbrances;

            (d) At the  Closing,  MMI shall  have no  liabilities  and no assets
except as otherwise set forth in SCHEDULE 4(D);

            (e) The MRD Shares  represent  all of MRD's  issued and  outstanding
capital  stock and at  Closing  MRD  shall  have no  outstanding  subscriptions,
options, warrants, convertible securities,  instruments or other agreements that
could result in an obligation to issue additional capital stock of MRD;

            (f) This Agreement has been duly authorized,  executed and delivered
by MMI  and  constitutes  the  legal,  valid  and  binding  obligation  of  MMI,
enforceable against MMI in accordance with its terms;

<PAGE>

            (g) This Agreement has been duly authorized,  executed and delivered
by MRD  and  constitutes  the  legal,  valid  and  binding  obligation  of  MRD,
enforceable against MRD in accordance with its terms;

            (h) The execution and delivery of this Agreement and the performance
of the  obligations  imposed  hereunder  will not conflict  with, or result in a
breach by MMI of, any of the terms or  provisions  of, or  constitute  a default
under,  the  certificate  of  incorporation  or bylaws of MMI,  or any  material
agreement or  instrument  to which MMI is a party,  or by which it or any of its
properties or assets are bound,  or result in a violation of any order,  decree,
or judgment of any court or governmental  agency having jurisdiction over MMI or
MMI's properties,  will not conflict with, constitute a default under, or result
in the breach of, any contract, agreement, or other instrument to which MMI is a
party or is otherwise bound and no consent, authorization or order of, or filing
or  registration  with,  any court,  governmental,  or  regulatory  authority is
required in connection with the execution and delivery of this Agreement and any
related agreements or the performance by MMI of its obligations hereunder;

            (i) The execution and delivery of this Agreement and the performance
of the  obligations  imposed  hereunder  will not conflict  with, or result in a
breach by MRD of, any of the terms or  provisions  of, or  constitute  a default
under,  the  certificate  of  incorporation  or bylaws of MRD,  or any  material
agreement or  instrument  to which MRD is a party,  or by which it or any of its
properties or assets are bound,  or result in a violation of any order,  decree,
or judgment of any court or governmental  agency having jurisdiction over MRD or
MRD's properties,  will not conflict with, constitute a default under, or result
in the breach of, any contract, agreement, or other instrument to which MRD is a
party or is otherwise bound and no consent, authorization or order of, or filing
or  registration  with,  any court,  governmental,  or  regulatory  authority is
required in connection with the execution and delivery of this Agreement and any
related agreements or the performance by MRD of its obligations hereunder;

            (j) There is no  litigation  or  proceeding  pending or, to the best
knowledge of MMI and MRD,  threatened,  against MRD or MMI or the  properties of
MRD or MMI;

            (k) MMI and MRD have filed  (except  for 2002 tax  returns for which
extension requests have been filed) with the appropriate  governmental  agencies
all tax returns and tax reports  required to be filed;  all  Federal,  state and
local income,  franchise,  sales,  use,  occupation or other taxes due have been
fully  paid or  adequately  reserved  for;  and MMI or MRD is not a party to any
action or proceeding by any governmental  authority for assessment or collection
of taxes, nor has any claim for assessments been asserted against MMI or MRD;

            (l)  There  are   presently  no  contingent   liabilities,   factual
circumstances,  contractually  assumed obligations or unasserted possible claims
which are known to MMI or MRD which might result in a material adverse change in
the future financial condition or operations of MMI; and

            (m) MMI owns the MRD  Shares  free and clear of all  liens,  claims,
charges, preemptive rights, and any other encumbrances and shall deliver the MRD
Shares to  Lantibio  at Closing  free and clear of all liens,  claims,  charges,
preemptive rights, and any other encumbrances.

