Exhibit 10.1

EXCLUSIVE LICENSE AGREEMENT

THIS AGREEMENT is made and entered into this 21st day of May, 2008, by and
between: SYNTHETIC BLOOD INTERNATIONAL, INC. (hereinafter referred to as the
“LICENSEE”) with its principal place of business at 3189 Airway Avenue Bldg. C,
Costa Mesa, CA 92626, and VIRGINIA COMMONWEALTH UNIVERSITY INTELLECTUAL PROPERTY
FOUNDATION (hereinafter referred to as the “LICENSOR”), and with its principal
place of operation at Virginia Commonwealth University, 800 E. Leigh Street,
Suite 113, Richmond, Virginia 23298-0568, United States of America.

WHEREAS, LICENSOR is charged with management and licensing of intellectual
properties developed at Virginia Commonwealth University (“VCU”) and, under VCU
intellectual property policy, inventions made by employees of VCU or made using
the facilities of VCU are required to be assigned to VCU and managed by
LICENSOR;

WHEREAS, VCU is the owner of all right, title, and interest in patent
applications associated with the VCU invention disclosure 06-31 “Novel Means to
Provide Non pulmonary Oxygenation,” VCU invention disclosure 07-080 “Novel
Combinatorial Approaches to Enhancing Oxygen Transport to Tissue”, and VCU
Invention disclosure 08-008 “Gas Based Wound and Tissue Therapeutics” invented
by Dr. Kevin Ward, Bruce Speiss, Robert Diegelman, Gary Bowlin, et al, employees
at Virginia Commonwealth University; and

WHEREAS, LICENSEE is desirous of acquiring from LICENSOR certain rights set
forth below;

NOW, THEREFORE, in consideration of the promises and the covenants set forth
herein, LICENSOR and LICENSEE agree as follows:

I. DEFINITIONS

The following definitions shall apply in the interpretation of this AGREEMENT.

1.1 “AFFILIATE” of any LICENSEE means any corporation which, directly or
indirectly, controls or is controlled by, or is under direct or indirect common
control with, such LICENSEE; and for the purposes of this definition “control”
(including “control by” and “under common control with”) as used with respect to
any corporation or LICENSEE, shall mean the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of
such corporation or LICENSEE, through the ownership of more than 50% of the
voting shares.

1.2 “CALENDAR QUARTER” means the three-month period ending
March 31, June 30, September 30, or December 31 in any year.

1.3 “LICENSED PATENTS” shall mean the VALID CLAIMS of to, the extent controlled
by LICENSOR, the United States patents and patent applications, corresponding
foreign patents and patent applications as listed in Appendix A, attached hereto
and incorporated herein by reference, and any reissues, re-examinations,
renewals, extensions, substitutions, continuations, divisions, and
continuation-in-part applications (but only those VALID CLAIMS in the
continuation-in-part applications that are entirely supported in the
specification and entitled to the priority date of the parent application).

1.4 “LICENSED PRODUCTS” shall mean any product in the FIELD OF USE that
incorporates, is covered by (in whole or in part), or is made, uses or is used
by a process covered by (in whole or in part), one or more VALID CLAIMS in one
or more of the LICENSED PATENTS (including reissues and re-examinations) and
without a license from VCU, would infringe one or more of the VALID CLAIMS in a
Licensed Patent.

 

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1.5 “FIELD OF USE” shall mean all therapeutic and diagnostic applications in
humans and animals.

1.6 “IMPROVEMENT INVENTIONS” shall mean inventions in the FIELD OF USE which
improvement arose from research sponsored by LICENSEE and/or arose out of
research in the FIELD OF USE in the area of oxygen therapeutics conducted
(i) solely by Dr. Bruce Spiess, or (ii) under the direction or control of
Dr. Bruce Spiess (e.g., arising from Dr. Spiess’ laboratory or research group).

1.7 “EFFECTIVE DATE” shall mean the date of the AGREEMENT set forth above.

1.8 “NET SALES” shall mean the amounts received by LICENSEE from the use of
LICENSED PRODUCTS, or the sale of LICENSED PRODUCTS, less (i) discounts or
rebates actually allowed from the billed amount, (ii) credits or allowances
actually allowed upon claims or returns, (iii) shipping and insurance charges,
and (iv) taxes, customs, or other government charges and surcharges included in
the amounts billed. For non-cash and partial-cash sales, NET SALES shall include
the fair market value of non-cash consideration received for such sale of the
same quantity of LICENSED PRODUCTS. For sales not at arms-length, NET SALES
shall be equal to the fair market price of such LICENSED PRODUCTS as when
transferred in comparable arms-length transactions. In the event that LICENSED
PRODUCTS are used by LICENSEE rather than sold, the parties shall agree upon an
appropriate NET SALES price for each such use on which to base a royalty
calculation. The distribution of reasonable quantities of free promotional
samples of LICENSED PRODUCT or LICENSED PRODUCTS provided without charge for
clinical trials or research purposes shall not be considered a sale of a
LICENSED PRODUCT for royalty purposes.

1.9 “SUBLICENSEE” shall mean any non-affiliated third party to whom LICENSEE has
granted a SUBLICENSE. “SUBLICENSE” shall mean an agreement in which LICENSEE
(i) grants or otherwise transfers any of the rights licensed to LICENSEE
hereunder, (ii) agrees not to assert such rights or to sue, prevent or seek a
legal remedy for the practice of same, or (iii) is under an obligation to grant,
assign or transfer any such rights or non-assertion, or to forebear from
granting or transferring such rights to any other entity, including licenses,
option agreements, right of first refusal agreements, or other agreements.

1.10 “SUBLICENSING REVENUE” shall mean the fair market cash value of any and all
consideration received by LICENSEE from SUBLICENSEE under its SUBLICENSE,
including without limitation running royalties paid for NET SALES of LICENSED
PRODUCTS by SUBLICENSEE, license issue fees and other licensing fees, option
fees, milestone payments, minimum annual royalties, equity or other payments of
any kind whatsoever, irrespective of whether such revenues are received in the
form of cash, barter, credit, stock, warrants, release from debt, goods or
services, licenses back, or any other form whatever. Notwithstanding the
foregoing, “SUBLICENSING REVENUE” shall not include the following payments, in
cash or equity, received by LICENSEE: (i) payments for research and development
activities, as documented in development plans and/or budgets under research or
development agreements with third parties, (ii) amounts received in
consideration for LICENSEE’s equity, and (iii) amounts received in consideration
for the sale of all or substantially all of the business or assets of LICENSEE
relating to this license, whether by merger, acquisition, sale of assets, stock,
or otherwise.

