Sample Business Contracts

Exclusive License Agreement - Regent Court Technologys and Star Scientific Inc.

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                           EXCLUSIVE LICENSE AGREEMENT

This Agreement is made by and among Regent Court Technologys (hereinafter "RCT")
and Star Scientific, Inc. (hereinafter "SSI"). RCT and SSI individually and
collectively are hereinafter referred to as "Party" or "Parties," as the case
may be.


      1.1 The effective date of this Agreement (the "Agreement") shall be as of
March 16, 2001.

      1.2 WHEREAS Regent Court Techno1ogies ("RCT"), a general partnership of
which Jonnie R. Williams ("Williams"), of Manakin-Sabot, Virginia, and Francis
O'Donnell, Jr., M.D. ("O'Donnell"), of Chesterfield, Missouri, are partners,
Williams, individually, O'Donnell individually, and Star Tobacco &
Pharmaceuticals, Inc., a Virginia corporation ("STPI") entered into a Licensing
Agreement on January 5, 1998 for certain intellectual properly rights, including
without limitation Patent Rights under United States and foreign patent
applications relating to methods to cure tobacco so as to substantially prevent
the formation of tobacco-specific nitrosamines in cured tobacco, and products
containing such specially-cured tobacco, which license agreement was amended on
August 3, 1998 (hereinafter "the Basic License Agreement");

      1.3 WHEREAS as of March 16, 2001 STPI assigned all of its rights and
obligations under the Basic License Agreement to SSI and SSI assumed all such
rights and obligations; and

      1.4 WHEREAS RCT and SSI wish to terminate the Basic License Agreement and
supersede with this Agreement;

            NOW, THEREFORE, the Parties enter into this License Agreement in
consideration of the mutual covenants and terms expressed herein.



      2.1 Regent Court Technologies ("RCT") is a general partnership having a
place of business at 709 The Hamptons Lane, Chesterfield, Missouri 63017.

      2.2 Star Scientific, Inc. ("SSI") is a Delaware corporation having its
principal place of business at 801 Liberty Way, Chester, Virginia 23836-2704.

      2.3 The Basic License Agreement is hereby terminated.


      3.1 "Patent Rights," as used in this Agreement, shall mean (i) all claims
of patent applications and issued patents which are now owned by RCT in the
United States and in foreign countries, or to which RCT has rights, and which
read on Low TSNA Tobacco or which read on the Know-How; (ii) all claims of
such patent applications and issued patents which may hereafter be filed or
issued, or of which RCT or Williams or O'Donnell may hereafter become owner, or
to which any of them may hereafter acquire rights during the term of this
Agreement, and which read on or relate to Low TSNA Tobacco or which read on or
relate to the Know-How; (iii) any inventions, conceived or reduced to practice
before the date of this Agreement or during the term of this Agreement, and
thereafter made the subject of a patent application, relating to the production,
treatment or curing of tobacco, or a method of manufacturing a product
containing tobacco, or of extracting one or more substances from tobacco for the
purpose of incorporating such substance or substances in a product or products,
and which RCT, Williams or O'Donnell may hereafter own or acquire rights to.
"Patent Rights" shall include, without limitation, U.S. Patents 5,803,081,
5,845,647, 6,135,121, 6,202,649, and any and all divisions, continuations,
continuations-in-part, and reissues thereof.

      3.2 "Know-How," as used in this Agreement shall mean all information,
including without limitation trade secrets, whether or not patentable, relating
to, used in, or useful in connection with, Low TSNA Tobacco, or any methods or
devices which are claimed to result in


and be useful in connection with tobacco or any product containing tobacco that
is less toxic and potentially less harmful to humans, or for which therapeutic
claims are made, whether any such information is now in the possession of RCT,
Williams or O'Donnell, or developed or acquired by any of them during the term
of this Agreement.

      3.3 "Low TSNA Tobacco" shall mean tobacco in which the formation of one or
more tobacco-specific nitrosamines has been substantially prevented during the
tobacco curing process. "Low TSNA Tobacco" shall also refer to any process or
device used to product Low TSNA Tobacco.

      3.4 "Product" shall mean any article, composition, apparatus, substance,
chemical, material, method or services which is made, used, distributed or sold
which: (i) is covered in whole or in part by one or more pending or unexpired
claims contained in any patent included in the Patent Rights; (ii) is pictured
using a method or process which is covered in whole or in part by one or more
pending or unexpired claims contained in any patent included in the Patent
Rights and/or which utilizes any of the Know-How; or (iii) the use of which
is covered in whole or in part by one or more pending or unexpired claims
contained in any patent included in the Patent Rights. For purpose of this
definition, a Product is covered by a pending or unexpired claim of a patent if
in the course of manufacture, use, distribution or sale, it would, in the
absence of this Agreement, infringe one or more claims of a patent which has not
been held invalid by a court from which no appeal can be taken.

