Document:

Exhibit 10.1
    

    
      EXCLUSIVE LICENSE AGREEMENT
    

    
      This Exclusive License Agreement and the attached Appendix A
      (collectively, the “Agreement”) is made and is effective this 26th
      day of September 2008 (the "Effective Date") between THE REGENTS OF THE
      UNIVERSITY OF CALIFORNIA ("The Regents"), a California corporation
      having its corporate offices located at 1111 Franklin Street, Oakland,
      California 94607-5200, acting through The Office of Intellectual
      Property Administration of the University of California, Los Angeles,
      located at 11000 Kinross Avenue, Suite 200, Los Angeles, CA 90095-1406
      and Entest BioMedical Inc. ("Licensee"), a corporation having a
      principal place of business at 1010 University Avenue #40, San
      Diego, CA 92103.
    

    
      RECITALS
    

    
      WHEREAS, a certain invention (the "Invention"), generally characterized
      as “SCREENING TEST FOR GESTATIONAL DIABETES MELLITUS” (UCLA Case No.
      2007-523) was made in the course of research at the University of
      California, Los Angeles by Brian J. Koos, and is and claimed in Regents'
      Patent Rights as defined below;
    

    
      WHEREAS, Brian J. Koos is an employee of The Regents and as such is
      obligated to assign his/her right, title and interest in and to the
      Invention to The Regents;
    

    
      WHEREAS, The Regents wishes that Regents' Patent Rights be developed and
      utilized to the fullest extent so that the benefits can be enjoyed by
      the general public.
    

    
      WHEREAS, Licensee is a "small business concern" as defined in 15 U.S.C.
      §§632; and
    

    
      The parties agree as follows:
    

    
      1.  DEFINITIONS
    

    
    	
          1.1
        	
          "Regents' Patent Rights" means The Regents’ interest in any of the
          patent applications listed in Appendix A attached to this Agreement
          and assigned to The Regents (UCLA Case No. 2007-523); any continuing
          applications thereof including divisions; but excluding
          continuations-in-part except to the extent of claims entirely
          supported in the specification and entitled to the priority date of
          the parent application; any patents issuing on these applications
          including reissues and reexaminations; and any corresponding foreign
          patents or patent applications; all of which will be automatically
          incorporated in and added to Appendix A and made a part of this
          Agreement.
        
	

        	
           
        
	
          1.2
        	
          
            "Licensed Product" means any article, composition, apparatus,
            substance, chemical, or any other material covered by Regents'
            Patent Rights or whose manufacture, use or sale would, absent the
            license granted under this Agreement, constitute an infringement,
            inducement of infringement, or contributory infringement, of any
            claim within Regents' Patent Rights, or any service, article,
            composition, apparatus, chemical, substance, or any other material
            made, used, or sold by or utilizing or practicing a Licensed
            Method. This definition of Licensed Product also includes a
            service either used by Licensee or sublicensee or provided by
            Licensee or sublicensee to its customers when such service
            requires the use of Licensed Product or performance of Licensed
            Method. If the Licensed Product is a component of another product
            such as a kit, composition of matter or combination, such kit,
            composition of matter or combination is deemed to be the Licensed
            Product for purposes of this Agreement. Likewise, if the Licensee
            or sublicensees receives a Licensed Product for incorporation into
            another product intended for sales, transfer, lease or other
            disposition, then, for the purposes of this Agreement, the
            Licensed Product is the product intended for sale, transfer,
            lease, or other disposition by recipient Licensee or sublicensee.
          

        

    

    
      
        

        

      

      
        
          4
        

        
          

        

      

      
        

        

      

    

    

    

    
    	
          1.3
        	
          "Licensed Method" means any process, service, or method which is
          covered by Regents' Patent Rights or whose use or practice would,
          absent the license granted under this Agreement, constitute an
          infringement, inducement of infringement, or contributory
          infringement, of any claim within Regents' Patent Rights.
        
	

        	
           
        
	
          1.4
        	
          The "Field of Use" means all fields of use.
        
	

        	
           
        
	
          1.5
        	
          " Affiliate " means any corporation or other business entity in
          which Licensee owns or controls, directly or indirectly, at least
          fifty percent (50%) of the outstanding stock or other voting rights
          entitled to elect directors. In any country where the local law does
          not permit foreign equity participation of at least fifty percent
          (50%), then "Affiliate" means any company in which Licensee owns or
          controls, directly or indirectly, the maximum percentage of
          outstanding stock or voting rights that is permitted by local law.
        
	

        	
           
        
	
          1.6
        	
          “Joint Venture” means any separate entity established pursuant to an
          agreement between a third party and the Licensee and/or Sublicensee
          to constitute a vehicle for a Joint Venture, in which the separate
          entity manufactures, uses, purchases, Sells or acquires Licensed
          Products from the Licensee or Sublicensee. Each reference to
          Licensee herein will be meant to include its Joint Venture(s), and
          Licensee will be responsible for all obligations of its Joint
          Ventures.
        
	

        	
           
        
	
          1.7
        	
          "First Commercial Sale" means the first sale of any Licensed Product
          by Licensee or sublicensee, following approval of it's marketing by
          the appropriate governmental agency for the country in which the
          sale is to be made. When governmental approval is not required,
          "First Commercial Sale" means the first sale in that country.
        
	

        	
           
        
	
          1.8
        	
          "Final Sale" means any sale, transfer, lease, exchange or other
          disposition or provision of a Licensed Product and/or a Licensed
          Method to a Customer by a Licensee or Sublicensee. A Final Sale will
          be deemed to have occurred upon the earliest to occur of the
          following (as applicable): (a) the transfer of title to such
          Licensed Product and/or Licensed Method to a Customer, (b) the
          shipment of such Licensed Product to a Customer, (c) the provision
          of a Licensed Method to a Customer, (d) the provision of an invoice
          for such Licensed Product or Licensed Method to a Customer, or (e)
          payment by the Customer for Licensed Products or Licensed Methods.
          Exchange of Licensed Products between Licensee and sublicense(s) is
          not a Final Sale if the Licensed Product is intended for further
          sale, transfer, lease, exchange or other disposition and instead the
          Final Sale will be deemed to have occurred upon sale, transfer,
          lease, exchange or other disposition or provision of Licensed
          Product by recipient to the Customer. If the Licensee or sublicense
          transfers Licensed Product at no cost during a clinical study,
          clinical trial, or as a free sample in product promotion, then such
          sale will not be considered a Final Sale and no royalty will be owed
          hereunder.
        

    

    
      
        

        

      

      
        
          5
        

        
          

        

      

      
        

        

      

    

    

    

    
    	
          1.9
        	
          "Net Sales" means the total of the gross amount invoiced or
          otherwise charged (whether consisting of cash or any other forms of
          consideration) for all Final Sales, less the following deductions
          (to the extent included in and not already deducted from the gross
          amount invoiced or otherwise charged) to the extent reasonable and
          customary: cash, trade or quantity discounts actually granted to
          Customers; sales, use, tariff, import/export duties or other excise
          taxes imposed on particular sales, and value added taxes (“vat”) to
          the extent that such vat is incurred and not reimbursed, refunded,
          or credited under a tax authority; and allowances or credits to
          Customers because of rejections or returns. Income taxes are not an
          allowed deduction under Net Sales. If the Licensee, a sublicense,
          development partner or Joint Venture is a Customer, then Licensee
          will pay royalties on Net sales based on the total gross amount
          normally charged to other Customers in arms length transactions.
        
