EXHIBIT 10.1
PATENT AND TRADEMARK LICENSE AGREEMENT
This Agreement is entered into as of October 24, 1998, between THREE
R ASSOCIATES, INC., a California corporation ("Licensor"), and BRITISH LION
MEDICAL, INC., a California corporation ("Licensee").
RECITALS:
WHEREAS, Licensor represents that upon the occurrence of certain
conditions set forth in this Agreement it will be the sole owner of all
right, title and interest in the inventions, processes and improvements
described and claimed in United States Patent No. 5,424,066 entitled METHOD
FOR INCREASING CD4+ CELL NUMBERS THROUGH THE USE OF MONOCLONAL ANTIBODIES
DIRECTED AGAINST SELF-REACTIVE, CD4 SPECIFIC CYTOTOXIC T-CELLS issued June
13, 1995 and United States Patent No. 5,651,970 entitled METHOD FOR
INHIBITING DISEASE ASSOCIATED WITH THE HUMAN IMMUNODEFICIENCY VIRUS THROUGH
THE USE OF MONOCLONAL ANTIBODIES DIRECTED AGAINST ANTI-SELF CYTOTOXIC
T-LYMPHOCYTES OR THEIR LYTICS, issued July 29, 1997 (the "Patents"), as well
as corresponding foreign patent applications filed thereon, together with
any continuations, divisional or continuation-in-part applications and all
other applications relating in any way to the subject matter described in
the Patents and any letters patent related thereto as well as any reissue
and/or re-examined patents issuing thereon (the "Patent Rights"), together
with (i) all know-how, intellectual
property, technical expertise, inventions, information, improvements,
computer programs, algorithms, data, discoveries, ideas, and concepts,
whether or not patentable or copyrightable, including but not limited to
medical, clinical, chemical, pharmaceutical, pharmacological, topological,
toxicological or other scientific data (including without limitation
preclinical and clinical data, notes, reports, models and samples), unique
methods, processes, techniques, designs, formulae, configurations of any
kind, computer graphics, apparatus, products, devices, software,
specifications, drawings and all testing, assaying and analysis
methodologies in any manner pertaining or relating to, resulting from or
useful in connection with the Patents or Patent Rights (the "Know-How"),
(ii) all products that embody or make use of all or any part of the Patents
or Patent Rights or Know-how (the "Products"), (iii) all documents and
information in any form that have been originated by, are peculiarly within
the knowledge of or are proprietary to the inventor, Allen D. Allen, in
whole or in part, and are subject to protection under recognized legal
principles as trade secrets or otherwise pertaining or relating to,
resulting from or useful in connection with the design, manufacture,
installation, sales, marketing, administration, use, repair or operation of
products, processes or services pertaining or relating to, resulting from
or useful in connection with the Patents or Patent Rights or Know-how or
Products (the " Trade Secrets") (such Patents, Patent Rights, Know-how,
Products and Trade Secrets are hereinafter collectively referred to as the
"Technology"); that it will be the exclusive
-2-
licensee of the trademark Cytolin (the "Trademark") with the right to
sublicense the use of the Trademark; and that it will have the sole
authority to enter into this Agreement and to grant the rights, licenses
and privileges herein provided for; and
WHEREAS, Licensee desires to obtain the irrevocable, exclusive and
worldwide right, license and privilege to use the Technology and all
improvements in the Technology which hereafter may be made or acquired by
Licensor or Licensee, or with respect to which Licensor may obtain the
right to grant licenses, and to obtain the exclusive right to use the
Trademark.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual promises and covenants
set forth herein, the parties agree as follows:
1. LICENSE.
(a) Subject to satisfaction of the conditions set forth in the
following paragraph, Licensor grants to Licensee the irrevocable, exclusive
and worldwide right, license and privilege to use the Technology and all
improvements, applications and patents for any improvements thereto which
hereafter may be acquired or made by Licensor, or with respect to which
Licensor may obtain the right to grant licenses and to use the Trademark.
Except as otherwise provided herein, this license shall be exclusive even
against Licensor. Licensor further grants to
-3-
Licensee the right to stamp, designate and advertise all products using the
Technology under such names, designs and/or appellations as Licensee may
determine in its sole discretion, including the Trademark. This license is
subject to the limitation that Licensee may not manufacture, use or sell
products using the Technology in any country in which Licensee has not
applied for patent protection.