<PAGE>

                                    ARTICLE 5
                         REPRESENTATIONS, WARRANTIES AND
                              COVENANTS OF LANTIBIO

            Lantibio hereby represents and warrants to MMI as follows:

            (a) Lantibio has all  necessary  authority to enter into and perform
this Agreement and to consummate the transactions contemplated hereby;

            (b) This Agreement has been duly authorized,  executed and delivered
by Lantibio and constitutes a legal,  valid and binding  obligation of Lantibio,
enforceable against Lantibio in accordance with its terms;

            (c) The execution and delivery of this Agreement and the performance
of the  obligations  imposed  hereunder  will not conflict  with, or result in a
breach by  Lantibio  of,  any of the terms or  provisions  of, or  constitute  a
default under, the certificate of  incorporation  or bylaws of Lantibio,  or any
material agreement or instrument to which Lantibio is a party, or by which it or
any of its  properties  or assets are  bound,  or result in a  violation  of any
order,   decree,  or  judgment  of  any  court  or  governmental  agency  having
jurisdiction  over Lantibio or Lantibio's  properties,  will not conflict  with,
constitute a default under, or result in the breach of, any contract, agreement,
or other  instrument to which  Lantibio is a party or is otherwise  bound and no
consent,  authorization or order of, or filing or registration  with, any court,
governmental,  or  regulatory  authority  is  required  in  connection  with the
execution  and  delivery of this  Agreement  and any related  agreements  or the
performance by Lantibio of its obligations hereunder; and

            (d)  There  are   presently  no  contingent   liabilities,   factual
circumstances,  contractually  assumed obligations or unasserted possible claims
which are known to Lantibio  which might result in a material  adverse change in
the future financial condition or operations of Lantibio.

                                    ARTICLE 6
                                     NOTICE

            All notices,  demands or other  communications given hereunder shall
be in writing and shall be deemed to have been duly given when  received if sent
by fax or overnight courier, and if mailed shall be deemed to have been given on
the first  business day after mailing by United  States  registered or certified
mail, return receipt requested, postage prepaid, addressed as follows:

            To MMI:                   Molichem Medicines, Inc.
                                      c/o Gilles Cloutier
                                      100 Chestnut Road
                                      Chapel Hill, North Carolina 27514
                                      Telephone: (919) 942-4245
                                      Facsimile:  (919) 933-0664

            with a copy to:           Kaplan Gottbetter & Levenson, LLP
                                      630 Third Avenue
                                      New York, NY 10017
                                      Attention: Adam S. Gottbetter

<PAGE>

                                      Telephone:  (212) 983-6900
                                      Facsimile:   (212) 983-9210

            To Lantibio:              Lantibio, Inc.
                                      100 Europa Drive, Suite 421
                                      Chapel Hill, North Carolina 27517

                                      Attn: Dr. Luis Molina
                                      Telephone: (919) 960-0217
                                      Facsimile:  (919) 929-3447

            with a copy to:           Wyrick Robbins Yates & Ponton, LLP
                                      4101 Lake Boone Trail, Suite 300
                                      Raleigh, NC 27607
                                      Attention: W. David Mannheim

                                      Telephone: (919) 781-4000
                                      Facsimile:   (919) 781-4865

                                   ARTICLE 7
                                 MISCELLANEOUS

            (a) Each of MMI, MRD and Lantibio agrees to take such actions as are
reasonably  necessary  to carry out the  intentions  of the  parties  under this
Agreement, including but not limited to the prompt execution and delivery of any
documents  reasonably  necessary to carry out and perform the terms or intention
of this Agreement.

            (b) Certain  costs and  expenses  incurred in  connection  with this
Agreement and the transactions  contemplated hereby shall be paid from an escrow
account held by Kaplan Gottbetter & Levenson, LLP, as previously agreed.

            (c) This Agreement  shall be governed by and construed in accordance
with the laws of the State of New York,  without  regard to conflicts of laws of
principles  and  each  party  hereby  agrees  that  all   performances  due  and
transactions  undertaken pursuant to this Agreement shall be deemed to be due or
have occurred in New York, and the exclusive venue and place of jurisdiction for
any litigation  arising from or related to this Agreement  shall be the state or
federal courts located in the State and County of New York.

