Exhibit 10.20
MASTER LICENSE
AGREEMENT
THIS AGREEMENT by and between
SurModics, Inc., a corporation of the State of Minnesota, which has
an office at 9924 West 74th Street, Eden Prairie, MN 55344,
(hereinafter referred to as SURMODICS ), and Innercool
Therapies, Inc., a corporation of the State of California, which
has an office at 3931 Sorrento Valley Blvd., San Diego, CA 92121
(hereinafter referred to as INNERCOOL ).
WHEREAS, SURMODICS is engaged in
biological, chemical and technical research and has developed a
body of technology and know-how, including reagents, processes and
devices which the parties believe will improve the performance of
various products and processes of INNERCOOL.
WHEREAS, the technology of SURMODICS
includes confidential information (including trade secrets and
other know-how) which is proprietary to SURMODICS and SURMODICS is
in the process of securing patent coverage for certain items of its
technology, and continues to maintain the confidentiality of other
portions of its technology.
WHEREAS, INNERCOOL (formerly known
as Del Mar Medical Technologies) and SURMODICS are parties to a
Mutual Confidential Disclosure Agreement dated December 18,
1998 (“Prior Disclosure Agreement”);
WHEREAS, INNERCOOL may desire to
acquire additional licenses under SURMODICS’ know-how and
patent rights, such licenses to be added to this Master
Agreement;
NOW, THEREFORE, in consideration of
the mutual covenants and agreements set forth below and for other
good and valuable consideration of which receipt is acknowledged,
the parties agree as follows:
1.
DEFINITIONS
The following definitions apply to
this Agreement and to all addenda thereto:
a. “Affiliate” means any
entity which owns at least 50% of, is at least 50% owned by, or is
under common (at least 50%) ownership with INNERCOOL.
b. “Effective Date”
means the date upon which this Agreement is fully
executed.
c. “Know-how” means
SURMODICS’ trade secrets and other technical information
relating to the surface-treatment of medical devices and which
SURMODICS has the right to transmit to others. Know-how includes
but is not limited to information contained in pending patent
applications of Patent Rights and information that is Confidential
Information as defined in Paragraph 13.
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d. “Licensed Products”
means each of the separately sold Medical Products specifically
described in Attachment Bl, B2, and so forth, and which:
i. but for the license granted
herein the manufacture, use or sale would infringe (or a surface
treatment process employed to produce a product or a reagent used
in such process would infringe) any claim of Patent Rights,
or
ii. are produced through the use of
SURMODICS’ Know-how.
e. “Licensed Product Effective
Date” for each license granted herein shall mean the date
specified in the respective Attachment Bl, B2, and so
forth.
f. “Manufacturer” means
a non-Affiliate third party which manufactures Licensed Products
for INNERCOOL pursuant to a separate agreement with INNERCOOL, and
subject to the execution by the Manufacturer and SURMODICS of the
document entitled “Manufacturer Agreement and
SurModics’ Consent” attached hereto as Attachment
C.
g. “Medical Products”
means products that are specifically described and defined in
Attachment B1, B2, and so forth.
h. “Net Sales” means the
total actual billing for sales of Licensed Products, less the
following deductions where they are applicable with respect to such
billings and when separately shown on invoices:
i. discounts actually allowed and
taken;
ii. any customs, duties, taxes or
other governmental excise or charge upon or measured by the
production, sale, transportation, delivery or use of Licensed
Product and actually paid by INNERCOOL;
iii. amounts allowed or credited on
rejections or returns;
iv. transportation charges prepaid
or allowed.
Notwithstanding the above, if any
Licensed Product is sold both separately and as an integral part of
a combination product containing one or more integral components in
addition to that Licensed Product, then Net Sales of that Licensed
Product resulting from sales of that combination product will be
calculated by multiplying the Net Sales for the combination product
as calculated above by the fraction A/B where A is the invoice
price of the Licensed Product as sold separately and B is the
invoice price of the combination product.
