Trademark License Agreement

CERTAIN INFORMATION HAS BEEN DELETED FROM THIS EXHIBIT AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT UNDER RULE 24b-2.


EXHIBIT 10.10


TRADEMARK LICENSE AGREEMENT


BETWEEN


THE PROCTER & GAMBLE COMPANY


AND


CNS INC.


TABLE OF CONTENTS


PAGE
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1. LICENSE....................................................................1
(a) Manufacturing.........................................................2
(b) Labeling and Packaging................................................2
(c) Sale..................................................................2
(d) Use of the Licensed Marks.............................................2
(e) Use of P&G's Name.....................................................2


2. CNS' OBLIGATIONS...........................................................3
(a) Warranties...........................................................3
(b) Compliance with Laws.................................................3
(c) Import/Export........................................................3
(d) Samples..............................................................4
(e) Artwork..............................................................4
(f) Copy Review..........................................................5
(g) Product Preview Meetings.............................................5
(h) Improper Use.........................................................6
(i) Development of Product...............................................6
(j) Prohibition on Sales.................................................6
(k) Other Approvals......................................................7


3. CNS' COVENANTS.............................................................7
(a) Authorization........................................................7
(b) Conflicts............................................................7
(c) Plant(s) Where Product is Manufactured...............................7
(d) Quality Control Sampling.............................................7
(e) Sub-Standard Product.................................................8
(f) Non-Competition......................................................8


4. P&G'S RIGHTS & OBLIGATIONS.................................................9
(a) Ownership of Licensed Marks..........................................9
(b) Cooperation.........................................................10
(c) Actions.............................................................10
(d) P&G Materials.......................................................11
(e) Use of Names........................................................11
(f) Limitations.........................................................12


5. P&G'S COVENANTS...........................................................12
(a) Authorization.......................................................12
(b) Conflicts...........................................................12
(c) Enforceable License.................................................12
(d) Non-Competition.....................................................12


6. INDEMNIFICATION AND INSURANCE.............................................13
(a) Indemnification of P&G..............................................13
(b) Insurance...........................................................14
(c) Indemnification of CNS..............................................15
(d) Promotions..........................................................15


7. LICENSE FEES..............................................................15
(a) Calculation of Royalties............................................15
(b) Minimum Royalties...................................................16
(c) Reports.............................................................16
(d) Payment Terms.......................................................16
(e) Tax Withholding.....................................................16


8. CNS' RECORDS..............................................................17
(a) Records.............................................................17
(b) Audit Right.........................................................17
(c) Corrections.........................................................18


9. PROMOTION.................................................................18


10. TERM AND TERMINATION.....................................................19
(a) Extension and Non-Renewal...........................................19
(b) Termination by P&G..................................................19
(c) Termination for CNS Bankruptcy......................................20
(d) Termination by CNS..................................................20
(e) Change of Control...................................................21
(f) Consequences of Expiration and Termination..........................21


11. CONFIDENTIALITY..........................................................22
(a) P&G Trade Secrets...................................................22
(b) CNS Trade Secrets...................................................22
(c) Nondisclosure.......................................................23
(d) Press Releases......................................................23


12. MARKING..................................................................23


13. FORCE MAJEURE............................................................24


14. MISCELLANEOUS............................................................24
(a) First Line Goods....................................................24
(b) Use of Mark as Names................................................24
(c) Notice..............................................................25
(d) Relationship Between the Parties....................................25
(e) Entire Agreement....................................................26
(f) Interpretation......................................................26
(g) Waiver..............................................................26
(h) Dispute Resolution..................................................26
(i) Assignment..........................................................26
(j) Other Licenses......................................................27


TRADEMARK LICENSE AGREEMENT


THIS AGREEMENT (the "Agreement") is made effective as of the ______ day of _____________, 2000 by and between The Procter & Gamble Company, an Ohio Corporation with a place of business at One P&G Plaza, Cincinnati, Ohio 45202 and its affiliates and subsidiaries (collectively, "P&G"), and CNS Inc., a Delaware corporation with a place of business at 4400 West 78th Street, Minneapolis, MN 55435, ("CNS"). WHEREAS, P&G has the right to use and to license others to use the VICKS(R) trademark and the triangle design trademark which are well-known and famous marks owned and used by P&G in association with its advertising and marketing of cough and cold products; and WHEREAS, CNS recognizes the benefits to be derived from utilizing the VICKS(R) trademark and the triangle design trademark and desires to utilize said trademarks upon and in connection with the manufacture, sale, and distribution of Breathe Right(R) nasal strips; NOW, THEREFORE, the parties agree as follows:


