Exhibit 10.1

Escrow Agreement

This Escrow Agreement (the "Escrow Agreement") is entered into as of February
14, 2011 by and between Herman H. Pettegrove (the "Escrow Agent"), Entest
BioMedical Inc. (“Purchaser”), Noah’s Ark Starr Animal Hospital, Inc.
and  Barbara Starr, DVM (collectively the “Seller”), herein collectively
referred to herein as the “Parties” (“Parties”).

RECITALS

WHEREAS, the Seller and Purchaser have entered into a Letter of Intent (LOI) to
purchase all assets of Noah’s Ark Starr Animal Hospital, Inc. located at 422 N.
Euclid Street, Fullerton, CA, 92832 (“Transaction”). The LOI attached hereto as
Exhibit A.

WHEREAS the LOI requires that the parties enter into an Escrow Agreement.

WHEREAS the LOI anticipates that the Purchaser and Seller shall enter into a
binding agreement to complete the Transaction (“Definitive Purchase Agreement”)
on or before April 30, 2011.

WHEREAS it is agreed that upon execution of a Definitive Purchase Agreement, the
terms of that Definitive Purchase Agreement will dictate the terms and
conditions of this Escrow Agreement as of and subsequent to the date
of  execution of the Definitive Purchase Agreement (DPA).

ESCROW AGREEMENT

NOW, THEREFORE, in consideration of the preliminary statements and the mutual
agreements, covenants, representations and warranties set forth in this
Agreement and for other good, valid and binding consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties agree as follows:

ARTICLE I
APPOINTMENT OF ESCROW AGENT;
ESTABLISHMENT OF ESCROW; DEPOSIT

Section 1.1 Appointment of Escrow Agent; Limited Responsibilities. Seller and
Purchaser hereby appoint Escrow Agent to act as escrow agent hereunder, and
Escrow Agent hereby accepts such appointment and agrees to act as escrow agent
and to hold, safeguard, and disburse the Escrow Assets (as defined below)
pursuant to the terms and conditions of this Agreement. This Agreement expressly
sets forth all the duties of Escrow Agent with respect to any and all matters
pertinent hereto. No implied duties or obligations will be read into this
Agreement against Escrow Agent. Escrow Agent will not be bound by the provisions
of any agreement among the other parties hereto except this Agreement.

Section 1.2 Deposit of Escrow Assets and Documents. In accordance with Schedule
A, the Escrow Assets (as defined in schedule A) shall be deposited with the
Escrow Agent as per Escrow Agents instruction to the other Parties. Escrow
Assets shall be disbursed by Escrow Agent in accordance with Schedule B. Escrow
Agent acknowledges that it has received a copy of the LOI and upon receipt of
Escrow Assets will promptly provide written notice of such receipt to the other
Parties.

ARTICLE II
CLAIMS; TERMINATION OF ACCOUNTS

Section 2.1 Disbursements from Escrow Account.

(a) Escrow Assets shall be released in accordance with Schedule B.

(b) Termination of Account. Upon payment of all amounts in the Escrow Account,
the Escrow Account will be deemed closed, and this Agreement will be deemed
terminated with respect to the Escrow Account.

 
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ARTICLE III
DUTIES OF ESCROW AGENT

Section 3.1 Degree of Care. Escrow Agent will not be under any duty to give the
Escrow Assets held by it hereunder any greater degree of care than it gives its
own similar property and will not be required to invest any funds held hereunder
except as directed in this Agreement.

Section 3.2 Liability; Indemnification of Escrow Agent. Escrow Agent will not be
liable, except for its own gross negligence or willful misconduct and, except
with respect to claims based upon such gross negligence or willful misconduct
that are successfully asserted against Escrow Agent, the Seller on the one hand
and the Purchaser on the other hand will jointly and severally indemnify and
hold harmless Escrow Agent (and any successor Escrow Agent) from and against any
and all losses, liabilities, claims, actions, damages and expenses, including
reasonable attorneys' fees and disbursements, arising out of and in connection
with this Agreement. Without limiting the foregoing, Escrow Agent will in no
event be liable in connection with its investment or reinvestment of any cash
held by it hereunder in good faith, in accordance with the terms of this
Agreement, including, any liability for any delays (not resulting from its gross
negligence or willful misconduct) in the investment or reinvestment of the
Escrow Assets, or any loss of interest incident to any such delays. This Section
will survive notwithstanding any termination of this Agreement or the
resignation of Escrow Agent.

