DEVELOPMENT AGREEMENT
 
BETWEEN
 
CARDIOVASCULAR BIOTHERAPEUTICS, INC.
 
AND
 
CARDIO DERMA CLINICAL PARTNERS, LP
 

 
 
 
Dated as of July 10, 2008
 

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TABLE OF CONTENTS

     
Page
     
 
1.
Definitions
1
 
1.1
Definitions
1
 
1.2
Singular and Plural
1
     
2.
Description of Technology / Goal of Development
3
     
3.
Development Services
3
 
3.1
License
3
 
3.2
Development
4
 
3.3
Disclaimer of Warranties
4
 
3.4
Rights to Property
5
 
3.5
Reports and Records.
5
 
3.6
Other Activities
5
     
4.
Development Fee
4
     
5.
Revenue Sharing from Product Sales
5
     
6.
Representations and Warranties of CVBT
5
 
6.1
Organization
5
 
6.2
Authorization
5
 
6.3
Intellectual Property Rights
5
     
7.
Representations, Warranties and Covenants of CDCP
5
     
8.
Insurance
5
     
9.
Term and Termination
5
 
9.1
Term
5
 
9.2
Events of Termination.
6
 
9.3
Effect of Termination
6
     
10.
Indemnification
6
 
10.1
Indemnification by CVBT
6
 
10.2
Indemnification by CDCP
6
 
10.3
Defense of Claims
7
 
10.4
Consequential Damages
7
     
11.
Miscellaneous
7
 
11.1
No Implied Waivers; Rights Cumulative
7
 
11.2
Force Majeure
7
 
11.3
Relationship of the Parties
7
 
11.4
Notices
8
 
11.5
Successors and Assigns
8
 
11.6
Amendments
9
 
11.7
Governing Law
9

 
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11.8
Taxes
9
 
11.9
Severability
9
 
11.10
Confidentiality
10
 
11.11
Trading Limitations
10
 
11.12
Counterparts
10
 
11.13
Entire Agreement
10

SCHEDULES
 
1.1
 
Definitions
2.1
 
Description of Wound Healing IP
3.1
 
Technology License Agreement
3.2.1
 
Work Plan
4
 
Development Fee

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DEVELOPMENT AGREEMENT

This Development Agreement (the “Agreement”) is made as of July 10, 2008, by and
between CardioVascular BioTherapeutics, Inc., a Delaware corporation (“CVBT”),
and Cardio Derma Clinical Partners, LP, a Nevada limited partnership (“CDCP”).
 
RECITALS
 
A. CVBT has developed certain intellectual property regarding a potential drug
for wound healing (the “Wound Healing IP”) and is willing to license to CDCP the
Wound Healing IP for the purpose of further developing the Wound Healing IP and
advancing a potential wound healing drug in the FDA Process.
 
B. CVBT has experience in the development of pharmaceutical products and has, or
has access to, the facilities, equipment, employees and other resources to
accomplish development activities, on behalf of CDCP, with respect to the Wound
Healing IP.
 
C. CDCP desires to engage CVBT to perform such services in connection with the
Development, and CVBT is willing to provide such services.
 
NOW, THEREFORE, in consideration of the mutual covenants set forth herein and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, and in order to induce CVBT to enter into the
Agreements, CVBT and CDCP hereby agree as follows:
 
1. Definitions.
 
1.1 Definitions. All capitalized terms used herein and not otherwise defined
shall have the respective meanings, to the extent such terms are used herein,
set forth in Schedule 1.1 attached hereto, which is incorporated by this
reference as though fully set forth herein.
 
1.2 Singular and Plural. Singular and plural forms, as the case may be, of terms
defined herein shall have correlative meanings.
 
2. Description of Technology / Goal of Development. The Wound Healing IP is
described in Schedule 2.1 attached hereto and incorporated herein by this
reference. The goal of the Development is to advance the Wound Healing IP in the
FDA Process. The parties hereto understand and acknowledge that the goal of the
Development conducted under this Agreement is to result in a wound healing drug
that has been authorized for commercial exploitation by the FDA and further,
both parties understand and acknowledge that there is no guarantee that the
development conducted under this Agreement will result in a wound healing drug
authorized by the FDA for commercial exploitation.
 

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3. Development Services.
 
