Development Agreement

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CHEMOKINE THERAPEUTICS CORP

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Title: Development Agreement
Date: 1/8/2007

Search Development Agreement by:

exv10w1

Exhibit 10.1

THIS AGREEMENT made as of December 29, 2006.

BETWEEN:

GLOBE LABORATORIES INC.,
a company amalgamated under the laws of British Columbia

(the “Vendor”)

AND:

CHEMOKINE THERAPEUTICS (B.C.) CORP.,
a company incorporated under the laws of British Columbia

(the “Purchaser”)

AND:

CHEMOKINE THERAPEUTICS CORP.
a corporation incorporated under the laws of Delaware

(“CTC”)

WHEREAS:

A.		CTC and the Vendor entered into a Development Agreement dated January 1, 2003 (the “Development Agreement”) with respect to the Vendor providing biotechnology research and development for the benefit of CTC;

B.		The Vendor and CTC wish to cease future research and development under the Development Agreement;

C.		The Purchaser is a wholly-owned subsidiary of CTC; and

D.		The Vendor desires to sell and the Purchaser desires to purchase certain assets of the Vendor on an “as is” basis and otherwise subject to the terms and conditions set forth in this Agreement.

THIS AGREEMENT WITNESSES THAT, in consideration of the premises and the covenants and agreements herein contained, the Vendor and the Purchaser agree as follows:

ARTICLE 1
INTERPRETATION

1.1 Definitions.

In this Agreement unless otherwise expressly provided:

“Agreement” means this agreement and all amendments made hereto by written agreement between the Vendor, the Purchaser and CTC;

“Assets” has the meaning set out in Section 2.1;

“Business Day” means a day other than a Saturday, Sunday or statutory holiday in British Columbia;

“Closing Date” means January 1, 2007 or such other date as may be agreed to in writing between the Vendor and the Purchaser;

“Effective Time” means 12:01 a.m. (Vancouver time) on the Closing Date or such other time on the Closing Date as the parties hereto may agree;

“Employees” means all employees employed by the Vendor as at today’s date, except Gleb Feldman and Yong Chen;

“Excluded Liabilities” has the meaning set out in Section 2.2;

“IRAP Agreement” means the contribution agreement which came into effect on November 1, 2005 between the Vendor and the National Research Council Canada;

“Purchase Price” has the meaning set out in Section 3.1; and

“Sublease” means the Vendor’s interest in a certain sublease described in an Extension and Amendment of Sub-Lease between Discovery Parks Trust and the Vendor dated for reference the 13^th day of December, 2006, covering certain premises located at the Gerald McGavin Building at 2386 East Mall, University of British Columbia, Vancouver, British Columbia.

1.2 Interpretation.

In this Agreement:

	(i)		“this Agreement” means this agreement as supplemented or amended and in effect from time to time and includes the attached schedules;

	(ii)		all references to a designated “Article”, “section”, “subsection” or other sub or to a schedule are to the designated Article, section, subsection or other sub of or schedule to this Agreement;

	(iii)		the words “herein”, “hereof”, “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular Article, section, subsection, schedule or other sub of this Agreement;

	(iv)		the headings are for convenience only and do not form a part of this Agreement and are not intended to interpret, define or limit the scope, extent or intent of this Agreement or any of its provisions;

	(v)		the singular of any term includes the plural, and vice versa, and any reference to the masculine, feminine or neuter, as the case may be, will include a reference to each of the masculine, feminine or neuter, as the case may be, and where applicable, a corporation, the word “or” is not exclusive and the word “including” is not limiting whether or not non-limiting language (such as “without limitation” or “but not limited to” or words of similar import) is used with reference thereto but rather refers to all other items or matters that could reasonably fall within the broadest possible scope of such general statement, term or matter;

	(vi)		any reference to currency is to Canadian currency;

	(vii)		any reference to a statute includes a reference to such statute and to the regulations made pursuant thereto with all amendments made thereto and in force from time to time, and to any statute or regulations that may be passed which has the effect of supplementing or superseding such statute or such regulations; and

	(viii)		any reference to an entity includes and is also a reference to any entity that is a successor to such entity.