(b) Notwithstanding the preceding paragraph and any other term
of this Agreement, this license will not be effective until the later to
occur of: (i) Western Center for Clinical Studies, Inc. or an affiliate
company has entered into a management contract with Licensee; and (ii)
Licensee being merged (the "Merger") into a publicly held company or
subsidiary thereof (the "Conditions").
2. REPRESENTATIONS OF LICENSOR. Licensor covenants and represents
as follows:
(a) Upon satisfaction of the Conditions, it will be the sole owner of
all right, title and interest in the Technology and the exclusive licensee
of the Trademark with the right to sublicense the use of the Trademark.
(b) It has at no time filed, or caused to be filed, applications for
patents, or obtained in its name or caused to be obtained in the name of
others, any patents in the United States
-4-
or elsewhere in respect of the Technology or any technology similar
thereto.
(c) It has no knowledge that, upon satisfaction of the Conditions,
there will be any other person, firm or corporation having any right, title
or interest in the Technology or the Trademark (except for the Trademark
owner).
(d) Licensor knows of no prior art not disclosed in the Patents.
(e) Upon satisfaction of the Conditions, there will be no outstanding
options, licenses or agreements of any kind relating to the Technology, or
to the manufacture, use or sale of products using the Technology, or to the
Trademark (except for the Trademark license between Licensor and the
Trademark owner).
(f) Upon satisfaction of the Conditions, it will have the full power
to grant the rights, licenses and privileges herein given.
3. DISCLOSURE AND FURTHER AGREEMENTS.
(a) Following the effectiveness of this Agreement, Licensor shall
furnish to Licensee at its request, or to its nominees and patent
attorneys, all information and documents regarding the Technology,
including a description of the processes which the
-5-
Technology incorporates, in order to enable Licensee to operate hereunder.
(b) Licensee agrees to assume responsibility for prosecution of any
subsequent patent applications and shall pay all the costs thereof,
including but not limited to, attorneys', engineering and drafting fees and
all other costs that accrue after the date of this Agreement.
(c) Licensor grants to Licensee the right to file for patent
protection for the Technology and trademark protection for the Trademark,
in the name of Licensor, in all countries of the world, at Licensee's sole
cost and expense.
(d) Licensor shall deliver to Licensee, immediately upon
effectiveness of this Agreement, all research and development reports and
studies that have been completed or compiled as of the date hereof, and all
other data relating to the Technology, and shall execute all papers,
documents and instruments necessary to enable Licensee to cause to be
prepared, filed and prosecuted, at Licensee's expense, applications for
letters patent and trademark protection within such countries of the world
as Licensee shall, in its sole discretion, determine is advisable.
(e) Licensee shall mark all products using the Patents manufactured
and distributed under this Agreement with patent numbers in accordance with
statutory requirements and, pending
-6-
the issue of any patents, shall stamp such products "Patent Applied For".
(f) All improvements to the Technology, whether or not patented,
shall be the exclusive property of Licensor, subject to the license hereby
granted. For purposes of this Agreement, "improvement" shall include any
method, process, technology, device, finding, discovery, invention,
addition, modification, formulation or product within the scope of the
Technology that improves, modifies or changes the performance, reliability,
effectiveness, ease of use, marketability, and/or maintenance of the
Technology and its components.
(g) Licensor shall, upon demand, execute and deliver to Licensee such
documents as may be reasonably required by Licensee for filing in the
appropriate patent offices to evidence the granting of the exclusive
license hereby given. Licensor and Licensee shall each provide copies to
the other of all correspondence and filings with the United States Patent
Office and the patent authorities of all other countries in which Licensee
files for patent protection.
4. LICENSE FEE. As full and complete consideration for the license
granted hereunder, Licensee:
(a) shall issue to Licensor simultaneously with the satisfaction
of the Conditions 3,075,000 shares of common stock of
-7-
Licensee, which shall be fully paid and nonassessable upon the issuance
thereof (the "Stock"); and
(b) hereby assumes and agrees to pay the obligation of Licensor
to pay Allen D. Allen ("Allen") an amount at the rate of $90,000 a year
commencing on the date Licensee is merged into a publicly held company,
with such consideration being increased 5% on August 1 of each succeeding
year until the effective date of the termination of the letter consulting
agreement entered into as of August 1, 1998 between Licensor and Allen, and
with such consideration being paid on the first day of each month and
partial years being paid on a pro rata basis.