3.1 License. Pursuant to the Technology License Agreement of even date herewith,
a copy of which is attached hereto as Schedule 3.1, CVBT has licensed to CDCP
the Wound Healing IP on a nonexclusive basis for the purpose of permitting CDCP
to participate with CVBT in the Development. CDCP acknowledges that CVBT has
pledged its interest in the Wound Healing IP as collateral for a prior loan
financing entered into on March 20, 2006 as further described on Form 8-K filed
on March 22, 2006 with a remaining balance due as of June 3, 2008, of $2,680,000
and that the rights of such lender are superior to those of CDCP. CDCP further
acknowledges and understands that CVBT may enter into future research and
development arrangements to further the advancement of the Wound Healing IP and
related potential drug candidate, and that the rights of such research and
development partnerships will be pari passu with those of CDCP. CVBT agrees to
not enter in research and development arrangements that will result in
aggregating more than 50% of revenue due to these arrangements during the period
of time that R&D LP is still due any royalty under this Agreement.
 
3.2 Development. CDCP hereby engages CVBT, and CVBT hereby accepts such
engagement, to use commercially reasonable efforts to undertake the Development.
Such services shall be provided as follows:
 
3.2.1 Work Plan. The proposed work plan is attached as Schedule 3.2.1 and
incorporated herein by this reference. The work plan may be revised by CVBT upon
written notice to CDCP.
 
3.2.2 Conduct of Development. During the term of this Agreement, CVBT shall use
commercially reasonable efforts to (a) conduct the Development on behalf of CDCP
in a prudent and skillful manner in accordance, in all material respects, with
the work plan then in effect and applicable laws, ordinances, rules,
regulations, orders, licenses and other requirements now or hereafter in effect
and (b) diligently execute such work plan and report to CDCP any significant
deviations therefrom in a timely manner. CDCP hereby appoints CVBT its exclusive
agent, for the term of this Agreement, with the sole power and authority to file
and prosecute all necessary regulatory applications and permits in CVBT’s name
required to obtain FDA and other regulatory approvals for CVBT’s Development
efforts. Without limiting the generality of the foregoing sentence, absent
specific requirements of the FDA to the contrary, CVBT is authorized by CDCP to
conduct FDA trials in CVBT’s name. Using the Available Funds provided by CDCP,
CVBT shall furnish all labor, supervision, services, supplies and materials
necessary to perform the Development in accordance with the work plan then in
effect. In addition, CVBT agrees to use commercially reasonable efforts, on
behalf of itself and CDCP, to attempt to obtain and to sublicense any patent or
technology license or sublicense from any Person, including CVBT, that CVBT
reasonably determines to be necessary or useful to enable CVBT to conduct the
Development under this Agreement.
 
3.2.3 Subcontracts. CDCP acknowledges that CVBT may elect to subcontract to
third parties a portion of the Development. CDCP acknowledges and agrees that in
performing the Development, CVBT may, and is hereby authorized to, without the
prior written consent of CDCP, engage or agree or otherwise collaborate with
other Persons, including, without limitation, Affiliates of CVBT or entities
performing other development activities for CVBT, to provide assistance in
carrying out the Development.
 
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3.3 Disclaimer of Warranties. CVBT cannot and does not guarantee that the
Development will be successful in whole or in part or that any significant
advancement in the FDA Process will occur. To the extent that CVBT has complied
with Section 3.2.2 hereof, the failure of CVBT to further develop successfully
the Wound Healing IP will not in and of itself constitute a breach by CVBT of
any representation, warranty, covenant or other obligation under the Agreements.
In addition, neither CVBT nor CDCP makes any representation or warranty or
guaranty that the development fee described in Section 4 will be sufficient for
the completion of the Development contemplated in the work plan. Furthermore,
nothing in this Agreement shall be construed as a representation made or
warranty given that any patents or other registrable technology will issue from
the Development. CDCP understands that the Development shall involve
technologies that have not been approved by any regulatory authority and that
CVBT does not guaranty the safety, effectiveness, performance or usefulness of
any drug or technology that results from the Development.
 
3.4 Rights to Property. All right, title and interest to the data, know-how and
enhancements of the Wound Healing IP and any other intellectual property
resulting from the Development acquired or developed pursuant to this Agreement
(the “Program IP”) including any submissions or applications to the FDA or any
foreign equivalent made by CVBT in its name on behalf of itself or CDCP shall be
the exclusive property of CDCP; provided, however, that such right, title and
interest shall be subject in all events to that certain exclusive license
agreement of even date herewith attached hereto as Schedule 3.1 and incorporated
herein by this reference; and provided further, that CDCP shall have no right to
physical possession of the Program IP.
 