1.3 Governing Law.

This Agreement and all matters arising hereunder will be governed by and construed in accordance with the laws of the Province of British Columbia and the federal laws of Canada applicable therein.

ARTICLE 2
SALE AND PURCHASE OF ASSETS

2.1 Assets to be Sold and Purchased.

Upon and subject to the terms and conditions hereof, the Vendor hereby agrees to sell, transfer and assign to the Purchaser, and the Purchaser hereby agrees to purchase and accept from the Vendor the property and equipment owned by the Vendor listed in Schedule A hereto together with the subleasehold interest (including improvements) described in Schedule E (collectively, the “Assets”), free and clear of all liens, charges and encumbrances.

The Purchaser agrees to assume the obligations of the lease for the photocopy machine to be transferred from the Vendor to the Purchaser on the Closing Date.

2.2 Excluded Liabilities.

(a)

Except as provided in this Agreement, the Purchaser will not assume and will not be liable for any other obligations or liabilities of the Vendor whatsoever including, without limiting the generality of the foregoing:

(i)

any obligation to any Employee accrued up to the Closing Date;

	(ii)		any taxes or amounts due under the Income Tax Act (Canada) or any other taxes whatsoever that may be or become payable by the Vendor, or any income or corporation taxes resulting from or arising as a consequence of the sale by the Vendor to the Purchaser of the Assets;

	(iii)		any liabilities of the Vendor arising under or with respect to the Sublease prior to the Effective Time; and

	(iv)		any liabilities of the Vendor arising under or with respect to the IRAP Agreement.

(b)

The Vendor will indemnify and save harmless the Purchaser from and against any Excluded Liabilities.

2.3 Chemokine Assets

The Vendor acknowledges that the equipment listed in Schedule S belongs to the Purchaser and on or before February 28, 2007 will either be returned to the Purchaser or purchased for $40,800 being the fair market value as determined by Universal Appraisal Company Ltd. of Burnaby, British Columbia by the Vendor together with GST and PST thereon. The Purchaser shall have the right to setoff the amount due (including GST and PST) against any amount owing by it to the Vendor, provided it agrees to remit the GST and PST thereon.

ARTICLE 3
PURCHASE PRICE

3.1 Purchase Price

The purchase price payable by the Purchaser to the Vendor for the Assets (the “Purchase Price”) is $375,935 which is equal to the aggregate fair market value of the Assets as of the Closing Date, as determined by Universal Appraisal Company Ltd. of Burnaby, British Columbia.

3.2 Payment of Purchase Price

The Purchaser will pay the Purchase Price to the Vendor on the Closing Date as follows:

	(a)		as to $125,312 by issuing a non-interest bearing promissory note due January 10, 2007, in the form attached as Schedule B; and

	(b)		as to $250,623 by issuing an interest bearing promissory note due on the earlier of June 30, 2007 and 3 business days after CTC completes a material financing, in the form attached in Schedule C.

If requested by the Vendor the Purchaser will grant a security interest in the Assets securing payment of the notes.

3.3 Allocation of Purchase Price.

The Purchase Price shall be allocated among the Assets as set out in Schedule D.

ARTICLE 4
TAX MATTERS

4.1 GST Payment

The Purchaser will be liable for all GST properly payable upon and in connection with the sale, transfer and assignment of the Assets and other transactions contemplated herein between the Vendor and the Purchaser.

4.2 PST Payment.

The Purchaser will be liable for and will pay and remit all provincial sales taxes (if any), registration charges and transfer fees properly payable upon and in connection with sale, transfer and assignment of the Assets and other transactions contemplated herein between the Vendor and the Purchaser.