Section 3.3 Reliance by Escrow Agent. Escrow Agent will be entitled to rely upon
any order, judgment, certification, demand, notice, instrument or other writing
delivered to it hereunder without being required to determine the authenticity
or the correctness of any fact stated therein or the propriety or validity of
the service with respect to this Agreement. Escrow Agent may act in reliance
upon any instrument or signature believed by it to be genuine and may assume
that the person purporting to give receipt or advice or make any statement or
execute any document in connection with the provisions of this Agreement has
been duly authorized to do so. Escrow Agent may conclusively presume that the
undersigned representative of any party hereto which is an entity other than a
natural person has full power and authority to instruct Escrow Agent on behalf
of that party unless written notice to the contrary is delivered to Escrow
Agent.

Section 3.4 Advice of Counsel. Escrow Agent may act pursuant to the advice of
counsel with respect to any matter relating to this Agreement and will not be
liable for any action taken or omitted by it in good faith in accordance with
such advice.

Section 3.5 Subject to Taxes and Regulations. Escrow Agent does not have any
interest in the Escrow Assets deposited hereunder but is serving as escrow
holder only and having possession only pursuant to this Agreement. The Parties
will provide Escrow Agent with any necessary tax identification numbers and
related information that may be required or reasonably requested by Escrow Agent
for purposes of complying with applicable tax information reporting and
withholding requirements.

Section 3.6 No Representation. Escrow Agent makes no representation as to the
validity, value, genuineness, or the collectability of any security or other
document or instrument held by or delivered to it.

Section 3.7 No Advice. Escrow Agent will not be called upon to advise any party
as to the wisdom in selling or retaining or taking or refraining from any action
with respect to any securities or other property deposited hereunder.

Section 3.8 Resignation of Escrow Agent. Escrow Agent (and any successor Escrow
Agent) may at any time resign as such by delivering the Escrow Assets to any
successor Escrow Agent jointly designated in writing by the Seller on the one
hand and the Purchaser on the other hand, or, if no such written designation is
made, to any court of competent jurisdiction, whereupon Escrow Agent will be
discharged of and from any and all further obligations arising from or in
connection with this Agreement. The resignation of Escrow Agent will take effect
on the earlier of (a) the appointment of a successor (including a court of
competent jurisdiction) or (b) the day which is 30 days after the date of
delivery of its written notice of resignation to the other Parties. If at the
effective time of Escrow Agent's resignation it has not received a designation
of a successor Escrow Agent, Escrow Agent's sole responsibility after that time
will be to retain and safeguard the Escrow Assets until receipt of a designation
of successor Escrow Agent or a joint written disposition instruction by the
Purchaser on the one hand and the Seller on the other hand or a final
non-appealable order of a court of competent jurisdiction.

 
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Section 3.9 Disputed Disbursements. In the event of any disagreement between the
Parties resulting in adverse claims or demands being made in connection with the
Escrow Account or in the event that Escrow Agent is in doubt as to what action
should be taken hereunder, Escrow Agent will be entitled to retain the
applicable Escrow Assets until Escrow Agent will have received (a) the written
determination of a duly empowered arbitrator or a court of competent
jurisdiction  directing delivery of the applicable Escrow Assets, or (b) a
written agreement executed by  the Seller and Purchaser directing delivery of
the applicable Escrow Assets, in which event Escrow Agent will disburse the
applicable Escrow Assets in accordance with such written determination or
agreement. Escrow Agent will act on such written determination without further
question.