1. LICENSE. Subject to the terms of this Agreement, P&G hereby grants to CNS a non-transferable and exclusive license to use the Licensed Marks listed on Schedule 1 (the "Licensed Marks"), on the Product listed on Schedule 2 (the "Product"), in the countries listed in Schedule 3 (the "Area") and subject to the restrictions outlined in Schedule 4. Schedules 1, 2, 3, 4 and 5 may be amended at any time upon agreement by the parties in writing. Notwithstanding anything in Schedules 1, 2, 3 or 4 to the contrary, P&G has the right to not approve the launch of any Product in any country for the reasons pursuant to the process set forth in Section 3 hereto and, if P&G does not approve any launch, then CNS shall not launch such Product as set forth in Section 3 hereof. Unless otherwise agreed to in writing by the parties, CNS shall have the right to do the following:


(a) Manufacturing. To manufacture (or have manufactured by a contract manufacturer), in a manner and quality that is consistent with Product specimens approved by


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P&G prior to the date of this Agreement, the Product for distribution and sale under the grant given in 1(c).
(b) Labeling and Packaging. To label and package Product manufactured under the grant given in Section 1(a), using labeling and packaging that is consistent in form and quality with labeling and packaging specimens approved by P&G prior to the date of this Agreement, for distribution and sale under the grant given in Section 1(c).
(c) Sale. To distribute and sell the Product manufactured, labeled and packaged under the grants in Sections 1 (a) and (b) solely within the Area. CNS shall use commercially reasonable efforts to maximize sales of the Product in the Area, consistent with the terms and conditions of this Agreement. It is acknowledged that CNS will roll out the Product in phases over time.
(d) Use of the Licensed Marks. To use the Licensed Marks in such form and manner as approved by P&G, which may include displaying the Licensed Marks on CNS vehicles, stationery, advertising and promotional materials used in connection with the sale of the Product, subject to compliance with all other provisions set forth herein.
(e) Use of P&G Name. To use the words "The Vicks(R)trademark is used under license from The Procter & Gamble Company, Cincinnati, Ohio" or such other entity as P&G shall designate, or the equivalent of such language approved by P&G on labels or packaging for Product manufactured and packed under the grants in Sections 1 (a) and (b).


2. CNS OBLIGATIONS.


(a) Warranties. CNS warrants that the Product shall be free of impurities or defects and will be produced, packaged and distributed in compliance with all applicable laws and regulations of the country or countries in which the Product is sold or distributed. CNS hereby agrees to use best efforts to ensure that each shipment or other delivery of the Product now or hereafter made by CNS shall, as of the date of such shipment or other delivery, conform to all the above requirements. CNS warrants that the manufacture, use, sale, offer for sale, or importation of the Product will not infringe the rights of third parties, including (without limitation) patent, trademark and copyrights. CNS expressly disclaims any implied warranties, including the implied warranties of merchantability and fitness for a particular purpose.