ARTICLE 5
REPRESENTATIONS AND WARRANTIES

5.1 Representations and Warranties of Vendor.

The Vendor represents and warrants to the Purchaser that:

	(i)		the Vendor is a corporation duly amalgamated and existing under the laws of British Columbia, has the power and authority to enter into this Agreement and to carry out the transactions contemplated by this Agreement, all of which have been duly and validly authorized by all requisite proceedings and this Agreements constitutes a legal, valid and binding obligation of the Vendor;

	(ii)		the Vendor is the legal and beneficial owner of the Assets;

	(iii)		the Vendor has and shall, on the Closing Date, have good and marketable title to the Assets, free and clear of all liens, charges and encumbrances; and

	(iv)		the Vendor is resident in Canada within the meaning of the Income Tax Act (Canada).

5.2 Acknowledgment of Purchaser.

The Purchaser acknowledges that otherwise than as provided in Section 5.1 above, the Assets are sold and transferred “as is” and that the Vendor makes no warranty or representation as to the physical condition of the Assets or any part thereof and any implied warranties whether pursuant to the Sale of Goods Act or otherwise are expressly denied by the Vendor and waived by the Purchaser.

5.3 Representations and Warranties of Purchaser.

The Purchaser represents and warrants to the Vendor that the Purchaser is a corporation duly incorporated and existing under the laws of British Columbia; the Purchaser is duly qualified to purchase and own the Assets and the Purchaser has full power, authority and capacity to enter into this Agreement and carry out the transactions contemplated herein.

ARTICLE 6
EMPLOYEES

6.1 Offers of Employment.

The Vendor and the Purchaser acknowledge that the Purchaser has made offers of employment to all Employees at a remuneration equal or greater to that paid by the Vendor prior to their termination effective December 31, 2006..

6.2 Termination by Vendor.

The Vendor covenants and agrees to take such steps as are necessary to terminate the employment of the Employees. As between the Vendor and the Purchaser, the Vendor is solely responsible for and will discharge all obligations and liabilities for wages, severance pay, termination pay, notice of termination of employment or payment in lieu of such notice, damages for wrongful dismissal or other employee benefits or claims, including vacation and overtime pay accrued up to the close of business on the date immediately preceding the Closing Date.

ARTICLE 7
TERMINATION OF OBLIGATIONS UNDER
DEVELOPMENT AGREEMENT

7.1 End of Research and Development Under the Agreement.

CTC and the Vendor agree that the Vendor will cease conducting research and development activities for the benefit of CTC under the Development Agreement after December 31, 2006 and without prejudice to payment obligations with respect to the period prior to January 1, 2007, CTC will accordingly have no obligation to pay for research and development conducted by the Vendor after December 31, 2006.

7.2 Remaining Provisions of Development Agreement Unaffected.

All other provisions of the Development Agreement, and in particular the provisions relating to Confidential Information (as defined in the Development Agreement), remain in full force and effect except to reflect the termination of further research and development.

7.3 Financial Statements, Books and Records.

The Vendor will provide to CTC within 60 days after the respective year ends the Vendor’s financial statements prepared by an D&H Chartered Accountants Group for the fiscal years ended December 31, 2006 and December 31, 2007 and permit CTC and its advisors to inspect

the books and records of the Vendor, as necessary, in order for CTC to verify the calculation of costs.

7.4 Adjustments.

Subject to Section 7.3, CTC and the Vendor will, by February 28, 2007, adjust all amounts due between CTC and the Vendor under the Development Agreement, for the period from January 1, 2003 to December 31, 2006, including making a final determination of costs and by taking into account advances made by CTC to the Vendor, other inter-company accounts and other items which properly require adjustment between the parties.

7.5 Delivery of Items.

	(a)		The Vendor agrees to deliver to CTC, or the Purchaser, as the case may be, all Confidential Information (as defined in the Development Agreement), Work Product (as defined in the Development Agreement) and studies, tests and electronic files and work-in-progress as well as notes, writings, documents and other materials related to the Work Product (collectively, the “Delivery Items”).