 

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1.11 “VALID CLAIM” means a claim of a patent or patent application in any
country that (i) has not expired, (ii) has not been disclaimed, (iii) has not
been cancelled or superseded, or if cancelled or superseded, has been
reinstated; (iv) has not been revoked, held invalid, held unpatentable, or
otherwise declared unenforceable or not allowable by a tribunal or patent
authority of competent jurisdiction over such claim in such country from which
no further appeal has or may be taken, and (v) has not been admitted to be
invalid or unenforceable through reissue, re-examination, disclaimer, or
otherwise.

II. GRANT

2.1 LICENSOR grants to LICENSEE an exclusive, royalty bearing, worldwide license
under the LICENSED PATENTS to make, have made, use, offer to sell, sell, have
sold, and import LICENSED PRODUCTS, with the right to SUBLICENSE under the terms
of Article VIII, throughout the term hereof in the FIELD OF USE. This grant
shall be subject to the payment by LICENSEE to LICENSOR of all consideration as
provided in this AGREEMENT, and shall be further subject to the rights retained
by LICENSOR and VCU to:

 

  a. publish the scientific findings from research related to LICENSED PATENTS;
provided, however, LICENSOR shall provide LICENSEE any proposed publication at
least thirty (30) days prior to any proposed publication thereof to review any
such publication for the purpose of identifying any patentable inventions and,
in the event that LICENSEE identifies any such information, LICENSOR will delay
any publication for up to forty-five (45) days for the purpose of filing a
patent application; and

 

  b. practice under the LICENSED PATENTS for educational, research,
non-commercial patient care and treatment, and other non-commercial internal
purposes. Such reservation shall include the right to extend such right to
practice under the LICENSED PATENTS for non-commercial educational and academic
research purposes (but not for patient care and treatment, or any other internal
purpose) to subsequent employers of any of the Inventors, but only to the extent
that such employers are not-for-profit organizations. Such reservation shall
further include the right to provide technical information, and to grant
non-transferable licenses, without the right to sublicense, under the LICENSED
PATENTS, to not-for-profit and governmental institutions for their internal
non-commercial research and scholarly use only, in accordance with the NIH
Guidelines for Obtaining and Disseminating Biomedical Research Resources (as
published in the U.S. Federal Register / vol. 64, No. 246 - 12/23/99).

2.2 LICENSOR grants to LICENSEE, and LICENSEE accepts, an exclusive first option
to include IMPROVEMENT INVENTIONS in this AGREEMENT. Subject to any third party
obligations, LICENSOR grants to LICENSEE, and LICENSEE accepts, an exclusive
first option to enter into good faith negotiations for a license in the FIELD OF
USE to include any inventions with respect to oxygen therapeutics invented by
Dr. Bruce Spiess together with other inventors (if no inventor objects in
writing) in this AGREEMENT upon payment of $25,000 fee. Subject to any third
party obligations and if no inventor objects in writing, LICENSEE shall have an
option to negotiate an exclusive license on inventions based on oxygen delivery
to tissue developed by other inventors at VCU after the EFFECTIVE DATE under
commercially reasonable terms. The exclusive option granted to LICENSEE under
this Section 2.2 must be exercised in writing within forty-five (45) days after
LICENSEE’S receipt of written information of LICENSOR’S decision to file a
patent application concerning an IMPROVEMENT INVENTION or other invention from
LICENSOR. Upon expiration of the option period, LICENSOR may seek other
licensees.

 

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2.3 Notwithstanding anything herein to the contrary, any and all licenses and
other rights granted hereunder are limited by and subject to the rights and
requirements of the United States Government which may attach as a result of
United States Government sponsorship of research at VCU, in which the invention
covered by the LICENSED PATENTS was conceived or reduced to practice, as set
forth in 35 U.S.C. §§200-206, 37 C.F.R. Part 401 and in the relevant United
States Government research contracts with VCU, and as such rights and
requirements may be amended or modified by law. To the extent applicable, such
rights and requirements include without limitation (i) the grant of a
nonexclusive, nontransferable, irrevocable, paid-up license to practice or have
practiced for or on behalf of the Government any of the LICENSED PATENTS
throughout the world (as set forth in 35 U.S.C. §202(c)(4)), and (ii) the
requirement that LICENSED PRODUCTS used or sold in the United States will be
manufactured substantially in the United States (as set forth in 35 U.S.C.
§204).

III. PAYMENT PROVISIONS

3.1 In consideration for the rights, privileges and license granted under this
AGREEMENT, the LICENSEE must pay to LICENSOR the fees and royalties specified in
Appendix B, attached hereto and incorporated herein by reference.

3.2 With each report submitted under Section 5.1 of this AGREEMENT, LICENSEE
shall make all payments to LICENSOR in US dollars due and payable under this
Article III. If no royalties are due, LICENSEE shall so report.

3.3 LICENSEE shall be obligated to pay royalties as provided in this AGREEMENT
on all LICENSED PRODUCTS that are either sold or produced under this license,
regardless of whether such LICENSED PRODUCTS are produced prior to the EFFECTIVE
DATE of this AGREEMENT or sold after the termination of this AGREEMENT. LICENSEE
also agrees to make a written report to LICENSOR within ninety (90) days after
the termination of this AGREEMENT pursuant to Article VII. LICENSEE shall
continue to make reports concerning royalties on the sale of LICENSED PRODUCTS
payable in accordance with this Article III after termination of this AGREEMENT,
until such time as all such LICENSED PRODUCTS produced under the license have
been sold or destroyed. Concurrent with the submittal of each post-termination
report, LICENSEE shall pay LICENSOR all applicable royalties.

3.4 All payments due the LICENSOR must be paid in U.S. currency to the LICENSOR.
The LICENSEE must convert NET SALES invoiced in foreign currency into equivalent
U.S. currency at the exchange rate for the foreign currency prevailing as of the
last day of the reporting period, as reported in the Wall Street Journal®.
Royalty payments shall be based on NET SALES in any country where a valid patent
covering LICENSED PATENTS or LICENSED PRODUCTS is in effect, and on NET SALES of
export PRODUCTS when the PRODUCTS were produced in a country where a valid
patent covering LICENSED PATENTS is in effect. LICENSEE agrees to pay interest
of 1.5% per month, the interest being compounded monthly, or two hundred fifty
dollars ($250.00), whichever is greater, on any delinquent payments to LICENSOR.
LICENSEE shall calculate the correct late payment charge, and shall add it to
each such late payment. LICENSEE shall pay for all costs and reasonable
attorneys fees incurred by LICENSOR in collecting payments due to LICENSOR.

