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Exhibit 10.10
NONEXCLUSIVE LICENSE AGREEMENT
This
Agreement is effective May 14, 1999, between Alsius Corporation
with
offices at #5 Jenner, Suite 150, Irvine, CA 92618-3808 ("ALSIUS")
and Baxter
Healthcare Corporation, acting through its CardioVascular Group
business unit
with offices at 17211 Red Hill Avenue, Irvine, CA. 92614
("BAXTER").
BACKGROUND
BAXTER has developed a certain proprietary biological heparin
medical
treatment known as DURAFLO(R) (the "DURAFLO Treatment") which it
represents is
described in and covered by certain patents owned by BAXTER as
identified on
Exhibit A ("Patents") and certain specifications, methods,
processes, systems,
and other know-hiow relating to the application of the DURAFLO
Treatment to
products "(Know-How") which is confidential, not known in the
industry, and
owned by BAXTER.
BAXTER desires to license to ALSIUS and ALSIUS desires to obtain
from
BAXTER a limited nonexclusive, nontransferable license to apply
DURAFLO
Treatment to and sell Heat Exchange Catheters ("Field of Use")
manufactured by
ALSIUS ("ALSIUS Products") treated with the DURAFLO Treatment
("Treated ALSIUS
Products") as listed on Exhibit B.
AGREEMENT
1. LICENSE TO DURAFLO TREATMENT.
1.1
License to Patents and Know-How. BAXTER hereby grants to ALSIUS
a
limited, non-exclusive, non-transferable, world-wide license under
the Patents
and Know-How to apply the DURAFLO Treatment to ALSIUS Products and
to sell
Treated ALSIUS Products to its customers including its distributors
or
resellers. This limited license is not intended to grant ALSIUS the
right to
make or sell the DURAFLO Treatment, but is solely a limited right
to apply the
DURAFLO Treatment purchased from BAXTER to ALSIUS Products and to
sell Treated
ALSIUS Products. BAXTER shall have the right to sell the DUR.AELO
Treatment to
other persons and to use the DURAFLO Treatment on its own or a
third party's
products, at its sole discretion. BAXTER's right to license,
manufacture, use,
sell or resell the DURAFLO Treatment ha1l not be limited in any
way.
1.2
Pricing and Payment. BAXTER shall supply ALSIUS with DURAFLO
Treatment
powder necessary for ALSIUS to apply the DURAFLO Treatment to
ALSIUS Products,
at a price of $39 per gram. ALSIUS shall pay BAXTER for the DURAFLO
Treatment
powder within one (1) month after shipping and invoicing of the
DURAFLO
Treatment powder. Prices for the DURAFLO Treatment powder shall be
fixed for the
first calendar year of the Agreement. Thereafter, BAXTER may
increase the prices
based on increases in material costs, but in no event more than 3%
per year.
1.3
Know-How Transfer. BAXTER agrees to disclose and transfer to
ALSIUS
Know-How necessary for ALSIUS to apply the DURAFLO Treatment to
ALSIUS Products
and to test and evaluate Treated ALSIUS Products. ALSIUS shall
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apply all DURAFLO Treatments to ALSIUS Products at wholly (100%)
owned ALSIUS
manufacturing facilitates in accordance with the confidentiality
requirements of
this Agreement, or at ALSIUS controlled manufacturing facilities
which shall be
bound by the confidentiality requirements of this Agreement.
2. TRADEMARK LICENSE.
2.1
BAXTER further grants to ALSIUS a non-exclusive,
non-transferable
license to use the trademark DURAFLO(R) in connection with Treated
ALSIUS
Products. ALSIUS agrees to label Treated ALSIUS Products with the
DURAFLO(R)
trademark and to identify DURAFLO(R) as a trademark of Baxter
International
Inc., both on the product container, and any product packaging, Any
and all uses
of the DURAFLO(R) trademark will be accompanied by an appropriate
trademark
notice, consisting of an encircled R, with a statement to the
effect that
"DURAFLO(R) is a registered trademark of BAXTER INTERNATIONAL
INC."
2.2
In order for ALSIUS to maintain its trademark license, ALSIUS
agrees
that the Treated ALSIUS Products in their finished form shall be of
high
standard and quality so as to protect and enhanee the goodwill
pertaining to the
DURAFLO Treatment and shall be of a quality consistent with the
quality of
products manufactured and sold by BAXTER having the DURAFLO
Treatment applied
thereon. Upon BAXTER's request, but not more than once per year,
ALSIUS agrees
to provide BAXTER with samples of the Treated ALSIUS Products in
their finished
form, for BAXTER'S review and approval to ensure ongoing quality of
the Treated
ALSIUS Products. Should BAXTER at any time determine that the
ongoing quality of
the Treated ALSIUS Products in their finished form do not adhere to
BAXTER's
quality standards, ALSIUS license to the DURAFLO(R) trademark may
be terminated
by BAXTER at BAXTER's sole discretion,
3. UPFRONT LICENSE FEE AND DEVELOPMENT FEE.
3.1
ALSIUS agrees to pay BAXTER a license fee of $100,000, payable
as
follows:
(a)
$5,000 - Feasibility
payment.
(was previously paid to BAXTER by Alsius Corporation)
(b)
$20,000 - On approval
of license agreement by ALSIUS and BAXTER.
(c)
$25,000 - Submission
of PMA or 510 (k) to US. regulatory authority.
(d)
$25,000 - 1st
commercial sale inside the United States.
(e)
$25,000 - 1st
commercial sale outside the United States.