3.5 Reports and Records.
 
3.5.1 Progress Reports. Within 30 days after the end of each calendar quarter
during the term of this Agreement, CVBT shall deliver to CDCP a report setting
forth in reasonable detail a summary of the work performed pursuant to the work
plan during the immediately preceding calendar quarter.
 
3.5.2 Financial Reports. Within five (5) business days after the filing of its
Form 10-Q with the SEC for the first three calendar quarters of each calendar
year during the term of this Agreement, CVBT shall provide to CDCP (a) a
reasonably detailed report setting forth in respect of such quarter the revenues
collected by CVBT based on the exploitation of any wound healing drug developed
as a partial result of the Development, and (b) a check payable to CDCP in an
amount equal to the amount calculated pursuant to Section 5 hereof for that
quarterly period. Within five (5) business days after CVBT files its Form 10-K
with the SEC, it shall provide to CDCP an audited report of the revenues
collected by CVBT based on the exploitation of any wound healing drug developed
as a partial result of the Development for the prior fiscal year of CVBT. Any
adjustments to the amounts paid or payable to CDCP shall be made as a result of
such audit at the time of delivery of such audit, and an appropriate payment
will be made to CDCP.
 
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3.5.3 Final Report. CVBT shall prepare a final report, within 90 days after the
expiration or termination of this Agreement, setting forth in reasonable detail
a summary of the work performed since the last report provided to CDCP hereunder
and the material developments with respect thereto and containing a final
statement of, and payment based on, all applicable collected revenues upon which
payment to CDCP pursuant to Section 5 hereof are based and deliver such report
to CDCP.
 
3.5.4 Records/Review of Records. CVBT shall keep and maintain proper and
complete records and books of account documenting all of its collected revenues
based on the exploitation of any wound healing drug developed as a partial
result of the Development. At CDCP’s request and expense, CVBT shall permit a
certified independent public accountant selected by CDCP to have access, no more
than once in each calendar year during the term of this Agreement and each year
for three calendar years following the termination hereof, during regular
business hours and upon reasonable notice to CVBT, to such records and books for
the sole purpose of determining the accuracy of the collected revenues reports.
If such certified independent public accountant reasonably determines that the
collected revenues reported have been, for any calendar year understated by CVBT
by an amount equal to or greater than five percent, CVBT shall promptly forward
any such underpayment to CDCP and pay all reasonable fees and disbursements of
such certified independent public accountant incurred in the course of making
such determination. If such accountant reports an underpayment by CVBT of less
than five percent, CVBT shall forward such underpayment to CDCP and CDCP shall
pay all fees and expenses of such accountant. If such accountant reports an
overpayment by CVBT, CDCP will repay such overpayment and bear all fees and
expenses of such accountant.
 
3.6 Other Activities. During the term of this Agreement, CVBT shall devote such
time and effort to the performance of services pursuant to this Agreement as may
be necessary or appropriate to fulfill its duties under this Agreement;
provided, however, it is specifically understood and agreed by CDCP that CVBT
shall not be required to devote itself, on a full-time basis, to the provision
of such services and that CVBT shall have the right to engage in its own
development activities for other drug candidates and in other business
activities with other Persons, and CDCP shall not, by virtue of this Agreement,
have any right, title or interest in or to such independent activities or to the
income or profits derived therefrom and, without limiting CVBT’s obligation to
use commercially reasonable efforts to provide certain services hereunder,
nothing set forth in this Agreement shall limit or reduce the ability of CVBT to
carry on such other activities.
 
4. Development Fee. The nonrefundable fee for the Development contemplated
herein is set forth on Schedule 4 hereto which is incorporated herein by this
reference. CDCP hereby acknowledges that CVBT has in no way guaranteed any
particular results from the Development; that, indeed, there may be no positive
results from the Development; and that, as a consequence, it may receive no
return of, or on, the Investment.
 
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5. Revenue Sharing from Product Sales. If, as a result of the Development, as
well as additional and subsequent development of the Wound Healing IP, CVBT is
able to commercialize or in any other way exploit value from the Wound Healing
IP, CDCP will be entitled to ten percent (10%) of the gross cash actually
collected by CVBT based on CVBT’s exploitation of the wound healing drug (the
participation). Such exploitation may include, without limitation, direct
marketing by CVBT or its Affiliates and/or marketing, licensing, and/or
partnering arrangements with other pharmaceutical companies. Payment of such
amounts shall be made contemporaneously with the quarterly and annual revenue
reports described in Section 3.5 hereof up to a maximum amount of the total
Investment multiplied by ten.
 