3.5 In the case of a buyout or other change in majority ownership of LICENSEE,
or a buyout of LICENSED PRODUCTS, all payment provisions arc passed through,
non-negotiable, and remain in effect for LICENSEE. SUBLICENSEE, or purchaser, as
applicable. LICENSEE shall inform any potential purchaser of this clause and
present evidence of such notification to LICENSOR.

 

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IV. DILIGENCE AND PATENT PROSECUTION

4.1 The LICENSEE will use its reasonable best efforts to bring one or more
LICENSED PRODUCT(S) to market through a thorough, vigorous and diligent program
for exploitation of the PATENT RIGHTS and to continue active, diligent marketing
efforts for LICENSED PRODUCTS throughout the life of this AGREEMENT.

4.2 LICENSEE agrees to present to LICENSOR a development plan for each LICENSED
PRODUCT within two (2) months of acquiring the relevant LICENSED PATENT. The
diligence milestones outlined in the development plans for each LICENSED PRODUCT
will be attached to this AGREEMENT as a new Appendix C1.2.3 etc., no later than
two months after LICENSEE acquires the the relevant LICENSED PATENT. To be in
compliance with Section 4.1, the LICENSEE must meet the diligence milestones set
out in Appendix C, which shall be attached hereto and incorporated herein by
reference.

4.3 Article IV is a material term of this AGREEMENT, without which the license
grant under Article II would not have been made, and the LICENSEE’S failure to
perform in accordance with Sections 4.1 and 4.2 is grounds for the LICENSOR to
terminate this AGREEMENT pursuant to Article VII.

4.4 LICENSEE shall be responsible for the cost of prosecution and maintenance of
patents and copyrights during the term of this AGREEMENT. LICENSEE shall have
the right to appoint and engage patent counsel to prosecute and maintain the
LICENSED PATENTS, subject to the approval of LICENSOR, such approval not to be
unreasonably or untimely withheld. LICENSOR shall fully cooperate and assist
LICENSEE in all related matters. LICENSEE shall provide LICENSOR with copies of
all papers received from and to be filed in the U.S. Patent and Trademark
Office, U.S. Copyright Office, and corresponding foreign patent and copyright
offices.

4.5 All patents, patent applications, and copyrights on the LICENSED PATENTS
shall be, assigned to LICENSOR, and LICENSOR’S interest therein shall be
recorded in the U.S. Patent and Trademark Office, U.S. Copyright Office, and
corresponding foreign patent and copyright offices.

4.6 LICENSOR shall provide LICENSEE with copies of all papers, including without
limitation, all papers existing prior to the EFFECTIVE DATE, received from and
to be filed in the U.S. Patent and Trademark Office, U.S. Copyright Office, and
corresponding foreign patent and copyright offices.

4.7 LICENSEE shall be entitled, in its discretion, to abandon any application or
granted patent or copyright if it considers that the ongoing costs of the same
are not justified, provided that LICENSEE notifies LICENSOR prior to such
abandonment and allows LICENSOR opportunity to avoid such abandonment. In no
event shall such reasonable opportunity be less than three (3) months prior to
abandonment. If LICENSEE chooses to abandon an application or granted patent or
copyright under this provision and LICENSOR, at its sole expense, continues
pursuing the application, granted patent or copyright, LICENSEE shall retain no
right to use or exploit the LICENSED PATENTS or any related copyright in the
country, territory or jurisdiction which granted the patent or copyright.

4.8 LICENSOR shall have the right to immediately terminate this AGREEMENT,
without requirement of notification of default, in the event that LICENSEE
challenges, directly or indirectly or at written urging of a third party on
behalf of LICENSEE, whether as a claim, a cross-claim, counterclaim, or defense,
the validity or enforceability of any of the LICENSED PATENTS before any court,
arbitrator, or other tribunal or administrative agency in any jurisdiction. The
parties acknowledge that re-examination proceedings shall not be considered a
challenge of the LICENSED PATENTS.

 

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V. REPORTING OBLIGATIONS

5.1 LICENSEE, within sixty (60) days after each CALENDAR QUARTER of each year,
shall deliver to LICENSOR true and accurate reports, pertaining to NET SALES of
LICENSED PRODUCTS, which shall include at least the following information:

 

  a) the identity of each of the LICENSED PRODUCTS being developed,
manufactured, marketed and/or sold;

 

  b) the stage of development of each LICENSED PRODUCT;

 

  c) the number of each LICENSED PRODUCT manufactured and/or sold in each
country;

 

  d) NET SALES of LICENSED PRODUCTS sold by the LICENSEE and all SUBLICENSEES,
prepared in accordance with generally accepted accounting principles, on a
country by country basis, for each LICENSED PRODUCT;

 

  e) any and all allowable deductions from NET SALES;

 

  f) names and addresses of all SUBLICENSEES; and

 

  g) total fees, royalties, and SUBLICENSING REVENUE due.

5.2 Progress Report. On or before January 1 and July 1 of each year until
LICENSEE markets LICENSED PRODUCTS, LICENSEE shall make a written semi-annual
report to LICENSOR covering the preceding six (6) months regarding the progress
of LICENSEE toward commercial use of LICENSED PRODUCTS. Such report shall
include, as a minimum, information sufficient to enable LICENSOR to satisfy
reporting requirements of the U.S. Government and for LICENSOR to ascertain
progress by LICENSEE toward meeting the diligence requirements of Sections 4.1
and 4.2.

5.3 LICENSEE shall keep full, true and accurate books of account containing all
particulars that may be necessary for the purpose of showing the amounts payable
to LICENSOR hereunder. Said books of account shall be kept at LICENSEE’S
principal place of business. Said books and supporting data, subject to
reasonable obligations of confidentiality, shall be open at all reasonable times
for five (5) years following the end of the calendar year to which they pertain,
to the inspection of LICENSOR or its agents for the purpose of verifying
LICENSEE’s royalty statement or compliance in other respects with this
AGREEMENT. Said records will include general ledger records showing cash
receipts and expenses, and records which include production records, customers,
serial numbers, and related information, as applicable, in sufficient detail to
enable the royalties payable hereunder by LICENSEE to be determined. Such
examination is to be made by LICENSOR or its designee, at the expense of
LICENSOR. Should such inspection, however, lead to the discovery of a greater
than five percent (5%) discrepancy in reporting to LICENSOR’S detriment,
LICENSEE shall pay the full cost of such inspection. LICENSEE shall pay any
amounts such inspection reveals to be due and owing within thirty (30) days of
the receipt of an invoice for same.