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(b) Compliance with Laws. CNS warrants that the Product will conform to all hazardous substance laws, consumer product safety laws, trade laws and any other applicable laws of the country or countries in which the Product is sold or distributed. CNS hereby agrees to use best efforts to ensure that each shipment or other delivery of the Product now or hereafter made by CNS shall, as of the date of such shipment or other delivery, conform to all the above requirements. CNS warrants that it will obtain all necessary health licenses or other regulatory approvals for the Product in each country or countries.
(c) Import/Export. If the Product is to be imported into any region or country for sale, CNS agrees that CNS or a CNS distributor shall be the importer of record and shall pay all duties and information costs in connection with the importation of the Product into such region or country. CNS shall be liable for all customs duties accruing at the time of such importation or at any time thereafter and that P&G shall not appear as importer nor as the "account party" on any documents submitted for purposes of customs procedures. Neither CNS nor any agent of CNS shall submit any documents of any kind to any customs agency or authority that reflect that the Product in question are to be imported for the account of P&G without the prior written consent of P&G.
(d) Samples. Prior to the first shipment by CNS or a contract manufacturer of the Product to a distributor, licensee or customer in each country in the Area, and at least once each calendar year thereafter during the Term, CNS shall provide to P&G the reasonable number of pre-production samples requested (only once prior to first shipment) and the reasonable number of production samples of such Product requested. Each of the foregoing items shall be sent to the person and location designated by P&G's Marketing Director, North America, Respiratory. P&G shall examine any such samples of the Product pursuant to the foregoing to determine the nature and quality of the Product. P&G designee shall review and respond in writing with regard to its approval (needed for initial samples only) or non-approval of such samples within ten (10) of P&G's business days after receipt of such samples from CNS. Neither CNS nor any contract manufacturer shall make any first shipment of Product to a distributor, licensee or customer in a region or a country in the Area unless and until CNS has received P&G's written approval of the production samples of the Product for such country. CNS shall immediately cease any and all


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shipments of Product by CNS or by a contract manufacturer to distributors, licensees and/or customers in any region or country if CNS receives P&G written disapproval of the provided production samples of such Product. In view of the substantial tooling and other costs which will be incurred by CNS prior to its delivery to P&G of the representative production samples, P&G agrees that it will not unreasonably withhold its approval of such samples. CNS shall not ship Product which has not been approved by P&G to trade customers.
(e) Artwork. Prior to the first public release of any artwork or other materials which incorporate or otherwise include the Licensed Marks, or which otherwise relate to the Product, in any country in the Area, CNS shall provide to P&G the reasonable number of copies of the rough artwork requested and the reasonable number of copies of the final artwork for each such piece of material (together with English translations if needed) requested. Each of the foregoing items shall be sent to the person and location designated by P&G's Marketing Director, North America, Respiratory. P&G shall examine any such materials received from CNS pursuant to the foregoing. P&G's designee shall review and respond in writing with regard to its approval or non-approval of such materials within ten (10) of P&G's business days after receipt of such materials from CNS. Such approval will not be unreasonably withheld. CNS shall not make any first release of such material in a region or country in the Area unless and until CNS has received P&G's written approval of the final artwork for such material. If either party fails to respond in writing in ten (10) days in accordance with the above, such party will pay any late charges arising from the delay that may be incurred by the submitting party.
(f) Copy Review. Both parties shall submit all printed materials, advertising and promotional copy (and English translations thereof) (including but not limited to audio and video materials) pertaining to Product and Promotion outlined in Section 9 to the other party for written approval prior to any release of such materials to the general public. Each of the foregoing items shall be sent to the person and location designated by each party. Each party's designee shall review and respond in writing with regard to its approval or non-approval of such materials within ten (10) business days after receipt of such materials from the other party. Approval of the submitted materials will not be unreasonably withheld. If either party fails to respond in


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writing in ten (10) days in accordance with the above, such party will pay any late charges arising from the delay that may be incurred by the submitting party.
(g) Product Preview Meetings. In order to facilitate review and approval of samples, artwork and copy, CNS and P&G shall meet at least once per year to review plans for the next year. Such review shall include, but shall not be limited to, new registrations and/or changes to existing registrations, new product launches, product and packaging changes and planned copy that is related to the Product. CNS shall propose the timing for these meetings and shall coordinate them with P&G's Marketing Director, North America, Respiratory or his/her designee.
(h) Improper Use. Notwithstanding anything herein to the contrary, if at any time CNS is using the Licensed Marks on the Product, or on labels or tags or in advertising in any country in the Area in a manner not consistent with this Agreement, or if the standard of quality of the Products in any country in the Area does not conform to the standards set by P&G or is not of a quality at least equal to similar "first line" products manufactured by CNS, then P&G may give CNS written notice to that effect, identifying in such notice the situation to which it objects. CNS shall have fifteen (15) days after receipt of any such notice to notify P&G of the means by which CNS intends to correct the situation to which P&G has objected, and, notwithstanding Sections 1 or 10 thereof, if CNS fails to complete such corrective action within a reasonable time, then P&G may by further written notice to CNS cancel this Agreement forthwith with respect to the country(ies) affected. If P&G so cancels, then CNS shall immediately discontinue use of the Licensed Marks in such country(ies) and shall not thereafter adopt any conflicting or confusingly similar mark or symbol for use on any goods. CNS shall bear all costs of any corrective action.
(i) Development of Product. Subject to the right of approval by P&G under Paragraph 1(a) and the other rights to P&G under this Agreement, CNS shall have sole responsibility for research, development and design of the Product(s) sold under this Agreement.
(j) Prohibition on Sales. The parties hereto shall cooperate to avoid and resolve conflicts. If P&G is prohibited from selling any goods under the Licensed Marks in any country because CNS is selling the Product, then P&G shall give CNS at least 180 days notice of P&G's