	

        	
           
        
	
          1.10
        	
          Sublicensee" means any party sublicensed by Licensee to make, have
          made, use, sell, offer for sale or import any Licensed Product or to
          practice any Licensed Method.
        
	

        	
           
        
	
          1.11
        	
          "Sublicensing Income" means income received by Licensee under or on
          account of sublicenses. Sublicensing Income includes income received
          from Sublicensees attributable to the licensed Invention in the form
          of license issue fees, milestone payments, and the like but
          specifically excludes royalties on the sale or distribution of
          Licensed Products or the practice of Licensed Methods. Not included
          in the definition of Sublicensing Income is income received by
          Licensee as payment or reimbursement for research costs applied to
          the licensed Invention and conducted by or for Licensee, including
          costs of materials, equipment or clinical testing.
        
	

        	
           
        
	
          1.12
        	
          “Customer” means any individual or entity that receives Licensed
          Products or Licensed Methods, provided however, that Licensee or
          sublicensee shall be deemed a Customer only if it receives Licensed
          Products or Licensed Method that are not intended for further sale,
          transfer, lease, exchange or other disposition.
        
	

        	
           
        
	
          
            2. GRANT
          

        
	

        	
           
        
	
          2.1
        	
          Subject to the limitations set forth in this Agreement, The Regents
          hereby grants to Licensee an exclusive license (the "License") under
          Regents' Patent Rights, in jurisdictions where Regents' Patent
          Rights exist, to make, have made, use, sell, offer for sale and
          import Licensed Products and to practice Licensed Methods in the
          Field of Use to the extent permitted by law. The Licensee will not
          make, use, sell, import, or offer for sale, Licensed Products
          outside the Field of Use.
        
	

        	
           
        
	
          2.2
        	
          The Regents expressly reserves the right to: (a) use Regents' Patent
          Rights and associated technology for educational and research
          purposes, clinical research, and research sponsored by commercial
          entities (b) to publicly disclose research results, and (c) allow
          other non-profit research institutions to use Regents' Patent Rights
          and associated technology for the same purposes as (a) and (b).
        
	

        	
           
        
	
          2.3
        	
          The Agreement will terminate immediately if Licensee files a claim
          including in any way the assertion that any portion of Regents’
          Patent Rights is invalid or unenforceable where the filing is by the
          Licensee, a third party on behalf of the Licensee, or a third party
          at the written urging of the Licensee
        

    

    
      
        

        

      

      
        
          6
        

        
          

        

      

      
        

        

      

    

    

    

    
    	
          
            3. SUBLICENSES
          

        
	

        	
           
        
	
          3.1
        	
          The Regents also grants to Licensee the right to issue exclusive or
          nonexclusive sublicenses ("Sublicenses") to third parties to make,
          have made, use, sell, offer for sale or import Licensed Products and
          to practice Licensed Methods in any jurisdiction in which Licensee
          has exclusive rights under this Agreement, but Sublicenses will not
          include further right to sublicense on the part of the Sublicensee.
          Each Sublicense will be issued in writing. To the extent applicable,
          sublicenses must include all of the rights of and will require the
          performance of obligations due to The Regents (and, if applicable,
          the U.S. Government under 35 U.S. C. §§201-212) contained in this
          Agreement. Affiliates have no rights hereunder, unless, granted a
          Sublicense. For the purposes of this Agreement, operations of
          Sublicensees are deemed to be the operations of the Licensee, for
          which the Licensee is responsible.
        
	

        	
           
        
	
          3.2
        	
          Licensee must pay to The Regents Twenty-five percent (25%) of all
          Sublicensing Income.
        
	

        	
           
        
	
          3.3
        	
          On Net Sales of Licensed Products sold or disposed of by a
          Sublicensee, Licensee must pay to The Regents an earned royalty in
          accordance with Article 5 (Royalties) as if these were Licensee's
          Net Sales. Any royalties received by Licensee in excess of royalties
          due to The Regents under this Paragraph 3.3 belong to Licensee.
        
	

        	
           
        
	
          3.4
        	
          Licensee must provide to The Regents a copy of each Sublicense
          within thirty (30) days of execution, and a copy of all information
          submitted to Licensee by Sublicensees relevant to the computation of
          the payments due to The Regents under this Article 3.
        
	

        	
           
        
	
          3.5
        	
          If this Agreement is terminated for any reason, all outstanding
          Sublicenses not in default will be assigned by Licensee to The
          Regents, at the option of The Regents. The Sublicenses will remain
          in full force and effect with The Regents as the licensor or
          sublicensor instead of Licensee, but the duties of The Regents under
          the assigned Sublicenses will not be greater than the duties of The
          Regents under this Agreement, and the rights of The Regents under
          the assigned Sublicenses will not be less than the rights of The
          Regents under this Agreement, including all financial consideration
          and other rights of The Regents.
        
	

        	
           
        
	
          
            4. FEES
          

        
	

        	
           
        
	
          4.1
        	
          In partial consideration for the License, Licensee will pay to The
          Regents a license issue fee of Five thousand dollars ($5,000) within
          thirty (30) days of the Effective Date. This fee is nonrefundable
          and is not an advance against royalties.
        
	

        	
           
        
	
          4.2
        	
          Licensee must pay to The Regents a license maintenance fee of Five
          thousand dollars ($5,000) beginning on the one-year anniversary date
          of the Effective Date of this Agreement and continuing annually on
          each anniversary date of the Effective Date. The maintenance fee
          will not be due and payable on any anniversary date of the Effective
          Date if on that date Licensee is commercially selling a Licensed
          Product and paying an earned royalty to The Regents on the sales of
          that Licensed Product. The license maintenance fees are
          non-refundable and are not an advance against royalties.
        

    

    
      
        

        

      

      
        
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      5.     ROYALTIES
    

    
    	
          5.1
        	
          Licensee must pay to The Regents for sales by Licensee and
          sublicensees an earned royalty of Six percent (6%) of Net Sales of
          Licensed Products or Licensed Methods.
        
	

        	
           
        
	
          5.2
        	
          Licensee must pay to The Regents a minimum annual royalty of Fifty
          thousand dollars ($50,000) for the life of Regents' Patent Rights,
          beginning one year after the First Commercial Sale of Licensed
          Product. Licensee must pay the minimum annual royalty to The Regents
          by February 28 of each year. The minimum annual royalty will be
          credited against the earned royalty due and owing for the calendar
          year in which the minimum payment was made.
        
	

        	
           
        
	
          5.3
        	
          Royalties are payable on products covered by pending patent
          applications and issued patents. Royalties accrue for the duration
          of this Agreement.
        
	

        	
           
        
	
          5.4
        	
          Licensee must pay royalties owed to The Regents on a quarterly
          basis. Licensee must pay the royalties within two (2) months of the
          end of the calendar quarter in which the royalties accrued.
        
	

        	
           
        
	
          5.5
        	
          All monies due The Regents must be paid in United States funds. When
          Licensed Products are sold for monies other than United States
          dollars, the royalties will first be determined in the currency of
          the country in which the Licensed Products were sold and, second,
          converted into equivalent United States funds. Licensee will use the
          exchange rate established by the Bank of America in San Francisco,
          California on the last day of the calendar quarter.
        