Section 3.10 Compensation of Escrow Agent.  Purchaser will pay compensation due
to Escrow Agent of $400.00 for the preparation and execution of this escrow. In
the event of a dispute between the Parties, the Parties will not pay direct
compensation to the Escrow Agent, however, each agrees to reimburse Escrow Agent
for all reasonable expenses, disbursements, and advances incurred or made by
Escrow Agent in performance of its duties hereunder (including reasonable fees,
expenses, and disbursements of its counsel).

Section 3.11 Disclosure of Relationship. No printed or other matter in any
language (including prospectuses, notices, reports, and promotional material)
that mentions Escrow Agent's name or the rights, powers, or duties of Escrow
Agent will be issued by the other parties hereto or on such parties' behalf
unless Escrow Agent will first have given its specific written consent thereto.

ARTICLE IV
MISCELLANEOUS

Section 4.1 Amendment. No amendment of this Agreement will be effective unless
in writing signed by each Party.

Section 4.2 Counterparts. This Agreement may be executed in any number of
counterparts, each of which will be deemed to be an original agreement, but all
of which will constitute one and the same agreement. Any Party may execute and
deliver this Agreement by an executed signature page transmitted by a facsimile
machine. If a Party transmits its signature page by a facsimile machine, such
Party will promptly thereafter deliver an originally executed signature page to
the other Parties, provided that any failure to deliver such an originally
executed signature page will not affect the validity, legality, or
enforceability of this Agreement and the Sales Agreement constitute the entire
agreement and understanding between the Parties and supersedes all prior
agreements and understandings, both written and oral, with respect to the
subject matter of this Agreement.

Section 4.3 Expenses. Each Party will bear its own expenses with respect to the
negotiation and preparation of this Agreement.

Section 4.4 Notice. All notices and other communications hereunder shall be in
writing and shall be deemed given upon (i) transmitter's confirmation of a
receipt of a facsimile transmission, (ii) confirmed delivery by a standard
overnight carrier or when delivered by hand or (iii) the expiration of five
Business Days after the day when mailed by certified or registered mail, postage
prepaid, addressed to the following addresses (or at such other address for a
party as shall be specified by like notice):

If to Seller:

Barbara Starr, DVM
Noah’s Ark Starr Animal Hospital, Inc.
422 N. Euclid Street, Fullerton, CA, 92832

If to Purchaser:

David R. Koos, Chairman & CEO
Entest BioMedical, Inc.
4700 Spring Street, Suite 203
La Mesa, CA 91942

 
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If to Escrow Agent:

Herman H. Pettegrove
1350 Main Street
Venice, CA 90291
Phone: (310) 392-5400

Section 4.5 Governing Law; Jurisdiction.

(a) The terms and conditions of this Agreement shall be governed by and
construed in accordance with the laws of the State of California, without
reference to its choice of law rules.  Any action arising as a result of this
Agreement shall be brought in the state courts located in San Diego County,
State of California.

(b) Without prejudice to any other mode of service:

(i) the Parties, and their assigns each appoint Herman H. Pettegrove as his or
her agent for service of process relating to any proceedings before the federal
courts in California in connection with this Agreement and agree to maintain the
process agent in California notified to the other Parties;
 
(ii) the Escrow Agent agrees that it may be served at its office in California
for service of process relating to any proceedings before the federal courts in
California in connection with this Agreement;

(iv) each Party agrees that failure by a process agent to notify him, her or it
of the process shall not invalidate the proceedings concerned; and

(v) each Party consents to the service of process relating to any such
proceedings by prepaid mailing of a copy of the process to his, her or its
respective agent at the address identified in paragraph (i), (ii) or (iii) above
or by prepaid mailing by air mail, certified or registered mail of a copy of the
process to it at the address set forth in Section 4.4.

(c) Each of the Parties hereto:

(i) waives objection to the courts in California on grounds of inconvenient
forum, venue or otherwise as regards proceedings in connection with this
Agreement or any agreements or transactions contemplated hereby; and

(ii) agrees that a final judgment or order of a federal court in California in
connection with this Agreement or any agreements or transactions contemplated
hereby is conclusive and binding on him, her or it, subject to appellate review,
and may be enforced against him, her or it in the courts of any other
jurisdiction.

