Preferred Stock And License Restructuring Agreement

Exhibit 10.21


PREFERRED STOCK AND LICENSE RESTRUCTURING AGREEMENT


THIS PREFERRED STOCK AND LICENSE RESTRUCTURING AGREEMENT (this " Agreement" ), is made effective as of the 12th day of April, 2006, by and between Chemokine Therapeutics Corp., a Delaware corporation (" Chemokine" ), and Pharmaceutical Product Development, Inc., a North Carolina corporation (" PPD" ).


RECITALS


A. Chemokine and PPD entered into a certain Loan and Stock Warrant Agreement dated effective as of October 16, 2002 (the " Loan Agreement" ), a Warrant Agreement dated as of November 13, 2002 (the " Warrant Agreement" ), an Agreement Re: Exercise of Stock Warrant dated April 15, 2003 (" Exercise Agreement" ), an Option and License Agreement dated April 15, 2003, as amended (" License Agreement" ), an Exclusive Provider Master Services Agreement dated April 15, 2003 (" Master Services Agreement" ), a Modification and Waiver Agreement dated September 14, 2004 (" Modification Agreement" ), and a 2004 Warrant Agreement dated September 14, 2004 (" 2004 Warrant Agreement" ) (the Loan Agreement, Warrant Agreement, Exercise Agreement, License Agreement, Master Services Agreement, and Modification Agreement are sometimes referred to herein collect ively as the " Existing Agreements" ). Pursuant to the terms of the Existing Agreements and the 2004 Warrant Agreement, PPD holds (i) 2,000,000 shares of preferred stock (" Preferred Shares" ) of Chemokine, convertible into 2,000,000 shares of common stock (" Conversion Common Shares" ) of Chemokine, (ii) 500,000 warrants exercisable into 500,000 shares of common stock of Chemokine (the " Warrants" ) under the 2004 Warrant Agreement, and (iii) certain license rights (" License Rights" ) to compounds developed by Chemokine, primarily CTCE-0214, under the License Agreement.


B. Subsequent to the execution of the Existing Agreements, Chemokine completed a Phase I clinical trial of compound CTCE-0214. In December 2005, Chemokine initiated a second Phase I clinical study CTCE-0214, that is currently ongoing.


C. Chemokine has raised CDN$6.860 million through the sale of shares of its common stock and desires to reacquire exclusive rights to compound CTCE-0214 and to other compounds under development with respect to which PPD has certain rights. Chemokine desires to eliminate the preferred stock in its capital structure. PPD is willing to sell its Preferred Shares and is willing to transfer back to Chemokine its rights to CTCE-0214 and other rights under the Existing Agreements, except that PPD desires to retain its Warrants and certain rights to future cash flows on the CTCE-0214 program, so that PPD will have the opportunity to participate in the future growth and success of Chemokine.


D. Chemokine will commit to purchase the Preferred Shares if PPD does not convert and sell its Conversion Common Shares to a third-party buyer.


E. All " dollars" , " $' s" referred to herein are in U.S. dollars.


NOW, THEREFORE, in consideration of the foregoing premises, the mutual covenants and agreements contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Chemokine and PPD covenant and agree with each other as follows:


1. Sale of Preferred Shares .


(a) For a period of 45 days commencing upon the execution of this Agreement (the " Selling Period" ), PPD shall refrain from exercising its rights to convert the Preferred Shares into Conversion Common Shares and from selling, transferring, disposing, or encumbering the Preferred Shares (other than to a direct or indirect, wholly-owned subsidiary of PPD).


(b) During the Selling Period, PPD may find a buyer or buyers for the Conversion Common Shares. Since Chemokine is familiar with investors and potential investors, Chemokine may refer one or more buyers and/or one or more broker-dealers to assist in this effort.


(c) During the Selling Period, a third party (" Third Party" ) may give irrevocable notice to PPD to convert some or all of the Preferred Shares into the Conversion Common Shares and the Third Party shall purchase and PPD shall sell all of the Conversion Common Shares into which the Preferred Shares have been converted pursuant to the notice on or before the end of the Selling Period. Notwithstanding anything else in this Agreement, PPD shall not have an obligation to convert its Preferred Shares into the Conversion Common Shares unless the gross purchase price per Converted Common Share, less commissions payable by PPD, is at least US$0.86 per share, and any such conversion shall be contingent upon closing of the sale of Conversion Common Shares by PPD to the Third Party buyer.


(d) Chemokine shall purchase and PPD shall sell all of the Preferred Shares that have not been converted into Conversion Common Shares on or before the end of the Selling Period for a price of US$0.86 per share.


(e) The sale of the Preferred Shares or Conversion Common Shares shall be subject to the applicable rules, regulations and requirements of applicable securities laws and, any stock exchange on which Chemokine' s shares are listed.


(f) If a Third Party gives irrevocable notice to PPD to convert some or all of the Preferred Shares as contemplated in this Section 1, any such notice shall be accompanied by a writing, signed by such Third Party, under which such Third Party unconditionally agrees to purchase from PPD 100% of the Conversion Common Shares into which the Preferred Shares will be converted by PPD pursuant to the notice. The writing shall contain a representation and warranty by the Third Party that the writing has been duly authorized by the board of directors and executed by the corporate officers (or authorized and executed by the managers or others who have the power to act on behalf of the Third Party). The writing shall contain no other obligation or condition of PPD that is not contained within this Agreement.


2. Termination of Agreements and Return of the License Agreement and License Rights .


(a) Subject to Section 6, Chemokine and PPD hereby terminate each of the Existing Agreements. All rights of PPD to CTCE-0214 and any other compound developed by Chemokine are hereby retransferred to and conveyed to Chemokine.


(b) As consideration for the termination of the Existing Agreements and the return of the License Rights set forth in subsection 2.(a), Chemokine shall pay to PPD the following additional consideration:


i.

$100,000 cash upon the closing of the sale of Preferred Shares or Conversion Common Shares under Section 1 of this Agreement;

ii.

$250,000 cash upon the dosing of the first subject in a Phase III clinical trial of CTCE-0214;

iii.

$250,000 cash upon filing a New Drug Application with the United States Food and Drug Administration (" FDA" ) with respect to CTCE-0214 (or an equivalent filing in any foreign country);

iv.

$1,000,000 cash upon approval by the FDA (or equivalent regulatory body in a foreign country) of CTCE-0214 for any therapeutic use; and

v.

50 percent of the first Net Sales (as defined in Section 10.(m)) of CTCE-0214 after regulatory approval, up to a cap of $1,000,000 (for clarity, the total amount that PPD is entitled to receive under this clause 2.(b) v. is $1,000,000).


(c) The 2004 Warrant Agreement shall remain in force.


3. Release of Claims by Chemokine . Conditioned upon the satisfaction of all the conditions precedent set forth in this Agreement and subject to the covenants and performance of this Agreement: for valuable consideration provided by PPD to Chemokine, Chemokine, for itself and its partners, employees and assigns, and the heirs, executors, administrators and assigns of each of them, hereby fully and completely release and discharge PPD, and its past, present and future partners, employees, agents, servants, legal representatives, attorneys, predecessors, successors and insurers, and their assigns, heirs, executors, administrators, trustees and respec ...