	

        	
           
        
	
          5.6
        	
          Any tax for the account of The Regents required to be withheld by
          Licensee under the laws of any foreign country must be promptly paid
          by Licensee for and on behalf of The Regents to the appropriate
          governmental authority. Licensee will use its best efforts to
          furnish The Regents with proof of payment of any tax. Licensee is
          responsible for all bank transfer charges. All payments made by
          Licensee in fulfillment of The Regents' tax liability in any
          particular country will be credited against fees or royalties due
          The Regents for that country.
        
	

        	
           
        
	
          5.7
        	
          If at any time legal restrictions prevent the acquisition or prompt
          remittance of United States Dollars by Licensee with respect to any
          country where a Licensed Product is sold, the Licensee shall pay
          royalties due to The Regents from Licensee’s other sources of United
          States Dollars.
        
	

        	
           
        
	
          5.8
        	
          If any patent or any claim included in Regents' Patent Rights is
          held invalid or unenforceable in a final decision by a court of
          competent jurisdiction from which no appeal has or can be taken, all
          obligation to pay royalties based on that patent or claim or any
          claim patentably indistinct from it will cease as of the date of
          that final decision. Licensee will not, however, be relieved from
          paying any royalties that accrued before that decision or that is
          based on another patent or claim not involved in that decision.
        
	

        	
           
        
	
          
            6. DILIGENCE
          

        
	

        	
           
        
	
          6.1
        	
          Upon the execution of this Agreement, Licensee must diligently
          proceed with the development, manufacture and sale
          ("Commercialization") of Licensed Products and must earnestly and
          diligently endeavor to market them within a reasonable time after
          execution of this Agreement and in quantities sufficient to meet the
          market demands for them.
        

    

    
      
        

        

      

      
        
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          6.2
        	
          
            Licensee must endeavor to obtain all necessary governmental
            approvals for the Commercialization of Licensed Products.
          

        
	

        	

        	
           
        
	
          6.3
        	
          
            The Regents has the right and option to either terminate this
            Agreement or reduce Licensee’s exclusive license to a nonexclusive
            license if Licensee fails to perform any of the terms in this
            Paragraph 6.3. This right, if exercised by The Regents, supersedes
            the rights granted in Article 2 (Grant).
          

        
	

        	

        	
           
        
	

        	
          6.3a
        	
          Initiate a study in humans to measure D-chiro-inositol (“DBI”)
          throughout pregnancy and correlate DBI levels with conventional
          gestational diabetes mellitus (“GDM”) assays to determine value of
          DBI in predicting GDM by September 1, 2010.
        
	

        	

        	
           
        
	

        	
          6.3b
        	
          Complete a study in humans to measure D-chiro-inositol (“DBI”)
          throughout pregnancy and correlate DBI levels with conventional
          gestational diabetes mellitus (“GDM”) assays to determine value of
          DBI in predicting GDM by September 1, 2011.
        
	

        	

        	
           
        
	

        	
          6.3c
        	
          Complete a study to measure plasma DBI levels in samples from the
          Hyperglycemia and Adverse Pregnancy Outcomes (HAPO) study and
          correlate these DBI levels to GDM incidence by June 1, 2012.
        
	

        	

        	
           
        
	

        	
          6.3d
        	
          Complete a prospective human study on DBI and its value in
          predicting GDM by June 1, 2013.
        
	

        	

        	
           
        
	

        	
          6.3e
        	
          Develop a urine-based test for assaying DBI by September 1, 2015.
        
	

        	

        	
           
        
	

        	
          6.3f
        	
          First Commercial Sale of a Licensed Product by September 1, 2017.
        
	

        	

        	
           
        
	
          6.4
        	
          Licensee has the sole discretion for making all decisions as to how
          to commercialize any Licensed Product.
        
	

        	

        	
           
        
	
          
            7. PATENT FILING, PROSECUTION AND MAINTENANCE
          

        
	

        	

        	
           
        
	
          7.1
        	
          As long as Licensee is current in reimbursing patent prosecution
          costs, The Regents will file, prosecute and maintain the patents and
          applications comprising Regents' Patent Rights. These patents will
          be held in the name of The Regents and will be obtained with counsel
          of The Regents' choice. The Regents must provide Licensee with
          copies of each patent application, office action, response to office
          action, request for terminal disclaimer, and request for reissue or
          reexamination of any patent or patent application under Regents'
          Patent Rights. The Regents will consider any comments or suggestions
          by Licensee and will use reasonable efforts to amend patent
          applications to include claims reasonably requested by the License
          to protect the products and services contemplated under this
          Agreement. The Regents is entitled to take action to preserve rights
          and minimize costs whether or not Licensee has commented.
        
	

        	

        	
           
        
	
          7.2
        	
          Patent Costs.
        

    

    
      
        

        

      

      
        
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          7.2.1
        	
          Licensee will bear all costs incurred prior to this Agreement as
          well as during the term of this Agreement for territories elected by
          Licensee pursuant to Section 7.3 of this Agreement, and invoiced to
          The Regents in the preparation, filing, prosecution and maintenance
          of patent applications and patents in Regents' Patent Rights.
          Prosecution includes interferences, oppositions and any other inter
          partes matters originating in a patent office. Licensee must send
          payment to The Regents within thirty (30) days after Licensee's
          receipt of an invoice.
        
	

        	
           
        
	
          7.2.2
        	
          The Regents will use reasonable efforts to give Licensee estimates
          in advance for patent actions costing more than two thousand dollars
          ($2,000) in order to get input from Licensee regarding the
          performance of such activity and cost control. Reasonable efforts
          pursuant to this Paragraph 7.2.2 shall include: (A) providing to
          Licensee, after receipt by The Regents from The Regents’ outside
          counsel, copies of all estimates for fees and expenses to the extent
          such documents were not previously provided to Licensee by Regents’
          outside counsel and (B) instructing its outside counsel to directly
          forward to Licensee, at the same time as its outside counsel
          forwards to The Regents and using the same means that The Regents’
          outside counsel uses to forward to The Regents, copies of all
          estimates for fees and expenses. No later than (A) ten (10) weeks
          prior to the relevant patent action deadline (for example a patent
          filing bar date or an office action response deadline); or (B)
          within ten (10) business days of The Regents supplying the relevant
          cost estimate, whichever is first, Licensee will inform The Regents
          in writing whether or not it elects to proceed with the relevant
          patent action. If, based on the cost estimate, Licensee elects not
          to proceed with the relevant patent action such patent applications
          or the patents to which the office action applies, will then no
          longer be subject to this Agreement, and The Regents will be free to
          negotiate an agreement such as an option or license with another
          party for these patent applications or patent (s). The Regents will
          also instruct its outside counsel to send to Licensee a duplicate
          copy of each invoice sent by The Regents’ outside counsel to The
          Regents. Licensee will have fifteen (15) business days from the
          effective date of delivery of the invoice or billing statement
          pursuant to Article 19(LIMITATION OF LIABILITY), to notify The
          Regents if Licensee believes there are any inaccurate, excessive, or
          questionable charges on such invoice or billing statement. For
          purposes of clarity it is understood that The Regents cannot
          guarantee that its outside counsel will adhere to these instructions.
        