Section 4.6 No Assignment. Other than as expressly set forth in this Agreement
regarding the Escrow Agent, no Party may assign its benefits or delegate its
duties under this Agreement without the prior written consent of the other
Parties. Any attempted assignment or delegation without such prior consent will
be void.

Section 4.7 No Third Party Beneficiaries. This Agreement is solely for the
benefit of the Parties and no other Person will have any right, interest, or
claim under this Agreement.

Section 4.8 Public Announcements. The Parties agree, to the extent practicable,
to consult with each other regarding any public announcement in advance thereof.

Section 4.9 Representation by Legal Counsel. Each Party is a sophisticated
Person that was advised by experienced legal counsel and other advisors in the
negotiation and preparation of this Agreement.

 
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Section 4.10 Severability. Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction will not invalidate the remaining provisions
of this Agreement or affect the validity or enforceability of such provision in
any other jurisdiction. In addition, any such prohibited or unenforceable
provision will be given effect to the extent possible in the jurisdiction where
such provision is prohibited or unenforceable.

Section 4.11 Specific Performance. The Parties acknowledges that the benefits
that they will derive from the transactions contemplated by this Agreement are
unique and irreplaceable. Accordingly, if any of the parties improperly abandon
or terminate this Agreement; either party would not have an adequate remedy at
law. The claiming Parties therefore will be entitled to a court order requiring
such Party to perform this Agreement.

Section 4.13 Successors. This Agreement will be binding upon and will inure to
the benefit of each Party and its heirs, legal representatives, permitted
assigns, and successors  provided that this Section will not permit the
assignment or other transfer of this Agreement, whether by operation of law or
otherwise, if such assignment or other transfer is not otherwise permitted under
this Agreement.

Section 4.14 Time of the Essence. Time is of the essence in the performance of
this Agreement and all dates and periods specified in this Agreement.

Section 4.15 Waiver. No provision of this Agreement will be considered waived
unless such waiver is in writing and signed by the Party that benefits from the
enforcement of such provision. No waiver of any provision in this Agreement,
however, will be deemed a waiver of a subsequent breach of such provision or a
waiver of a similar provision. In addition, a waiver of any breach or a failure
to enforce any term or condition of this Agreement will not in any way affect,
limit, or waive a Party's rights under this Agreement at any time to enforce
strict compliance thereafter with every term and condition of this Agreement.

IN WITNESS WHEREOF, each Party has executed, or has caused a duly authorized
officer to execute, this Agreement as of the date first above written.

PURCHASER:
/s/ David R. Koos
 
David R. Koos, Chairman & CEO
 
Entest BioMedical Inc.

ESCROW AGENT:
/s/ Herman H. Pettegrove, Esq.  
Herman H. Pettegrove, Esq.
 
   
SELLER:
/s/ Barbara Starr
 
 
Barbara Starr, DVM
As an individual and as President  Noah’s Ark Starr Animal Hospital, Inc.
 

 

 
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SCHEDULE A
ESCROW ASSETS
 

On or before February 18, 2011 Purchaser shall deliver to the Escrow Agent
100,000 common shares of Entest BioMedical, Inc. (“Initial Escrow Deposit”).

In accordance with the terms and conditions of the Definitive Purchase
Agreement, the Seller and Buyer shall deposit additional assets as required by
the Definitive Purchase Agreement.

SCHEDULE B
DISBURSEMENT OF ESCROW ASSETS

   (a) In the event that the Definitive Purchase Agreement is not executed by
the parties on or before April 30, 2011 then the Initial Escrow Deposit shall be
returned to Buyer.
 
 
   (b) In the event that negotiations regarding the Transaction terminate due to
a breach of 3(m) or 3(n) of the LOI then the Initial Escrow Deposit shall be
returned to Buyer.

Otherwise:
 
 
   (c) All Escrow Assets (including the Initial Escrow Deposit) shall be
disbursed in accordance to terms and conditions dictated by the Definitive
Purchase Agreement.