5. RESTRICTED STOCK AND TRANSFER RESTRICTIONS.
(a) Licensor understands that the Stock will be restricted
securities within the meaning of Rule 144 of the General Rules and
Regulations under the Securities Act of 1933 as amended (the "Act"), and
applicable state statutes. Licensor further understands that (i) an
appropriate restrictive legend (or legends) will be placed on the
certificates representing the Stock and that (ii) the stock transfer
records of Licensee will be noted to reflect such restrictions. Because
the Stock is "restricted" as defined under Rule 144, Licensor understands
that the Stock must be held for a minimum of one year following its
transfer to it. Thereafter, the Stock may be sold, and Licensor agrees it
will be sold, only in the amounts and the manner specified in Rule 144
unless first registered under the Act and
-8-
any applicable state securities laws or unless the availability of an
exemption from such registration requirement is established to the
satisfaction of Licensee.
(b) Licensor agrees not to offer, sell or contract to sell or
otherwise dispose of, directly or indirectly, or announce an offering of,
any of the Stock, including any hereafter acquired shares of Licensee
common stock (nor any securities convertible into, or exchangeable for,
shares of the Licensee's common stock) for a period of two years following
the date of this Agreement.
6. BOOKS AND RECORDS. Licensee shall keep accurate books and
records which shall contain all information necessary to enable Licensor to
audit Licensee's compliance with this Agreement. Licensee shall make these
records available for copying, inspection and auditing, at Licensee's
expense, by any representative designated by Licensor, during normal
business hours at Licensee's principal office, upon seven days' prior
written notice, no more frequently than annually.
7. ASSIGNMENT. This Agreement may not be assigned by Licensee
without the prior written consent of Licensor; provided, however, that
Licensee may assign this license and its rights under this Agreement to any
entity which shall succeed to substantially all of its business and
property and which shall
-9-
assume all of its obligations hereunder, and that the Merger shall not be
deemed an assignment.
8. SUBLICENSES.
(a) Licensee may sublicense the Technology and the Trademark with the
prior consent of Licensor. If Licensor does not object to a sublicense
agreement presented to it by Licensee for its approval within sixty days
after delivery thereof to Licensor, Licensor shall be deemed to have
consented to the sublicense.
(b) Within ten days following the execution of any such sublicense
agreement, Licensee will furnish to Licensor a signed copy of such
agreement.
(c) Licensor acknowledges that Licensee intends to contract with one
or more manufacturers to produce products using the Technology, and agrees
that such action shall not be deemed to be a "sublicense" requiring the
prior consent of Licensor. Licensee shall require all such manufacturers
to execute an agreement pursuant to which they covenant not to disclose any
proprietary information relating to the Technology.
9. IMPROVEMENTS.
(a) Licensee shall have the right to improve the Technology through
its own research and development, provided that all
-10-
improvements resulting therefrom shall be subject to this Agreement.
(b) If, during the continuance of this license, Licensor makes any
further improvements in the Technology or in the mode of using the
Technology, or becomes the owner of any such improvements, either through
patents or otherwise, then Licensor shall communicate any such improvements
to Licensee and give Licensee full information regarding the mode of using
them, and Licensee shall be entitled to use the same with all rights which
are hereby granted to Licensee in respect of the Technology without paying
additional consideration therefor. In its discretion, Licensee may apply
for and prosecute patents on such improvements in the name of Licensor or
require Licensor to apply for and prosecute such patents on improvements at
Licensee's cost.
10. INFRINGEMENT.
(a) If Licensor or Licensee becomes aware of any infringement of any
patent issued with respect to the Technology or of the Trademark, such
party shall immediately notify the other party, in writing, of the details
of such infringement. If any such infringement is within the United
States, Licensee shall, at its expense, prosecute any action necessary to
protect the rights of each of the parties to this Agreement. If Licensee
does not prosecute such action, this license shall terminate unless this
requirement is waived by Licensor in writing. If
-11-
such infringement is in a foreign country, and such infringement is
"substantial," Licensee shall, at its expense, prosecute any action
necessary to protect the rights of each of the parties to this Agreement.
If Licensee does not prosecute such action, Licensee's exclusive license to
manufacture, use, sell and sublicense in such country shall terminate. For
purposes of this paragraph, an infringement within a foreign country will
be deemed to be "substantial" if Licensee, or its sublicensee, experiences
more than a 25% reduction in sales in such country after introduction in
the market in such country of the infringing product. Licensee shall be
responsible for all costs, expenses and judgments associated with such
prosecutions, and shall be solely entitled to any monetary award or
judgment resulting therefrom.