	

        	
           
        
	
          7.3
        	
          Licensee has the right to request patent prosecution on the
          Invention in foreign countries if the rights are available. Licensee
          must notify The Regents of its decision no later than three (3)
          months prior to the Chapter Two Demand and no later than three (3)
          months prior to the National Phase filing date indicating which
          territories they wish to select for prosecution. This notice must be
          in writing and must identify the countries desired. With the notice
          of election the Licensee must pay in advance The Regents patent
          counsel’s estimated cost of the Chapter Two Demand or the entry into
          National Phase in the requested territories. The absence of this
          notice and advance payment either for Chapter Two or for National
          Phase from Licensee to The Regents will be considered an election
          not to secure the foreign rights associated with the specific phase
          of patent prosecution.
        
	

        	
           
        
	
          7.4
        	
          Three (3) months before the Chapter Two Demand and three (3) months
          before National Phase filing, but not sooner, The Regents will have
          the right to file patent applications at its own expense in any
          country which Licensee has not identified in written notice provided
          by Paragraph 7.3. These applications and resulting patents will not
          be part of Regents Patent Rights and therefore not subject to this
          Agreement.
        

    

    
      
        

        

      

      
        
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          7.5
        	
          Licensee's obligation to underwrite and to pay all United States and
          foreign patent costs will continue for as long as this Agreement
          remains in effect. Licensee may terminate its obligations with
          respect to any given patent application or patent upon three (3)
          months written notice to The Regents. The Regents will use its best
          efforts to curtail patent costs chargeable to Licensee under this
          Agreement after this notice is received from Licensee. The Regents
          may continue prosecution or maintenance of these application(s) or
          patent(s) at its sole discretion and expense, and Licensee will have
          no further rights or licenses to them.
        
	

        	
           
        
	

        	
           
        
	
          7.6
        	
          The Regents will use its best efforts to not allow any Regents'
          Patent Rights for which Licensee is licensed and is underwriting the
          costs of to lapse or become abandoned without Licensee's written
          authorization under Paragraph 7.5 or reasonable notice, except for
          the filing of continuations, divisionals, or the like which
          substitute for the lapsed application.
        
	

        	
           
        
	
          
            8. PATENT INFRINGEMENT
          

        
	

        	
           
        
	
          8.1
        	
          In the event that The Regents (to the extent of the actual knowledge
          of the licensing professional responsible for the administration of
          this Agreement) or the Licensee learns of infringement of potential
          commercial significance of any patent licensed under this Agreement,
          the knowledgeable party will provide the other (i) with written
          notice of such infringement and (ii) with any evidence of such
          infringement available to it (the “Infringement Notice”). During the
          period in which, and in the jurisdiction where, the Licensee has
          exclusive rights under this Agreement, neither The Regents nor the
          Licensee will notify a third party (including the infringer) of
          infringement or put such third party on notice of the existence of
          any Regents’ Patent Rights without first obtaining consent of the
          other. If the Licensee puts such infringer on notice of the
          existence of any Regents’ Patent Rights with respect to such
          infringement without first obtaining the written consent of The
          Regents and if a declaratory judgment action is filed by such
          infringer against The Regents, then Licensee's right to initiate a
          suit against such infringer for infringement under Paragraph 8.2
          below will terminate immediately without the obligation of The
          Regents to provide notice to the Licensee. Both The Regents and the
          Licensee will use their diligent efforts to cooperate with each
          other to terminate such infringement without litigation.
        
	

        	
           
        
	
          8.2
        	
          If infringing activity of potential commercial significance by the
          infringer has not been abated within ninety (90) days following the
          date the Infringement Notice takes effect, then the Licensee may
          institute suit for patent infringement against the infringer. The
          Regents may voluntarily join such suit at its own expense, but may
          not thereafter commence suit against the infringer for the acts of
          infringement that are the subject of the Licensee’s suit or any
          judgment rendered in the suit. The Licensee may not join The Regents
          in a suit initiated by Licensee without The Regents’ prior written
          consent. If, in a suit initiated by the Licensee, The Regents is
          involuntarily joined other than by the Licensee, then the Licensee
          will pay any costs incurred by The Regents arising out of such suit,
          including but not limited to, any legal fees of counsel that The
          Regents selects and retains to represent it in the suit.
        

    

    
      
        

        

      

      
        
          11
        

        
          

        

      

      
        

        

      

    

    

    

    
    	
          8.3
        	
          
            If, within a hundred and twenty (120) days following the date the
            Infringement Notice takes effect, infringing activity of potential
            commercial significance by the infringer has not been abated and
            if the Licensee has not brought suit against the infringer, then
            The Regents may institute such suit for patent infringement
            against the infringer. If The Regents institutes such suit, then
            the Licensee may not join such suit without The Regents consent
            and may not thereafter commence suit against the infringer for
            acts of infringement that are subject to The Regents suit or any
            judgment rendered in that suit.
          

        
	

        	

        	
           
        
	
          8.4
        	
          
            Any recovery or settlement received in connection with any suit
            will first be shared by The Regents and the Licensee equally to
            cover any litigation costs each incurred and next shall be paid to
            The Regents or the Licensee to cover any litigation costs it
            incurred in excess of the litigation costs of the other. In any
            suit initiated by the Licensee, any recovery in excess of
            litigation costs will be shared between Licensee and The Regents
            as follows: (a) for any recovery other than amounts paid for
            willful infringement: (i) The Regents will receive five percent
            (5%) of the recovery if The Regents was not a party in the
            litigation and did not incur any litigation costs, (ii) The
            Regents will receive twenty-five percent (25%) if The Regents was
            party in the litigation, but did not incur any litigation costs,
            including provisions of Paragraph 8.2 above, and (iii) The Regents
            will receive fifty percent (50%) of the recovery if The Regents
            incurred any litigation costs in connection with the litigation;
            and (b) for any recovery for willful infringement, The Regents
            will receive fifty percent (50%) of the recovery. In any suit
            initiated by The Regents, any recovery in excess of litigation
            costs will belong to The Regents. The Regents and the Licensee
            agree to be bound by all determinations of patent infringement,
            validity and enforceability (but no other issue) resolved by any
            adjudicated judgment in a suit brought in compliance with this
            Article 8 (Patent Infringement).
          

        
	

        	

        	
           
        
	
          8.5
        	
          
            Any agreement made by the Licensee for purposes of settling
            litigation or other dispute shall comply with the requirements of
            Article 3 (Sublicenses) of this Agreement.
          

        
	

        	

        	
           
        
	
          8.6
        	
          
            Each party will cooperate with the other in litigation proceedings
            instituted hereunder but at the expense of the party who initiated
            the suit (unless such suit is being jointly prosecuted by the
            parties).
          

        
	

        	

        	
           
        
	
          8.7
        	
          
            Any litigation proceedings will be controlled by the party
            bringing the suit, except that The Regents may be represented by
            counsel of its choice in any suit brought by the Licensee.
          

        
	

        	

        	
           
        
	
          
            9. PROGRESS AND ROYALTY REPORTS
          

        
	

        	

        	
           
        
	
          9.1
        	
          
            Beginning January 1, 2009, Licensee must submit to The Regents
            semiannual progress reports covering Licensee's activities related
            to the development and testing of all Licensed Products and the
            obtaining of the governmental approvals necessary for marketing.
            These progress reports must be made for each Licensed Product
            until its First Commercial Sale.
          

        
	

        	

        	
           
        
	
          9.2
        	
          
            The progress reports submitted under Paragraph 9.1 must include
            the following topics:
          

        
	

        	

        	
           
        
	

        	
          9.2a
        	
          Summary of work completed.
        