VI. INFRINGEMENT

6.1 LICENSOR represents that, to the best of its knowledge, as of the EFFECTIVE
DATE, the entire right, title, and interest in the patent applications or
patents comprising the LICENSED PATENTS have been assigned to it (or VCU) free
and clear of all liens, claims and encumbrances of any inventor or any
non-governmental third party and that it (or VCU) has all requisite power and
authority to grant the

 

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license contained in this AGREEMENT. LICENSOR also represents that it has
received no notification (i) that the LICENSED PATENTS are invalid or (ii) that
the exercise by LICENSEE of the rights granted hereunder will infringe on any
patent or other proprietary right of any third party. LICENSEE acknowledges and
agrees that all rights licensed by the LICENSOR hereunder are licensed “as is”
and without any representation, indemnification or warranty with respect to
possible infringement of third party rights. In the event of a third party
infringement action against either party with respect to any LICENSED PATENTS,
LICENSEE will defend LICENSOR and VCU at LICENSEE’s expense, with the
understanding that breaching such obligation may result in a default judgment
against LICENSEE, its AFFILIATES, SUBLICENSEEs, and/or LICENSOR (however,
LICENSEE’S failure to defend shall not prevent VCU and LICENSOR from defending
themselves). LICENSEE shall indemnify, defend and hold VCU and LICENSOR harmless
from any such judgment, and without limitation shall pay any damages awarded in
any such judgment against VCU and LICENSOR. LICENSOR will cooperate as requested
by LICENSEE, and will be compensated by LICENSEE for its reasonable
out-of-pocket expenses incurred in such cooperation, which LICENSOR will only be
required to expend if LICENSEE has approved the same for reimbursement. No
settlement, consent judgment, or other voluntary final disposition of any suit
that would affect the validity, scope or enforceability of the LICENSED PATENTS,
by estoppel, admission or otherwise, or the LICENSOR’S rights in or to same, may
be entered into without the consent of LICENSOR, such consent not to be
unreasonably withheld.

6.2 LICENSEE and LICENSOR shall promptly inform each other in writing of any
alleged infringement of the LICENSED PATENTS by a third party.

6.3 During the term of this AGREEMENT, LICENSOR will have the right, but shall
not be obligated, to prosecute at its own expense all infringements of the
LICENSED PATENTS and, in furtherance of such right, LICENSOR may include
LICENSEE, upon agreement by LICENSEE, as a party plaintiff in any such suit, at
LICENSEE’S expense. Each party shall bear its own costs of prosecuting any such
infringement action, shall be entitled to prove and recover any damages, and
distribution shall be governed by Section 6.5. Upon mutual agreement of the
parties, each may assign to the other its right to sue for past, present, or
future infringement of the LICENSED PATENTS, and to agree to a method to
allocate damages recovered by the assignee of such rights.

6.4 LICENSOR or LICENSEE shall have three (3) months after having been notified
of any alleged infringement to investigate whether infringement can be
established. If LICENSOR determines that infringement exits, then it shall have
three (3) months to negotiate in good faith with the alleged infringer to
resolve the dispute. At the end of such period, if the dispute has not been
resolved, LICENSOR shall have forty five (45) days to commence prosecuting an
infringement action (the filing period). If LICENSOR determines that
infringement can be established and (a) at any time decides not to pursue an
action against the alleged infringer, or (b) fails to commence prosecuting an
action before the end of the filing period, then LICENSOR shall notify LICENSEE
of its intention not to bring suit against any alleged infringer. In those
events only, LICENSEE shall have the right but shall not be obligated, to
prosecute at its own expense any infringement of the LICENSED PATENTS, and
LICENSOR hereby agrees at its discretion and upon terms to be mutually agreed by
the parties, to either be named as a plaintiff in any such proceedings or to
assign its rights to sue for infringement. LICENSEE shall pay all of LICENSOR’S
costs and reasonable attorney fees incurred in such action. No settlement,
consent judgment, or other voluntary final disposition of the suit shall be
entered into without the consent of LICENSOR, which consent shall not be
unreasonably withheld. LICENSEE hereby indemnifies LICENSOR against any order
for costs or attorney fees that may be made against LICENSOR in such proceedings
instituted by LICENSEE.

 

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6.5 In the event that LICENSOR shall undertake the enforcement and/or defense of
the LICENSED PATENTS by litigation, any monetary recovery by LICENSOR shall be
divided equally between LICENSOR and LICENSEE, after recovering of attorneys and
court costs. In the event that LICENSEE undertakes the enforcement and/or
defense of the LICENSED PATENTS by litigation, any monetary recovery by LICENSEE
shall be shared equally with LICENSOR, after recovering of attorneys and court
costs.

6.6 In any infringement suit that either party may institute to enforce the
LICENSED PATENTS pursuant to this AGREEMENT, the other party hereto shall, at
the request of the party initiating such suit and upon reasonable notice,
cooperate in all respects and, to the extent possible, have its employees
testify when requested and make available relevant records, papers, information
samples, models, specimens and the like.

6.7 LICENSEE, during the exclusive period of this AGREEMENT, shall have the sole
right, subject to approval by LICENSOR, which shall not be unreasonably
withheld, in accordance with the terms and conditions herein to SUBLICENSE to
any alleged infringer for future use of LICENSED PATENTS. Prior to the
distribution of sublicensing fees received from an alleged infringer as
specified in Article III, LICENSOR shall be compensated for any and all expenses
incurred by it, if any, in that regard prior to the commencement of the
SUBLICENSE with the infringer.

6.8 In the event that any legal action alleging invalidity or noninfringement of
any of the LICENSED PATENTS shall be brought against LICENSEE, or LICENSOR,
LICENSOR, at its option, shall have the right within thirty (30) days after the
commencement of such action, to intervene and take over the sole defense of the
action at its own expense. If LICENSOR chooses not to intervene, LICENSEE shall
have the option to intervene and take over the sole defense at its own expense.

VII. TERM AND TERMINATION

7.1 This AGREEMENT is in full force and effect from the EFFECTIVE DATE and
remains in effect until the expiration of the last to expire LICENSED PATENTS,
unless sooner terminated by operation of law or by acts of either of the parties
in accordance with the terms of this AGREEMENT.

7.2 LICENSEE may terminate this AGREEMENT at any time by giving LICENSOR ninety
(90) days written notice. In the event of termination of this AGREEMENT by
LICENSEE, LICENSEE shall have no further rights under this AGREEMENT; however,
LICENSEE will remain obligated for any royalties due or fees accrued or other
expenses incurred up until the date of termination including royalty on sale of
inventory in stock after the date of termination.