(b) Should any action be commenced against Licensor or Licensee, by
the filing of a complaint or otherwise, which alleges that the Technology,
or any of its improvements included within the scope of the license granted
hereunder, or the Trademark infringes the claims of any letters patent or
proprietary information or trademark of a third party, Licensee shall
defend such action at its cost and expense, and Licensor shall cooperate
fully with such defense.
(c) If Licensor is compelled in any suit which Licensee may institute
or defend to join Licensee as a party plaintiff or party defendant, then
Licensor shall not be chargeable for any
-12-
costs or expenses, except its attorneys' fees should it elect separate
representation, except as otherwise specifically provided herein. In
connection with such suit, Licensor shall execute all documents necessary
or desirable, and Licensor shall testify in any suit when requested to do
so by Licensee.
11. PRODUCT LIABILITY INDEMNIFICATION.
Licensee shall indemnify and hold harmless Licensor from and
against all product liability claims by persons purchasing products using
the Technology from Licensee. Licensee shall require any sublicensee to
agree to indemnify and hold harmless Licensor from and against all product
liability claims by persons purchasing such products from such sublicensee
and/or its agents or distributors.
12 TERM AND TERMINATION.
(a) This Agreement shall terminate (i) with respect to the
Patents or any other patent covered by this Agreement, upon the expiration
of such Patents or patents; (ii) with respect to the Know-how and Trade
Secrets, and any improvements thereto, and the Trademark, upon termination
of this Agreement as provided in the following subsection, it being the
intent of the parties that, absent such termination, the license with
respect to such Know-how, Trade Secrets, improvements and Trademark, will
be in perpetuity.
-13-
(b) Licensor may terminate this Agreement for a breach of this
Agreement by delivering written notice to Licensee setting forth that
Licensee is in breach of this Agreement and specific statements of such
breach or breaches (the "Written Notice"). This Agreement will terminate
(i) 30 days after receipt of the Written Notice if breaches capable of
being corrected within such 30 days have not been corrected, or (ii) for
breaches not capable of being corrected within 30 days of receipt of the
Written Notice, if commencement of correction of such breaches is not made
within such 30 days and prosecuted reasonably diligently thereafter.
(c) Upon termination of this Agreement, Licensee shall transfer
to Licensor all rights which it may have, if any, to the Technology and all
improvements thereto and the Trademark, together with all of its trade
names and trademarks in respect thereof, and all rights to any sublicenses
which may have been granted pursuant to the terms hereof.
13. NO PARTNERSHIP JOINT VENTURE OR AGENCY. Nothing in this
Agreement shall be deemed or construed to constitute or create between the
parties hereto a partnership, joint venture or agency.
14. BINDING ARBITRATION.
(a) All disputes arising out of or relating to this Agreement or the
relationship of the parties, including the
-14-
termination thereof and all tort and contract actions, shall be resolved by
binding arbitration in the City of Los Angeles, State of California, under
the Commercial Arbitration Rules of the American Arbitration Association
(the "Rules"), subject to the following limitations.
(b) The arbitration panel shall consist of three members, all of whom
shall be attorneys with experience in resolving contractual disputes and
who shall be neutral parties. The arbitrators shall be empowered to award
actual compensatory money damages and punitive damages, and shall be
empowered to award specific performance, injunctive relief or other
equitable relief. The award of the arbitrators shall be in writing and
shall specify the factual and legal bases for the award. Each party shall
be responsible for its own legal fees; however, the fees and expenses of
the arbitrators shall be paid by the party which does not substantially
prevail.
(c) The arbitrators will decide if any inconsistency exists between
the Rules, as applicable, and the arbitration provisions contained in this
Agreement. If any such inconsistency exists, the arbitration provisions
contained herein will control and supersede the Rules. In rendering the
award, the arbitrator shall determine the rights and obligations of the
parties strictly in accordance with the terms of this Agreement and upon no
other basis, interpreting such Agreement by applying the substantive laws
of the State of California. The failure of the
-15-
arbitrators to abide by this requirement shall be grounds for vacating of
the arbitration award.
(d) All arbitration proceedings, including testimony or evidence at
hearings, will be kept confidential, although any award or order rendered
by the arbitrator or director of arbitration pursuant to the terms of this
Agreement may be entered as a judgment or order.