            (d) The headings used in this Agreement are for convenience only, do
not form a part of this  Agreement,  and shall not affect in any way the meaning
or interpretation of this Agreement.

            (e) This Agreement may be executed in one or more counterparts which
when taken together shall constitute one agreement.

            (f) This Agreement is intended for the benefit of the parties hereto
and is not for the benefit of, nor may any provisions  hereof be enforced by any
other person, firm or entity.

            (g) This  Agreement  may be amended,  modified and  supplemented  in
writing only by the mutual consent of the parties hereto.

            (h) This Agreement and all of the provisions hereof shall be binding
upon and  inure to the  benefit  of the  parties  hereto  and  their  respective
successors  and  permitted  assigns,  but neither this  Agreement nor any of the
rights,  interests  or  obligations  hereunder  shall be  assigned by any of the
parties hereto without the prior written  consent of the other parties,  and any
attempts to do so without the consent of the other  parties shall be void and of
no effect.

<PAGE>

            (i) In the event any party breaches the terms of this Agreement, the
non-breaching parties shall be entitled to the recovery of their attorney's fees
and other  professional  costs  and fees  incurred  in  enforcing  their  rights
hereunder.

            (j) This writing  constitutes the entire agreement and understanding
between the parties hereto with respect to the subject matter contained  herein.
Neither  party is relying on any  representation  or statement  not contained in
this  writing.  This  Agreement  supercedes  and  cancels  any prior  agreements
relating to the subject matter contained herein.

<PAGE>

            IN WITNESS  WHEREOF,  the parties hereto have executed and delivered
this Agreement as of the date first written above.

MOLICHEM MEDICINES, INC.

By:  /S/ GILLES CLOUTIER
        Name:   Gilles Cloutier
        Title:     President

MOLICHEM R&D, INC.

By:  /S/ LUIS MOLINA
        Name:   Luis Molina, PhD.
        Title:          President

LANTIBIO, INC.

By:  /S/ LUIS MOLINA
        Name:   Luis Molina, PhD.
        Title:          President

<PAGE>

                                   SCHEDULE A

                                LICENSE AGREEMENT

                                     BETWEEN

                            MOLICHEM MEDICINES, INC.

                                       AND

                               MOLICHEM R&D, INC.

        The License Agreement is included with this Annual Report on Form
                            10-KSB as Exhibit 10.13

<PAGE>

                                  SCHEDULE 4(D)

       LIST OF MOLICHEM MEDICINES, INC. ASSETS AND LIABILITIES AT CLOSING

                                      NONEEXHIBIT 10.13

                                LICENSE AGREEMENT

            THIS AGREEMENT is made as of the 6th day of May, 2003 by and between
MOLICHEM R&D,  INC., a corporation  organized and existing under the laws of the
State of North Carolina,  having a place of business at 100 Europa Drive,  Suite
421, Chapel Hill, NC 27517 (hereinafter referred to as "LICENSOR"), and MOLICHEM
MEDICINES,  INC., a  corporation  organized  and existing  under the laws of the
State of Delaware,  having a place of business at 100 Europa  Drive,  Suite 421,
Chapel Hill, NC 27517 (hereinafter referred to as "LICENSEE").

                              W I T N E S S E T H:

            WHEREAS,  LICENSOR  is the  owner  of and has the  right  to grant a
license  with  respect to  certain  TECHNOLOGY  (as  hereinafter  defined);  and
WHEREAS,  LICENSOR  is willing to grant to LICENSEE a  non-exclusive  license to
develop,  market, and sell products incorporating the TECHNOLOGY pursuant to the
terms and conditions set forth herein;

            NOW,  THEREFORE,   in  consideration  of  the  mutual  promises  and
covenants set forth herein, the parties hereby agree as follows:

1.    DEFINITIONS

      (a) "FIELD OF USE" shall mean use of the  TECHNOLOGY  in the  treatment of
septic shock in non-human mammals.

      (b)  "TECHNOLOGY"  shall  mean  the  iron  containing   compounds  Moli56A
(commonly known as DTPA iron (III)) and Moli56B  (commonly known as Ferrioxamine
B) as described in patent 6,465,511 B1, issued October 15, 2002.