 
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Exhibit A

February 10, 2011

Barbara Starr, DVM
Noah’s Ark Starr Animal Hospital, Inc.
422 N. Euclid Street
Fullerton, CA 92832

Re:           Non-Binding Letter of Intent

Dear Dr. Starr:

This Letter of Intent (“LOI”) constitutes a proposal from Entest BioMedical,
Inc. (hereinafter, “Buyer”) to Noah’s Ark Starr Animal Hospital, Inc. (“NASAH”
and/or “Corporation”) and Barbara Starr, DVM (“Seller”) to buy 100% of the
assets of the Corporation as more clearly defined below (the “Transaction”)
owned by Seller in connection with the operation and management of its business
(the “Business”) located at 422 N. Euclid Street, Fullerton, CA, 92832 (the
“Property”). Buyer and Seller may be referred to individually as “Party” and
collectively as “Parties”.

This proposal supersedes any other previous written or oral proposals or
communications between the Parties. The terms of this proposal shall be as
follows:
 
1.
Purchase Price.

 
The Purchase Price for the acquisition of 100% of the assets of the Corporation
shall be three hundred thousand dollars ($300,000.00) to be paid as follows.
 

 
 
a.
Buyer shall pay $300,000 in a combination of cash, assumption of debt and
issuance of Entest BioMedical Inc.’s common stock (OTCBB: ENTB), hereafter
referred to as the “Purchase Price Components”.  The percentages of each of
these components will be determined once the due diligence has been completed by
Buyer.

 

 
 
b.
Buyer shall deposit as collateral for the completion of  the purchase of 100% of
the assets of  NASAH  100,000 common shares of ENTB stock (“Escrow Deposit”)
with Herman H. Pettegrove (“Escrow Agent”), Attorney at Law, 1350 Main Street,
Venice, CA 90291 – 310.392.5400  within two (2) days of execution by the parties
of This LOI  (as of February 10, 2011,  ENTB closed trading at $4.10 per share,
valuing  the Escrow Deposit at $410,000 as of that date). The terms of the
Escrow shall provide that:

 
 
i.
In the event that Definitive Purchase Agreement (“DPA” as defined in Section 2)
is not executed by the Parties on or before April 30, 2011 then the Escrow
Deposit shall be returned to Buyer;

 
 
ii.
In the event that negotiations regarding the Transaction terminate due to (a) a
breach of 3(m) or 3(n) by the Seller then the Escrow Deposit shall be returned
to Buyer and;

 
 
iii.
It is agreed by the Parties that Escrow Agent shall serve as such regarding any
escrow which is required to be established in accordance with any DPA entered
into by and among the Parties.

 

 
 
c.
On the Date of Closing of Sale the sum of the Purchase Price Components totaling
$300,000 shall be paid to Seller and;

 

 
 
d.
Any debt assumed will reduce the other Purchase Price Components by the amount
assumed.

 

 

 
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2.
Due Diligence

 
Upon the deposit of the Escrow Deposit by Buyer and for a period of thirty (30)
days thereafter (the “Due Diligence Period”), Seller shall provide Buyer with
reasonable access to all of the Corporation’s books, records, legal documents,
assets and other information (the “Books and Records”), all as no cost to Buyer.
At such time as Due Diligence Period has expired the Parties shall use their
best efforts to negotiate and execute a Definitive Purchase Agreement (“DPA”)
whereby Seller shall sell 100% of the assets of the Corporation to Buyer under
terms and conditions similar to those set forth herein. The Parties agree and
acknowledge that this list of terms and conditions set forth herein is not
intended to be all inclusive and the DPA to be executed by the Parties may
contain terms different or in addition to those set forth herein. Both Parties
shall use their best efforts to execute a DPA no later than April 1, 2011 with
the Transaction closing no later than April 15, 2011 (the “Closing Date of
Sale”).