	(b)		The Vendor will make delivery of all Delivery Items, as set out in paragraph (a) above, on or before January 10, 2007 (the “Delivery Date”). In the event that the Vendor inadvertently fails to deliver anything that would reasonably be considered a Delivery Item by the Delivery Date, the Vendor agrees and covenants that the Vendor will not use in any way, or convey, assign or transfer in any way to a third party, such Delivery Item. The Vendor will safeguard and hold such Delivery Item in trust for the benefit of CTC until such time as CTC requests delivery of the Delivery Item.

7.6 Non-Competition.

The Vendor shall not, for a period of five (5) years following the Closing Date, throughout the world, directly or indirectly, as an owner, agent, contractor, consultant, or otherwise, enter into any business or activities in competition with the present business of the Purchaser or CTC, namely research and development of chemokine agonists and antagonists in the treatment of cancer or for the purpose of stem cell mobilization, neutrophils mobilization or platelets mobilization; and the use of chemokine agonists or antagonists in the growth and stimulation of stem cells or white blood cells and also specifically including any business or activities relating to research and development and that are identical or substantially similar to the ones performed under the Development Agreement.

7.7 Non-Solicitation.

The Vendor agrees that, for a period of five (5) years following the Closing Date, it will not knowingly, either directly or indirectly, solicit, accept or engage the services or assistance, financial or otherwise of any Employee or other employees of the Purchaser or CTC for itself or for any other person in respect of any business operation.

7.8 Equitable Remedies.

The Vendor acknowledges and agrees that a breach by it of any of the covenants contained in this Article 7 or the covenants in the Development Agreement relating to Confidential Information (as defined in the Development Agreement) might result in damages to CTC or the Purchaser and that CTC or the Purchaser may not adequately be compensated for such damages by monetary award. Accordingly, the Vendor agrees that, in the event of any such breach, in addition to any other remedies available to CTC and the Purchaser at law or in equity, CTC or the Purchaser, as the case may be, will be entitled to apply to a court of competent equitable jurisdiction for such relief by way of restraining order, injunction, decree or otherwise, as may be appropriate to ensure compliance with the provisions of this Article 7 and the covenants in the Development Agreement relating to Confidential Information (as defined in the Development Agreement).

7.9 Mediation/Arbitration.

	(a)		The Vendor and the CTC will work in good faith to attempt to reach agreement on all issues covered by this Article 7 and failing such agreement by February 28, 2007, will work in good faith to resolve any disputes that arise under this Article 7. Where a dispute arises out of or in connection with this Article 7 that cannot be resolved by the parties, the parties agree to seek an amicable settlement of that dispute by mediation and, if necessary, arbitration.

	(b)		If good faith efforts to resolve the dispute have not been successful, either party may refer a dispute to mediation by providing written notice to the other party. If the parties cannot agree on a mediator within fifteen (15) days of receipt of the notice to mediate, then either party may make application to the British Columbia Mediator Roster Society to have one appointed. The mediation will be held in Vancouver, B.C., in accordance with the British Columbia International Commercial Arbitration Centre’s (the “BCICAC”) “Mediation Procedures for Cases under the BCICAC Rules”, and the costs of mediation will be shared equally between the parties.

	(c)		Where mediation is not successful in resolving a dispute and the mediator has been inactive for forty-five (45) days after the mediation, either party may refer the dispute for final and binding resolution by arbitration by providing written notice to the other party. If the parties cannot agree on an arbitrator within thirty (30) days of receipt of the notice to arbitrate, then either party may make application to the British Columbia Arbitration & Mediation Institute to appoint one. The arbitration will be held in Vancouver, B.C., in accordance with the BCICAC’s “Shorter rules for Domestic Commercial Arbitration”, and the costs of arbitration will be shared equally between the parties.