7.3 LICENSOR may terminate this AGREEMENT if LICENSEE:

 

  a. fails to pay on the due date any sum due under Article III and Appendix B
of this AGREEMENT;

 

  b. fails to provide reports on the due date specified under Article V of this
AGREEMENT; or

 

  c. fails to reach diligence milestones as specified in Sections 4.1 and 4.2
and Appendix C of this AGREEMENT;

and fails to correct any such default within thirty (30) days after receipt of
written notice thereof by LICENSOR.

 

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7.4 The LICENSEE must provide notice to the LICENSOR of its intention to file a
voluntary petition in bankruptcy or, where known to the LICENSEE, of another
party’s intention to file an involuntary petition in bankruptcy for the
LICENSEE, said notice must be received by the LICENSOR at least thirty (30) days
prior to filing such petition. LICENSOR may terminate this AGREEMENT upon
receipt of such notice at its sole discretion. The LICENSEE’S failure to provide
such notice to LICENSOR will be deemed a material, pre-petition, incurable
breach of this AGREEMENT and the AGREEMENT will terminate automatically on the
date of filing such voluntary or involuntary petition in bankruptcy.

7.5 Notwithstanding the above, this AGREEMENT and the licenses granted herein
shall immediately and automatically terminate without notice in the event
LICENSEE, or its AFFILIATES, SUBLICENSEES or any other party acting under
authority of LICENSEE, violates any provision of the Indemnification and
Insurance sections. A termination occurring under this Section 7.5 shall occur
and become effective at the time of the violation that causes such termination,
and LICENSEE and its AFFILIATES and SUBLICENSEES shall have no right to complete
production and sale of LICENSED PRODUCTS. Notwithstanding the foregoing, to the
extent that such rights are still available for licensing, LICENSEE shall have
the right to reinstate the effectiveness of this AGREEMENT by obtaining the
required insurance, whereupon this AGREEMENT shall automatically become
effective as of the date of reinstatement of said insurance, and shall remain in
full force and effect without any further action of the parties hereto until
termination or expiration of this AGREEMENT according to its terms.

7.6 Surviving any termination or expiration are:

 

  a. LICENSEE’S obligation to pay royalties and fees accrued or accruable;

 

  b. Any cause of action or claim of LICENSEE or LICENSOR, accrued or to accrue,
because of any breach or default by the other party; and

 

  c. The provisions of Article V, and Sections 9.6, and 9.8, and any other
provisions that by their nature are intended to survive.

7.7 No relaxation, forbearance, delay or indulgence by either party in enforcing
any of the terms of this AGREEMENT or the granting of time by either party to
the other shall prejudice, affect or restrict the rights and powers of the
former hereunder nor shall any waiver by either party of a breach of this
AGREEMENT be considered as a waiver of any subsequent breach of the same or any
other provision hereof.

7.8 The rights to terminate this AGREEMENT given by this clause shall not
prejudice any other right or remedy of either party in respect of the breach
concerned (if any) or any other breach.

7.9 Except as provided in Section 7.5, upon termination of this AGREEMENT in
whole or in part, LICENSEE shall have the privilege of selling or otherwise
disposing of the inventory of all LICENSED PRODUCTS in process of manufacture,
in use or in stock and LICENSEE will also have the right to complete performance
of all contracts requiring use or sale of the LICENSED PRODUCTS, provided that
the remaining term of any such contract does not exceed one (1) year from the
effective date of termination of this AGREEMENT.

 

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VIII. SUBLICENSE(S)

8.1 LICENSEE shall have the right to grant SUBLICENSES subject to the terms and
conditions of this AGREEMENT as stated in Article II and as defined in this
Article VIII. AFFILIATES shall have no licenses under the LICENSED PATENTS
unless such AFFILIATES are granted a SUBLICENSE. All SUBLICENSES will include
all of the rights of, and will require the performance of all the obligations
due to, LICENSOR under this AGREEMENT other than those rights and obligations in
Appendix B Section 2 (License Issue Fee), Appendix B Section 3 (Patent
Prosecution Costs) and Appendix B Section 7 (Annual Minimum Payment) of this
AGREEMENT. All SUBLICENSES also will contain provisions that either will require
payments sufficient to allow the LICENSEE to meet its obligations to LICENSOR as
set forth in Appendix B Sections 5 and 6. In addition to payment of royalties on
NET SALES, LICENSEE will pay to LICENSOR a percentage, as specified in Appendix
B Section 6, of SUBLICENSING REVENUES. SUBLICENSE terms and conditions shall
reflect that any SUBLICENSEE(s) shall not further SUBLICENSE, without the
approval of LICENSOR. For the purposes of this AGREEMENT, LICENSEE shall be
responsible for the performance of all SUBLICENSEES with respect to all
obligations of SUBLICENSEES under this AGREEMENT.

8.2 If LICENSEE licenses patent rights assigned to or otherwise acquired by it
(“LICENSEE’S Patent Rights”), and it believes, in good faith, that the recipient
of such license will infringe LICENSED PATENTS in practicing the LICENSEE’S
Patent Rights, then the LICENSEE will not separately grant a license to such
recipient under LICENSEE’S Patent Rights without concurrently granting a
SUBLICENSE under LICENSED PATENTS on the terms required under this AGREEMENT. In
the event that LICENSOR and the LICENSEE each own an undivided interest in any
LICENSED PATENTS licensed hereunder, the LICENSEE will not separately grant a
license to any third party under its rights without concurrently granting a
license under LICENSOR’S rights on the terms and conditions described in this
Article VIII.

8.3 The LICENSEE will notify LICENSOR of each SUBLICENSE granted hereunder and
provide LICENSOR with a complete copy of each SUBLICENSE within thirty (30) days
of issuance of the SUBLICENSE. Royalties and a percentage of SUBLICENSING
REVENUES owed to LICENSOR will be paid to LICENSOR on or before the due date of
the royalty report applicable, as per Article V, to the CALENDAR QUARTER in
which consideration was due and owing to the LICENSEE under the SUBLICENSE. The
LICENSEE will require SUBLICENSEES to provide it with copies of all Progress
Reports and royalty reports in accordance with the provisions herein, and the
LICENSEE will collect and deliver to LICENSOR all such reports due from
SUBLICENSEES.