 
 
3.
Basic Terms.

 
The DPA shall include terms and conditions similar to the following:

 
 
a.
Upon the mutual execution by the Parties of the Definitive Purchase Agreement,
Buyer shall have no contingencies and his obligation to close the Transaction
shall be unconditional;

 
 
b.
Seller shall assign the assets to Buyer;

 
 
c.
Seller shall retain cash and accounts receivable from Business and Buyer shall
have no interest or obligations with respect thereto to the extent such
retention shall not result in the Corporation having liabilities in excess of
what may be agreed upon by the Parties pursuant to a DPA as of the Closing Date
of Sale;

 
 
d.
Buyer shall indemnify and protect Seller from all liabilities or obligations of
Corporation after the Closing Date of Sale;

 
 
e.
Seller shall indemnify and protect Buyer from all liabilities or obligations of
Corporation prior to the closing Date of Sale;

 
 
f.
Seller shall not, within a radius of ten (10) miles of the Property, directly or
indirectly engage in the practice of veterinary, other than as provided in the
agreement, for a period of five (5) years from the Closing Date, unless Seller
is employed by Buyer;

 
 
g.
Seller agrees that it shall not directly or indirectly induce any former
patients to patronize anyone other than Buyer for a period of five (5) years
from the Closing Date;

 
 
h.
Seller agrees that it shall not solicit for hire employees of its Business for a
period of five (5) years from the Closing Date;

 
 
i.
Seller and Buyer agree to enter into an employment agreement such that Seller
shall be employed by Buyer as follows: (a) Annual salary and number of days to
be worked per week to be mutually agreed to by the Buyer and Seller; (b) a cash
bonus equal to 5.00% of the annual gross collections over baseline revenue of
$500,000.00; a stock bonus equal to 5% of the annual gross collections over
baseline revenue of $500,000.00.

 
 
j.
Seller shall represent and warrant that all tax returns and financial
information delivered to Buyer in connection herewith are true and accurate and
that to the best of Seller’s knowledge it is not aware of any actual, contingent
or threatened liabilities, lawsuits or claims against it for any act or omission
in connection with the Corporation or operation of the Business;

 

 
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k.
Buyer shall represent and warrant that it understands that it is purchasing the
assets of the Corporation “as is” without representation or warranty and the
Seller is making no representation or warranty with respect to the future
success of the Business;

 
 
l.
The Parties shall be responsible for their own costs or attorneys, advisor and
accountants in connection with the consummation of the Transaction.

 
 
m.
If any Party fails to negotiate in good faith, or if each Party hereto has not
entered into the Definitive Purchase Agreement by April 1, 2011, then any
obligation to negotiate and prepare the DPA or otherwise deal with any other
Party to this LOI shall immediately terminate.

 
 
n.
Seller agrees that it shall not entertain any offers to purchase the Corporation
during the term of this LOI;

 
 
o.
Each Party shall be solely responsible for its own expenses, legal fees and
consulting fees related to the negotiations described in the LOI, whether or not
any of the transactions contemplated in the LOI are consummated;

 
 
p.
VENUE, CHOICE OF LAW. The terms and conditions of the LOI shall be governed by
and construed in accordance with the laws of the State of California, without
reference to its choice of law rules. Any action arising as a result of this
Letter shall be brought in the state courts located in San Diego County, State
of California.

 
 
q.
Other than the covenants in Sections 1(b), 3(m), 3(n), 3(o) and 3(p) of this
LOI, this LOI is not binding upon either the buyer or the Seller, and the
Acquisition is subject to the negotiation and execution of a definitive
acquisition agreement between the Purchaser, Company and Seller.

 
Very truly yours,

“Buyer”

By: /s/David Koos
Entest BioMedical, Inc.
David Koos, CEO
Date: ___________________________

AGREED AND ACCEPTED THIS 11th DAY OF FEB., 2011:

“Seller”

By: /s/ Barbara Starr, DVM
Barbara Starr, DVM

“Corporation

By: /s/Barbara Starr, DVM
Noah’s Ark Starr Animal Hospital, Inc.
Barbara Starr, President

 
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