      3.5 "License," shall mean the license granted in Section 4 hereof.

      3.6 "FDA" shall mean the United States Food and Drug Administration.

      3.7 "Licensor Affiliate" shall mean any entity controlled by Williams
and/or O'Donnell.

      3.8 "Royalties" shall mean the royalties payable by SSI to RCT as set
forth in Section 5.1 of this Agreement.


      3.9 "Affiliated Sublicensee" shall mean an entity which SSI owns or
controls or which owns or controls SSI or which is under the common ownership or
control of another Affiliated Sublicensee.

      3.10 "Royalty Income" shall mean all royalties, license fees and other
revenue howsoever characterized earned by SSI and any Affiliate Sublicensee from
any third party other than SSI and any Affiliated Sublicensee by reason of or
pursuant to a sublicense, or rights in the nature of a sublicense, granted under
the License or otherwise.

      3.11 "Net Sales Price" shall mean the gross sales price of a Product, less
any rebates actually paid, discounts and allowances actually taken, and returns
to the extent credit is given or paid. There shall be no deduction from Net
Sales Price of any federal excise or sales taxes payable on account of the sale
of Products or otherwise, including without limitation tobacco product excise


      4.1 Subject to the terms and conditions of this Agreement, RCT hereby
grants and agrees to grant to SSI an exclusive and irrevocable license, with the
right to grant sublicenses as provided in this Agreement, under the Patent
Rights and under the Know-How, to make, have made, use, sell or otherwise
dispose of, or deal in, any Product anywhere in the world.


      5.1 In consideration of the grant of License hereunder, SSI agrees to pay
to RCT (a) a royalty of two percent (2%) on the Net Sales Price on the sale of
Products, less any Deductions, by SSI and any Affiliated Sublicensee, and (b) a
royalty of six percent (6%) on the Royalty Income, less any Deductions earned by
SSI and any Affiliated Sublicensee. As used herein, "Deductions" shall refer to
all expenses accruable under generally accepted accounting practices for (i) the
cost of applying for, obtaining, maintaining, enforcing and defending any


Rights, (ii) research and development costs related to any Product or any
potential Product, or any improvement thereto, or any technology which would be
encompassed within the definition of Patent Rights or Know-How. Only those
Deductions accruable from and after January 1, 1998, shall be deducted from the
Net Sales Price in order to determine the amount of Royalties earned for that

      5.2 All Royalties shall be paid by SSI to RCT on a quarterly basis within
thirty (30) days after the end of each calendar quarter in which such Royalties
are accrued. Each such payment shall be accompanied by an accounting statement,
which shall include:

      (i) the quantity and classification (e.g., tobacco, cigarettes, snuff,
chewing tobacco, or cigars) of Products sold;

      (ii) the aggregate Net Sales Price of each classification of Products sold
and the aggregate Net Sales Price of all Products sold;

      (iii) the amount of Royalty Income earned, broken down by identity of
sublicensee and a description of the transaction by which the Royalty Income has
been earned, including, if applicable, a copy of any royalty report or similar
report received by SSI or any Affiliated Sublicensee;

      (iv) the amount and classification (i.e., whether patent-related expense
or research and development expense) of Deductions, and the aggregate amount of
all Deductions; and

      (v) the total of all Royalties payable to RCT.

      5.3 SSI and all Affiliated Sublicensees shall keep proper books of account
showing sales of Products. RCT's designated auditing firm shall have access to
the books and records of SSI and all Affiliated Sublicensee at all reasonable
times to independently determine the amount of Royalties payable hereunder, but
for no other purpose. Under no circumstances shall RCT require such an
examination more often than once a calendar year. All information obtained by
RCT and its auditing firm shall be kept strictly confidential by RCT and its
auditing firm.



      6.1 Notwithstanding the exclusive license granted in Section 4, RCT will
have the absolute, nontransferable right to use the technology covered by the
Patent Rights and Know-How and all improvements thereof, for conducting


      7.1 SSI shall diligently prosecute at SSI's discretion and at SSI's
expense all United States patent applications, and foreign patent applications
in such foreign jurisdictions as SSI chooses, included within the Patent Rights,
and shall otherwise at its discretion take such action as shall perfect or
effect its title to the Patent Rights. SSI shall provide RCT with copies of all
U.S. and foreign patent applications included in Patent Rights, and, generally,
shall provide to RCT such other information regarding the Patent Rights as RCT
may request from time to time. All patent prosecution information supplied by
SSI to RCT hereunder shall be subject to the confidentiality provisions of this

      7.2 The Parties understand that International Application No.
PCT/US99/20909 has been assigned by Williams to SSI. SSI shall have the right to
file for and obtain patents based on said International Application No.
PCT/US99/20209 in the name of Star Scientific, Inc. in such foreign
jurisdictions as SSI chooses. In consideration of the assignment, SSI shall pay
a royalty to RCT for foreign patents based on International Application No.
PCT/US99/20209 in the same manner as provided for in Section 5.