8.4 LICENSEE shall cause every SUBLICENSE to provide LICENSEE the right to
assign its rights under the sublicense to LICENSOR in the event that this
AGREEMENT terminates. All SUBLICENSES granted by LICENSEE hereunder shall
survive termination of this AGREEMENT and will be assigned to LICENSOR in the
event that this AGREEMENT terminates, subject to the approval of LICENSOR, such
approval not to be unreasonably or untimely withheld. Further, LICENSOR will not
be bound by any grant of rights broader than or will not be required to perform
any obligation other than those rights and obligations contained in this
AGREEMENT. Moreover, LICENSOR will have the sole right to modify each such
assigned SUBLICENSE to include all of the rights of LICENSOR that are contained
in this AGREEMENT, including the payment of royalties directly to LICENSOR,
minimum annual royalties and reimbursement of patent prosecution costs, as per
Appendix B.

 

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IX. MISCELLANEOUS

9.1 Nothing in this AGREEMENT shall create, or be deemed to create, a
partnership, or the relationship of principal and agent, between the parties.

9.2 Assignment. So long as LICENSEE is not in breach of this AGREEMENT in any
respect, LICENSEE may assign or otherwise transfer this AGREEMENT and/or the
rights acquired by it hereunder to any entity (except that this entity (i) is an
entity with whom VCU or LICENSOR would NOT be permitted to enter into an
arrangement under Virginia state law; or (ii) has substantially and materially
less financial resources and experience than LICENSEE in development, marketing,
and sales of LICENSED PRODUCT) upon providing LICENSOR with a written notice for
the same and payment of an assignment fee of two hundred and fifty thousand
dollars (U.S. $250,000) immediately after the completion of such assignment,
along with a copy of such assignment agreement, pursuant to which such assignee
shall have agreed in writing to be bound by the terms and conditions of this
AGREEMENT. Upon completion of such assignment, LICENSEE shall immediately
provide the LICENSOR with payment of the assignment fee, and thereafter the term
“LICENSEE” as used herein shall mean such assignee. If LICENSEE shall sell or
otherwise transfer its entire business, and the transferee shall not have agreed
in writing to be bound by the terms and conditions of this AGREEMENT, or the
LICENSOR and such transferee do not agree upon new licensing terms and
conditions, within ninety (90) days of the closing date of such sale or
transfer, the LICENSOR shall have the right to terminate this AGREEMENT.

9.3 Subject to Section 9.2 of this AGREEMENT, the clauses herein are personal to
the parties and neither party may assign, mortgage, charge or license any of its
rights hereunder, nor may either party sub-contract or otherwise delegate any of
its obligations hereunder, except with the prior written consent of the other
party.

9.4 LICENSEE shall (i) to the extent reasonably practical, place in a
conspicuous location on all patented PRODUCTS made pursuant to this AGREEMENT a
patent notice in accordance with 35 U.S.C. §287 consisting of the word “Patent”
or “Patents” and the number or numbers of the United States patent or patents
licensed hereunder and (ii) comply in all respects with the laws of the country
of manufacture, and/or sale of the LICENSED PATENTS so as to ensure LICENSOR of
full protection and rights under such laws. LICENSEE shall include the
provisions of this clause in all SUBLICENSES with third parties and AFFILIATES.

9.5 LICENSEE shall at all times during the term of this AGREEMENT and thereafter
indemnify, defend and hold LICENSOR, its trustees, directors, officers,
employees and AFFILIATES harmless against all claims, proceedings, demands and
liabilities, including legal expenses arising out of the death of or injury to
any person or persons or out of any damages to property resulting from the
research, development, production, manufacture, sale, modification, use, import
or advertisement of LICENSED PRODUCTS or arising from any obligation of LICENSEE
hereunder, except to the extent any such claim is caused by the gross negligence
of, misconduct of, or breach of this AGREEMENT by LICENSOR.

9.6 LICENSEE shall obtain and carry in full force and effect commercial, general
liability insurance which shall protect LICENSOR in accordance with this
Section. Such insurance shall be written by a reputable insurance provider
authorized to due business in the Commonwealth of Virginia, shall list LICENSOR
as an additional named insured thereunder, shall be endorsed to include PRODUCTS
liability coverage and shall require reasonable written notice to be given to
LICENSOR prior to any cancellation or material change thereof. The limits of
such insurance shall not be less than one million dollars ($1,000,000) per
occurrence with an aggregate of five million ($5,000,000) for personal injury or
death, and one million dollars ($1,000,000) per occurrence with aggregate of
three million dollars ($3,000,000) for property damage. LICENSEE shall provide
LICENSOR with certificates of insurance evidencing same.

 

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9.7 Disclaimers. Nothing in this AGREEMENT shall be construed as (i) a warranty
or representation by LICENSOR as to the validity or scope of any LICENSED
PATENTS, (ii) a warranty or representation that anything made, used, imported,
developed, promoted, offered for sale, sold, or otherwise disposed of under any
license granted in this AGREEMENT docs not or will not infringe patents, trade
secrets or other proprietary rights of third parties, (iii) an obligation to
bring or prosecute actions or suits against third parties for infringement,
(iv) conferring the right to use in advertising, publicity or otherwise any
trademark, trade name, or names, or any contraction, abbreviation, simulation or
adaptation thereof of VCU or LICENSOR, (v) conferring by implication, estoppel
or otherwise any license or rights under any patents of LICENSOR other than the
LICENSED PATENTS, (vi) any other representations or warranties, either express
or implied, unless specified in this AGREEMENT, (vii) directly or indirectly
operating or applying as a waiver of sovereign immunity by the Commonwealth of
Virginia, or (viii) imposing any obligation or any liability on any party
contrary to the laws of the Commonwealth of Virginia. LICENSOR DISCLAIMS AND
MAKES NO EXPRESS OR IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE WITH RESPECT TO THE LICENSED RIGHTS, OR ANY LICENSED
PRODUCTS.

9.8 For the purposes of this AGREEMENT “Force Majeure” means any circumstances
beyond the reasonable control of either party including, without limitation, any
strike, lock-out, or other form of industrial action. If either party is
affected by Force Majeure, it shall forthwith notify the other party of the
nature and extent thereof. Neither party shall be deemed to be in breach of this
AGREEMENT, or otherwise be liable to the other, by reason of any delay in
performance, or the non-performance, of any of its obligations under this
AGREEMENT, to the extent that such delay or non-performance is due to any Force
Majeure of which it has notified the other party, and the time for performance
of that obligation shall be extended accordingly. If the Force Majeure in
question prevails for a continuous period in excess of six (6) months, the
parties shall enter into bona fide discussions with a view to alleviating its
effects, or to agreeing upon such alternative arrangements as may be fair and
reasonable.

9.9 LICENSEE shall not use the names or trademarks of LICENSOR, nor any
adaptation thereof, nor the names of any of its employees, in any advertising,
promotional or sales literature without prior written consent obtained from
LICENSOR, or said employee, in each case, except that the LICENSEE may state
that it is a LICENSEE of LICENSOR with respect to the LICENSED PATENTS.