4. ROYALTY.
4.1
ALSIUS agrees to pay BAXTER a royalty on the Net Selling Price of
each
Treated ALSIUS Product sold by ALSIUS, at the royalty rates
indicated in the
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attached Exhibit C. Net Selling Price shall mean the gross billing
price which
ALSIUS charges to its customers, including distributors where
ALSIUS does not
control the prices set by such Distributors, for Treated ALSIUS
Products less,
if included in gross billing price, any sales, use, occupation and
excise tax
paid, incurred or levied on such sales. The royalty payment shall
be made on the
basis of calendar quarters beginning with the calendar quarter in
which the
First Commercial Sale occurs, and shall be payable within thirty
(30) days of
the end of each such quarter. ALSIUS agrees to pay BAXTER a minimum
royalty of
$5,000 per calendar quarter, payable within 30 days of the end of
the quarter,
beginning with the second quarter after the first commercial sale
of the
product. "First Commercial Sale" as used herein shall mean: (1) in
the United
States, the first arms length sale to third party, including
distributors where
ALSIUS does not control the pricing set by such distributors, of a
Treated
ALSIUS Product which has been approved by the appropriate Federal
and State
governmental agencies for distribution and sale; and (2) outside
the United
States, the first arms length sale to a third party of a Treated
ALSIUS Product.
ALSIUS and its affiliates, if applicable, shall maintain books that
account for
its sales of Treated ALSIUS Products.
4.2
In the event that any Treated ALSIUS Products are sold in a kit
that
includes products other than those identified in Exhibit B, then
the Net Selling
Price for royalty purposes shall be computed using the average Net
Selling Price
for Treated ALSIUS Products sold separately in the same calendar
quarter. If the
Treated ALSIUS Product is not sold separately, then the Net Selling
Price for
the Treated ALSIUS Product shall be determined by using reasonable
market
pricing for similar products sold on an individual basis by other
entities, with
the reasonable market price for the Treated ALSIUS Products to be
based on the
average market price of such other similar products.
4.3
ALSIUS agrees to make payment to BAXTER by checks mailed to BAXTER
at
the address set forth below or at such other address as BAXTER may
specify for
that purpose. ALSIUS agrees to submit to BAXTER, with each royalty
payment, a
written report showing the number of Treated ALSIUS Products sold
in the quarter
and the Net Selling Price for such Treated ALSIUS Products. All
payments made to
BAXTER pursuant to this Agreement shall be made in United States
dollars; and
all international and domestic sales of Treated ALSIUS Products
shall be
reported in equivalent United States dollars.
4.4
ALSIUS shall keep full and accurate records and books of
account
containing all particulars necessary for showing the amounts of
royalties due
BAXTER hereunder. At all reasonable times for a period of not more
than two (2)
years after the end of each reporting year, not to exceed once each
year and
upon ten (10) business days prior written notice to ALSIUS, the
books and
records relating to sales of the Treated ALSIUS Products shall be
open to
inspection by BAXTER's duly appointed independent Certified Public
Accountants,
who may make such confidential inspection of such records and books
of account
as is necessary to verify the computation of royalties due to
BAXTER. Any
adjustment in the amount due to BAXTER on account of overpayment or
underpayment
of royalties shall be made at the next date when royalty payments
are called for
under the Agreement. In the event that there is an underpayment in
the royalties
which exceeds ten (10) percent of the actual royalties paid during
the period of
time
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under inspection, then ALSIUS shall reimburse BAXTER for all costs
incurred by
BAXTER in conducting such inspection.
5. ORDERS, FORECASTS AND SHIPPING.
5.1 BAXTER agrees to
supply ALSIUS with the DURAFLO Treatment in quantities
specified by ALSIUS; provided that the minimum quantity for each
purchase order
shall be one hundred (100) grams of powder and that orders must be
in increments
of fifty (50) whole grams.
5.2
ALSIUS shall give BAXTER quarterly rolling forecasts twelve (12)
months
in advance. ALSIUS shall issue firm Purchase Orders no less than
one (1) quarter
prior to specified delivery dates for quantities within forecasted
amounts using
the purchase order set forth in Exhibit E (the "Purchase Order").
BAXTER shall
acknowledge promptly each ALSIUS Purchase Order in writing and
confirm delivery
dates to destinations specified by ALSIUS. BAXTER shall not be
liable for
failure or delay in filling ALSIUS orders because of any cause
beyond the
control of and occurring without the fault of BAXTER; provided,
however, that
BAXTER shall notify ALSIUS promptly of anticipated delays and shall
use
reasonable efforts to fill such orders as soon as possible.
5.3
BAXTER shall ship the DURAFLO Treatment powder BAXTER's facility
via
mutually agreed upon carriers. ALSIUS shall pay all normal freight
charges.
6. SALES TRAINING.
BAXTER, at ALSIUS request and at ALSIUS expense, will provide
training for
ALSIUS sales force regarding the DURAFLO Treatment, as well as
provide ALSIUS
with existing marketing and technical information concerning the
DURAFLO
Treatment for ALSIUS use in marketing Treated ALSIUS Products.
7. CONFIDENTIALITY.
ALSIUS and BAXTER realize that some information received by one
party from
the other pursuant to this Agreement may be confidential. It is
therefore agreed
that any information received by one party from the other which is
in writing or
promptly reduced to writing, within thirty (30) days of disclosure,
and clearly
designated as "CONFIDENTIAL", shall not be disclosed by the
receiving party to
any third party and shall not be used by the receiving party for
purposes other
than those contemplated by this Agreement during the term of this
Agreement and
for a p