6. Representations and Warranties of CVBT. CVBT represents and warrants to CDCP
as follows:
 
6.1 Organization. CVBT is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware with full corporate power
and authority adequate for executing, delivering and performing its obligations
under the Agreements.
 
6.2 Authorization. The execution, delivery and performance of the Agreements
have been duly authorized by all necessary corporate action on the party of CVBT
and the Agreements shall constitute legal, valid and binding obligations of
CVBT, enforceable against CVBT in accordance with its terms, subject to laws of
general application related to bankruptcy, insolvency and the relief of debtors.
 
6.3 Intellectual Property Rights. To the best of its knowledge, CVBT believes it
has sufficient legal and/or beneficial title and ownership to the technology
described on Schedule 2.1 hereof to license to CDCP the Wound Healing IP as
contemplated by this Agreement in Section 3.1 and in the Technology Agreement.
CVBT is not aware of, and has not received any communications alleging that, it
has violated, or that CDCP, by participating in the development of the Wound
Healing IP as contemplated in this Agreement, would violate, any intellectual
property rights of any third party. To the best of CVBT’s knowledge, there is no
material unauthorized use, infringement or misappropriation of any of the
technology described in Schedule 2.1 hereto. CVBT is not aware of, nor has it
received any communications challenging, the ownership, validity or
effectiveness of the technology in Schedule 2.1.
 
7. Representations, Warranties and Covenants of CDCP. The representations,
warranties and covenants of CDCP set forth in Section 3.2 of the Technology
Agreement are incorporated herein by this reference.
 
8. Insurance. CVBT shall, to the extent available at commercially reasonable
rates, maintain, with insurers or underwriters of good repute, such insurance
relating to the Development, against such risks and pursuant to such terms,
including deductible limits or self-insured retentions, as is customary for
comparable businesses undertaking research and development programs of a similar
nature, and shall, to the extent reasonably possible and not unreasonably
expensive, cause CDCP to named as an additional insured on its applicable
insurance policies.
 
9. Term and Termination.
 
9.1 Term. This Agreement shall be effective as of the date hereof and, unless
earlier terminated, shall continue in full force and effect until such time as
the maximum revenue sharing amount set forth in Section 5 has been paid.
 
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9.2 Events of Termination.
 
9.2.1 Mutual Agreement. By mutual agreement, the parties hereto may at any time
terminate this Agreement and the Development on mutually acceptable terms.
 
9.2.2 Termination of Development. At any time, and upon notice to CDCP, CVBT may
elect to terminate the Development process due to insufficient progress or
outright inability to make progress toward a commercially marketable wound
healing drug.
 
9.2.3 Termination After Full Payment. This Agreement shall terminate upon
payment in full by CVBT to CDCP of the maximum amount set forth in Section 5
hereof.
 
9.3 Effect of Termination. If this Agreement is terminated pursuant to Sections
9.2.1, 9.2.2 or 9.2.3, neither party shall have any liability to the other
except as agreed upon pursuant to the termination, and the ownership of the
Wound Healing IP and the Program IP, including, without limitation, any patents
derived therefrom, will revert to CVBT without further action on the part of any
of the parties. To the extent that evidence of such reversion is required to be
placed in a writing, CDCP will, at CVBT’s request, execute and deliver to CVBT
specific assignments of the Wound Healing IP or the Program IP and execute,
acknowledge and deliver to CVBT such other documents and take such further
actions as CVBT may consider necessary or appropriate to confirm or vest title
in such intellectual property in CVBT. If the agreement is terminated pursuant
to Section 9.2.2, Section 5 will survive the termination. Under no circumstances
will CVBT have an obligation to refund any portion of the development fee.
 
10. Indemnification.
 
10.1 Indemnification by CVBT. CVBT shall indemnify the CDCP Indemnitees, pay on
demand and protect, defend, save and hold harmless each CDCP Indemnitee from and
against any and all Claims incurred by or asserted against any CDCP Indemnitee
of whatever kind or nature, including, without limitation, any claim or
liability based upon (a) negligence warranty, strict liability, violation of
government regulation or infringement of patent or other propriety rights,
arising from or occurring as a result any of the Development or any other
services to be performed by CVBT during the term of the Agreements pursuant to
the Agreements, including, without limitation, any workers’ compensation claim
by any CVBT employee or consultant or other Person or (b) any breach of the
Agreements by CVBT, except, with respect to CDCP Indemnitees in cases in which
Claims of CDCP Indemnitees are based upon the gross negligence or willful
misconduct of an CDCP Indemnitee. An CDCP Indemnitee shall promptly notify CVBT
of any Claim with respect to which an CDCP Indemnitee is seeking indemnification
hereunder, upon becoming aware thereof, and permit CVBT at CVBT’s cost to defend
against such Claim and shall cooperate in the defense thereof.
 