A Licensed Product shall be
considered sold when it is shipped or when it is invoiced,
whichever is earlier. To assure SURMODICS the full royalty payment
contemplated in this Agreement, INNERCOOL agrees that in the event
any Licensed Product is sold to an
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Affiliate for purposes of resale,
Earned Royalties for that Licensed Product shall be computed upon
the selling price at which such Licensed Product would ordinarily
be sold to a non-Affiliate, rather than on the selling price of
INNERCOOL to the Affiliate.
i. “Patent Rights” means
the patent application(s) and patent(s) identified in Attachment A
hereof, together with all foreign counterparts, divisions, and
continuation applications based thereon, any patent issuing on any
of said applications, and any reissues or extensions based on any
of such patents.
j. “Valid Claim” means a
claim of Patent Rights that has not been held invalid or
unenforceable by a court of competent jurisdiction beyond
possibility of appeal, or which has not expired due to non-payment
of maintenance fees beyond possibility of reinstatement based on
unintentional delay.
2. LICENSE
a. With respect to the Licensed
Product defined in each of Attachments B1, B2, and so forth,
SURMODICS grants to INNERCOOL, a separate worldwide license under
SURMODICS’ Patent Rights and Know-how to make, have made for
it by a Manufacturer as defined herein, use and sell that Licensed
Product. The license granted herein is expressly limited to the
specific Licensed Products defined herein, and does not include the
right to sublicense. Additional terms of each license are set out
in the respective Attachments Bl, B2, and so forth. To the extent
of any inconsistency between the terms set forth in the text of
this Agreement and the terms set forth in Attachments Bl, B2, and
so forth, the terms set forth in the text of this Agreement shall
be controlling. Each such license shall be effective as of its
Licensed Product Effective Date.
b. Subject to the limited license
granted herein, SURMODICS shall retain all rights to the Patent
Rights and Know-how. SURMODICS shall retain the right to use Patent
Rights and Know-how for its own research purposes.
c. INNERCOOL shall notify SURMODICS,
in advance and in writing, of any change in the location of the
production of a Licensed Product or any new location to be used for
the production of a Licensed Product.
3. LICENSE
FEES
For each license granted by
SURMODICS, INNERCOOL shall pay to SURMODICS a License Fee as set
out in the respective Attachment Bl, B2, and so forth.
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4. ROYALTIES
For each license granted herein,
INNERCOOL shall pay to SURMODICS a royalty for each quarter
calendar year during the term of this License Agreement which will
be the greater of the royalties of Paragraphs 4(a) or
4(b).
a. Earned Royalties shall be
calculated as provided for in the respective Attachment Bl, B2, and
so forth. No more than one Earned Royalty shall be paid by
INNERCOOL for any Licensed Product. However, if any Licensed
Product is covered by more than one Attachment B1, B2, and so
forth, then the Earned Royalty rate shall be the highest rate
specified for such Licensed Product.
b. Minimum Royalties shall be paid
for each Licensed Product as provided for in the respective
Attachment Bl, B2, and so forth.
5. ROYALTY PAYMENTS, REPORTS,
RECORDS
a. During the term of this
Agreement, and for each license granted hereunder, INNERCOOL will
make written reports and payments to SURMODICS within thirty
(30) days after the last day of each calendar quarter ending
March 31, June 30, September 30, and
December 31. Each such report shall state the Net Sales, unit
volumes, Earned Royalty, corrections of error in prior royalty
payments, and data and calculations used by INNERCOOL to determine
such payments for each of the licenses corresponding to the
respective Attachments B1, B2, and so forth. Each report shall be
accompanied by payment in full of the royalty due SURMODICS for
that quarter. The December 31 quarterly report shall also
include a summary progress report regarding INNERCOOL’s
relevant developmental, manufacturing scale-up, regulatory affairs,
and marketing activities with respect to all Licensed Products
along with a summary forecast of projected sales of Licensed
Products and a nonbinding forecast of reagent usage for the next
calendar year.
b. INNERCOOL will maintain, for a
period of five (5) years following each sale of Licensed
Product, true and accurate records supporting the reports and
payments made under this Agreement. SURMODICS shall have the right
to carry out an audit of such records no more frequently than once
per calendar year by a certified public accountant of its choice.