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desire to sell goods in such country. Upon receipt of such notice, CNS shall cease selling the Product in such country as soon as is reasonably commercially possible, but in no event later than 180 days from the date of such notice, and shall take all steps necessary to enable P&G to sell goods under the Licensed Marks in that country. Subject to the preceding, P&G shall use commercially reasonable efforts to cooperate with CNS in a phase out plan to sell out finished goods of the Product and any unique materials specifically identified to the manufacture of the Product for such country.
(k) Other Approvals. In addition, CNS shall submit the Product to a testing laboratory identified by P&G for tests reasonably requested by P&G. P&G may withhold final approval of the Product pending P&G's reasonable satisfaction with said test results, such approval not to be unreasonably withheld. All costs of such testing will be borne by CNS. 3. CNS COVENANTS
With regard to its actions hereunder, CNS expressly covenants as follows:
(a) Authorization. CNS is a corporation duly organized, validly existing, and in good standing under the laws of the state of Delaware and is duly authorized to do business therein, with full corporate power to enter into this Agreement.
(b) Conflicts. To the knowledge of CNS, the execution and delivery of this Agreement does not violate any law, rule or regulation or order, judgment, or decree within the Area binding on either party and will not result in a breach of any contract, agreement or other instrument to which either CNS is a party.
(c) Plant(s) Where Product is Manufactured. CNS and its contract manufacturer(s) (if any) shall maintain and operate a plant or plants with manufacturing and packaging equipment adequate to produce and supply Product in quantities adequate to meet reasonably anticipated consumer demand. CNS agrees that in the manufacturing, packaging, distributing and selling of Product, it shall, and CNS will use best efforts to determine that all contract manufacturers it utilizes shall, comply with all applicable laws, regulations and ordinances pertaining to the operation of its plants and will maintain such plant(s) at all times in a clean, wholesome and sanitary condition consistent with the laws of the country or countries in which the plants are located.


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(d) Quality Control Sampling. P&G representatives shall be permitted to enter and inspect, at reasonable times during business hours and with at least forty-eight (48) hours' prior notice, CNS's plants and warehouses where Product is being manufactured or stored and the plants and warehouses of CNS's contract manufacturer(s) (if any) where Product is being manufactured or stored.
(e) Sub-Standard Product.
(i) CNS covenants, warrants and guarantees that none of the Product will be in violation of the drug, medical device or other laws of the United States or any applicable country, and that the Product will not be produced or shipped in violation of any applicable laws of the United States or other country; provided, however, that CNS does not covenant, warrant or guarantee against the Product becoming violative within the meaning of the applicable drug, medical device, health or consumer product safety laws after shipment by reason of causes beyond CNS's control.
(ii) If CNS learns that it has manufactured or has in its possession or control or has shipped or sold Product which is in violation of drug, medical device, health or other applicable laws, then CNS agrees to notify P&G of such fact promptly and in writing. Upon notice to P&G from CNS, or upon notice given by P&G to CNS of the existence of this Substandard Product, CNS will promptly take whatever action is reasonably necessary to correct this situation. If requested by P&G, CNS shall, solely at CNS's expense, promptly retrieve from CNS's warehouse or plant and from all trade customers all such Substandard Product. CNS must seek and receive P&G consent as to its proposed handling of the retrieved Substandard Product. In the event of any consumer recall, however or by whomever the recall is initiated, CNS shall, solely at CNS's expense, promptly retrieve all such Substandard Product and CNS must seek and receive P&G's consent as to its proposed handling of the retrieved Substandard Product.
(f) Non-Competition. During the Term of this Agreement ...