10.2 Indemnification by CDCP. CDCP shall indemnify the CVBT Indemnitees, pay on
demand and protect, defend, save and hold harmless each CVBT Indemnitee from and
against any and all Claims incurred by or asserted against any CVBT Indemnitee
of whatever kind or nature, including, without limitation, any claim or
liability based upon negligence, warranty, strict liability, violation of
government regulation or infringement of patent or other propriety rights,
arising from or occurring as a result of any breach of the Agreements by CDCP,
except, with respect to CVBT Indemnitees, in cases in which Claims are based
upon the gross negligence or willful misconduct of a CVBT Indemnitee. An
Indemnitee hereunder shall promptly notify CDCP of any Claim with respect to
which such Indemnitee is seeking indemnification hereunder, upon becoming aware
thereof, and permit CDCP at CDCP’s cost to defend against such Claim and shall
cooperate in the defense thereof.
  
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10.3 Defense of Claims. None of CVBT or CDCP shall enter into, or permit, any
settlement of any Claim for which indemnification is being sought by such party
hereunder without the express written consent of each other party (or a CVBT or
CDCP Indemnitee, as the case may be), which consent shall not be unreasonably
withheld or delayed. Each party may, at its option and expense, have its own
counsel participate in any proceeding which is under the direction of another
party (the “Indemnifying Party”) and will cooperate with the Indemnifying Party
and its insurer in the disposition of any such matter; provided, however, that
if the Indemnifying Party shall not defend such Claim, the other party shall
have the right to defend such Claim itself and recover from the Indemnifying
Party all reasonable attorneys’ fees and expenses incurred by it during the
course of such defense.
 
10.4 Consequential Damages. None of the parties to this agreement shall be
entitled to recover from another party hereto any special, incidental,
consequential or punitive damages.
 
11. Miscellaneous.
 
11.1 No Implied Waivers; Rights Cumulative. No failure on the part of CVBT or
CDCP to exercise and no delay in exercising any right, power, remedy or
privilege under this Agreement or provided by statute or at law or in equity or
otherwise, including, without limitation, the right or power to terminate this
Agreement, shall impair, prejudice or constitute a waiver of any such right,
power, remedy or privilege or be construed as a waiver of any breach of this
Agreement or as an acquiescence therein, nor shall any single or partial
exercise of any such right, power, remedy or privilege preclude any other or
further exercise thereof or the exercise of any other right, power, remedy or
privilege.
 
11.2 Force Majeure. CVBT and CDCP shall each be excused for any failure or delay
in performing any of their respective obligations under this Agreement, if such
failure or delay is caused by a force, effect, cause or circumstance beyond the
control of the nonperforming party.
 
11.3 Relationship of the Parties. Nothing contained in this Agreement is
intended or is to be construed to constitute CVBT and CDCP as partners or joint
venturers or one party as an employee of any other party. Except as expressly
provided herein, no party hereto shall have any express or implied right or
authority to assume or create any obligations on behalf of or in the name of any
other party or to bind any other party to any contract, agreement or undertaking
with any third party.
 
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11.4 Notices. All notices, requests and other communications to CVBT or CDCP
hereunder shall be in writing (including telecopy or electronic mail (“e-mail”)
transmissions), shall refer specifically to this Agreement and shall be
personally delivered or sent by telecopy, facsimile or e-mail transmission or by
registered mail or certified mail, return receipt requested and postage prepaid,
or by reliable overnight courier service, in each case to the respective address
specified below (or to such address as may be specified in writing to the other
party hereto):
 

If to CVBT, addressed to: CardioVascular BioTherapeutics, Inc.
1635 Village Center Circle
Suite 250
Las Vegas, Nevada 89134
Attention: Mickael A. Flaa, CFO
Fax No.: 702-304-2120
E-mail: mflaa@cvbt.com

 
with a copy to the attention of General Counsel (using the same information
above except if via email, then also to vroth@cvbt.com)
 

If to CDCP, addressed to: 
Cardio Derma Clinical Partners, LP
5005 S. E. Williams Way
Stuart, Florida 34997 
Attention: Philip Frey Jr.
Fax No.:
E-mail: pf4105@comcast.net

 
Each party shall provide each other party with copies of any notices sent
hereunder, with such copies sent at the same time as the original notice. Any
notice or communication given in conformity with this Section 11.4 shall be
deemed to be effective when received by the addressee, if delivered by hand,
telecopy or electronic transmission, three days after mailing, if mailed and one
business day after delivery either to a reliable overnight courier service or
via any electronic means permissible under this Agreement provided the sender
has confirmation of successful transmission.
 