      8.1 SSI shall promptly notify RCT of all claims, allegations and
notifications of infringement of third party patents. Except for the placing in
escrow of a portion of royalties as


referred to hereinafter, RCT shall have no obligation or liability in the event
that legal action is brought against SSI for patent infringement. Such
obligation and liability shall be borne by SSI. SSI may choose legal counsel and
defend the patent infringement lawsuit. During such lawsuit, SSI may place all
Royalties in an interest-bearing escrow account. The escrow account shall be
established in a bank mutually acceptable to both parties under escrow
instructions insulating the finds from claims of any creditor. Upon termination
of the action, one-half (1/2) of any judgment amount, reasonable attorneys' fees
and costs, may be paid from this escrow account. In addition, should the
settlement of any such patent infringement lawsuit involve payment of royalties
by SSI to a third party for the continued right to manufacture, use, and sell a
Product, then funds in the escrow account and royalties payable to RCT may be
applied against up to one-half (1/2) of such royalties to a third party. Any
funds thereafter remaining in the escrow shall be paid to RCT. The above shall
constitute RCT's sole liability and responsibility in the event of such action.
During the patent infringement litigation each Party shall keep the other Party
informed in writing of significant developments in the lawsuit.

      8.2 SSI shall promptly notify RCT of any potential infringement of any of
the Patent Rights. In the event that a third party infringes on any of the
Patent Rights, SSI shall have the right but not an obligation to bring legal
action to enforce any such patent, including the right to bring suit in the name
of Star Scientific, Inc. If SSI exercises such right, SSI shall select legal
counsel and pay all legal fees and costs of prosecution of such action. In the
event that SSI shall choose not to take such action, RCT shall have the right,
at its option and at it own expense, to prosecute any action to enjoin such
infringement or to prosecute any claim for damages. The party prosecuting any
such action shall be entitled to retain any funds received as a result of
settlement or judgment of such action. The Parties may also agree to jointly
pursue infringers. After deduction and payment to the Parties of their
respective costs and fees (including without limitation reasonable attorneys'
fees) incurred in prosecuting any such actions, the net funds obtained as a
result of settlement or of judgment of any such jointly prosecuted action shall
be divided in the following manner: 25% of all net funds shall be divided
equally by the Parties and 75% of all the net funds shall be divided between the
Parties in the proportion to the amount of legal fees and costs incurred by the
Parties in the prosecution of such actions. If funds are


insufficient to pay all cost and fees then all of the funds shall be paid to the
Parties in said proportion.

      8.3 During any litigation described in Section 8, each Party shall keep
the other Party timely informed of any significant development in the litigation
and provide all reasonably requested technical assistance. During any such
controversy, full royalty payment shall continue, except as otherwise provided


      9.1 SSI may sublicense any of the Patent Rights; provided that, with
respect to any sublicense to an Affiliated Sublicensee, it shall be a condition
precedent to any such sublicense that such Affiliated Sublicensee shall agree in
writing to be jointly and severally obligated and liable to RCT for all of the
obligations of SSI under this Agreement, and that no further right to
sublicense may be granted to an Affiliated Sublicensee and further provided that
all sublicensees shall agree to the terms of Section 10 hereof.


      10.1 SSI, all Affiliated Sublicensees and any other sublicensee shall use
reasonable efforts to place all appropriate patent and other intellectual
property notices, markings and indicia on product and marketing literature for
any Products as needed to protect the patent and other intellectual property
rights of RCT and right for damage for infringement thereof.


      11.1 SSI may terminate this Agreement at any time, for any reason, by
providing RCT not less than thirty (30) days prior written notice thereof.


      11.2 RCT may terminate his Agreement upon the occurrence of any of the

      (i) A default in the payment of Royalties when due and payable, or a
failure to submit to RCT when due a true and complete accounting statement
pursuant to Section 5.2 of this Agreement, which default or failure continues
for a period of at least thirty (30) days after RCT has given to SSI written
notice of such default or failure.

      (ii) A material breach of any other obligation of SSI under this
Agreement, which breach shall not have cured within sixty days after RCT has
given to SSI written notice of such breach, in which notice RCT shall have
specified in reasonable detail the nature of such breach. For pursues of
determining materiality, and provided the nature of the breach may be measured
in monetary terms, a breach shall be deemed "material" if such breach results in
a loss of Royalties exceeding $100,000.


      12.1 SSI acknowledges and agrees that any violation of this Agreement by
SSI would result in irreparable harm to RCT. Accordingly, SSI consents and
agrees that, if SSI violates any of the provisions of this Agreement, RCT shall
be entitled, in addition to other remedies available to it, to an injunction to
be issued by any court of competent jurisdiction restraining SSI from committing
or continuing any violation of this Agreement, without the need for posting any
bond or any other undertaking.