	

        	
          9.2b
        	
          Key scientific discoveries.
        
	

        	
          9.2c
        	
          Summary of work in progress.
        
	

        	
          9.2d
        	
          Current schedule of anticipated events or milestones.
        
	

        	
          9.2e
        	
          Market plans for introduction of Licensed Products.
        
	

        	
          9.2f
        	
          
            A summary of resources (dollar value) spent in the reporting
            period.
          

        

    

    
      
        

        

      

      
        
          12
        

        
          

        

      

      
        

        

      

    

    

    

    
    	
          9.3.
        	
          Licensee must notify The Regents if Licensee or any of its
          sublicensees ceases to be a small entity (as defined by the United
          States Patent and Trademark Office) under the provisions of 35
          U.S.C. §41(h).
        
	

        	

        	
           
        
	
          9.4
        	
          Licensee must report the date of the First Commercial Sale in the
          royalty report immediately following that sale.
        
	

        	

        	
           
        
	
          9.5
        	
          After the First Commercial Sale of each Licensed Product, Licensee
          will make quarterly royalty reports to The Regents by February 28,
          May 31, August 31 and November 30 of each year (i.e., within two
          months from the end of each calendar quarter). Each royalty report
          will cover Licensee's most recently completed calendar quarter and
          must show:
        
	

        	

        	
           
        
	

        	
          9.5a
        	
          Gross sales and Net Sales of any Licensed Product.
        
	

        	
          9.5b
        	
          Number of each type of Licensed Product sold.
        
	

        	
          9.5c
        	
          Royalties payable to The Regents.
        
	

        	

        	
           
        
	
          9.6
        	
          Licensee will state in its royalty report if it had no sales of any
          Licensed Product in the applicable quarter.
        
	

        	

        	
           
        
	
          
            10. BOOKS AND RECORDS
          

        
	

        	

        	
           
        
	
          10.1
        	
          Licensee must keep accurate books and records of all Licensed
          Products developed, manufactured, used or sold. Licensee must
          preserve these books and records for at least five (5) years from
          the date of the royalty payment to which they pertain. These books
          and records will be open to examination by representatives or agents
          of The Regents during regular office hours to determine their
          accuracy and assess the Licensee’s compliance with the terms of this
          Agreement. The Licensee will pay fees and expenses of these
          inspections if an error favoring Licensee of more than five percent
          (5%) of the total annual royalties is discovered, otherwise The
          Regents will pay the fees and expenses of inspections. Payment owed
          by Licensee hereunder for underpayment of royalties will be due
          within thirty (30) days of the examination result and payment by
          Licensee for any examination costs incurred by The Regents will be
          due within thirty (30) days from the date of The Regents’ invoice.
        
	

        	

        	
           
        
	
          
            11. LIFE OF THE AGREEMENT
          

        
	

        	

        	
           
        
	
          11.1
        	
          Unless otherwise terminated by operation of law or by acts of the
          parties in accordance with the terms of this Agreement, this
          Agreement is in force from the Effective Date recited on page one
          and remains in effect for the life of the last-to-expire patent or
          last to be abandoned patent application in Regents' Patent Rights,
          whichever is later.
        
	

        	

        	
           
        
	
          11.2
        	
          Upon termination of this Agreement, Licensee will have no further
          right to make, have made, use or sell any Licensed Product except as
          provided in Article 14 (Disposition of Licensed Products on Hand
          Upon Termination).
        
	

        	

        	
           
        
	
          11.3
        	
          Any expiration or termination of this Agreement will not affect the
          rights and obligations set forth in the following Articles:
        

    

    
      
        

        

      

      
        
          13
        

        
          

        

      

      
        

        

      

    

    

    

    
    	
           
        	
          Article 10
        	
          Books and Records.
        
	

        	
          Article 14
        	
          Disposition of Licensed Products on Hand upon Termination.
        
	

        	
          Article 16
        	
          Use of Names and Trademarks.
        
	

        	
          Article 17
        	
          Warranties
        
	

        	
          Article 18
        	
          Indemnification.
        
	

        	
          Article 23
        	
          Failure to Perform.
        
	

        	
          Article 24
        	
          Governing Laws
        

    

    
      12.     TERMINATION BY THE REGENTS
    

    
    	
          12.1
        	
          If Licensee violates or fails to perform any material term of this
          Agreement, then The Regents may give written notice of the default
          ("Notice of Default") to Licensee. If Licensee does not repair the
          default within sixty (60) days after the effective date of the
          Notice of Default, then The Regents has the right to terminate this
          Agreement and the License by a second written notice ("Notice of
          Termination") to Licensee. If The Regents sends a Notice of
          Termination to Licensee, then this Agreement automatically
          terminates on the effective date of this notice. Termination does
          not relieve Licensee of its obligation to pay any royalty or fees
          owing at the time of termination and does not impair any accrued
          right of The Regents.
        
	

        	
           
        
	
          
            13. TERMINATION BY LICENSEE
          

        
	

        	
           
        
	
          13.1
        	
          Licensee has the right at any time to terminate this Agreement in
          whole or with respect to any portion of Regents' Patent Rights by
          giving written notice to The Regents. This notice of termination
          will be subject to Article 20 (Notices) and will be effective ninety
          (90) days after the effective date of the notice.
        
	

        	
           
        
	
          13.2
        	
          Any termination in accordance with Paragraph 13.1 does not relieve
          Licensee of any obligation or liability accrued prior to
          termination. Nor does termination rescind anything done by Licensee
          or any payments made to The Regents prior to the effective date of
          termination. Termination does not affect in any manner any rights of
          The Regents arising under this Agreement prior to termination.
        
	

        	
           
        
	
          
            14. DISPOSITION OF LICENSED PRODUCTS
          

        
	
          
            ON HAND UPON TERMINATION
          

        
	

        	
           
        
	
          14.1
        	
          Upon termination of this Agreement, Licensee will have the right to
          dispose of all previously made or partially made Licensed Products,
          but no more, within a period of six (6) months. But Licensee must
          submit royalty reports on the sale of these Licensed Products and
          must pay royalties at the rate and at the time provided in this
          Agreement.
        
	

        	
           
        
	
          
            15. PATENT MARKING
          

        
	

        	
           
        
	
          15.1
        	
          Licensee must mark all Licensed Products made, used or sold under
          the terms of this Agreement, or their containers, in accordance with
          the applicable patent marking laws.
        
	

        	
           
        
	
          
            16. USE OF NAMES AND TRADEMARKS
          

        
	

        	
           
        
	
          16.1
        	
          The Licensee will not use any name, trade name, trademark or other
          designation of The Regents’ or its employees (including contraction,
          abbreviation or simulation of any of the foregoing) in advertising,
          publicity or other promotional activity. Unless required by law,
          Licensee is expressly prohibited from using the name "The Regents of
          the University of California" or the name of any campus of the
          University of California in advertising, publicity, or other
          promotional activity, without written permission of The Regents.
        

    

    
      
        

        

      

      
        
          14
        

        
          

        

      

      
        

        

      

    

    

    

    
      17.    LIMITED WARRANTY
    

    
    	
          17.1
        	
          The Regents warrants that it has the lawful right to grant this
          license to Licensee.
        