11.5 Successors and Assigns. The terms and provisions of this Agreement shall
inure to the benefit of, and be binding upon, CVBT, CDCP, and their respective
successors and assigns; provided, however, that CVBT and CDCP may not assign or
otherwise transfer any of their respective rights and interests, nor delegate
any of their respective obligations, hereunder, including, without limitation,
pursuant to a merger or consolidation, without the prior written consent of the
other party hereto; provided further, however, that CVBT may fully assign its
rights and interests, and delegate its obligations, hereunder, effective upon
written notice thereof (a) to an Affiliate if such Affiliate assumes all of the
obligations of CVBT hereunder and this Agreement remains binding upon CVBT; or
(b) to any Person that acquires all or substantially all of the assets of CVBT,
or which is the surviving Person in a merger or consolidation with CVBT, if such
Person assumes all the obligations of CVBT hereunder. Notwithstanding the
foregoing, CDCP shall have the right to assign only its rights to payments
pursuant to Section 5 hereof and shall have no right to assign its interest in
the Wound Healing IP licensed to it pursuant to the Technology Agreement or
derived as the result of the Development to any party not approved by CVBT. Any
attempt to assign or delegate any portion of this Agreement or the results of
the Development in violation of this Section 11.5 shall be null and void.
Subject to the foregoing any reference to CVBT or CDCP hereunder shall be deemed
to include the successors thereto and assigns thereof.
 
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11.6 Amendments. No amendment, modification, waiver, termination or discharge of
any provision of this Agreement, nor consent by CVBT or CDCP to any departure
therefrom, shall in any event be effective unless the same shall be in writing
specifically identifying this Agreement and the provision intended to be
amended, modified, waived, terminated or discharged and signed by CVBT and CDCP,
and each amendment, modification, waiver, termination or discharge shall be
effective only in the specific instance and for the specific purpose for which
given and shall not be deemed to be a wavier, termination or discharge for any
subsequent individual or repeated similar or different instance or purpose. No
provision of this Agreement shall be varied, contradicted or explained by any
other agreement, course of dealing or performance or any other matter not set
forth in an agreement in writing and signed by CVBT and CDCP.
 
11.7 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, as applied to contracts made
and performed entirely within the State of Delaware. Except as otherwise
provided herein, any claim or controversy arising out of or related to this
contract or any breach hereof shall be submitted to a court of competent
jurisdiction in the State of Nevada, and the parties hereby consent to the
jurisdiction and venue of such court.
 
11.8 Taxes. If a law or governmental regulation requires withholding of taxes on
any payment due hereunder, such taxes shall be deducted from any amount to be
remitted hereunder and shall be paid to the proper taxing authority, and proof
of payment shall be provided to the party on whose behalf such taxes were paid
as evidence of such payment in such form as required by the tax authorities
having jurisdiction thereover.
 
11.9 Severability. If any provision hereof should be held invalid, illegal or
unenforceable in any respect in any jurisdiction, then, to the fullest extent
permitted by law, (a) all other provisions hereof shall remain in full force and
effect in such jurisdiction and shall be liberally construed in order to carry
out the intentions of the parties hereto as nearly as may be possible and (b)
such invalidity, illegality or unenforceability shall not affect the validity,
legality or enforceability of such provision in any other jurisdiction. To the
extent permitted by applicable law, CVBT and CDCP hereby waive any provision of
law that would render any provision hereof prohibited or unenforceable in any
respect.
 