Such accountant shall have reasonable access to INNERCOOL’s
offices and the relevant records, files and books of account, and
such accountant shall have the right to examine any other records
reasonably necessary to determine the accuracy of the calculations
provided by INNERCOOL under Paragraph 5(a). Such audit shall be at
SURMODICS’ expense except that if an underpayment error is
found for any twelve month period that exceeds 5% of the payment
made to SURMODICS for that period, then INNERCOOL will bear the
cost of such audit.
c. All royalties on sales of each
Licensed Product to be paid to SURMODICS by INNERCOOL under this
Agreement shall be paid in U.S. Dollars to SURMODICS in
the
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United States. For the purpose of
calculating Earned Royalties on sales outside the United States for
any calendar quarter, INNERCOOL shall utilize the average rate of
exchange on the last business day of that calendar quarter as
quoted in the Wall Street Journal.
d. Any sum required under U.S. tax
laws (or the tax laws of any other government) to be withheld by
INNERCOOL from payment for the account of SURMODICS shall be
promptly paid by INNERCOOL for and on behalf of SURMODICS to the
appropriate tax authorities, and INNERCOOL shall furnish SURMODICS
with official tax receipts or other appropriate evidence issued by
the appropriate tax authorities sufficient to enable SURMODICS to
support a claim for income tax credit in respect to any sum so
withheld.
6. DEVELOPMENT
FEES
INNERCOOL agrees to pay SURMODICS
for development efforts (“Development Fees”) while
working on INNERCOOL’s products at SURMODICS’ then
standard hourly rate for development efforts provided, however,
that such development effort is pursuant to a mutually agreed upon
project plan. SURMODICS’ standard hourly rate includes direct
labor costs plus direct labor overhead. SURMODICS shall
additionally charge direct materials plus direct materials overhead
of fifteen percent (15%). Direct materials may include expenses
such as travel and special equipment, but only as mutually agreed
upon in writing. SURMODICS shall invoice INNERCOOL monthly for such
Development Fees and payment shall be made within thirty
(30) days thereafter.
Notwithstanding the above, SURMODICS
will not charge INNERCOOL for the initial disclosure of such
Know-how. Such initial disclosure of Know-how shall include the
preparation and delivery to INNERCOOL of a ‘Technology
Transfer Document” which shall contain information relating
to the procedures and techniques used by SURMODICS to coat such
Licensed Product. SURMODICS will provide up to two days of training
in the use of SURMODICS’ coating procedures covered in the
Technology Transfer Document. Such training shall be at
SURMODICS’ facility and be offered to a reasonable number
(three or less) of INNERCOOL employees who will be using or
implementing such coating procedures. Travel and accommodations for
such INNERCOOL employees will be at INNERCOOL’s expense. At
INNERCOOL’s request, SURMODICS will send a coating engineer
to the INNERCOOL manufacturing facility or to one designated
Manufacturer facility in the United States for up to two days to
review the production line, advise on reagent handling and to
provide other advice that may assist INNERCOOL in the
implementation of the coating process into INNERCOOL’s
manufacturing process. Travel and accommodations for such SURMODICS
employee will be at SURMODICS’ expense.
7. TERM
a. Unless earlier terminated, each
license herein granted shall begin upon the Licensed Product
Effective Date set out in the respective Attachment Bl, B2, and so
forth, and shall
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extend for each Licensed Product so
licensed until expiration of the last to expire patent of Patent
Rights that covers that product or for a period of fifteen
(15) years following the first bona fide commercial sale of
such Licensed Product, whichever is longer.
b. Upon expiration of the full term
of the license granted herein for any Licensed Product, and upon
full payment by INNERCOOL to SURMODICS of any monies due under this
Agreement, the license with respect to Know-how licensed herein for
that Licensed Product shall be deemed paid up and non-exclusive (if
any such license was exclusive), and SURMODICS may negotiate
additional license agreements with any other party for
SURMODICS’ surface modifications.