      (c) "TERRITORY" shall mean the United States.

2.    GRANT OF LICENSE

      (a)  During the term of this  Agreement,  and  subject  to the  provisions
herein,  LICENSOR hereby grants to LICENSEE a non-exclusive  License to develop,
market,  and sell products

<PAGE>

incorporating  the  TECHNOLOGY  in the  TERRITORY in the FIELD OF USE.  LICENSEE
acknowledges  that this license does not extend to any human  subject use of the
TECHNOLOGY.

      (b) This  Agreement  is personal to the LICENSEE and shall not be assigned
by LICENSEE. LICENSEE shall have no right to grant any sublicenses.

3.    OWNERSHIP AND CONFIDENTIALITY OF TECHNOLOGY

      (a) All of the TECHNOLOGY  which  LICENSOR  discloses to LICENSEE shall be
and remain the property of LICENSOR.  All improvements and developments  thereof
made by LICENSEE shall be the property of LICENSOR.

      (B) LICENSEE'S only right in the TECHNOLOGY shall be to use it pursuant to
the  terms  of  this  Agreement.  LICENSEE  shall  keep  all of  the  TECHNOLOGY
confidential and secret,  and shall not reveal all or any part of the TECHNOLOGY
to any person other than to the officers, directors, consultants or employees of
LICENSEE who need to know about the TECHNOLOGY and are bound by  confidentiality
agreements satisfactory in form and content to the LICENSOR.  Further,  LICENSEE
agrees to notify  LICENSOR  prior to any such  disclosure of the  TECHNOLOGY and
provide  LICENSOR the opportunity to review any such  confidentiality  agreement
and comment on the compliance with this Agreement of any such  disclosure.  This
Paragraph 3(b) shall specifically survive termination of this Agreement.

(C)  LICENSEE,  at any time both  during  and after the term of this  Agreement,
shall  execute all  necessary  documents to affect the intent of this Section 3.
This Paragraph 3(c) shall  specifically  survive  termination of this Agreement.
However, the obligations under this Paragraph shall not apply to such TECHNOLOGY
which is now or may hereafter  come into the public domain  without fault on the
part of LICENSEE or its  employees,  directors or officers.

      (D) LICENSEE,  upon  termination  of this License,  shall promptly give to
LICENSOR  all  material   pertaining  to  the  TECHNOLOGY,   including   copies,
translations and any media in which the

<PAGE>

TECHNOLOGY is contained,  and shall cease all use and sale of the  TECHNOLOGY or
products  incorporating the TECHNOLOGY.  (E) LICENSEE acknowledges that LICENSOR
has not given or made any representation or warranties, express or implied, with
respect to the TECHNOLOGY, and the TECHNOLOGY is being delivered "as is" without
any warranty as to merchantability or fitness for a particular purpose.

4.    LICENSING FEE, ROYALTIES, CONTINUATION PAYMENT AND MILESTONE PAYMENT

            In  consideration  of the  rights  granted  to  LICENSEE  hereunder,
LICENSEE  shall  pay to  LICENSOR  (a) a  licensing  fee of $1.00  per year (the
"Licensing  Fees"),  payable  each year on the  anniversary  of the date of this
Agreement; (b) an annual royalty equal to 6% of net sales of LICENSEE related to
the TECHNOLOGY and  attributable  to this Agreement (the  "Royalties"),  payable
each  year on the  anniversary  of the  date of this  Agreement;  (c) a one time
continuation  payment of $500,000 (the  "Continuation  Payment")  payable on the
first  anniversary of the date of this  Agreement;  and (d) a one time milestone
payment of  $2,000,000  (the  "Milestone  Payment")  within sixty (60) days of a
product  incorporating  the TECHNOLOGY being approved in the FIELD OF USE but in
no event shall such payment be due prior to the first anniversary of the date of
this Agreement.

5.    TERM AND TERMINATION

      (a) This Agreement and the License granted hereunder shall commence on the
date set forth above and shall  remain in effect for a period of ten (10) years,
unless sooner  terminated as provided  herein.