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11.10 Confidentiality. Any party receiving Confidential Information shall
maintain the confidential and proprietary status of such Confidential
Information, keep such Confidential Information and each part thereof within its
possession or under its control sufficient to prevent any activity with respect
to the Confidential Information that is not specifically authorized or
contemplated by this Agreement, use all commercially reasonable efforts to
prevent the disclosure of any Confidential Information to any other Person, and
use commercially reasonable efforts to ensure that such Confidential Information
is used only for those purposes specifically authorized or contemplated herein;
provided, however, that such restriction shall not apply to any Confidential
Information that is (a) independently developed by the receiving party outside
the scope of this Agreement (provided, however, that such restriction shall
apply to any technology grants by CVBT to CDCP under this Agreement), (b) in the
public domain at the time of its receipt or thereafter becomes part of the
public domain through no fault of the receiving party, (c) received without an
obligation of confidentiality from a third party having the right to disclose
such information, (d) released from the restrictions of this Section 11.10 by
the express written consent of the disclosing party, (e) disclosed to any
permitted assignee, permitted sublicensee or permitted subcontractor of CVBT
under the Agreements (if such assignee, sublicensee or subcontractor is subject
to the provisions of this Section 11.10 or substantially similar provisions) or
(f) required by law, statute, rule or court order to be disclosed provided the
receiving party promptly provides sufficient notice to the disclosing party so
that the disclosing party may seek a protective order or other confidential
treatment (the disclosing party shall, however, use commercially reasonable
efforts to obtain confidential treatment of any such disclosure). The
obligations set forth in this Section 11.10 shall survive the expiration or
termination of this Agreement. Without limiting the generality of the foregoing,
CVBT and CDCP each shall use commercially reasonable efforts to obtain, if not
already in place, confidentiality agreements from their respective employees,
subcontractors and agents, similar in scope to this Section 11.10, to protect
the Confidential Information.
 
11.11 Trading Limitations. In addition to being Confidential Information, the
results of the Development will be deemed material nonpublic information until
disclosed to the public by CVBT in a report to the Securities and Exchange
Commission (the “SEC”), or, if applicable and/or permissible and/or appropriate,
in a press release or published on CVBT’s web site in an event where a filing
with the SEC is not required or is discretionary. If CDCP is in possession of,
or otherwise has knowledge of, the results of the Development before such public
disclosure by CVBT, CDCP acknowledges and agrees that it may not trade in CVBT
securities. Further, CDCP agrees to obtain a similar acknowledgment and
agreement from its partners.
 
11.12 Counterparts. This Agreement may be executed in any number of
counterparts, each of which counterpart, when so executed and delivered, shall
be deemed to be an original, and all of which counterparts, taken together,
shall constitute one and the same instrument.
 
11.13 Entire Agreement. This Agreement, together with any agreements referenced
herein, constitute, on and as of the date hereof, the entire agreement of CVBT
and CDCP with respect to the subject matter hereof, and all prior or
contemporaneous understandings or agreements, whether written or oral, between
CVBT and CDCP with respect to such subject matter are hereby superseded in their
entirety.
 
 
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10

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

       
CARDIOVASCULAR BIOTHERAPEUTICS, INC.
 
   
   
    By:   /s/ Daniel C. Montano  

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Daniel C. Montano
Its President and Chief Executive Officer
   

 

       
Cardio Derma Clinical Partners, LP
 
   
   
    By:   PF-1, LLC  

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Its General Partner

 

  By Philip Frey Jr.    

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Its Manager      

 
11

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SCHEDULE 1.1
DEFINITIONS
 
“Affiliate” of a person shall mean a Person that directly or indirectly through
one or more intermediaries, controls, is controlled by or is under common
control with such Person. “Control” (and, with correlative meanings, the terms
“controlled by” and “under common control with”) shall mean the possession of
the power to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting stock, by contract or
otherwise. In the case of a corporation, “control” shall mean, among other
things, the direct or indirect ownership of more than 50% of its outstanding
voting stock.
 
“Agreements” means the Development Agreement and the Technology License
Agreement.
 
“Available Funds” shall mean the Investment proceeds.
 
“Claim” shall mean any and all liabilities, damages, losses, settlements,
claims, actions, suits, penalties, fines, costs or expenses (including, without
limitation, reasonable attorneys’ fees).
 
“Confidential Information” shall mean the Wound Healing IP described in Schedule
2.1 hereof and all Program IP developed by CVBT (and its Affiliates) and
disclosed to CDCP pursuant to the Agreements.
 
“CVBT Indemnitee” shall mean CVBT, its successors and assigns, and the
directors, officers, employees, agents and counsel thereof.
 
“Development” shall mean the further development of the Wound Healing IP for the
purpose of advancing the FDA Process toward development of a wound healing drug
approved for commercialization by the FDA.
 
“Development Agreement” shall mean the Development Agreement dated as of July
10, 2008, between CVBT and CDCP, as amended, modified or supplemented from time
to time.
 
“FDA” shall mean the United States Food and Drug Administration or any successor
agency or authority, the approval of which is required to market biologic
products in the United States.
 
“FDA Process” shall mean the clinical trials and other activities necessary to
obtain FDA approval for commercialization.
 