	

        	

        	
           
        
	
          17.2
        	
          This License and the associated Invention are provided WITHOUT
          WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR
          ANY OTHER WARRANTY, EXPRESS OR IMPLIED. THE REGENTS MAKE NO
          REPRESENTATION OR WARRANTY THAT ANY LICENSED PRODUCT WILL NOT
          INFRINGE ANY PATENT OR OTHER PROPRIETARY RIGHT.
        
	

        	

        	
           
        
	
          17.3
        	
          IN NO EVENT WILL THE REGENTS BE LIABLE FOR ANY INCIDENTAL, SPECIAL
          OR CONSEQUENTIAL DAMAGES RESULTING FROM EXERCISE OF THIS LICENSE OR
          THE USE OF THE INVENTION OR LICENSED PRODUCTS OR THE USE OR THE
          PRACTICE OF LICENSED METHODS.
        
	

        	

        	
           
        
	
          17.4
        	
          Nothing in this Agreement will be construed as:
        
	

        	

        	
           
        
	

        	
          17.4a
        	
          A warranty or representation by The Regents as to the validity or
          scope of any Regents' Patent Rights.
        
	

        	
          17.4b
        	
          A warranty or representation that anything made, used, sold or
          otherwise disposed of under any license granted in this Agreement is
          or will be free from infringement of patents of third parties.
        
	

        	
          17.4c
        	
          Obligating The Regents to bring or prosecute actions or suits
          against third parties for patent infringement except as provided in
          Article 8 (Patent Infringement).
        
	

        	
          17.4d
        	
          Conferring by implication, estoppel or otherwise any license or
          rights under any patents of The Regents other than Regents' Patent
          Rights as defined herein, regardless of whether such patents are
          dominant or subordinate to Regents' Patent Rights.
        
	

        	
          17.4e
        	
          Obligating The Regents to furnish any know-how not provided in
          Regents' Patent Rights.
        
	

        	

        	
           
        
	
          
            18. INDEMNIFICATION
          

        
	

        	

        	
           
        
	
          18.1
        	
          Licensee will, and will require its sublicensees to, indemnify, hold
          harmless and defend The Regents, its officers, employees, and
          agents, the sponsors of the research that led to the invention, the
          inventors of the patents and patent applications in Regents' Patent
          Rights and their respective employers from and against any and all
          liability, claims, suits, losses, damages, costs, fees and expenses
          resulting from or arising out of exercise of this Agreement or any
          Sublicense. Indemnification includes but is not limited to products
          liability. If The Regents, in its sole discretion, believes that
          there will be a conflict of interest or it will not otherwise be
          adequately represented by counsel chosen by Licensee to defend The
          Regents in accordance with this Paragraph 18.1, then The Regents may
          retain counsel of its choice to represent it, and Licensee will pay
          all expenses for such representation.
        

    

    
      
        

        

      

      
        
          15
        

        
          

        

      

      
        

        

      

    

    

    

    
    	
          18.2
        	
          Licensee, at its sole cost and expense, must insure its activities
          in connection with the work under this Agreement and obtain, keep in
          force and maintain Commercial Form General Liability Insurance
          (contractual liability included) with limits as follows:
        

    

    
    	
           
        	
          18.2a
        	
          Each occurrence
        	
          $500,000
        
	

        	
          18.2b
        	
          Products/completed operations aggregate
        	
          $1,000,000
        
	

        	
          18.2c
        	
          Personal and advertising injury
        	
          $500,000
        
	

        	
          18.2d
        	
          General aggregate (commercial form only)
        	
          $1,000,000
        

    

    
    	
           
        	
          
            In Vitro Diagnostics
          

        
	

        	
          Notwithstanding the foregoing, no later than the sooner of 60 days
          before the first use of any Licensed Product or Licensed Method in
          or on a human or 60 days before the anticipated date of market
          introduction of any Licensed Product or Licensed Method where such
          Licensed Product or Licensed Method is a diagnostic for in vitro
          use, Licensee, at its sole cost and expense, shall insure its
          activities in connection with the work under this Agreement and
          obtain, keep in force and maintain Comprehensive or Commercial Form
          General Liability Insurance (contractual liability included) with
          limits as follows (or an equivalent program of self-insurance):
        

    

    
    	
          
             
          

        	
          
            18.2e
          

        	
          Each occurrence
        	
          $1,000,000
        
	

        	
          18.2f
        	
          Products/completed operations aggregate
        	
          $5,000,000
        
	

        	
          18.2g
        	
          Personal and advertising injury
        	
          $1,000,000
        
	

        	
          18.2h
        	
          General aggregate (commercial form only)
        	
          $5,000,000
        

    

    
    	
           
        	
          
            In Vivo Diagnostics
          

        
	

        	
          Notwithstanding the foregoing, no later than 60 days before the
          first use of any Licensed Product or Licensed Method in or on a
          human where such Licensed Product or Licensed Method is a diagnostic
          for in vivo use, Licensee, at its sole cost and expense, shall
          insure its activities in connection with the work under this
          Agreement and obtain, keep in force and maintain Comprehensive or
          Commercial Form General Liability Insurance (contractual liability
          included) with limits as follows (or an equivalent program of
          self-insurance):
        

    

    
    	
          
             
          

        	
          
            18.2i
          

        	
          Each occurrence
        	
          $2,000,000
        
	

        	
          18.2j
        	
          Products/completed operations aggregate
        	
          $10,000,000
        
	

        	
          18.2k
        	
          Personal and advertising injury
        	
          $1,000,000
        
	

        	
          18.2l
        	
          General aggregate (commercial form only)
        	
          $4,000,000
        

    

    
    	
           
        	
          Notwithstanding the foregoing, no later than 60 days before the
          anticipated date of market introduction of any Licensed Product or
          Licensed Method where such Licensed Product or Licensed Method is a
          diagnostic for in vivo use, Licensee, at its sole cost and expense,
          shall insure its activities in connection with the work under this
          Agreement and obtain, keep in force and maintain Comprehensive or
          Commercial Form General Liability Insurance (contractual liability
          included) with limits as follows (or an equivalent program of
          self-insurance):
        

    

    
    	
           
        	
          18.2m
        	
          Each occurrence
        	
          $5,000,000
        
	

        	
          18.2n
        	
          Products/completed operations aggregate
        	
          $10,000,000
        
	

        	
          18.2o
        	
          Personal and advertising injury
        	
          $5,000,000
        
	

        	
          18.2p
        	
          General aggregate (commercial form only)
        	
          $10,000,000
        

    

    
      
        

        

      

      
        
          16
        

        
          

        

      

      
        

        

      

    

    

    

    
    	
          18.3
        	
          If the above insurance is written on a claims-made form, it shall
          continue for three (3) years following termination or expiration of
          this Agreement. The insurance shall have a retroactive date of
          placement prior to or coinciding with the Effective Date of this
          Agreement.
        
	

        	

        	
           
        
	
          18.4
        	
          Licensee will obtain, keep in force and maintain Worker's
          Compensation Insurance as legally required in the jurisdiction in
          which Licensee is doing business.
        
	

        	

        	
           
        
	
          18.5
        	
          Licensee expressly understands, however, that the coverages and
          limits in Paragraph 18.2 do not in any way limit the Licensee's
          liability. Licensee must furnish The Regents with certificates of
          insurance evidencing compliance with all requirements. Licensee's
          insurance must:
        
	

        	

        	
           
        
	

        	
          18.5a
        	
          Provide for thirty (30) day advance written notice to The Regents of
          any modification.
        