      (B) LICENSOR may, at its option,  terminate  this Agreement if there shall
occur a breach by LICENSEE of any of the terms and  conditions of the Agreement,
including  but not limited to the  following  situations,  and LICENSEE does not
cure the breach within thirty (30) days after receiving written notice thereof:

<PAGE>

            (I)   LICENSEE  takes  any  action  that  could  publicly  damage or
                  reflect adversely on LICENSOR (e.g., an officer or employee of
                  LICENSEE is arrested for criminal activity); or

            (ii)  LICENSEE fails to make payment of Licensing  Fees,  Royalties,
                  the Continuation Payment or the Milestone Payment when due.

      If LICENSEE  cures such defect  within the thirty (30) day cure period and
diligently  pursues  such cure,  the  Agreement  shall  remain in full force and
effect.

      (C) LICENSEE may, at its option,  terminate  this Agreement if there shall
occur a breach by LICENSOR of any of the terms and conditions of this Agreement,
and LICENSOR  does not take  reasonable  steps to cure the breach  within thirty
(30) days after receiving  written notice thereof.  If LICENSOR takes reasonable
steps to cure such defect within the thirty (30) day cure period and  diligently
pursues such cure,  the  Agreement  shall  remain in full force and effect.

      (D) LICENSOR may, at its option, immediately terminate this Agreement upon
the occurrence of any of the following events:

            (i)   upon   information   and  belief  that   LICENSEE  has  become
                  insolvent;

            (ii)  the  placement  of the  assets of  LICENSEE  in the hands of a
                  receiver,  an assignment of assets of LICENSEE for the benefit
                  of creditors or the commencement of any bankruptcy  proceeding
                  for LICENSEE; or

            (iii) the voluntary or involuntary dissolution of LICENSEE.

      (e) The termination of this Agreement for any reason shall not release any
party from any obligation which accrued prior to such termination,  or which, by
its  terms,  is  to  continue  beyond  such  termination.   Notwithstanding  the
foregoing,  LICENSOR's sole remedy for LICENSEE's failure to make payment of the
Continuation Payment or the Milestone Payment due hereunder, in a timely fashion
or within the thirty (30) day

<PAGE>

cure period,  shall be to terminate this Agreement and LICENSEE shall thereafter
have no further obligation to make such payment or payments to LICENSOR.

6.    INFRINGEMENT

            (a) If, at any time  during the term of this  Agreement,  a claim is
asserted or an action is commenced by a third person in which it is alleged that
the TECHNOLOGY infringes upon the property rights of such third person, then the
party  against  whom the claim is  asserted  or the  action is  commenced  shall
promptly notify the other party hereto. At such time or any time thereafter,  if
reasonably asked to do so by LICENSOR,  LICENSEE shall promptly  discontinue use
of the TECHNOLOGY.

      In such an infringement  situation,  LICENSOR shall defend,  indemnify and
hold LICENSEE  harmless from and against any and all demands,  claims,  actions,
liability,  losses, damages, costs or expenses,  including reasonable attorneys'
fees, resulting from LICENSEE'S use of the TECHNOLOGY up until the time LICENSOR
notified LICENSEE to discontinue said activities.

            (b) If LICENSEE  continues to use the  TECHNOLOGY  after it has been
notified by LICENSOR,  pursuant to Section 6(a) hereof, to discontinue such use,
such action shall be  considered a breach of the  Agreement  pursuant to Section
6(a) hereof,  all licenses granted to LICENSEE  hereunder shall  immediately and
automatically  terminate and LICENSOR  shall no longer be obligated to indemnify
and hold  LICENSEE  harmless  from that  point on.  Thereafter,  LICENSEE  shall
indemnify  and hold  LICENSOR  harmless  from and against  any and all  demands,
claims,  actions,  liability,  losses,  damages,  costs or  expenses,  including
reasonable  attorneys'  fees,  arising out of or in connection  with  LICENSEE'S
continued  use  of  the  TECHNOLOGY.  Nevertheless,   LICENSOR'S  obligation  to
indemnify and hold LICENSEE  harmless up until the point of  notification  shall
remain in effect.