      13.1 Any notice, report or payment permitted or required under this
Agreement shall be in writing, and shall be sent or delivered to the receiving
party at the address set forth below or at such address as either Party may from
time to time designate in writing.


If RCT to: Regent Court Technologies            If SSI to: Star Scientific, Inc.
           c/o Francis E. O'Donnell, Jr., M.D.             7475 Wisconsin Avenue
           709 The Hamptons Lane                           Suite 850
           Chesterfield, MO 63017                          Bethesda, Maryland
                                                           c/o Paul L. Perito,
                                                           Chairman, President
                                                           and Chief
                                                           Operating Officer


      14.1 Paragraph headings are for the convenience of this Agreement only and
shall not add to or detract from any of the terms or provisions.


      15.1 If any provision of this Agreement is held invalid under any law
applicable to the Parties, Affiliated Sublicensees and other sublicensees
and/or assignees, that provision shall be considered severable and its
invalidity shall not affect the remainder of this Agreement, which shall
continue in full force and effect.


      16.1 This Agreement shall be deemed to be executed and to be performed in
the Commonwealth of Virginia, and shall be construed in accordance with the laws
of the Commonwealth of Virginia as to all matters, including but not limited to
matter of validity, constriction, effect and performance. In the event of any
controversy, claim or dispute between the Parties hereto arising out of or
relating to this Agreement, such controversy, claim or dispute may be tried
exclusively in the courts of the Commonwealth of Virginia or in the United
States Federal District Court located in, or closest to, Richmond, Virginia, as
either party may elect.


Each of the Parties hereby waives any defense of lack of in personam
jurisdiction, improper venue and forum non conveniens, and agrees that service
of process of such court may be made upon each of them by personal delivery or
by mailing certified or registered mail, return receipt requested, to the other
Party at the address provided for in Section 13 hereof. Both Parties hereby
submit to the jurisdiction of the court so selected, to the exclusion of any
other courts which may have had jurisdiction apart from this Section 16.


      17.1 Except as otherwise terminated pursuant to the other provisions of
this Agreement, this Agreement shall terminate upon expiration of the last to
expire of the Patent Rights.


      18.1 Nothing in this Agreement shall be construed as:

      (i.) a warranty or representation by RCT as to the validity or scope of
any of the Patent Rights; or

      (ii.) a warranty or representation that any Products 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; or

      (iii.) an obligation to bring or prosecute actions or suits against third
parties for infringement; or

      (iv.) conferring the rights to use in advertising, publicity or otherwise
any trademark, trade name, or names or any contraction, abbreviation, simulation
or adoption thereof, of RCT; or


      (v.) any obligation to furnish any know-how not provided.

FITNESS FOR A PARTICULAR PURPOSE, nor does RCT represent that the rights granted
hereunder will result in Products that are commercially successful.

      18.3 SSI further agrees that it will not rely upon technical information
provided by RCT in developing and manufacturing any Products hereunder, but will
independently test, analyze and evaluate all Products prior to manufacture and
distribution of such Products.


      19.1 SSI shall defend, indemnify and hold harmless RCT and its partners,
employees, and agents and Williams and O'Donnell, and their respective
successors, heirs and assigns (the "Indemnitees"), against all liabilities,
demands, losses, costs, and expenses (including without limitation attorneys'
fees) incurred by or imposed upon the Indemnitees or any one of them in
connection with any claims, suits, actions, demands or judgments arising out of
any theory of liability (including but not limited to, actions in the form of
tort, warranty, or strict liability) for death, personal injury, illness, or
property damage arising from SSI's use, sale, or other disposition of any
Product, or exercise of any of rights under the License.

      19.2 SSI agrees, at its own expense, to provide attorneys reasonably
acceptable to RCT to defend against any actions brought or filed against any
party indemnified hereunder with respect to the subject of indemnity contained
herein, whether or not such actions are rightfully brought.

      19.3 As a condition precedent to a grant of permission by RCT for SSI to
sublicense any of the Patent Rights herein after the date of this Agreement, the
prospective sublicensee shall agree to indemnify SSI and RCT to the same extent
and degree as SSI has agreed to indemnify RCT herein.



      20.1 In any action on or concerning this Agreement, the prevailing Party
shall be awarded its reasonable attorneys' fees, cost and necessary
disbursements, to be paid by the non-prevailing Party.

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

                                REGENT COURT TECHNOLOGIES

                              By: /s/ Francis E. O'Donnell
                                Francis E. O'Donnell, General Partner

                                STAR SCIENTIFIC, INC.

                              By: /s/ Paul L. Perito
                                Paul L. Perito, Chairman, President and
                                Chief Operating Officer