	

        	
          18.5b
        	
          Indicate that The Regents of the University of California is
          endorsed as an insured under the coverages listed in Paragraph 18.2.
        
	

        	
          18.5c
        	
          Include a provision that the coverages will be primary and will not
          participate with nor will be excess over any valid and collective
          insurance or program of self-insurance carried or maintained by The
          Regents.
        
	

        	

        	
           
        
	
          18.6
        	
          The Regents shall notify Licensee in writing of any claim or suit
          brought against The Regents in respect of which The Regents intends
          to invoke the provisions of this Article 18 (Indemnification).
          Licensee shall keep The Regents informed on a current basis of its
          defense of any claims under this Article 18 (Indemnification).
        
	

        	

        	
           
        
	
          
            19. LIMITATIONS OF LIABLITY
          

        
	

        	

        	
           
        
	
          19.1
        	
          THE REGENTS WILL NOT BE LIABLE FOR ANY LOST PROFITS, COSTS OF
          PROCURING SUBSTITUTE GOODS OR SERVICES, LOST BUSINESS, ENHANCED
          DAMAGES FOR INTELLECTUAL PROPERTY INFRINGEMENT OR ANY INDIRECT,
          INCIDENTAL, CONSEQUENTIAL, PUNITIVE OR OTHER SPECIAL DAMAGES
          SUFFERED BY LICENSEE, SUBLICENSEES, JOINT VENTURES, AFFILIATES OR
          DEVELOPMENT PARTNERS ARISING OUT OF OR RELATED TO THIS AGREEMENT.
          THE REGENTS WILL NOT BE LIABLE FOR ANY CAUSES OF ACTION OF ANY KIND
          (INCLUDING TORT, CONTRACT, NEGLIGENCE, STRICT LIABILITY AND BREACH
          OF WARRANTY) EVEN IF THE REGENTS HAS BEEN ADVISED OF THE POSSIBILITY
          OF SUCH DAMAGES.
        
	

        	

        	
           
        
	
          
            20. NOTICES
          

        
	

        	

        	
           
        
	
          20.1
        	
          Any notice or payment required to be given to either party must be
          sent to the respective address given below and is effective: (a) on
          the date of delivery if delivered in person, (b) five (5) days after
          mailing if mailed by first-class certified mail, postage paid, or
          (c) on the next business day if sent by overnight delivery. Either
          party may change its designated address by written notice.
        

    

    
      
        

        

      

      
        
          17
        

        
          

        

      

      
        

        

      

    

    
    	
           
        	
          For Licensee:
        	
          Entest BioMedical Inc.
        
	

        	

        	
          1010 University Avenue #40
        
	

        	

        	
          San Diego, CA 92103
        
	

        	

        	
           
        
	

        	

        	
          Attention: David R. Koos
        
	

        	

        	
           
        
	

        	
          For The Regents:
        	
          The Regents of the University of California
        
	

        	

        	
          University of California, Los Angeles
        
	

        	

        	
          Office of Intellectual Property Administration
        
	

        	

        	
          11000 Kinross Avenue, suite 200
        
	

        	

        	
          Los Angeles, CA 90095-1406
        
	

        	

        	
           
        
	

        	

        	
          Attention: Director
        
	

        	

        	
          Ref: UC Case No. 2007-523
        

    

    
      21.     ASSIGNABILITY
    

    
    	
          21.1
        	
          This Agreement is binding upon and inures to the benefit of The
          Regents, its successors and assigns. But it is personal to Licensee
          and assignable by Licensee only with the written consent of The
          Regents. The consent of The Regents will not be required if the
          assignment is in conjunction with the transfer of all or
          substantially all of the business of Licensee to which this license
          relates.
        
	

        	
           
        
	
          
            22. LATE PAYMENTS
          

        
	

        	
           
        
	

        	
           
        
	
          22.1
        	
          For each royalty payment or fee not received by The Regents when
          due, Licensee must pay to The Regents a simple interest charge of
          10% per annum to be calculated from the date payment was due until
          it was actually received by The Regents.
        
	

        	
           
        
	
          
            23. WAIVER
          

        
	

        	
           
        
	
          23.1
        	
          The waiver of any breach of any term of this Agreement does not
          waive any other breach of that or any other term.
        
	

        	
           
        
	
          
            24. FAILURE TO PERFORM
          

        
	

        	
           
        
	
          24.1
        	
          If either party takes legal action against the other because of a
          failure of performance due under this Agreement, then the prevailing
          party is entitled to reasonable attorney's fees in addition to costs
          and necessary disbursements.
        
	

        	
           
        
	
          
            25. GOVERNING LAW
          

        
	

        	
           
        
	
          25.1
        	
          THIS AGREEMENT IS TO BE INTERPRETED AND CONSTRUED IN ACCORDANCE WITH
          THE LAWS OF THE STATE OF CALIFORNIA, but the scope and validity of
          any patent or patent application will be governed by the applicable
          laws of the country of the patent or patent application.
        
	

        	
           
        
	
          
            26. GOVERNMENT APPROVAL OR REGISTRATION
          

        
	

        	
           
        
	
          26.1
        	
          If this Agreement or any associated transaction is required by the
          law of any nation to be either approved or registered with any
          governmental agency, Licensee will assume all legal obligations to
          do so. Licensee will notify The Regents if it becomes aware that
          this Agreement is subject to a United States or foreign government
          reporting or approval requirement. Licensee will make all necessary
          filings and pay all costs including fees, penalties, and all other
          out-of-pocket costs associated with such reporting or approval
          process.
        

    

    
      
        

        

      

      
        
          18
        

        
          

        

      

      
        

        

      

    

    

    

    
    	
          
            27. COMPLIANCE WITH LAWS
          

        
	

        	

        	
           
        
	
          27.1
        	
          The Licensee will comply will all applicable international,
          national, state, regional, and local laws and regulations in
          performing its obligations hereunder and in its use, manufacture,
          sale or import of the Licensed Products or practice of the Licensed
          Methods. The Licensee will observe all applicable United States and
          foreign laws with respect to the transfer of Licensed Products and
          related technical data and the provision of services using Licensed
          Methods to foreign countries, including and without limitation, the
          International Traffic in Arms Regulations (ITAR) and the Export
          Administration Regulations. The Licensee will manufacture Licensed
          Products and practice the Licensed Methods in compliance with all
          applicable government importation laws and regulations of a country
          into which Licensed Products are imported.
        
	

        	

        	
           
        
	
          
            29. FORCE MAJEURE
          

        
	

        	

        	
           
        
	
          29.1
        	
          Except for the Licensee’s obligation to make any payments to The
          Regents hereunder, the parties shall not be responsible for any
          failure to perform due to the occurrence of any events beyond their
          reasonable control which render their performance impossible or
          onerous, including, but not limited to: accidents (environment,
          toxic spill, etc.); acts of God; biological or nuclear incidents;
          casualties; earthquakes; fires; floods; governmental acts; orders or
          restrictions; inability to obtain suitable and sufficient labor,
          transportation, fuel and materials; local, national or state
          emergency; power failure and power outages; acts of terrorism;
          strike; and war.
        
	

        	

        	
           
        
	
          29.2
        	
          Either party to this Agreement, however, will have the right to
          terminate this Agreement upon thirty (30) days’ prior written notice
          if either party is unable to fulfill its obligations under this
          Agreement due to any of the causes specified in Paragraph 29.1 for a
          period of one (1) year.
        