            (C) LICENSOR  may handle any claim or defend any action  referred to
in Section  6(a) hereof in its own name,  in the name of LICENSEE or in the name
of both.  LICENSEE shall participate in the handling of any such claim or in the
defense of any such  action at  LICENSOR'S  expense,  if such  participation  is
reasonably  requested  by  LICENSOR.  If  LICENSOR  does not handle any claim or

<PAGE>

defend any action  referred to in Section 6(a) hereof,  LICENSEE  shall have the
right to terminate this Agreement. However, LICENSEE shall not have the right to
handle any such claim or defend any such action.

7.    MISCELLANEOUS

      (a)   NOTICES

All notices and other communications required or permitted hereunder shall be in
writing and

            (i)   when  delivered  by hand,  shall be deemed  effective  when so
                  delivered;

            (ii)  when sent by certified or registered  mail,  postage  prepaid,
                  shall be deemed effective five days after having been sent;

            (iii) when  sent  by  telefax,  with a copy  by  regular  mail or by
                  Federal  Express,  shall  be  deemed  effective  at  the  time
                  indicated on the fax transmission receipt; or

            (iv)  when sent by prepaid cable, telex or telegram, shall be deemed
                  effective one day after having been sent.

      All such notices and other communications shall be addressed as follows:

               If to LICENSOR, to:     Molichem R&D, Inc.
                                       100 Europa Drive
                                       Suite 421
                                       Chapel Hill, North Carolina 27517
                                       Attention: Luis Molina, President

               With copies of all
               correspondence to:      Wyrick Robbins Yates & Ponton LLP
                                       4101 Lake Boone Trail
                                       Suite 300
                                       Raleigh, North Carolina 27607
                                       Attention: W. David Mannheim, Esq.

               If to LICENSEE, to:     Molichem Medicines, Inc.
                                       c/o Gilles Cloutier
                                       100 Chestnut Road
                                       Chapel Hill, North Carolina 27514

<PAGE>

               With copies of all
               correspondence to:      Kaplan Gottbetter & Levenson, LLP
                                       630 Third Avenue
                                       Fifth Floor
                                       New York, New York 10017
                                       Attention: Adam S. Gottbetter, Esq.

            or to such other address as each party shall notify the other.

            (b)         WAIVER, MODIFICATIONS AND AMENDMENTS

                  The failure of either  party to enforce at any time any of the
provisions of this  Agreement or any rights in respect  thereto,  or to exercise
any election  herein  provided,  shall in no way be  considered a waiver of such
provisions, rights or election.

                  This  Agreement  may not be  modified  or amended  except by a
writing signed by both parties hereto.

            (c)         NONENFORCEABILITY

                  If any provision of this Agreement  should be proven  unlawful
or  nonenforceable,  such will not affect the validity or  enforceability of the
remaining provisions.

            (d)         GOVERNING LAW

                  The  construction,  validity and performance of this Agreement
shall  be  governed  in all  respects  by the  laws of the  State of New York in
connection  with any dispute or  controversy  arising out of or relating to this
Agreement,  and both parties  consent to the  jurisdiction  of the United States
District Court for the Southern District of New York or the appropriate New York
State court.

            (e)         ENTIRE AGREEMENT

                  This Agreement  constitutes the entire  agreement  between the
parties  relating to the subject  matter hereof and supersedes any and all prior
agreements, whether written or oral, with respect to the subject matter hereof.

<PAGE>

                        IN WITNESS WHEREOF,  the parties hereto have caused this
Agreement to be executed and  delivered by their  respective  officers as of the
date first above written.

MOLICHEM MEDICINES, INC.                     MOLICHEM R&D, INC.

By: /S/ GILLES CLOUTIER                      By:    /S/ LUIS MOLINA
    ----------------------------------------        ----------------------------
          Name: Gilles Cloutier                     Name: Luis Molina
          Title: President                          Title: President

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