9.10 Any notice or payment required to be given to either party will be deemed
to have been properly given and to be effective:

 

  a. on the date of delivery if delivered in person;

 

  b. on the date of mailing if mailed by first-class certified mail, postage
paid; or

 

  c. on the date of mailing if mailed by any global express carrier service that
requires the recipient to sign the documents demonstrating the delivery of such
notice or payment;

 

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to the respective addresses given below, or to another address as designated in
writing by the party changing its address.

LICENSOR:

VIRGINIA COMMONWEALTH UNIVERSITY

INTELLECTUAL PROPERTY FOUNDATION

President

800 E. Leigh Street, Suite 113

Virginia Commonwealth University

Richmond, VA 23219

LICENSEE:

Synthetic Blood International, Inc.

3189 Airway Avenue Bldg. C

Costa Mesa, CA 92626

Attn: Chief Executive Officer

9.11 This AGREEMENT contains the entire and only agreement and understanding
between the parties and supersedes all preexisting agreements between them
respecting its subject matter. Any representation, promises, or condition in
connection with such subject matter which is not incorporated in this AGREEMENT
shall not be binding on either party. No modification, renewal, wavier, and no
termination of this AGREEMENT or any of its provisions shall be binding upon the
party against whom enforcement of such modification, renewal, waiver or
termination is sought, unless made in writing and signed on behalf of such party
by one of its duly authorized officers. As used herein, the word “termination”
includes any and all means of bringing an end prior to its expiration by its own
terms this AGREEMENT, or any provisions thereof, whether by release, discharge,
abandonment or otherwise.

9.12 This AGREEMENT shall be construed, governed, interpreted and applied in
accordance with the laws of the Commonwealth of Virginia, U.S.A., except that
questions affecting the construction and effect of any patent shall be
determined by the law of the country in which the patent was granted. Any legal
action or proceeding relating to this AGREEMENT or any document or instrument
related hereto shall be brought only in the courts of the Commonwealth of
Virginia in Richmond, Virginia, and by its execution and delivery of this
AGREEMENT, LICENSEE hereby accepts for itself and in respect to its property,
generally and unconditionally, the jurisdiction of the aforesaid courts.

9.13 This AGREEMENT may be executed in one or more counterparts and any party
hereto may execute any such counterparts each of which shall be deemed an
original and all of which, taken together, shall constitute but one and the same
document. It shall not be necessary in making proof of this document or any
counterpart hereof to produce or account for any of the other counterparts.

9.14 The provisions of this AGREEMENT are severable, and in the event that any
provisions of this AGREEMENT shall be determined to be invalid or unenforceable
under any controlling body of the law, such invalidity and unenforceability
shall not in any way affect the validity or enforceability of the remaining
provisions hereof. In the event the validity or unenforceability of any
provision of this AGREEMENT is brought into question because of the decision of
a court of competent jurisdiction, the parties agree that such court shall have
the power to modify the scope, duration, or area of the term or provision, to
delete specific words or phrases, or to replace any invalid or unenforceable
term or provision with a term or provision that is valid and enforceable and
this AGREEMENT shall be enforceable as so modified after the expiration of the
time within which such judgment may be appealed.

 

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9.15 It is understood that LICENSOR and VCU are subject to United States laws
and regulations controlling the export of technical data, computer software,
laboratory prototypes and other commodities (including the Arms Export Control
Act, as amended and the United States Department of Commerce Export
Administration Act of 1979). The transfer of such items may require a license
from the cognizant agency of the United States Government and/or written
assurances by LICENSEE that LICENSEE shall not export data or commodities to
certain foreign countries without prior approval of such agency. LICENSOR
neither represents that license shall not be required nor, if required, it shall
be issued.

9.16 All reports and documents to be forwarded to LICENSOR shall be in the
English language.

 

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IN WITNESS WHEREOF, the parties have caused this AGREEMENT to be executed in
duplicate as first above written.

AGREED AND ACCEPTED:

SYNTHETIC BLOOD INTERNATIONAL, INC.

 

By:   /s/ Chris Stern     Date: 5/29/08 Name   Chris Stern       Title  
Chairman/CEO       VIRGINIA COMMONWEALTH UNIVERSITY INTELLECTUAL PROPERTY
FOUNDATION     By:   /s/ Ivelina S. Metcheva     Date: May 22, 2008

Ivelina S. Metcheva, Ph.D., MBA

Director, VCU Office of Technology Transfer

President VCU Intellectual Property Foundation

     

 

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APPENDIX A

LICENSED PATENTS

 

1. PCT application, filed May 14, 2007, Publication No. WO2007134304 entitled
“METHODS AND COMPOSITIONS FOR CONTROLLED AND SUSTAINED PRODUCTION AND DELIVERY
OF PEROXIDES” based on VCU invention 06-31

 

2. Provisional patent application, filed 02/13/2008, Serial No. 61/028230,
entitled “GAS BASED WOUND AND TISSUE THERAPEUTICS”, based on VCU invention VCU
08-008

 

3. Provisional patent application, filed 12/10/2007, Serial No. 61/012,508,
entitled “NOVEL COMBINATORIAL APPROACHES TO ENHANCE OXYGEN TRANSPORT TO
TISSUES”, based on VCU invention VCU 07-080

 

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Proprietary Information

APPENDIX B

FEES AND ROYALTIES

1. In partial consideration of execution of the AGREEMENT before June 1, 2008,
LICENSOR shall pay to LICENSEE upon execution of the AGREEMENT a Stand-Still Fee
of $50,000, fully creditable towards royalty or SUBLICENSING REVENUE payments in
the second year of market entry (when LICENSEE generates license income, or
sales).

2. In lieu of a non-creditable, non-refundable signing fee, LICENSEE shall issue
to LICENSOR a warrant to purchase five hundred thousand (500,000) shares of
LICENSEE’S common stock at an exercise price of $0.42 per share, which warrant
shall expire five (5) years from the EFFECTIVE DATE. The warrant shall be
delivered upon execution of the AGREEMENT.

3. LICENSEE agrees to reimburse LICENSOR for all documented patent prosecution
costs incurred by LICENSOR prior to the EFFECTIVE DATE (total of $16,228.33 as
of May 13, 2008). All ongoing patent costs for the drafting, filing,
prosecution, issuance and maintenance of the LICENSED PATENTS will be covered by
LICENSEE.