	

        	

        	
           
        
	
          
            30. CONFIDENTIALITY
          

        
	

        	

        	
           
        
	
          30.1
        	
          If either party discloses confidential information to the other
          party, the disclosing party will designate this information as
          confidential by appropriate legend or instruction, and the receiving
          party will:
        
	

        	

        	
           
        
	

        	
          30.1a
        	
          Use the same degree of care to maintain the secrecy of the
          confidential information as it uses to maintain the secrecy of its
          own information of like kind.
        
	

        	

        	
           
        
	

        	
          30.1b
        	
          Use the confidential information only to accomplish the purposes of
          this Agreement.
        
	

        	

        	
           
        
	
          30.2
        	
          Neither party will disclose confidential information received from
          the other party except to its employees, customers, distributors and
          other agents who are bound to it by similar obligations of
          confidence and only as required to accomplish the purposes of this
          Agreement.
        

    

    
      
        

        

      

      
        
          19
        

        
          

        

      

      
        

        

      

    

    

    

    
    	
          30.3
        	
          Neither party will have any confidentiality obligation with respect
          to the confidential information belonging to or disclosed by the
          other party that:
        
	

        	

        	
           
        
	

        	
          30.3a
        	
          the receiving party can demonstrate by written records was
          previously known to it.
        
	

        	

        	
           
        
	

        	
          30.3b
        	
          the receiving party lawfully obtained from sources under no
          obligation of confidentiality.
        
	

        	

        	
           
        
	

        	
          30.3c
        	
          is or becomes publicly available other than through an act or
          omission of the receiving party or any of its employees.
        
	

        	

        	
           
        
	

        	
          30.3d
        	
          Is required to be disclosed under the California Public Records Act,
          governmental audit requirement or other requirement of law.
        
	

        	

        	
           
        
	
          30.4
        	
          The provisions of this Article 30 will continue in effect for five
          (5) years after expiration or termination of this Agreement.
        
	

        	

        	
           
        
	
          30.5
        	
          The Regents is free to release to the Inventors and senior
          administrators employed by The Regents the terms and conditions of
          this Agreement. If such release is made, then The Regents shall give
          notice of the confidential nature and shall request that the
          recipient not disclose such terms and conditions to others. If a
          third party inquires whether a license to Regents’ Patent Rights is
          available, then The Regents may disclose the existence of this
          Agreement and the extent of the grant in Articles 2 (Grant) and 3
          (Sublicenses) to such third party, but will not disclose the name of
          Licensee or any other negotiated terms or conditions of this
          Agreement, except where The Regents is required to release
          information under the California Public Records Act, a governmental
          audit requirement, or other applicable law.
        
	

        	

        	
           
        
	
          
            31. MISCELLANEOUS
          

        
	

        	

        	
           
        
	
          31.1
        	
          The headings of the several sections are inserted for convenience of
          reference only and are not intended to be a part of, or to affect
          the meaning or interpretation of, this Agreement.
        
	

        	

        	
           
        
	
          31.2
        	
          This Agreement is not binding upon the parties until it has been
          signed below on behalf of each party, in which event it becomes
          effective as of the date recited on page one.
        
	

        	

        	
           
        
	
          31.3
        	
          No amendment or modification of this Agreement will be valid or
          binding upon the parties unless made in writing and signed by each
          party.
        
	

        	

        	
           
        
	
          31.4
        	
          This Agreement and Appendix A (Regents’ Patent Rights) embodies the
          entire understanding of the parties and supersedes all previous
          communications, representations or understandings, either oral or
          written, between the parties relating to the subject matter hereof.
        
	

        	

        	
           
        
	
          31.5
        	
          If any part of this Agreement is for any reason found to be
          unenforceable, all other parts nevertheless remain enforceable as
          long as a party's rights under this Agreement are not materially
          affected. In lieu of the unenforceable provision, the parties will
          substitute or add as part of this Agreement a provision that will be
          as similar as possible in economic and business objectives as was
          intended by the unenforceable provision.
        

    

    
      
        

        

      

      
        
          20
        

        
          

        

      

      
        

        

      

    

    
      Both The Regents and Licensee have executed this Agreement in duplicate
      originals by their authorized officers on the dates written below:
    

    
    	
          
            ENTEST BIOMEDICAL INC.
          

        	
           
        	
          
            THE REGENTS OF THE UNIVERSITY OF CALIFORNIA
          

        
	

        	

        	
           
        
	

        	

        	
           
        
	
          
            By
          

        	
          
            /s/David R. Koos
          

        	

        	
          
            By
          

        	
          
            /s/Emily Loughran
          

        
	

        	
          
            Signature
          

        	

        	

        	
          
            Signature
          

        
	
          
            Name:
          

        	
          
            David R. Koos
          

        	

        	
          
            Name:
          

        	
          
            Emily Loughran
          

        
	
          
            Title
          

        	
          
            Chairman and CEO
          

        	

        	
          
            Title
          

        	
          
            Director of Licensing
          

        
	
          
            Date
          

        	
          
            10/14/2008
          

        	

        	
          
            Date
          

        	
          
            10/23/08
          

        

    

    

    

    
      
        

        

      

      
        
          21
        

        
          

        

      

      
        

        

      

    

    

    

    
      APPENDIX A
    

    
      REGENTS' PATENT RIGHTS
    

    
      Provisional Patent Application No. 61/030,316 entitled “SCREENING TEST
      FOR GESTATIONAL DIABETES MELLITUS” filed 02/21/2008 (UCLA Case No.
      2007-523-1) by Dr. Brian Koos, and assigned to The Regents.
    

    

    

    
      22Exhibit 10.1                                    Filed Pursuant to Rule 424(b)(3)
                                                      Registration No. 333-33527

                           PROSPECTUS SUPPLEMENT NO. 3
                      (to Prospectus dated August 13, 1997)

                             FOUR OAKS FINCORP, INC.
                  Dividend Reinvestment and Stock Purchase Plan

         This  Prospectus  Supplement  No. 3 is part of,  and  should be read in
conjunction with, the prospectus relating to our Dividend Reinvestment and Stock
Purchase Plan dated August 13, 1997 and the Prospectus  Supplement dated October
4,  2004  and  the   Prospectus   Supplement   dated   December  18,  2006  (the
"Prospectus"). This Prospectus Supplement No. 3 describes certain changes to the
Plan  and  supersedes  the  information  in the  Prospectus  only to the  extent
inconsistent with the Prospectus. The changes to the Plan include:

         Features.  Participants in the Plan may now elect to make optional cash
payments  from  $20.00 to  $2,500.00  per quarter for  additional  Common  Stock
purchases.  This changes the maximum  optional cash payment  allowable under the
Plan from $1,000.00 to $2,500.00 per quarter.

         The  Prospectus,   together  with  Prospectus   Supplement  No.  1  and
Prospectus  Supplement No. 2 and this Prospectus  Supplement No. 3,  constitutes
the prospectus required to be delivered by Section 5(b) of the Securities Act of
1933,  as amended,  with  respect to the offers and sales of Four Oaks  Fincorp,
Inc. Common Stock offered hereby.

         The  Prospectus   will  be  provided  upon  the  request  of  any  Plan
participant.

          This Prospectus Supplement No. 3 is dated September 22, 2008.

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