(e) Any arbitration proceeding must be instituted within two years
after the date the incident giving rise thereto occurred, whether or not
any damage was sustained or capable of ascertainment or either party knew
of such incident. Failure to institute arbitration proceedings within such
period will constitute an absolute bar and waiver to the institution of any
proceedings with respect to such dispute. No arbitration hereunder will
include, by consolidation, joinder or otherwise, any third party, unless
such third party agrees to arbitrate pursuant to the arbitration provisions
contained herein and the Rules, as applicable.
(f) The parties further agree that neither shall commence any
litigation against the other arising out of this Agreement with respect to
any arbitration proceeding or award, except in a court located in the State
of California. Each party consents to jurisdiction over it by, and
exclusive venue in, such a court by a judge without a jury. If either
party brings any action for
-16-
judicial relief with respect to any dispute.which is required to be
arbitrated hereunder, the party bringing such action will be liable for and
shall immediately pay all of the other party's costs and expenses
(including reasonable attorneys' fees) incurred to stay or dismiss such
action and remove or refer such dispute to arbitration. If either party
brings or appeals an action to vacate or modify an arbitration award and
such party does not prevail, such party will pay all costs and expenses,
including attorneys' fees, incurred by the other party in defending such
action.
(g) Any award rendered will be final and binding upon the parties.
Any judgment on the award may be entered in and enforced by any court
having jurisdiction.
15. NOTICE. Any notice, payment or statement required by this
Agreement shall be sent in writing and addressed as follows or to such
other address as either party may designate by delivery of written notice
to the other party as provided in this paragraph.
To Licensor:
Three R Associates, Inc.
Warner Center Plaza,
21550 Oxnard Street,
Woodland Hills, California, 91367
To Licensee:
British Lion Medical, Inc.
Warner Center Plaza,
-17-
21550 Oxnard Street,
Woodland Hills, California, 91367
Any written notice or communication shall be personally delivered,
telecopied, telexed, faxed or marked certified mail, return receipt
requested, to the other party. Delivery or service of any written notice
or communication shall be deemed completed (a) if personally delivered,
upon such delivery, (b) if telecopied, telexed or faxed, upon
acknowledgment thereof, or (c) if mailed, upon 72 hours after deposit in
the mail.
16. CONSTRUCTION.
(a) Any waiver by Licensor or Licensee of any rights arising from any
breach of any term of this Agreement shall not be construed as a continuing
waiver of other breaches of the same or other terms of this Agreement by
Licensee or Licensor, respectively.
(b) This Agreement constitutes the entire Agreement between the
parties and replaces any prior agreements between them. No alteration of,
or amendment to, this Agreement shall be effective unless given in writing
and signed by the party or parties sought to be charged or bound by the
alteration or amendment.
(c) Neither party shall be deemed to have waived any rights under
this Agreement unless such waiver is given in writing and signed by such
party. No delay or omission on the part of either party in exercising any
right shall operate as a waiver of such
-18-
right or any other right. No prior waiver by a party, nor any course of
dealing between the parties, shall constitute a waiver of any of such
party's rights or of any of the other party's obligations as to any future
transactions. Whenever the consent of a party is required under this
Agreement, the granting of such consent by such party in any instance shall
not constitute continuing consent to subsequent instances where such
consent is required and in all cases such consent may be granted or
withheld in the sole discretion of such party.
(d) This Agreement shall be binding upon and inure to the benefit of
the legal representatives and assigns of Licensor and to the successors
and, subject to the terms of Section 6 hereof, assigns of Licensee.
(e) If any provision of this Agreement is held invalid or
unenforceable to any extent, the remainder of this Agreement, other than
those provisions as to which it shall have been held invalid or
unenforceable, shall not be affected thereby and shall continue valid and
enforceable to the fullest extent permitted by law.
(f) This Agreement shall be construed and interpreted in accordance
with the laws of the State of California without regard to the choice of
law provisions thereof.
-19-
(g) Any provision of this Agreement which imposes an obligation after
termination or expiration of this Agreement shall survive the termination
or expiration of this Agreement and be binding on the parties hereto.
IN WITNESS WHEREOF, the parties have executed this Agreement.
Licensor:
THREE R ASSOCIATES, INC.
By: /s/ ROY AZARNOFF
------------------------------
Vice President
Licensee:
BRITISH LION MEDICAL, INC.
By: /s/ LOIS REZLER
------------------------------
President
-20-