“Form 10-K” shall mean CVBT’s annual report on Form 10-K to the SEC pursuant to
the Securities Exchange Act of 1934, as amended.
 
1.1-1

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“Form 10-Q” shall mean CVBT’s quarterly report on Form 10-Q to the SEC pursuant
to the Securities Exchange Act of 1934, as amended.
 
“Force Majeure” shall mean any act of God, any accident explosion, fire, storm,
earthquake, flood, drought, peril of the sea, riot, embargo, war or foreign,
federal, state or municipal order of general application, seizure, requisition
or allocation, any failure or delay of transportation, shortage of or inability
to obtain supplies, equipment, fuel or labor or any other circumstance or event
beyond the reasonable control of the party relying upon such circumstance or
event.
 
“Investment” means the amount actually provided by CDCP pursuant to its
agreement in Section 4 hereof.
 
“Person” shall mean any individual, partnership, corporation, firm, association,
unincorporated organization, joint venture, trust or other entity.
 
“Program IP” shall have the meaning ascribed to it in Section 3.4 hereof.
 
“CDCP Indemnitee” shall mean CDCP, its successors and assigns, and the
directors, officers, employees, agents and counsel thereof.
 
“SEC” means the U.S. Securities and Exchange Commission.
 
“Technology Agreement” shall mean the Technology License Agreement dated as of
June 3, 2008, among CVBT and CDCP, as amended, modified or supplemented from
time to time.
 
1.1-2

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SCHEDULE 2.1
 
DESCRIPTION OF WOUND HEALING IP

According to the American College of Foot and Ankle Surgeons, 15 percent of the
estimated 20 million Americans afflicted with diabetes will develop a serious
foot ulcer during their lifetime. A similar percentage of patients with chronic
venous hypertension will also develop wounds. Non-healing dermal ulcers of the
lower extremities can lead to infections and amputations. Chronic wounds
represent an increasing global health challenge, yet there are currently no
universally-accepted standards of care. 

FGF-1 offers the possibility of improved dermal ulcer healing by the promotion
of new blood vessel growth, known as angiogenesis, in the wound bed, resulting
in enhanced development of granulation tissue and is able to fill wounds of
almost any size. According to the American Diabetes Association, comprehensive
foot care programs can reduce amputation rates by 45 to 85 percent. 

CVBT has successfully completed its Phase I wound healing clinical trial aimed
at evaluating the safety and tolerability of its wound healing formulation of
FGF-1 (CVBT-141B) in patients suffering from either diabetic or venous stasis
ulcers.  FGF-1 was applied topically and found to be safe and well tolerated. In
the Phase II Protocol we will now shift to examining different doses of FGF-1
applied to the wounds over a 1 month period to look at both safety and efficacy
of FGF-1 in healing dermal ulcers.

2.1-1

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SCHEDULE 3.1
TECHNOLOGY LICENSE AGREEMENT

3.1-1

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SCHEDULE 3.2.1
 
WORK PLAN
 
We will submit our Phase II Clinical Protocol to the FDA within 45 days and hope
to begin dosing patients at 30 U.S. and Canadian clinical trial sites by June
2008. We estimate it will take approximately 6 months to enroll and treat the
proposed 136 patients that will be included in this double-blind,
placebo-controlled trial examining two doses of the FGF-1 wound formulation.
This would allow us to start our pivotal Phase III trial in 2009, which should
run for approximately 12 months followed by preparation and submission of a New
Drug Application (NDA) to the FDA in 2010.

This Work Plan contains statements that involve risks and uncertainties. These
statements relate to future events and involve known and unknown risks,
uncertainties and other factors that may cause results, levels of activity,
performance or achievements to be materially different from those expressed or
implied by this Work Plan. Factors that might affect actual outcomes include,
but are not limited to, FDA approval of CVBT drug candidates and new
developments in the industry. Although CVBT believes that the expectations
reflected in this Work Plan are reasonable, CVBT cannot guarantee future
results, levels of activity, performance or achievements.

3.2.1-1

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SCHEDULE 4
DEVELOPMENT FEE
 
Up to $5,000,000 with a minimum of $1,000,000
 
Payable $200,000 upon execution of the sponsor agreement on a best-efforts
basis, up to an additional $4,800,000 not later than August 15, 2008.
 
Schedule of Amounts Paid

 

   
 Acknowledged Receipt by CVBT
Date
Amount
Name
Initials
       
July 25
             
August 15
             
Total
     

4-1

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