ARTICLE 8
CONDITIONS

8.1 Conditions for the Benefit of the Purchaser.

The sale by the Vendor and the purchase by the Purchaser of the Assets is subject to the following conditions, which are for the exclusive benefit of the Purchaser and which are to be performed or complied with at or prior to the Closing Date:

	(a)		the representations and warranties of the Vendor set forth in Section 5.1 will be true and correct on the Closing Date with the same force and effect as if made at and as of such time;

	(b)		no action or proceeding in Canada will be pending or threatened by any person, government, governmental authority, regulatory body or agency to enjoin, restrict or prohibit the sale and purchase of the Assets contemplated hereby;

	(c)		all necessary steps and proceedings, including the due authorization of the transactions by the directors and if necessary, the shareholders of the Vendor, will have been taken to permit the Assets to be duly and regularly transferred to, and the registrable Assets registered in the name of, the Purchaser free and clear of all charges, liens and encumbrances and any other rights of others;

	(d)		the Vendor will have terminated all contracts, whether written or oral, with the Employees;

	(e)		the Vendor will have executed any instrument, document or certificate necessary to effect a partial assignment of the Sublease, substantially in form set out in Schedule E and received the consent of the landlord therefor; and

	(f)		the Vendor will have delivered to the Purchaser all other documents and assurances as reasonably requested by the Purchaser to more effectively complete the transactions herein provided for.

8.2 Conditions for the Benefit of the Vendor.

The sale by the Vendor and the purchase by the Purchaser of the Assets is subject to the following conditions, which are for the exclusive benefit of the Vendor and which are to be performed or complied with at or prior to the Closing Date:

	(a)		the representations and warranties of the Purchaser set forth in Section 5.3 will be true and correct on the Closing Date with the same force and effect as if made at and as of such time; and

	(b)		the directors of the Purchaser and CTC will have approved the transactions contemplated herein.

ARTICLE 9
GENERAL

9.1 Risk.

The Assets will be at the risk of the Vendor until the Effective Time.

9.2 Transfer Documents.

Each of the Vendor and the Purchaser will deliver or cause to be delivered on the Closing Date or within a reasonable time thereafter all deeds, documents of title, conveyances, bills of sale, transfers, assignments, declarations of trust, acknowledgements, consents, indentures and other instruments and documents necessary or desirable to effect the transfer of the Assets to the Purchaser and to obtain all necessary consents and approvals, if any, in connection therewith or in respect thereof.

9.3 Time.

Time shall be of the essence of this Agreement and the transactions contemplated in this Agreement notwithstanding the extension of any of the dates under this Agreement.

9.4 Further Assurances.

Each of Vendor and the Purchaser will at any time and from time to time execute and deliver such further agreements, instruments and documents and do all such acts and things as may be necessary or desirable to give full effect to the meaning and intent of this Agreement.

9.5 Enurement.

This Agreement will enure to the benefit of and be binding upon the parties and upon their respective successors and assigns.

9.6 Counterparts/Facsimile Transmission.

This Agreement may be executed in several counterparts, each of which when executed by any of the parties will be deemed to be an original and such counterparts will together constitute one and the same instrument. This Agreement may be executed and delivered by facsimile transmission.

9.7 Schedules

The Schedules attached to this Agreement form part of this Agreement.

IN WITNESS WHEREOF the parties have executed this Agreement on the date first appearing above.


GLOBE LABORATORIES INC.

By:		/s/ Hassan Salari Authorized Signatory


CHEMOKINE THERAPEUTICS (B.C.) CORP.

By:		/s/ Hassan Salari Authorized Signatory


CHEMOKINE THERAPEUTICS CORP.

By:		/s/ Bashir Jaffer Authorized Signatory

SCHEDULE A

ASSETS

Chemokine Therapeutics Corp.
405-6190 Agronomy Road, Vancouver, BC


	December 18, 2006

	Market Value
	“In Use”
FURNITURE AND FIXTURES
1- Double pedestal desk		275
1- Bookcase and key pad tray		100
1- Storage cabinet		100
1- Guest chair		100
1- Microwave		50
1- Desk, bookcase, chair (New Lab, Ahmed)		750
1- Fridge/microwave combo		150
1- Leather chair (Room 204, Donald)		60
1- Fridge		150
1- Shredder		100
1- Lot of 3 file cabinets - 5 drawer lateral		950
1- Artificial plant		100
1- Lot of 2 storage cabinet