4. To maintain an exclusive license to the LICENSED PATENTS, LICENSEE agrees to
make a maintenance fee of $20,000, payable on each anniversary of the EFFECTIVE
DATE of the AGREEMENT. Said maintenance fee shall be credited against royalty or
SUBLICENSING REVENUE payments due for the same year.

5. LICENSEE agrees to pay to LICENSOR a running royalty on the NET SALES of
LICENSED PRODUCTS made by LICENSEE or any AFFILIATES as follows.

 

Net Sales

   Applicable Royalty  

Up to $10 Million

   25 %

Over $10 M to $49 M

   15 %

Over $49 M

   10 %

6. LICENSEE shall pay to LICENSOR a percentage of SUBLICENSING REVENUE received
from SUBLICENSEE or any third party in regard to the LICENSED PATENTS
(“Sublicense Payment”), determined as follows:

Thirty three percent (33%) of any third party payments (including without
limitation royalties on net sales, license issue fees and other licensing fees,
option fees, milestone payments, minimum annual royalties, equity or other
payments of any kind whatsoever). The following reductions from the initial 33%
shall be allowed:

 

  (i) following the completion of pre-clinical studies, the non-royalty
sublicensing income paid to VCU shall be reduced to 25%;

 

  (ii) (ii) following the completion of Phase I clinical studies, the
non-royalty sublicensing income paid to VCU shall be reduced to 20%;

 

  (iii) (iii) following the completion of Phase II clinical studies, non-royalty
sublicensing income paid to VCU shall be reduced to 17%; and

 

  (iv) (iv) following the completion of Phase III clinical studies, non-royalty
sublicensing income paid to VCU shall be reduced to 10%.

 

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7. LICENSEE agrees to make a $50,000 Annual Minimum Royalty payment that shall
start on the first anniversary of the EFFECTIVE DATE of the AGREEMENT and shall
be payable on each anniversary thereafter. Said payment shall be credited
against royalty or SUBLICENSING REVENUE payments due for the same year.

8. Upon exercising of the option pursuant to Section 2.2, LICENSEE shall pay a
fee of $25,000 per invention if developed by Dr. Bruce Spiess together with
other inventors that are principle investigators (outside of Dr. Bruce Spiess
laboratory or research group) as set forth in Section 2.2.

9. Royalty Stacking

9.1. The PARTIES recognize that the LICENSEE may need to obtain additional
rights and licenses to make, have made, use, import, sell and offer to sell, and
have sold LICENSED PRODUCTS. In the event that the LICENSEE’S royalty obligation
to the LICENSOR combined with third-party obligations (“Total Royalty
Obligation”) exceeds a certain threshold cumulative royalty, the royalty payable
by LICENSEE to LICENSOR will be reduced by an amount proportionate to the amount
by which the Total Royalty Obligation by the LICENSEE exceeds the threshold.

Notwithstanding the foregoing, (a) LICENSOR will agree to reduce the royalty
only if all parties lower their royalties by the same proportion and (b) the
royalty due to LICENSOR will not be less than 2/3 of the original rate, i.e. for
25% royalty no less than 16.75%

a. For 25% royalty rate a threshold cumulative royalty of 30%

R2 = 0.25(1-[T-0.30]/T),

where T is the Total Royalty Obligation and R2 is the adjusted royalty to be
paid to LICENSOR.

b. For 15% royalty rate a threshold cumulative royalty of 22%

R2 = 0.15(1-[T-0.22]/T),

But no less than 2/3 of the original royalty rate or 10.5%.

c. For 10% royalty rate a threshold cumulative royalty of 16%

R2 = 0.10(1-[T-0.16]/T),

But no less than 2/3 of the original royalty rate or 6.67%.

9. 2. The Parties recognize that the LICENSEE may need to obtain additional
rights and licenses that need to be included in a SUBLICENSE so that the
SUBLICENSEE has the necessary rights to make, have made, use, import, sell and
offer to sell, and have sold LICENSED PRODUCTS. In the event that the LICENSEE’S
Sublicensee Payment obligations (as described above) to the LICENSOR combined
with sublicensee payment obligations to other licensors (“Total Sublicensing
Obligation”) exceeds a certain threshold cumulative payment percentage to all
licensors, the sublicensing percentage payable by LICENSEE to LICENSOR will be
reduced by an amount proportionate to the amount by which the Total Sublicensing
Obligations exceeds the threshold.

Notwithstanding the foregoing, (a) LICENSOR will agree to reduce the Sublicense
Payment percentage only if all parties lower their Sublicense Payment percentage
by the same proportion and (b) the Sublicense Payment percentage rate due to
LICENSOR will not be less than 2/3 of the original rate, i.e. for 25% no less
than 16.75%.

 

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a. For 33% Sublicense Payment rate a threshold cumulative payment percentage of
40%

S2 = 0.33(1-[T-0.40]/T),

where T is the Total Sublicensing Obligation and S2 is the adjusted Sublicense
Payment percentage to be paid to LICENSOR.

But not be less than 2/3 of the original rate, i.e. no less than 21.78%.

b. For 25% Sublicense Payment rate a threshold cumulative payment percentage of
30%

S2 = 0.25(1-[T-0.30]/T),

But not be less than 2/3 of the original rate, i.e. no less than 16.75%.

c. For 20% Sublicense Payment rate a threshold cumulative payment percentage of
30%

S2 = 0.20(1-[T-0.30]/T),

But not be less than 2/3 of the original rate, i.e. no less than 13.2%.

d. For 17% Sublicense Payment rate a threshold cumulative payment percentage of
25%

S2 = 0.17(1-[T-0.25]/T),

But not be less than 2/3 of the original rate, i.e. no less than 11.39%.

e. For 10% Sublicense Payment rate a threshold cumulative payment percentage of
16%

S2 = 0.10(1-[T-0.16]/T),

But not be less than 2/3 of the original rate, i.e. no less than 6.67%.

10. LICENSEE agrees to make the following minimum milestone payments to
LICENSOR:

The following milestone payments shall be made with respect to the first
LICENSED PRODUCT to achieve each milestone. However, if new LICENSED PRODUCTS
are separately patentable (different product groups), the same milestone
payments shall apply to them.

 

Clinical Indication

  

Medical Device

$25,000 upon filing of IND

   $ 100,000 upon filing FDA 510K or PMA

$100,000 upon completion of Phase I clinical trial

   $250,000 upon receipt of FDA or foreign equivalent marketing approval

$200,000 upon completion of Phase II human clinical trial

  

$300,000 upon completion of Phase III human clinical trial

  

$500,000 upon receipt of FDA or foreign equivalent marketing approval

  

Proprietary Information

 

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Proprietary Information

APPENDIX C

DILIGENCE MILESTONES

 

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