8. PATENTS
a. INNERCOOL shall see to it that
all Licensed Products sold by INNERCOOL shall be appropriately
marked with the applicable patent numbers, in conformity with
applicable law.
b. SURMODICS recognizes that it is
an objective of INNERCOOL to obtain patents on technology that it
develops concerning chemicals having latent reactive groups and
their uses. INNERCOOL recognizes that a vital part of
SURMODICS’ business involves the licensing of others under
SURMODICS’ patents and know-how to make, use and sell
products, and that it is an objective of SURMODICS to enable its
present and future licensees to exploit patent licenses from
SURMODICS to produce and sell products without interference from
any patent that INNERCOOL might obtain. A purpose of this Paragraph
8(b) is to establish a system under which each party may accomplish
its respective objective.
i. “INNERCOOL Latent Reactive
Chemical Patents” (INNERCOOL LRC Patents) means patents which
(a) claim inventions conceived or first reduced to practice
during the term of this Agreement solely by one or more INNERCOOL
employees or others who are required to assign inventions to
INNERCOOL, and (b) claim inventions relating to chemical
species having photo-reactive or other latent reactive groups for
the purpose of bonding chemicals such as synthetic polymers and
biologically active materials onto surfaces or into matrices or to
other molecules, the use of such chemical species, or the products
resulting from such use, and (c) which could be infringed by
the manufacture, use or sale of any product or process covered by
any claim of any patent that SURMODICS has the right to license to
others or may have licensed to others.
ii. During the term of this
Agreement, INNERCOOL will provide SURMODICS with a copy of each
proposed patent application for a INNERCOOL LRC Patent, and
SURMODICS will provide comments concerning such application,
including comments regarding inclusion of SURMODICS’
Confidential Information, prior work done by SURMODICS in
connection with the claimed invention, and the state
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of the art. No application for an
INNERCOOL LRC Patent shall be made without SURMODICS’ prior
written permission. If SURMODICS can fairly show that it had
substantial knowledge of the invention of any INNERCOOL LRC Patent
application before receiving from INNERCOOL that patent
application, SURMODICS shall promptly notify INNERCOOL and the
parties shall cooperate in comparing records of conception of that
invention to determine in good faith which party was the earliest
to conceive the invention.
iii. SURMODICS shall have and is
hereby granted a noncancelable, nonexclusive, worldwide license,
with the right to sublicense, to make, have made for it, use and
sell products and processes covered by each INNERCOOL LRC Patent to
the extent that such manufacture, use or sale also is covered by
any claim of any patent that SURMODICS has the right to license to
others or may have licensed to others. If INNERCOOL was the
earliest to conceive the invention of that patent, then the license
granted to SURMODICS, and SURMODICS’ right to sublicense,
shall exclude the right to manufacture, use or sell Medical
Products.
iv. In return for such license,
SURMODICS will pay INNERCOOL a total of five percent (5%) of
the royalties (regardless of the number of INNERCOOL LRC Patents
that are licensed to SURMODICS or the number of licenses involved)
that SURMODICS receives from its sublicensees based on sales by its
sublicensees of products that but for such sublicenses would
infringe any Valid Claim of INNERCOOL LRC Patents. Notwithstanding
the above, if SURMODICS was the earliest to conceive the invention
of any INNERCOOL LRC Patent, then the license granted to SURMODICS
shall be considered paid-up.
c. The parties agree to execute and
exchange upon request such documents as may be necessary or
desirable to carry out the provisions of Paragraph 8(b).
d. Notwithstanding the provisions of
Paragraph 12(c), in the event that any third party infringes or
threatens to infringe the Patent Rights, a party shall notify the
other party in writing of such infringement which becomes known to
it and the parties shall discuss together by whom and what action
shall be taken, if any. This paragraph shall not obligate either
party to undertake, join in, or fund any litigation. Either party
shall undertake to provide the other party with any documents or
other reasonable, non-financial assistance, as may be required
should the other party choose to undertake, join in, or fund any
litigation.
9. ALLOCATION OF
ROYALTIES
It is agreed that royalties payable
under the applicable Attachment B shall be allocated seventy
percent (70%) to Know-how licensed herein and thirty percent
(30%) to Patent Rights licensed herein. The Earned Royalty
rate with respect to any Licensed Product shal
